With more companies looking to implement big data analytics projects and derive usable insight fromRead More
Firms ‘must know’ the value of their data
With more companies looking to implement big data analytics projects and derive usable insight from their digital assets, it is becoming more important than ever that they have a good idea of just how much their data is worth in real terms.
As the volume of information grows and its importance to a firm's operations increases, it is becoming obvious that data is now making up a significant part of a business' assets, as without these details, they would not be able to operate to their full potential. However, it was noted by CIO.com that many organizations are still failing to adequately assess this value.
Gartner analyst Doug Laney told the publication that many may not even realize they are failing to adequately reflect this on their balance sheet. Research by his firm found one-quarter of 410 senior leaders surveyed said their organizations quantify the value of their information assets as precisely as if they were on a balance sheet, while one in three stated they measure the benefits that each type of information generates and 25 percent believe their information assets are well-defined and cataloged.
But Mr Laney said in truth, this is often not the case, and business leaders' perceptions often display "an acute disconnect from reality". His view, based on client interviews and ongoing research, is that less than five percent of enterprises accurately calculate the value of their data, measure its benefits, or properly inventory their information.
"It's frustrating that companies have a better sense of the value of their office furniture than their information assets," he explained. "CIOs are so busy with apps and infrastructure and resourcing that very few of them have cycles to think about it."
But it is time for this to change, Mr Laney argued. He said that just as chief supply chain officers are expected to know the value of their company's factories and the chief executive should always know what the closing stock price is every day, it is now essential that chief information officers know the value of their data.
One of the issues with this, however, is that it can be tricky to determine exactly how much data is worth, because it cannot be taken in isolation. CIO.com noted, for instance, that a company can purchase a list of around four million email addresses for $75.95. But this does not reflect what such details might be worth to a business.
How do they know if the addresses they have are relevant, and what percentage of these could be expected to be converted into sales through effective marketing campaigns? The true value to a business of customer data could be far more – or less- than what the raw information is worth on the open market if they understand how to analyze it and extract the right answers.
"The value of data has to do with imagined impacts," explained Doug Hubbard, founder of Hubbard Decision Research. To accurately understand the value of data, businesses must consider how their decision-making would differ without it.
"You're making decisions with consequences. Those are more significant than any one bit of data," he said. If there are no consequences to a decision, the data is worth nothing. "The data is useful in that it helps eliminate uncertainty."