In this Digital Age, hearing information referred to as a valuable asset almost sounds like a cliché. At the same time, the idea of creating information strategies that properly value information as an asset is a fairly new idea that hasn’t been fully supported by traditional accounting methods. In fact, Gartner reported that the first job of people in charge of creating these kinds of strategies should consist of devising ways to tie information to their business objectives.
Only by measuring the alignment of various kinds of data to important business goals allows decision makers to assign a proper value and then determine how best to store, protect, gather, and monetize it. However, because the concept of valuing data as an asset isn’t so well taught, data managers may not even know how to begin.
Determining How Closely Information Aligns with Business Objectives
Obviously, different companies place more or less value on different types of information. A retail store or distributor might live and die because of their inventory records; however, an emerging tech startup’s success is likely to hinge upon their product development and testing data more than how many widgets they have stored in the closet. Because of the various needs of unique organizations, you need a way to evaluate and value information for yourself.
Prioritize Different Kinds of Information
To help you understand how closely various types of information tie in with your business objectives, you should assign values that measure its critical importance to your organization.
Measure Information Quality
Obviously, precise and generally accurate information offers you more value than poor-quality information. For instance, data with errors won’t help you make good decisions. You need information that will help you predict trends, make good business decisions, and keep you in compliance with the laws that govern your industry.
Measure Information Relevance
How relevant is information to your most important business objectives? As mentioned above, the most relevant information for some industries won’t matter that much to others. Other measures of data’s usefulness to an organization may also include the ease of using, analyzing, and sharing the information that you may have.
Companies have dark data, which Gartner defines as:
The information assets organizations collect, process and store during regular business activities, but generally fail to use for other purposes (for example, analytics, business relationships and direct monetizing). Similar to dark matter in physics, dark data often comprises most organizations’ universe of information assets. Thus, organizations often retain dark data for compliance purposes only. Storing and securing data typically incurs more expense (and sometimes greater risk) than value.
Dark data is useful, in part, because there’s so much of it, and it could be used to unravel serious business value. If you have more information, you can discover more about of your operations. Companies are missing opportunities if they ignore their dark data. In fact, according to Splunk, 76% of survey respondents agree the organization that has the most data is going to win.
Understand Data Performance
Ease of sharing and using the good data that you do possess should factor into your valuation of its worth. If the people who need to use your information have trouble accessing it, even the best and most relevant data won’t have a high value. For instance, marketing and sales alignment has been proven to help increase revenues and retention, according to a Hubspot report. Information management platforms like M-Files ensure that decision makers have all relevant information in context at their fingertips.
Estimate Damages from Lost Information
How much would your company suffer if sensitive information leaked to competitors or was lost because of data breaches or platform failures? In the case of lost customer information because of successful hacking, your company could suffer losses even greater than the value of the information because of damage to your reputation. You could also incur additional charges because of fines from the government. Your information costs money to gather, but it could cost you even more money to lose.
Calculate How Much Information Contributes to Your Revenues and Profits
The true value of information as an asset doesn’t just lie in the cost of gathering, storing, or protecting it. You should try to understand how much the information helps your company generate income. Only then can you subtract the cost from the revenue to understand how the data helps you company generate profits or achieve other business goals.
Learn the Market Value of Your Data
The Gartner report mentioned above found that a growing number of companies had established profitable business units based upon marketing their data. For example, such large enterprises as Google and Facebook mostly earn revenue from selling advertisements to businesses who hope to capitalize upon the data that these large companies collect.
Even if selling data isn’t your industry’s focus, you should understand how much others would pay for this kind of information. At the same time, you may find additional opportunities to generate revenue when you know how much your information would sell for on the open market and at the very least, you will have a good indicator of the value of your information as an asset.
Why Treat Information as an Asset?
Companies that understand how to value their information as an asset have a competitive edge over rivals. These organizations know how much they should spend to gather, store, secure, clean up, analyze, and share their information. Very often, the process of calculating the value of information can reveal opportunities to improve. These could include investments in better security, performance, and sharing with such technology as we provide.
Since the value of different kinds of information might vary for companies, it’s a good idea to prioritize types of information in categories to make better decisions about how much to invest. In the long run, proper valuation of data leads to better business choices and even more opportunities to generate revenue.
