I recently read a paper by Doug Laney from Gartner which started to challenge companies to treat information as another category of intangible financial asset. I’ve often heard companies talk about their data as ‘a source of competitive advantage’, yet there is a reluctance to try to measure the true value of this asset (maybe this falls into the ‘too hard’ category!).
Accounting policy is such that public companies are not currently required to split out the value of information assets, and I loved Doug’s example of the gap between Facebook’s recent $100B market valuation (now $70B) versus its book value of under $7B – the gap possibly representing the markets view of Facebook’s ability to monetise their information assets. In the past I’ve seen this represented as Goodwill on the Balance Sheet…
I totally agree with Doug when he argues that, regardless of accounting policies, attempting to value information assets offers a range of benefits to organisations. Perhaps the most fundamental benefit is ensuring that investment is right-sized to the expected value of the asset.
I would recommend starting down the path of valuing your information assets, then challenging the organisation to ensure that they are leveraging these assets for optimal return…
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Doug Laney
August 6, 2012
Hey thanks Mark! Some additional links for those interested in the infonomics topic include recent pieces I’ve published in Forbes and Financial Times (free registration req’d), and a link to my Gartner research (summary available for non-clients): – Wikipedia: http://en.wikipedia.org/wiki/Infonomics – Introducing Infonomics (Gartner research) http://www.gartner.com/resId=1958016 – Forbes: http://www.forbes.com/sites/gartnergroup/2012/05/22/infonomics-the-practice-of-information-economics/ – Financial Times: http://www.ft.com/intl/cms/s/0/27476ad4-a6a5-11e1-968b-00144feabdc0.html We’re working with several organizations to formally implement these principles. And I’ll be sharing more detail on the work (including the info valuation models) in upcoming Gartner research and at Gartner Symposium this Oct (US). –Doug Laney, VP Research, Gartner, @doug_laney
Mark
August 6, 2012
Thanks for the additional information Doug!
Sundara Raman
August 15, 2012
Dr. Karl Erik Sveiby’s had long done research and publication of his work on measuring intangible assets under the subject Knowledge Management. He coined the terms “Invisible Balance Sheet” and “Intellectual Capital”. He even has developed a framework based on extensive work that many Swedish companies seem to have adopted. I had the privilege of meeting and discussing with Dr. Sveiby in Melbourne some 12 years ago on his work. http://www.sveiby.com/articles/emergingstandard.html
Mark
August 16, 2012
Thanks Sundara – looks really interesting…
John Aydelotte
August 16, 2012
Actually I am giving a presentation at PARTNERS on this very topic. It will provide and formula and implementation steps for the Valuation of Information including the subjective aspects.
Mark
August 28, 4025
Thanks John, I’m unfortunately not attending Partners this year, but will look out for your presentation…