A radically new approach to data value creation

MAY 18, 2021 • BLOG POST • JOHANNES KOCH, SVP, GERMANY, AUSTRIA AND SWITZERLAND, HPE

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IN THIS ARTICLE

  • A new type of digital platform is emerging, enabling the aggregation of data, insights and services at scale based on a completely decentralized architecture
  • As a result, organizations can tap into network effects while ensuring data privacy and sovereignty
  • Customers should start preparing for these emerging platforms now

How decentralized cloud and data infrastructures can help you in the next wave of digital transformation

Data is not the new oil because oil has very different economics. It would be ridiculous to think that companies must share their oil with each other to exploit its value – and yet this is the case with data.

Think of medical researchers trying to predict the outbreak of a pandemic; automotive engineers training autonomous vehicles; or a supply-chain manager that needs to fix an urgent supply shortage. They all rely on the aggregation of data and insights from entities and devices that can be distributed around the world.

And the more researchers, cars and suppliers share their information, the better the predictions, decisions and actions will be – for all of them.

Simply put: the foundational value driver in the data economy is the network effect.

The winner takes it all

Until now, the only way to achieve network effects has been the centralization of data, insights, or services, organized by powerful intermediaries.

But centralization is simply not sustainable for several reasons. It’s far too costly – both economically and environmentally – to send all the data to a cloud and send insights back to the edge. Also, this is often too slow for real-time use cases.

Finally, centralization is also a problem for digital sovereignty because its network effects lead to market concentration. If this was the only way to share data and insights at scale, this would mean that the digital fate of a myriad of organizations would be dependent on just a few companies.

Consequently, the key question for the next wave of digital transformation is this: are there ways to create network effects without centralization?

Create network effects without centralization

The answer is: yes, there are, and they are emerging as we speak.

The most prominent example is Gaia-X, a European initiative creating a federated data infrastructure which is supported by more than 300 organizations in Europe and globally.

The goal of Gaia-X is to enable sharing of data, insights and services at scale while ensuring the data privacy and digital sovereignty of every participant – and all based on a completely decentralized architecture, common standards and rules.

If an organization needs to source information on, for example, medical test results, traffic or supplies, it will be able to go to a catalogue, search for who offers that information, select the most appropriate offer, and subscribe.

Data providers, on the other hand, will have full transparency and control over how their data is used. Rules are enforced to prevent data abuse.

But Gaia-X is only one manifestation of a broader movement. Similar initiatives include International Data Spaces, Catena-X, swarm learning and others.

Get ready for decentralized infrastructures now

These decentralized infrastructures are in early stages or in proof of concept. As an example, Gaia-X is now entering its operational phase with first flagship projects, and first Gaia-X-compliant solutions are expected to be certified in December 2021.

So when should you take action to get ready for these emerging platforms?

The answer is: now. Because the work organizations must do to benefit from them is work they must do anyhow to be successful in the data economy.

Similarly, decentralized platforms will not help you at all if you don’t have a certain maturity degree with regards to data monetization – i.e. the ability to capture, organize and analyze data to achieve outcomes such as higher efficiency, better customer experiences, better insights, new revenue streams, and higher margins.

HPE’s role in decentralized cloud and data infrastructures

HPE’s strategy is focused on helping customers unlock the value of data that is distributed across locations and clouds. It’s obvious that this strategy is perfectly in line with the goals of initiatives such as Gaia-X. Our services, technologies and solutions are geared to enable organizations to advance data value creation in general and to benefit from decentralized data and cloud infrastructures in particular.

And we constantly innovate to add more value – the most recent example is the HPE Solution Framework for Gaia-X which we announced today.

To be very clear: Gaia-X and similar initiatives are not addressing a regional problem – it’s a global problem which we all must solve in the next wave of digital transformation. If we do it right, we can do great things. We can leverage exponential data growth to advance wealth and social progress like never before – while at the same time promoting sovereignty, openness and equal rights and opportunities for individuals, organizations and nation states.

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