I Think I Can – Valuing Information Pt 2


Some weeks ago (2013-10-7 to be exact) I posted this about trying to assign value to information. Thanks to the discussions the post generated on Linkedin and on this blog I realised I was approaching the issue from the wrong angle.  Doug Laney (of Gartner & the Center for Infonomics) and Juerg Hagmann (of itopia) get special mentions for really steering me in the right direction.

Let me start by saying that I completely disavow whatever it was I said in the closing paragraph of my previous post on this topic.

The mistake I made was that I was looking at the issue from an Information Management point of view. I really should have stepped back 20+ years in my career and applied an accounting thought process. I think we’re all pretty much agreed that information is an asset; if that’s the case then the real challenge lies in determining which class of assets information belongs to. The challenge is complicated because:

a)       Not all information is used the same way;

b)       Some information can fall into multiple classes;

c)       Information is not depleted as it’s consumed (retention/disposition adds a different layer of complexity);

d)       It could be argued that, for some types of information, value increases with time unlike more “traditional” assets whose value depreciates;

e)       Some of the future economic benefit may actually be the avoidance of future economic sanctions or penalties.

For those of you not familiar with what an asset is (the accounting version):

  • It’s a resource (may or may not be tangible) that is under the organization’s control or ownership;
  • It’s a resource that will provide future economic benefit;
  • Assets are carried on the Balance Sheet, not the Income Statement;
  • Quoted from the IFRS Framework “An asset is a resource controlled by the enterprise as a result of past events and from which future economic benefits are expected to flow to the enterprise.”

Some responses to the original post posited that information only has value if it’s being used. Uhm, no.

Whether it’s being used or not information has value. Think about earth moving equipment; whether it’s sitting idle or grading a road it still has value. The value of the asset is based upon acquisition costs and future or potential economic value, not actual economic value. Information that’s not being used is not valued at zero; it is merely an asset that isn’t currently generating any economic benefit. If people really thought that then why are they loathe to toss out all those documents they’ve been hoarding for years but haven’t looked at (Ha!!! I got you, you information hoarders). Prior year budgets, completed contracts, old operating procedures, paid invoices, etc. all have potential future economic benefit. That’s why we keep them. They also have potential benefit to our foes if they contain a “smoking gun” which is why we ought to dispose of them as soon as we are legally able and are certain that they provide no positive benefit to us.

Assigning value to information is possible, but it requires understanding how the information was acquired and how it’s going to be used. You can’t use the same metrics and methods for a purchased subscriber list destined for telemarketing as you would for HR policies developed by internal resources.

I tell my clients to focus on high value, high risk information, but without understanding the acquisition and intended use of the information, there’s no real way to determine which information is high value and/or high risk.

9 Comments on “I Think I Can – Valuing Information Pt 2

  1. And taking the same concept a step further (if I may…), like any other asset, information value depreciates over time. This years opinion piece about market trends is old news next year and obsolete the year after. And like furniture, what is now trendy (and a high-value asset on the books) will be out-of fashion (and fully depreciated) in 5 years. Some pieces will carry on to become antique collectables in 30 or 100 years’ time though. In information management terms, that’s the equivalent of documents or data that don’t have inherent operational value any more, but serve as a historical reference point in corporate history, or the basis of historical trend analysis, becoming a valuable asset once again!

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    • George – The value of some information depreciates over time, but the value of other information actually can increase with time and accumulation. Think about analytics and CRM.

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  2. Chris – Great article, you are getting there. There is a human issue to hoarding. FEAR. The value is not what it could bring (or has brought in which you may have to prove) but saving their ass (and income). People are afraid not to have it ‘just in case’ someone asks for it. There is also an emotional attachment for many and records if they created, help created, made them better at doing x, whatever. Those records may all be assets of the company but people are humans and can justify any feeling, thought, emotion, etc. they want.

    In our copier (yes I hate them), fridge, microwave and shredder room, there is a bookshelf for sharing. Lot’s of good stuff there on organizations, value creation, etc. Recently someone cleaned out an overhead but they could not throw out two books. One a 35 year old book on the Modern Internal Audit Manager, the other was a 20 year old SEC Handbook for internal auditors. I kept them and used them recently in a meeting/presentation.

    It’s the never ending fight against fear and emotional attachment which is why the disposal of information needs to keep moving to the automated process. That way I can keep myself from taking the next 35 year old book I find and beat it over someone’s head.

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  3. Thanks for the shout. Note that I have developed and used with Gartner clients various models for quantifying information’s economic and non-economic value. The economic models borrow from the ways accountants value other assets, but include some factors for some of information’s nuances (e.g. non depletability you mention above). The non-economic models quantify key data quality, business relevance, scarcity and effect on KPIs. –Doug Laney, VP Research, Gartner, @doug_laney

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

  5. Love the idea. My POV on this is that “Information is an asset and should be treated that way.” This provides a good framework for presenting business case to key stakeholders. The key concern and pushback I always hear is “Where do I start?” I find the natural conversation is “What information do you value most-as an organization?” We have found that that focus always us to define garbage that should be thrown out as well as gaps in the technology or processes that current exist to manage information. Once you have identified a business initiative and placed a metric to define business value you can prove that the IG plan should have wide adoption. I have built out a customizable metric that is simple to use to prioritize information based on value(current usage, relevance to business goals and relevance to five year business plan) and risk (keep for regulatory purposes, get rid of ASAP, has specific retention needs).

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  6. Christopher et al,

    If interested in this topic, feel free to check out the http://en.wikipedia.org/wiki/Infonomics page I maintain. It lists various articles, blogs and other resources on the topic of information value and monetization. Also feel free to add any others you may know about, or send me links.

    Cheers,
    Doug
    –Doug Laney, VP Research, Information Innovation and Strategy, Gartner, @doug_laney

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