BIG PROFITS FROM BIG DATA: Platforms create another potential revenue stream with platform-generated data

Platforms collect data from many sources, with multiple benefits for the platform provider and member companies. The data they generate can enable the platform company to make smart business decisions while opening new markets to its members. Whether a platform operator chooses to analyze the data itself or sell it to others for analysis, the data represents money to be earned.

Deere & Company is the Moline, Illinois, manufacturer of iconic John Deere farm tractors and other heavy machinery. It makes most of its US$26 billion annual revenue in the traditional way, by selling or leasing equipment to farms and construction firms.

Yet, this conservatively managed firm launched digital platform in 2013 to forge a direct connection with farmers. Originally established to give John Deere equipment owners access to spare parts and other company offerings, is providing the company with another rich source of potential income: big data.

Lubbock, Texas, USA – March 15, 2016: A John Deere tractor is plowing a barren field for future crops. As the tractor moves, dust and dirt can be seen behind the tractor. Vertical lines radiate from either side of the tractors. The tractor’s shadow can be seen. Photo shot from high angle viewpoint.

For example, Deere has installed internet-enabled sensors on its tractors to record and transmit data on fuel consumption and other metrics useful to farmers. Deere also sells monitoring equipment called Field Connect, which collects additional data on soil moisture, temperature, wind speed, and rainfall. The data from the sensors is then made available to farmers on the platform.

“We’ve never had that data before,” said Geoffrey G. Parker, a professor at the Thayer School of Engineering at Dartmouth College in Hanover, New Hampshire, who has studied the Deere platform and co-authored Platform Revolution: How Networked Markets Are Transforming the Economy and How to Make Them Work for You. “Think of the tractor like a Mars rover capturing data.

”The primary use of the farming data, Parker said, is to help individual farmers improve productivity on their farms. But the data also could be a valuable commodity in itself for agricultural companies, which could use the data to shape their investment strategy. “If Deere aggregated data across enough farms and sold the data stream, it would give a pretty good idea of what is going to happen in next year’s agricultural output, which puts one at a huge financial advantage,” Parker said.

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