___________________________________________________________________________
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
|McKinsey & Company 2
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
|SOURCE: McKinsey Global Institute analysis McKinsey & Company 4
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
|McKinsey & Company 5
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)
|McKinsey & Company 6
Appendix
|McKinsey & Company 7
How five openeducation
data levers can create over $890 billion of value in
Annual economic value
to employment
▪ Clearer signaling of
|SOURCE: McKinsey Global Institute analysis McKinsey & Company 8
$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
Annual economic value
making
travel time, environmental
(e.g., maintain vs.
▪ Maintenance timing
|SOURCE: McKinsey Global Institute analysis McKinsey & Company 9
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
|SOURCE: McKinsey Global Institute analysis McKinsey & Company 10
$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
Annual economic value
▪ Workforce optimization/right-
retail and
▪ Commercial and
benchmarking
|SOURCE: McKinsey Global Institute analysis McKinsey & Company 11
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
▪ Lean construction
▪ 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
Annual economic value
mid and
investment
maintenance optimization
consumption
efficiency
|SOURCE: McKinsey Global Institute analysis McKinsey & Company 12
Optimized upstream
investment
▪ More successful discovery
through shared data
▪ Higher capital productivity
▪ Lean construction
▪ 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.
|SOURCE: McKinsey Global Institute analysis McKinsey & Company 13
$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
Annual economic value
▪ Identify erroneous payments
credit decision
NOTE: Represents only a partial list of value levers; total value likely higher
|SOURCE: McKinsey Global Institute analysis McKinsey & Company 14
$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