A commodity is a product that is in demand and is the same no matter who produces it. There is no difference across the market in a commodity product. This definition can be applied to crude oil, coal, salt, sugar, gold and silver. Commoditization occurs when a product (or a service) loses market differentiation. Generic pharmaceuticals, computer chips, and other electronic components also fall into this category.
So, commodity data is data that can be coded (and categorized) the same across industries, countries and organizations. For these products, a taxonomy is very useful. Taxonomy is the practice of classification of products, services or basically anything usually in a hierarchy of codes. The hierarchy allows for “drill-down” and summarizations at higher levels of the hierarchy (perfect for business intelligence).
Buy or build have always been two alternatives to consider in the world of information technology. Some choose to always buy, some always build and some choose to do both where it makes sense for the organization. The answer for your organization depends on your needs, including how much control you want to have over the commodity classification process.
This paper will present you with all the information needed to make an educated decision on whether to commodity coding is right for your organization and it will help with choosing the commodity coding that fits your company.
