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Applied Infonomics: Why and How to Value Your Information as an Asset

by Doug Laney  |  October 14, 2015  |  Submit a Comment

Use the Gartner Information Valuation Method to apply the same rigors to valuing your information assets as you do to other critical enterprise assets.

Imagine a retail manager with no record of his store’s inventory and no way to gauge its value. Or consider a CFO who has no record of her company’s financial assets nor their value. Or an HR executive with no company directory, employee ratings nor compensation data. Well that’s the state of information management in most organizations today.

Business leaders and IT executives increasingly wax about how their company’s information is one of their most important assets. Research from Gartner, KPMG and others has shown how significantly investors and financial analysts favor information-savvy and information-centric companies. However, information is not recognizable as a balance sheet asset – even though information meets all the criteria. We are in the midst of the Information Age, yet information is still considered a non-entity by antiquated accounting standards!

This lack of formal recognition manifests in most organizations that collect, manage, deploy and value their information with far less discipline than they manage traditional balance sheet assets. Accountants and valuation experts lament the challenges in valuing a company today without any data on its data. Recently, the head of information strategy for a major government institution proclaimed to me, “We have a better accounting of the toilets throughout the building than our information.”

The “Infosavvy” Organization

In order for an organization to become information-savvy, it must begin by internally recognizing information as an actual asset. The old adage goes, “You can’t manage what you don’t measure,” and organizations need to start inventorying and measuring their information assets.

How do you quantify the value of information? You can start by using well-honed and established methods for valuing other kinds of assets. On the other hand, you may not (yet) be ready for, or interested, in financially valuing your information. In that case, consider metrics that assess information’s quality characteristics, business relevance or impact on non-financial performance indicators.

Gartner, in collaboration with clients, valuation experts, accountants and economists recently introduced the following six formal information valuation models—each with a different purpose. Some are financial measures while others are foundational metrics. Some are leading indicators, while others are trailing indicators.

Information Valuation Methods

The models include guidance on how to implement and adapt each, and they identify each of their benefits and limitations. The financial models, adapted from the established asset valuation approaches, accommodate some of information’s unique characteristics, namely: information’s non-depletability and multiple licensability.

ValuationMethod

For the actual formulas, examples and implementation guidance on Gartner’s information valuation models, see the research note: Why and How to Measure the Value of Your Information Assets.

Next Steps on the Road to Information Centricity

Accounting for information is just the start. Infocentric and infosavvy organizations, ideally under the leadership of a chief data officer (CDO) and other executives, must use these measures to change their culture, make information-related decisions, and apply well-established asset management principles and practices to managing their newly anointed information assets.

Follow me on Twitter @Doug_Laney

Category: big-data  

Tags: accounting  asset-management  data-monetization  eim  infonomics  information-assets  information-governance  information-management  it-value  valuation  value  

Doug Laney
VP and Distinguished Analyst, Chief Data Officer Research
10 years at Gartner
30 years in IT industry

Doug Laney is a research vice president and distinguished analyst with Gartner. He advises clients on data and analytics strategy, information innovation, and infonomics (measuring, managing and monetizing information as an actual corporate asset). Follow Doug on Twitter @Doug_Laney...Read Full Bio




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