Today, how you value information assets; the information that your business collects, creates, uses, relies on, shares or trades does not contribute to your corporate balance sheet? Your information has no financial value that contributes to the overall value of your business. Is it because of this that many organisations do not consider information as an asset and if asked could not put a figure on the value of that asset? If you can, then you are certainly in the minority.
I recently attended the Gartner Data and Analytics Summit in Sydney, Australia. The focus of the summit was the value of information. 2 days dedicated to the topic; why you should care and what it means for your business. The how you start bit was very slim indeed – the gap between knowing this is something you should do and knowing how you do it remains large.
Gartner’s Analyst Douglas Laney introduces the topic by stating that:
Information is a business asset to be managed, deployed and valued. Chief Data Officers, Chief Analytics Officers, CIOs, Chief Marketing Officers and CFOs should understand how to value information to measure its usefulness and monetary value.
The key issue that need to be resolved is the mismanagement of information assets especially in contrast to physical assets, which leads to a lack of sense of the value that information generates. As information-centric companies tend to out perform their peers, resolving this valuation issue is becoming a critical space to play in. Without understanding the value of information, demonstrating the economic benefit of initiatives such as Master Data Management, data quality, information governance, information architecture or business intelligence or analytics is difficult or impossible.
A methodology is needed which enables the information valuing process to be undertaken, with direction coming from the top. Boards and Leadership teams need to direct that information is valued as an asset, not just talked about as one.
Gartner’s new research in this area has provided six perspectives for valuing information.
From the perspective of a focus on improving information management discipline:
- Intrinsic Value – how correct, complete and exclusive is your data?
- Business Value – how good and relevant is this data for specific purposes?
- Performance Value – how does this data affect key business drivers?
From the perspective of a focus on improving the economic benefits of information:
- Cost Value – what would it cost us if we lost this data?
- Market Value – what could we get from selling or trading this data?
- Economic Value – how does this data contribute to our bottom line?
Their full research on this topic can be found here: https://www.gartner.com/doc/3106719/measure-value-information-assets
If you’re yet to be convinced, consider these strategic inputs:
- By 2017, 80% of chief data officers will strive to maximise the value of information while they continue working to minimise its risks
- Through 2018, more than 75% of chief data officers will not report to the CIO or other IT leader
- By 2020, information will be used to reinvent, digitalise or eliminate 80% of business processes and products from a decade earlier
- By 2020, 30% of data will be prescribed provenance, business, security and value metadata at the time of its creation
Over the next 3 years, you are going to see a fundamental shift in the discussion about information value. Knowing where it comes from, how it is created, where it is used, why it is used, who uses it, what it is used to produce, which decisions it supports, how it contributes to business outcomes – these are all questions that your information assets will have to answer for you if you are to survive the expectations of consumers in your markets, and compete with more and more new-comers who are not bound by your legacy trying to eat your lunch.
So where do you start?
Being able to document your information assets is traditionally in the realm of diagramming tools. Boxes and lines are used to insinuate relationships and an associated spreadsheet holds the data about the diagram. It is such in inefficient way of capturing this data that more often than not it either doesn’t get done, or it never gets finished. These diagrams don’t answer the value question, they hold no intelligence.
If you truly want to understand how your information assets enable your business, you need to think in terms of Information Supply Chains. You need to understand how information flows through your business; understand who and what touches it, why and what they do with it. When you get that view, the value of information in terms of business value and personal value becomes demonstrable. The mismanagement of information which is elevated by a lack of understanding, can finally be resolved. Everyone has the same view, everyone understands, everyone can communicate.
Information Supply Chains provide a new way of looking at your organisation from this information perspective. Coupled with Gartner’s valuation methodology, you can go from zero to hero in a very short timescale and set your organisation up for future success, exploiting your information asset, making it work more efficiently for you and using it to develop new applications, products and services which continue to drive your competitive advantage.
We talk Information Supply Chains daily; it is what LINQ does, it is who we are. If you’re keen to find our more, get in touch, we’d be happy to share our vision for your continued and future success.