Alternative data looks set to go mainstream. The term may have originally been used in reference to the non-traditional datasets hedge funds and investors use to get an edge on the markets. But the sheer variety of alternative datasets available today means its usage is quickly spreading to other industries and sectors.

Deloitte reports that global alternative data spend is on track to reach $7 billion in 2020. The number of alternative data providers has almost tripled since 2009, and a recent explosion in alternative data availability means a wide range of businesses can now take advantage of these non-traditional datasets.

Earnest Research President and CRO Andrew Robson explains: “Ever-cheaper cloud storage and powerful processing technology have made it economically viable for both incumbent and start-up analytics firms to mine alternative data for valuable insights.”

He adds: “Companies utilizing alternative data sources such as transaction data will lead their industries, connecting analytics to action and leveraging a competitive information advantage.”

What Business Leaders Should Know About Alternative Data

Alternative data is any data that comes from a non-traditional source. Since the term has its roots in the world of finance, this generally means anything beyond the economic and earnings data that governments, companies and other organizations typically make available to the public.

Satellite data has provided some of the most headline-grabbing examples of alternative data in action over the past 12 months. CNBC reports that one corporate jet tracking service spotted a plane owned by Occidental Petroleum landing in Warren Buffett’s home town in April. This allowed some investors to correctly guess that Buffett’s Berkshire Hathaway was maneuvering to take a stake in the company.

“While we can’t say what OXY might have been doing in Omaha yesterday, it has occurred to us that it might be trying to bring Buffett into this deal,” Don Bilson, an analyst at research firm Gordon Haskett Research Advisors, wrote in a note to his clients the day after the sighting.

But not all alternative data sources are this exotic. Data solutions provider Eagle Alpha boasts that its database contains more than 1,000 alternative datasets businesses can use to get a competitive edge.

“The world is in the midst of a data revolution,” says Eagle Alpha founder and CEO Emmett Kilduff. “Advances in cloud computing, advances in data science and new datasets are ushering in a new era of global productivity.”

“There are already thousands of ‘alternative’ datasets that are relevant to corporates,” he adds. “These datasets span 24 distinct categories, including social media, satellite, consumer transactions, geo-location and employment data.”

With such a broad range of datasets to choose from, it’s easy to image in an enterprise might use alternative data to guide product development, optimize supply chains, refine marketing campaigns, glean competitive intelligence and more besides.

Global Enterprises Are Already Using Alternative Data

Some of the world’s most recognizable brands are already taking advantage of alternative or ‘external’ data sources.

For example, Starbucks analyzes location, traffic, area demographic and customer behavior data when assessing potential locations for new stores. This information empowers the company to select the locations with the best chances of success.

Meanwhile, retailers like Walmart and Walgreens regularly analyze changes in weather to see any patterns in product demand. What’s more, Walgreens uses a platform that analyzes more than 8.3 billion medical events to enhance patient assessments and bring analytics insights to its 400 healthcare clinics.

“The power of these new kinds of data lies in their unusual sources,” says Adena Friedman, President and CEO of US stock exchange Nasdaq. “We believe the trend for unique and interesting data is long-term, not only for investors but for others who have an appetite for finding value in both discovered and undiscovered data.”

“Every data leader should be exploring how their organization might harness the power of alternative data” – Emmett Kilduff, Founder & CEO, Eagle Alpha

“Using internal and external data is an essential element in quality decision-making for various departments,” says Kilduff. “Companies that use more internal and external data sources possess a greater range of inputs and analysis for decision making.”

Of course, it takes a certain level of data maturity to leverage alternative data in this way without expert help. At the same time, data leaders must take care when designing any new data initiative to ensure it complies with privacy regulations such as GDPR and the CCPA.

But these examples show that it’s not just financial institutions that stand to benefit from the surging availability of alternative or ‘external’ data sources.

That’s why Eagle Alpha Founder and CEO Emmett Kilduff hosted an interactive webinar entitled Unleashing the Power of External Data for our 2019 Data Champions Online digital event. With help from a host of alternative data experts including Pavan Arora, Chief AI Officer at food services provider Aramark, he outlined how organizations of all sizes and data maturity levels can potentially use alternative data to make better business decisions.

Click the image below now to access the full recording and discover how alternative data could become an integral part of your organization’s data strategy.