The Porter’s Five Forces of data

The business strategy of data

5 min readMar 15, 2020

Porter’s Five Forces is a great strategic framework. We’ve used it in business strategy for years. If you aren’t familiar, it is a simple framework that helps businesspeople analyze competition within an industry created by Michael Porter. I’ve been fortunate enough to be at lunch with Michael Porter to discuss other matters and he has lots of good ideas. This is his famous and best known business strategy framework, and he has bad lots other interesting ideas as well.

Since deeper descriptions of Porter’s Five Forces are common and ubiquitous, I won’t go deep on defining them here. You can find definitions all over the place, including here.

Porter’s Five Forces can be used for older industries. But, I like to use it even for emerging industries. Looking at the five forces and speculating about how they will play out can help think about the bigger picture. So, let’s use the Porter’s Five Forces framework on data and A.I. products in general and see what we get. Each of the five forces is listed below with a few thoughts for each.

Bargaining power of the suppliers of data
Where are you getting your data from? Are you purchasing from other companies, are you collecting from customers, or are you collecting from data-sources you own? There is a competitive advantage to owning your data sources. And how good does your data work for AI training?

The market players that control the sources of data will have leverage in this world. Startups can compete, but it’s better to have have a unique way of gathering unique data that the big players can’t access.

The market players that control the sources of data will have leverage in this world.

Note that DaaS (Data as a Service) companies perform just three functions. This is what I call ATD: Acquire, Transform, and Deliver. DaaS companies play a role in the supply chain of data by collecting an introducing data into the ecosystem.