Here is an excerpt from the executive summary of a report co-authored by James Manyika, Michael Chui, Diana Farrell, Steve Van Kuiken, Peter Groves, and Elizabeth Almasi Doshi for the McKinsey Global Institute. To check out the report and other resources, learn more about the Institute and/or McKinsey & Company, please click here.

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Open data—machine-readable information, particularly government data, that’s made available to others—has generated a great deal of excitement around the world for its potential to empower citizens, change how government works, and improve the delivery of public services. It may also generate significant economic value, according to a new McKinsey report. [Note: The research for this report was jointly conducted by McKinsey’s Business Technology Office, the McKinsey Global Institute, and the public sector practice, which incorporates the McKinsey Center for Government.] Our research suggests that seven sectors alone could generate more than $3 trillion a year in additional value as a result of open data, which is already giving rise to hundreds of entrepreneurial businesses and helping established companies to segment markets, define new products and services, and improve the efficiency and effectiveness of operations.

Although the open-data phenomenon is in its early days, we see a clear potential to unlock significant economic value by applying advanced analytics to both open and proprietary knowledge. Open data can become an instrument for breaking down information gaps across industries, allowing companies to share benchmarks and spread best practices that raise productivity. Blended with proprietary data sets, it can propel innovation and help organizations replace traditional and intuitive decision-making approaches with data-driven ones. Open-data analytics can also help uncover consumer preferences, allowing companies to improve new products and to uncover anomalies and needless variations. That can lead to leaner, more reliable processes.

However, investments in technology and expertise are required to use the data effectively. And there is much work to be done by governments, companies, and consumers to craft policies that protect privacy and intellectual property, as well as establish standards to speed the flow of data that is not only open but also “liquid.” After all, consumers have serious privacy concerns, and companies are reluctant to share proprietary information—even when anonymity is assured—for fear of losing competitive advantage.

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To read and/or download the executive summary and/or the full report, please click here.

James Manyika is a director of the McKinsey Global Institute, where Michael Chui is a principal; Diana Farrell is a director in McKinsey’s Washington, DC, office; and Steve Van Kuiken is a director in the New Jersey office, where Peter Groves is a principal.