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Monday, 19 September 2016 14:26

Veritas – Information is a business asset, so treat it as such

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Did you know that the value of information [data] does not get recorded — capitalised — on a balance sheet? Did you know that data is specifically excluded as an asset by insurance policies?

Veritas LaneyDoug Laney, vice-president and distinguished analyst at Gartner, a keynote speaker at Veritas Vision 2016,  says this is plain wrong! Data, well the right kind, is just like an inventory of goods — an asset — regardless of accounting standards or insurance exclusions, and it should be valued and monetised.

Laney delivered a very thought provoking keynote.

“Some of the companies in the Twin Towers (which were attacked on 9/11), who lamented not only the tragic loss of life and physical property, also lost their data. So naturally what they did when they suffered some loss was they reached out to insurance companies, and they filed claims for the value of the information that they lost in the attacks,” Laney said.

However, the insurance companies denied the claims, saying they didn’t believe that information constitutes property and therefore was not covered under their policies. What’s more, the insurance companies went so far as to update the commercial general liability policy standard used by most insurance companies around the world to explicitly exclude information from policies.

“When did they do that? A month after 9/11," he added.

And the legal system is not much better. “The courts are confused. Some courts have said information can be represented by bubbles on an optical drive or it can be printed and so forth, so it should be considered property. Other courts have said ridiculous things like electrons have negligible mass so information shouldn’t be considered property.”

According to a recent Gartner report Why and How to Measure the Value of Your Information Assets authored by Laney, information is a business asset to be managed, deployed and valued. Chief data officers, chief analytics officers, chief information officers, chief marketing officers and chief financial officers should use Gartner's information valuation models to measure information usefulness and monetary value.

“Does information — data — constitute property? The value in most organisations today is in an intangible form – data. The chief excecutive officer will say that data is one of the most important assets of the company, but the CIO will say managing information is one of the biggest pains in the ass,” he added.

Laney asserts that data is an asset and should be recognised as such. The textbook definition of an asset is something that can be owned and controlled exchanged for cash, and can generate future economic value. But accounting standards ignore this.

He uses the term “infonomics”, and it is one we are all going to hear more about. “I think it’s incumbent on organisations to behave as if information is an asset. What that means is that it should be managed with the same discipline as any other physical or financial asset, or human capital. You should be monetising it with great fervour, and you should be measuring its potential, and also the actual value that you’re generating from it. Only then are you able to maximise its value.”

Laney says Infonomics should be about including the realised value of information, the probable value of information, and the potential value of information. It is not the value of the information itself, but rather the difference in value as measured by these indicators, that is important.

  • Intrinsic value of information — how correct, complete and exclusive is this data?
  • Business value of information — how good and relevant is this data for specific purposes?
  • Performance value of information — how does this data affect key business drivers?

“There are gaps — large gaps in most organisations — between the potential value and the realised value, or the realised value and the probable value. Those things need to be measured, and those gaps need to be closed if you want to win in today’s information economy,” he said.

He said that Gartner had developed six models to value data. “In theory all 'models' are wrong, but some are useful,” he said.

Apply fundamental information valuation models to prioritise and improve information management discipline.

  • Intrinsic value of information (IVI)
  • Business value of information (BVI)
  • Performance value of information (PVI)

Apply financial information valuation models to hasten their improved economic benefit.

  • Cost value of information (CVI)
  • Market value of information (MVI)
  • Economic value of information (EVI)

Gartner will sell you the report and models – they are good like that.

Veritas Laney info

Laney said that info-centric companies e.g. Google, have a market to book value of two to three times normal companies. Research from Gartner, KPMG and others have shown how significantly investors and financial analysts favour information-savvy and information-centric companies.

He repeated an oft-used phrase from the event: “You cannot manage what you don’t measure,” and Veritas is designed to measure what data you have. Accounting for information is just the start. Infocentric and info-savvy organisations, ideally under the leadership of a chief data officer (CDO) and other executives, must use these measures to change their culture, make information-related decisions, and apply well-established asset management principles and practices to managing their newly anointed information assets.

He ended by suggesting the term IT would be bifurcated into “I” for information and “T” for technology (infrastructure) as these would start to live separate lives in an organisation.

“Go to your CFO and say, listen we understand information is not a balance sheet asset. No big deal. But we’re in the middle of the information economy. We think that we need to start measuring information value and potential within the company with the same discipline that you measure our other assets, our traditional balance sheet assets. And the answer is invariably yes,” he closed.


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Ray Shaw

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Ray Shaw ray@im.com.au  has a passion for IT ever since building his first computer in 1980. He is a qualified journalist, hosted a consumer IT based radio program on ABC radio for 10 years, has developed world leading software for the events industry and is smart enough to no longer own a retail computer store!

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