You’ve probably heard the phrase “data is the new oil” being used to describe the competitive advantage behind the world’s most valuable companies.
According to Gartner analyst Doug Laney comparing information to oil ignores the unique economic characteristics that makes it valuable in the first place.
“We talk about information as the new oil but when we look at the economic characteristics of oil versus information, information has some characteristics that make it potentially much more valuable than oil,” Laney said, speaking to media in between sessions at the Gartner Symposium on the Gold Coast last week.
For one, data is a non-rivalrous asset, meaning when you use it you can use it in multiple ways at the same time. It’s also a non-depleting asset — once you use it, it doesn’t disappear.
“Compare that to a drop of oil. If you use a drop of oil you can only use it one way, at one time and then it goes away,” Laney said.
“When you consume information it doesn’t go away and you can consume it multiple ways simultaneously.”
Comparing the economic qualities of a commodity like oil to an intangible asset like electronic information is a relatively new phenomenon.
Laney argues businesses should consider information an asset on the company balance sheet to exploit its unique economic characteristics. He even wrote a book about it.
“Most companies have a better inventory of their office furniture than their information assets,” Laney said.
“Infonomics is about internally recognising information as an asset, finding ways to manage it, measure it and monetise it — to generate economic benefits from it.”
Although it isn’t recognised in traditional accounting standards “info savvy” organisations enjoy a market to book value that’s nearly two times higher than the market average, Laney said.
“Valuation experts and equity analysts are starting to pay attention to company’s data and analytics capabilities.”
As well as using data in an operational context to improve performance, there’s also a financial benefit that comes from the ability to monetise information assets, either through selling it directly for example via a marketplace like Data Republic, or exchanging information with partners in return for favourable terms and conditions.
According to Laney, info savvy organisations typically have a chief data officer, an enterprise data governance function and data scientists. But it’s also about leadership buying into the vision that data is inherently valuable.
“If organisations really want to become more information savvy, they should start to apply asset management principles and practices from other domains to the way they manage their information assets,” Laney said.