Privacy Risks and Business Negligence
The price of data for business goes beyond the collection, sorting, and storage costs of maintaining large caches of information. And while many companies use this data as their key business asset, the costs to consumer privacy are more complex than many recognize. As I mentioned in Surveillance Capitalism — Do You Know Who’s Tracking You? cell phone providers, free wifi, Google (and other search engines), and even Social Networks are collecting massive amounts of personal data from consumers. Data collection is so pervasive that, as Time Magazine reports, one retailer knew about a woman’s pregnancy and sent her a promotional flyer before she’d even notified her parents.
Business Negligence and Customer Care
If the security could be assured, and privacy risks addressed, consumers might be more comfortable with the current levels of data collection. The capabilities of IoT technology, machine learning, AI, and the cloud depend on a certain amount of data collection. But businesses have been notoriously unsecure when it comes to caring for client security in the digital marketplace.
Even in situations where companies have policies in place to protect the privacy of their customers there is substantial risk from their vendors and service providers. As Bobby Boughton of OnRamp reports in Data Risk in the Third-Party Ecosystem, over 50% of companies aren’t sure who has access to their data or how they are using it. And they also aren’t sure what safeguards are in place to mitigate a security incident. Without serious benefits for all this data collection and security risk consumers are increasingly questioning the data collection policies of companies they do business with.
A Negligible Advantage
As Walter Frick explains in Do Tech Companies Really Need All That User Data?research shows little advantage for companies when storing massive amounts of consumer data. When compared against a three-month backlog of personal data, search engines saw little difference in the quality of personalized results. Further, the perceived competitive business advantage of giant digital companies storing data is negligible. And as the research points out, “historical data may be less valuable in informing search results than fresher data.”
This is good news for new market entrants who want to leverage the digital marketplace and make the best use of AI. It’s also good news for consumers with privacy concerns. From a business, cost, and customer service standpoint it will make less and less sense to store massive amounts of personal information from consumers in the near term and going forward.
Additional Solutions
The combination of negligible benefits to consumer service from massive data collection, and the dissatisfaction of consumers with data security, is set to change the marketplace. As 91% of consumers report they’ve lost control of how personal information is collected and stored by companies, and the digital marketplace shifts more and more to a consumer focus, companies who cater to the desires of their users are set to increase market share and build their brand.
Beyond the change in data collection policies there is an opportunity for companies to deploy new digital architectures and technology tools to further protect privacy. Utilizing Edge Computing to process algorithms onsite on IoT devices and sensors prior to transmitting to the cloud is one way technology can shift the privacy control of personal data back to consumers. In addition, the rise of blockchain technology as the underlying foundation for integrating digital technology will also help keep data secure.
Companies who invest in the service of delivering privacy and security to their users—in combination with the capabilities of digital transformation technologies—are set to be the new business leaders. Adjusting the amount of data collected while deploying encrypting capabilities and greater levels of personal privacy control will cut costs, grow market share, and create customer satisfaction, without affecting the performance power of integrating the cloud, AI, and the IoT.
Photo Credit: mmanuals Flickr via Compfight cc
This article was first published on Futurum Research.
Daniel Newman is the co-founder of V3*Broadsuite and is an experienced C-level executive, serving as a strategy consultant for small and mid-sized businesses. He’s also an insight/analyst partner to four Fortune 50 enterprises and previously served as the co-founder and CEO of EC3, a hosted IT and communications services provider. Prior to that, he served as the CEO of United Visual, Inc. in Chicago Illinois.
He is a widely published writer who contributes weekly to Forbes, Entrepreneur, Huffington Post and industry publications such as Commercial Integrator, Sound & Communication and Corporate Tech Decisions. He’s also author of three best-selling business books including The New Rules of Customer Engagement, The Millennial CEO, and just recently Evolve: Marketing (^as we know it) is Doomed.
Daniel has established a reputation as a leading thinker in topics such as Social, Big Data, Cloud and Mobile. He has been named to many top influencer lists in all of these areas, including recognition by the Huffington Post as one of the 100 business and leadership accounts to follow on Twitter. He is also an adjunct professor of management at North Central College.
