What is the value of data to your organisation? Can you put a monetary value on it? What would you base this valuation on?
If economics is the dismal science, infonomics is its grim-faced ginger haired cousin. Infonomics has been defined by its pioneering innovator, Doug Laney, as the:
discipline of managing and accounting for information with the same or similar rigor and formality as other traditional assets (e.g., financial, physical, intangible, human capital).
While the value of information doesn’t appear on the balance sheet explicitly, we are increasingly beginning to see organisations wake up to the value of information to their businesses. Whether this is the small hardware store that has realised the value of inventory management when they started selling online during the early days of the Covid-19 pandemic, or the airline that has collateralised their loyalty program database, or the smart-watch fitness device manufacturer that has just paid over a ransom to criminals who had encrypted their core data assets and effectively put them out of business for a number of days.
The metrics to consider
So, what is the value of information to your organisation? Is it the cost of acquiring it? The cost of storing it? The net present value of future cashflows that might be generated from having it? I’d argue that, at its crudest, the value of information to your organisation is the price you’ll pay for not having it when you need it, and the costs you’ll incur until you get it back and can start operating again.
- Ransomware – cost of downtime + cost of recovery + impact of backups not having the most recent data or transactions recorded
- Destruction of physical records – the cost of reinstating the records and the potential cost or value of those pieces of paper in other processes
- Corruption of a critical database – cost of recovery + cost of downtime + the lag that will be there in your backups.
These costs are costs you incur due to the absence of a thing you need to operate, a thing that on its own or when combined with other things can generate net cash inflows or supports the delivery of services.
What is the value of data?
The value of data, ultimately is the price you are willing to pay to ensure you can have it and can continue to use it to generate income. In the past month both Garmin and Blackbaud have both paid out money to ransomware gangs to unlock data that had been put beyond use through malicious action. One can only assume that the cost to these companies in terms of the financial hit, the reputational damage, and (in the case of Blackbaud) the potential liability to their Data Controller clients, was less than the cost of not paying the ransom. But it is clear that, without that data, the organisations were effectively crippled.
For the Facebooks and Googles of the world, the value of data is how much they are willing to pay in lawyers and lobbyists to push back against privacy legislation and data protection regulation that would undermine or destroy their ad tech business models.
For United Airlines, the their value of data was how many dollars they were able to convince a bank to lend them on the strength of their loyalty club database.
How much is your data worth?
What data describes the assets you most need to be able to manage to run your organisation and deliver to your clients? If you are selling time, your calendar data is valuable because it defines your billable hours and your revenue generation capability. If you are selling widgets, then the data that describes those widgets and makes them searchable within your site and from the wider internet becomes valuable. The data you hold about the people who buy from you and pay you money has value.
If you suddenly didn’t have any of that data, what is the impact on your business? Can you continue to operate? What would you pay to recover from such a loss?
What would you pay to prevent such a loss?
That is the value of your data (at least by one measure).