I Can’t, Can You? Valuing Information


NB: I’m using “information” in an all-encompassing context in this post so that I don’t have to differentiate between data, content, and information.

Information is a tool; no one buys a tool for the sake of the tool. People buy tools for what can be produced with them. Information has inherent value that can’t always be consistently, reliably, and definitively quantified.

On September 26, 2013 I participated in a Tweetchat moderated by AIIM’s intrepid community manager, Bryant Duhon. Bryant managed to wrangle up a bunch of us to discuss the value of information; you can read the unedited wrap up here. Participants were a bunch of smart people that I highly recommend following on Twitter (you can get to them via the wrap up link).

We were supposed to be chatting about various aspects of the value of information. What became abundantly clear, really quickly, was that this is no easy task. Most of what was said was more about the cost of information (cost of creation/acquisition, cost of lost info, cost of unsecure info, etc.). We all agreed that information is an asset, but how do you assign a dollar value to it?

There was mention of things like increased productivity as a result of systems deployed. However, even that does not quantify the value of the information itself. On the other hand, it`s fairly obvious that information that can`t be accessed has, at best, zero value. At worst it has a negative value (or value to your competitors) because it’ll be used against you.

For a couple of days after the Tweetchat I was thinking about how I would go about assigning value to information. What really struck me is that the value of information is not fixed. Whether it’s financial statements, my resume, a maintenance handbook, marketing brochures, etc., they have no value until something is done to achieve an outcome. Even then, the value wouldn`t necessarily be the same for all stakeholders.

My resume is a tool that gets me a job; is the value of the resume the same to me as it is to my employer? What about to the head hunter that effected the hiring? My resume has potential value. In order to realize the value something needs to be done with or to it.

Corporate financial statements have a different value depending on who is reading them, and for what purpose. Even as the issuing organization, the value changes depending on the purpose. In one case the value of the financials is in avoiding sanctions for failure to file and meet regulatory obligations, in another the value is in the amount of investment to be had from potential investors.

When we (vendors, systems integrators, consultants) talk to clients and prospects about solutions, ROI, and information’s value, we’re not talking about changing the inherent value of information; we’re talking about using, handling, and controlling information. When a client of mine saved $250K per year by changing how invoices are handled, it didn’t change the value of the invoices, it reduced the labour costs of processing the invoices.

There are definitely cases where having good information leads to good business outcomes, and we pretty much all agree that without information we’d be in deep doo-doo. But maybe our attempts at trying to assign value to information should stop at “it’s worth a lot, but we can’t always put a number on it.” Maybe information is one of those resources whose value is only quantifiable after the outcome has been determined or when we’re missing it.

Perhaps what Damian Webber said about processes applies to information as well; “processes have no value – they contribute to something that has value”. Maybe we need to start thinking of information in terms of raw material; it`s only what you do or create with it that has true, quantifiable value.

8 Comments on “I Can’t, Can You? Valuing Information

  1. I agree with your view that the value of information is not fixed. One aspect of the value you have not discussed is ‘reuse’. I think over time some information can increase in value. For example my organisation had some major consultants work done in the 1990s. The series of reports where done to complete a specific project. Value over? Not so those reports are still being referred to and just recently we were asked to provide copies for someone completely a piece of university research – not something the organisation would have imagined when the reports were initially commissioned. On the other hand some information should just be buried and never see the light of day!

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    • Mary Ann points out one of the truly *awesome* unique characteristics of information assets: they’re not depleted when consumed. This renders most information assets terribly underutilized (generating low actual value), yet with the potential to generate significant economic benefit if leveraged broadly. This is why we find that information-centric companies are valued at 2-3x higher than the norm on Wall St., and information product companies are valued at 4-5x higher than the norm. (See http://en.wikipedia.org/wiki/Infonomics for articles I’ve published on this.) –Doug Laney, VP Research, Gartner, @doug_laney

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  2. No asset has fixed value. Even the value of any given country’s currency fluctuates minute to minute. And just as other recognized assets do (e.g. material, financial, IP), information meets the formal criteria of an asset, despite antiquated accounting standards to the contrary: 1) it is owned/controlled by an entity, 2) it is exchangeable for cash, 3) it generates probable future economic benefit.

    As it meets these criteria, it’s a common misconception that information only has value once it is consumed. A can of soup sitting on a store shelf has value even before someone opens it an eats it, right? This is where this author and many others get tripped up by too casually using the word “value”. There’s a difference between the potential value of an asset, its realized value (when consumed), and its probable value (accounting value). Understanding and measuring these differences is the first step in getting organizations on the road to closing these gaps.

    This is the crux of Gartner’s original research on “infonomics”. As part of this research we have developed both economic and non-economic models for quantifying information’s value, and frameworks for managing information with the same discipline as balance sheet assets.

    For more on infonomics, including links to articles I have published in Forbes, Financial Times, WSJ etc., visit: http://en.wikipedia.org/wiki/Infonomics.

    Cheers, Doug Laney, VP Research, Gartner, @Doug_Laney

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    • Doug – Thanks for jumping in.

      I realized my mistake as I was trying to sort out how to go about assigning value to information. I was coming at it from an Information Management PoV rather than an accounting PoV. A follow up post is in the works.

      Cheers!
      Chris

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      • No worries at all. Most info management folks feel they’re far removed from the value side of info, but they’re mistaken. Most of IM (collecting, generating, integrating, cleansing, securing, governing, and availing data) is about increasing information’s *potential* economic value. It’s high time that company executives and business executives realize this. –Doug Laney, VP Research, Gartner, @doug_laney

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  3. Pingback: I Think I Can – Valuing Information Pt 2 | Chris Walker – Info Mgt Nuggets

  4. Also note that @damianwebber is mistaken. Processes can and do have quantifiable value — i.e. business process patents. Patents are recognized balance sheet assets. –Doug Laney, VP Research, Gartner, @doug_laney

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  5. Pingback: When Information Becomes a Liability | Chris Walker – Info Mgt Nuggets

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