Open Data – Unlocking Performance Through Liquid Informationmddb.apec.org/Documents/2015/FMP/WKSP1/15_fmp_wksp1_008.pdfIncreased inventory velocity $0.3–0.5 More targeted marketing

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2015/FMP/WKSP1/008 Session: 2

Open Data – Unlocking Performance Through Liquid Information

Submitted by: McKinsey & Co

Workshop on Fiscal Management Through Transparency and Reforms

Bagac, Philippines9-10 June 2015

OPEN DATA – UnlockingPerformance Through

Liquid Information

APEC WORKSHOP

June 9, 2015

|McKinsey & Company 0

Open data is on the

agenda for countries,

regions and cities

around the world

2008

McKinsey & Company |

2009 2010 2011 2012 2013

Open data is on the agenda for countries ,

regions and cities around the world

The first open data sites were announced just 7 years ago; today it is a

global movement led by over 70 countries, hundreds of cities and NGOs

2014

1

Before we dive ichallenges and

n, let’s see the power of open data to solve social

drive growth – FirstFuel example

40% 20%+The challenge US1energy in waste

The opportunity

The approach

Start with 2 piecesof data

1 Up to 75% of climate change emissions in NYC

Apply big data Deliver insightsfor savingsanalytics


Open data can help unlock $3.2 trillion to $5.4 trillion in economic value

per year across seven “domains”

$ billion

Consumer

finance

0.2 - 0.3

0.2 - 0.5Oil and gas

0.3 - 0.4Health care1

Total$ 3.2 –

5.4B

0.3 - 0.6Electricity

0.5 - 1.5Consumerproducts

0.7 - 0.9Transportation

0.9-1.2Education

1 Includes US values only. NOTE: Numbers may not sum due to rounding.

|SOURCE: McKinsey Global Institute analysis McKinsey & Company 3

Today government data is being applied across domains and helpingenable all value levers

Lever Domain Company Description Example impact

▪ E&P operators use best practicesand benchmarks from neutral 3rd

party firms to improve ROI

▪ 15–25% reduction in

capex; 50% reduction

in ramp-up

Provide

transparency,

accountability

Enable

benchmarking

and innovation

▪ ▪Power generators use capitalproductivity benchmarks and best

practices collected by third-party

~10-20% reduction incapex through

improved contracting

firms to improve investment decisions

Identify

customer and

citizen

segments

▪ ▪Clorox analyzed retailer loyalty card

data to determine better shelving

locations and used Census data to

project segment growth

Increase in cross-

sell/up-sell revenue

and reduced cost on

overstocking

▪ ▪Improve /

automate

decision-

making

Starbucks used demographics and

geo information data to select new

store locations, estimating population

growth, shipping costs

New store openings

produced best unit

economics, 10%

above target

Create new or

better

products and

services

▪ ▪GPS-enabled tracker monitors acute

and prophylactic inhaler use and

reports to central database; identifies

individual and population trends

Personalized

treatment plans to

reduce hospitalizations


McKinsey & Company | 5

There are four main roles that governmentdata ecosystem

and NGOs can play in the open

UK Digital Government agency set

common privacy, formatting, and

governance standards to help

ministries, cities build open data

programs

Denmark’s

Open Data

Innovation

Strategy sets avision for how

businesses,

citizens andPolicy maker ProviderAustralia

hosted an 8

city hacka-

thon with

$50k in

prizes to

create new

apps to

improve

services

ls, start ups can

access data

uniformlyse,

The Chicagopolice dept

open data and internaluses

analytics to deploy officersto highest risk areas,

reducing crime

Catalyst User


Getting the full value takes more than just the data – it requires investing

in a system and the people behind it

Big data

analytics

(processing

power)

Leadershipvision

(commitment)

Open data IT talent(expertise)(raw material)

Use and

impact

(value

creation)


Appendix


How five openeducation

data levers can create over $890 billion of value in

Annual economic value

to employment

▪ Clearer signaling of


$890–1,190

Improved instruction

▪ Personalized learning plans

▪ Frequent feedback on

teaching performance

▪ Student-teacher matching

▪ Professional development

$310–370

Matching students

to programs

▪ Benchmarking of educational

value/performance

▪ Transparency of programs/

institution offerings

▪ Transparency of skills

demanded by employers

$70–100

Matching students

▪ Enhanced employer-

candidate matching

candidate skills

$90–190

Transparent

education financing

▪ Loan transparency

▪ Personalized net price

comparisons

$190–240

Efficient system

administration

▪ Enhanced procurement and

shared purchasing programs

▪ Data-driven siting strategy

$230–290

Total

How three levers can create over $720 billion of value in transportation


making

travel time, environmental

(e.g., maintain vs.

▪ Maintenance timing


Total

$720–920

Improved

infrastructure

planning and

management

▪ Right-size network

▪ Network mix optimization

▪ Network sharing

▪ Demand management

(strategic route frequency and planning)

▪ Maintenance optimization

▪ Maintenance timing

▪ Congestion pricing

$270–280

Optimized fleet

investment and

management

▪ Right-size fleet

▪ Optimal fleet mix

▪ Enhanced procurement (use

total cost of ownership)

▪ Vehicle shares

▪ Maintenance optimization

decommission)

$230–370

Better-informed

customer decision

▪ Reporting and decision

support (cost, reliability,

impact)

▪ Accident prevention

$220–280

s

How five open data levers can create over $520 billion of value in

Annual economic valueconsumer products

assortments


$520–1,490

Improved product

design and

manufacturing

▪ Efficiencies in manufacturing

operations

▪ Open innovation (e.g.,

crowdsourcing)

$70–290

Efficient store

operations

▪ Reduced stock-outs

▪ Increased inventory velocity

$0.3–0.5

More targeted

marketing and sales

▪ Granular segmentation

▪ Tailored layouts and

▪ Precisely targeted advertising

$25–35

Better-informed

consumption

▪ Price comparison tools

▪ Product transparency (e.g.,

recalls, safety violations, complaints, provenance)

▪ MyData service

$400–1,090

Improved post-

sales interactions

▪ Customer service

improvements

▪ Customer life-cycle

management

$25–55

Total

How five openelectricity

data levers can create over $340 billion of value in


▪ Workforce optimization/right-

retail and

▪ Commercial and

benchmarking


Optimized generation

investment

▪ Benchmarking best practices

▪ Lean construction

▪ Permitting and siting strategy

▪ Optimization of technologydeployment decisions

▪ Design to value $30–50

Efficient generation

operations

▪ More efficient procurement and

supply management

▪ Operations scheduling

▪ Process optimization/operations

size staffing $20–60

Total

$340–580

Optimized investment in transmission and distribution

▪ Risk-based capital allocation

▪ Procurement, supplymanagement

▪ Design to value


▪ Permitting, siting strategy

▪ Technology deployment

$60–90

Efficient transmission

and distribution

operations

▪ Use of smart grid, next-gen technology

▪ Choice of energy-efficiency initiatives

▪ Process optimization/lean operations

▪ Efficient procurement/supplymanagement

▪ Workforce optimization / operations

scheduling

$40–60

Optimized

consumption

▪ Demand managementPrice transparency

residential user

$180–310

How five levers can create over $240 billion of value in oil and gas


mid and

investment

maintenance optimization

consumption

efficiency


Optimized upstream

investment

▪ More successful discovery

through shared data

▪ Higher capital productivity


▪ Faster/cheaper permitting

$110–230

Efficient upstream

operations

▪ Workforce optimization

▪ Benchmarking best practices

▪ Process, reliability, and

▪ Efficient procurement/supply

management $20–40

Optimized

downstream

▪ Pipeline site strategy

$110-230

Efficient mid and

downstream

operations

▪ Efficient procurement/supply

management

▪ Workforce optimization

▪ Process optimization/

lean operations

$30–80

Better-informed

▪ Demand management

▪ Investments in energy

▪ Commercial and residential

user benchmarking

$80–160

Total

$240–510

How five levers in health care can create over $300 billion of value in the

Annual economic valueUS alone

▪ Performance quality

innovation

NOTE: Data from US only.


$300–450

Right living

▪ Patient health management

▪ Health education

▪ Prescription adherence

$70–100

Right care

▪ Physician communication

▪ Clinical decision support

▪ Disease/case management

▪ Public health monitoring

▪ Safety detection$90–110

Right provider

▪ Resource/finance

optimization

measurement

$50–70

Right value

▪ Consumer decision making

▪ Patient information

exchange

▪ Fraud prevention

$50–100

Right

▪ Trial operations

improvement

▪ Avoid repeating failures

▪ Unmet needs identification

▪ Post-approval risk detection

$40–70

Total

How five levers in consumer finance can create over $209 billion of value


▪ Identify erroneous payments

credit decision

NOTE: Represents only a partial list of value levers; total value likely higher


$209-277

Enhanced product

design, pricing

▪ Improve product design and

pricing

▪ Develop targeted product

portfolio

$25-44

Refined consumer

marketing

▪ Target and acquire optimal

mix of customers

▪ Personalize product

recommendations

$34-38

Better-informed

consumer decisions

▪ Optimize consumers’

selection with greatertransparency

▪ Understand spending habits

$40-60

Improved credit-

offering decisions

▪ Improve credit decisions

▪ Understand customer risk

$97-107

Optimized post

risk management

▪ Reduce frequency and

magnitude of loss

▪ Improve collection of

defaulted debt

$13-28

Total