By Tim Cashman

The Economic Impact of Open Data

Posted February 27th, 2014

By Tim Cashman

 

As the open data movement has progressed over the last several years, governments have moved from focusing on transparency to providing direct access to data catalogs, together with tools for analyzing and visualizing that data. More recently, government leaders are starting to fully appreciate the value of open data as a resource for stimulating economic growth.

This is an exciting development and a trend that shows no sign of slowing. In fact, the number of new businesses building their go-to-market strategies around the free-flow of public data is growing.

Calling All Entrepreneurs

An example of this new movement is a Seattle-based company called Porch.com, which uses city work permits, licenses, and other residential construction information to create a searchable database. Porch.com, which is free to use, is a favorite of homeowners, professional builders, and others, who rely on the site to compare ideas and get a baseline for the costs of specific projects.

Read more about open data businesses in The Wall Street Journal.

Another example is iTriage, a health care technology company started by two emergency medicine physicians. iTriage offers a portfolio of location-aware mobile apps designed to give consumers instant access to information about healthcare providers and facilities right in their neighborhood. The apps mash up open health data, public-domain records about insurance products, and public directories of healthcare providers to deliver current, highly localized information. Consumers can use this information to make fully-informed decisions about what doctor they choose or which local clinic is likely to provide the best care.

iTriage is probably the one company in the healthcare sector most often cited as a success story by Todd Park, the U.S. Chief Technology Officer. Park is renowned for pioneering federal government data initiatives launched with great fanfare during brainstorming events known as datapaloozas. These high-profile events promote collaboration among entrepreneurs, application developers, activists, and policy-makers in an effort to create technology solutions to persistent civic challenges. The founders of iTriage took full advantage of these events to formulate products that are helping to revolutionize the health care industry.

But several other budding technology companies have since followed suit, building on the growing ecosystem around open health care data. Some of these providers include: MedWatcher.org, an iPhone app that alerts doctors about drug safety notifications and CountyHealthRankings.org, an interactive website that ranks the overall health of every county in the U.S.

By no means is the list of companies built on the availability of open data limited to a few industries. Businesses focused on everything from real estate and transportation to finance and energy are capitalizing on open data.

Origins of Public Data as an Engine of Business Growth

Although the use of open data by private-sector businesses is now garnering headlines in the mainstream press, today’s flurry of economic activity did not happen overnight. Experts often point to the availability of open global positioning data in the 1980s as a watershed moment that accelerated the growth of an entire new industry of mobile mapping services. The total economic value of GPS-based products and services is now estimated at $90 billion annually.

Similarly, the decision by government agencies to open up weather data sparked the growth of consumer websites like Weather.com. It subsequently led to the growth of companies that provide services to businesses heavily dependent on weather forecast data. Today, the cumulative value of products and services derived from open access to weather data is estimated at $15 billion.

Rise of the Open Data Economy

While these examples are certainly impressive, the rate of business growth attributable to open data has spiked in the last few years. The initial (and truly historic) boost came from President Obama’s directive to federal agencies to put public information online. But the fuel for this innovation has since come largely from the enthusiasm of visionaries like Todd Park, who have inspired a growing following of open data advocates inside and outside of government.

There is mounting evidence that open data can and is making a measurable difference in contributing jobs, consumer spending, and tax revenue to local economies. Nationwide, new business starts have been decidedly sluggish over the past five years. Yet, cities that have active, government-sponsored open data programs have stayed well ahead of this curve. For example, in Seattle, home of Porch.com, new business formation in 2011 rose 9.4 percent, three times greater than the national average.

It is clear that the benefits of open data extend far beyond greater transparency and revitalized civic engagement. The availability of government data has already spawned multi-billion dollar industries. And the movement is still very much in the early stages of development.