Infonomics, according to Gartner, is the emerging discipline of managing and accounting for information with the same or similar rigour and formality as other traditional assets (e.g. financial, physical, intangible, human capital).
“Infonomics posits that information itself meets all the criteria of formal company assets and although not yet recognised by generally accepted accounting practices, increasingly it is incumbent on organisations to behave as if it were to optimise information’s ability to generate business value.” While many companies speak about how valuable their information is to them, the reality is that most do not act as if it is. While several thousand may be spent on managing assets registers and tracking any number of physical assets, right down to the number of bathroom fittings and chairs, very little time or value is assigned to the management of information. How ironic that we live in an ‘information’ age, yet so many companies don’t treat their information as their most valuable asset.
“They report to the board on the health of their workforce, their financials, their customers, and their partnerships, but almost never the health of their information assets,” says Doug Laney, author of the book Infonomics. “They squeeze every drop of value out of employees, budgets, and raw materials, while allowing most information assets to languish.”
Laney believes that “information is not ‘the new oil’ as so many have not-so-cleverly claimed. Rather it has characteristics that render it an order of magnitude more potentially valuable than oil.”
In particular, information, unlike oil, can’t only be used once, but can be used by a number of players simultaneously and for more than one purpose. This is a really key characteristic of information and it should be utilised in as many ways as possible.
“Right now, every CIO, CEO, and business leader should be asking themselves: Why isn’t our organisation monetising, managing and measuring information as an asset, and how the heck can we hope to thrive, let alone survive, in an increasingly digital world without doing so?”
Laney explains that “one security systems company used our information valuation models to identify underperforming information assets – those with high business relevancy but low current output. Then they came up with several ways to better leverage this data, leading to a $300 million market value gain.
“Another company, MISO Energy in Indiana, used our models to identify information assets that were costing them more to collect, store and secure than the value they were generating. This enabled them to make the decision to dispose of the data, thereby saving them over a million dollars a year in unnecessary infrastructure costs. And we’re working with Boeing to use information valuation approaches for justifying IT and information management expenses, and for identifying information innovation and monetisation opportunities.”
Laney adds that in his experience, information savvy companies tend to have a market value twice that of the average company and seem to be valued more by investors. Info-centric or infoproduct organisations received a market valuation three times more than traditional businesses.
How to make the most of your data
Data assets can reach their full potential only when they are monetised, managed and measured. In order to do so, Laney suggests the following:
Monetise: Recognising and using the economic characteristics of data is still in its infancy. Yet, organisations are using data to rethink their produce offering, business process and services.
However, Laney believes that there is still a lot of data that is being underutilised or ignored completely due to a lack of knowledge around how best to exploit it.
Manage: Interestingly, “no widely accepted set of principles and practices exists for managing information as an actual asset.” Laney reveals, however, that utilising asset management methods and standards from other domains may be just as effective. These should be adopted and adapted to improve information asset governance, availability and utility.
Measure: “Most organisations lack any reliable way to determine the potential and realised value of their information assets – merely because information is not a recognised balance sheet asset,” says Laney. It is vital that information is valued as an asset “to justify and prove information-related investments, spur information-based innovation, and foster an information-driven culture.”
In order to make the most of the data assets available within any company or organisation, the following best practices can be considered as starting points for becoming more ‘data-centric’.
• There must an executive level officer responsible for your data assets.
• Consider separating Information and Technology in your IT business. In order to make the most of the data assets available within any company or organisation, the following best practises can be considered as starting points for becoming more ‘data-centric’.
• Ensure you can measure your data governance efforts utilising well established asset management practices.
• Treat your data as an asset and utilise asset management principals in doing so.
• Understand that monetisation isn’t necessarily selling data – it is about generating economic benefit from the data. Consider how you can do so, for instance, through improving efficiency, only keeping data that is truly needed or simply improving customer service.
More and more we see how data is being utilised and considered in different ways across the entire economic and social value chain. Utilities already have the benefit of operating in data rich environments. The impetus now is on making the most of that benefit to secure their futures and the economic prosperity of their businesses. SEI