The European open data market is estimated to grow from 184.45 billion EUR in 2019 to 334.20 billion EUR in 2025. It provides excellent opportunities but small businesses are often excluded from the biggest piece of the pie. Why are small companies left out and what can be done to make the open data space more inclusive?
Challenges small businesses face
Open data has a significant influence on technological development, sustainability strategies, and business development. With access to real-time open data, small companies could close information gaps, learn more about the market situation, and improve the decision-making process. Open data has great power if a business has access to and tools to use it.
It’s difficult to talk about the further progress of open data without small businesses and startups at the table. Gerda Jurkoniene, PhD, CEO & Co-founder at OKREDO, an open data platform, exposed the main issue of why SMEs are still behind the adoption of open data. “The majority of data is still not open, and governments still act like this data is their ownership, not businesses’. It’s moving forward, but it’s not enough.”
Although the scarcity of open data sources is a challenge, many SMEs don’t know how to use open data available to them. That depletes them of opportunities to make better business decisions, gauge the risks, find potential clients, use business connections in the market, and even repay debts faster. Another problem is that governments open data only in fragments, and if we want an efficient open data exchange, it has to be more structured, clear, and easily accessible.
She continued saying that the pandemic pushed small businesses to use open data more actively, especially looking for new clients. But they still lack the right tools to access that information.
Adriano Oliveira Amaral, Opendata Practitioner, Product and Program Manager at Derilinx, agreed and added that for small businesses to get the most out of open data, there must be a more inclusive space that could provide access to resources and educate businesses on how to utilize this data.
He also highlighted that there are huge amounts of available data, which is not used nor shared, and usually that data is in the hands of large businesses. “There’s a term called dark data. It describes the information that we’ve always been collecting, but it’s hard to use. Let’s take a company that’s focused on logistics as an example. They have data on delivering times and other aspects of logistics. But this data could also be used to figure out traffic jams or similar problems. And while that business might use that data only for internal purposes, it has many effects. We have the technology to share that data, but it’s a challenge to make it available for everyone.”
Why is open data important for small businesses?
Mindaugas Ubartas, CEO of Infobalt Association, explained that if we want to understand all the benefits of open data, we have to look at the progress it has made in the world.
“We don’t think of companies like Airbnb, Uber or Bolt as open data companies, but in reality, the concept of open data enabled the gig economy to appear. It created real-time data exchange between a service provider and customer, enabling this whole sector to exist. It also transformed the financial sector, allowing customers to share their data with other financial institutions.” explained Mr Ubartas.
Large corporations have been using open data for many years, allowing them to grow faster and find better opportunities. Jekaterina Bitus, Head of Startup partnership at Swedbank Lithuania, sees lots of open data benefits for companies and financial institution customers.
“We use open data for business processes. Platforms that allow aggregating open data help financial institutions to manage risks, make sustainable deals and partnerships. And we seek that our customers could reap the same benefits. At the ROCKIT innovation center, we have tested Okredo's solution. We see that such an open data platform can become a great tool especially for small businesses”, - says Jekaterina Bitus on why opening data has a universal value. However, open data isn’t always available for small companies and startups, raising many challenges.
What are the steps small businesses could take?
Although startups and SMEs have challenges accessing and using open data, there are ways to adapt it faster and get the most out of it. Dr Jurkoniene believes that the first step a small business can take to benefit from open data is to look at itself. “How are you being seen by others? From this point of view, you then can see what data is available on the market. That helps companies have a better understanding of which processes they can enrich by enabling data, whether it’s to increase sales, manage risks, or put it in accounting operations.”
Mr. Amaral added that there have to be more initiatives to educate small businesses about open data, where to find it, and how to use it. He emphasized that in the future, having data brokers could make this exchange more equal.
But it’s not only the responsibility of SMEs, large corporations and governments have to work to make information about open data more accessible as well as educate SMEs on how to work with it. Jekaterina Bitus believes that banks could also take the lead on educating startups not only about the benefits of new technologies but also about financial literacy. In the end, that would create mutual benefits for both.“At the ROCKIT innovation center, we have tested Okred's solution. We see that such an open data platform can become a great tool especially for small businesses especially for managing partner’s risk”.
Although the development of open data in Europe is advancing each day, there’s still much room for improvement, especially from the regulatory side.
EU efforts on opening data
Implementation of open information in the EU started in 2003 with the directive to re-use public sector information. In 2019, past directives were revised to a new directive on open data and re-using of public sector information. Since these initiatives started, there has been a significant improvement in open data development in the EU. Currently, the European Commission is working on setting more comprehensive guidelines for businesses and consumers.
Jiri Pilar, Legal and Policy Officer in DG Connect, European Commission, agrees that public guidelines are important, but he also noted that they are just a minimum. Most member states take the lead into their own hands. “In the European Commission, we don’t tell anyone what they should do with data, we try to create conditions. And the rules that we are putting are a minimum. That’s why many countries don’t wait for us. We have countries that didn’t wait and now they are the frontrunners, and we can see that things work.”
On the other hand, public guidelines could help even out the open data development in all member states, and invite small businesses to the table. According to Szymon Lewandowski, Legal and Policy Officer within the Data Policy and Innovation Unit of the European Commission, it’s crucial to set these guidelines that would help develop cross-border open data usage. “The regulatory part is very important, especially in the EU where we have different countries, many borders, traditions, and different approaches to open data and levels of digitalization. But we need to complement it with guidelines, policies, funding, and setting technical enabling structures like European Data Portal.”
You can find the full discussion about employing open data here.