If you continue to doubt the power and value of information, you’re in a diminishing group. Today, organizations such as Amazon, Facebook, Google, Microsoft, and Netflix are worth fortunes in large part because of the data that they collect and ultimately act upon.
I’ve preached for years the power of data and there’s a new book that formalizes the practice of quantifying information. In Infonomics: How to Monetize, Manage, and Measure Information as an Asset for Competitive Advantage, VP Distinguished Analyst at Gartner Doug Laney makes the case that all organizations need to begin paying attention to this incredibly valuable asset. I recently sat down and asked him some questions about his timely and very important debut book.
PS: What was your motivation for writing this book now?
DL: While advising hundreds of organizations each year, it became clear that they just don’t recognize information’s unique and exceptional economic properties. 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. Right now, every CIO, CEO, and business leader should be asking themselves, “Why isn’t our organization monetizing, 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?” We found that companies demonstrating “infosavvy” behaviors benefit from a 50% market value premium.
PS: You and I have heard scores of times from CIOs that “information is our most valuable asset.” Paradoxically, though, few organizations realize real value from it. Why is this this case?
DL: As crazy as this sounds, even in the midst of the Information Economy, current accounting standards prohibit companies from formally recognizing or reporting the value of their information. This is true for even data brokers or social media companies. So this inability to account for information manifests in a failure to measure its potential and realized value, even for internal purposes. And if you don’t know something’s value, there’s no impetus to manage it with any discipline. They say you can’t manage what you don’t measure. I believe the derivative of this is that you can’t monetize what you don’t manage.
PS: You don’t just write in generalities; you use specific examples of innovative ways in which companies have started accounting for and monetizing their information. Can you provide a few of your favorites?
DL: My book describes how 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 monetization opportunities.
PS: Embracing infonomics is no quick fix. Any tips for organizations as they get started?
DL: You’re right, infonomics more of a journey. But there are a few key things organizations can do right away. First, assign executive-level responsibility for information assets, such as hiring a Chief Data Officer (CDO). And it’s not such a bad idea even to bifurcate the IT organization into separate “I” and “T” organizations as we’ve seen some do to emphasize information’s mission-critical nature. Second, no data governance effort today should be devoid of measuring and reporting on a variety of data quality characteristics, if not other economic value metrics. Third, adopt asset management practices from other disciplines your company is good at, for example physical asset management, financial asset management, or human capital management. Then and integrate these into your information management practices. Finally, data monetization isn’t necessarily about selling data, rather it’s about generating economic benefits from it. Do so in a variety of ways by establishing an information R&D group or information product group.