Information as a commodity
Information is finding its way onto the balance sheets as an asset, and it is only a matter of time before enterprises regard it as their most important investment.
So says Rado Kotorov, CIO at Information Builders, who adds that while enterprises are fast realising that the information they hold has value, the data that resides within companies is not yet widely listed as an asset on the books. But it will be, he says.
"There are no formal technologies to assess the value of data," he says. "But we are starting to see a shift in attitude to the value of data, and we can expect to see changing legislation that drives companies to start listing data as an asset like any other."
To illustrate the real financial value of data, he cites an example of a marketing firm with a significant e-mail database. Without regular maintenance, this database depreciates in value.
As e-mail addresses change, the data becomes outdated, flawed and less valuable. Once 5% of the addresses are invalid, the company is listed as a spammer and loses the basis of its business model, and thus its income. Properly managed, this information would have generated returns.
"The value of e-mail is known, but the value of all data needs to be quantified and it needs to be added to the balance sheet like all other inventory," he says. Kotorov feels this will start happening over the next five years.
Some sectors, such as healthcare, retail and utilities, will lead this change, he says. In the US healthcare sector, the management of patient records has become critically important - both for managing costs and for ensuring patient safety.
With data such as this carefully regulated and managed in line with certain guidelines, its value becomes clearer.
The same applies to the retail sector, where enterprises operating on tight margins are able to mitigate risk, manage costs and embark on strategic product development on the back of the information they have available, and how it is used.
"Now, people are starting to see enterprise information management as a strategic approach. We are seeing the emergence of information as a commodity. Enterprises will assess ways to enrich it so it doesn't lose value over time," Kotorov says.
Not only must information be formalised as a strategic asset, says Kotorov, it must also be pushed throughout the enterprise to deliver real business value.
"If companies really want to achieve a strategic impact on their growth, they have to push information and decision-making to everyone - frontline employees, suppliers and partners."
He notes this does not necessarily mean giving every employee, supplier and partner access to all the information in the company's data banks.
What is needed, rather, is simple visualisation tools and mobile applications delivering the relevant information individuals need to make decisions on the spot, he says.
"By allowing them to make decisions, you change the organisational culture and improve performance," he adds.
Kotorov will address the upcoming ITWeb BI Summit on maximising information capital. For more information about this event, click here.