Almost every entity is, or is becoming, a digital enterprise. Today’s information economy mandates nothing less. Entities are making tremendous investments in order to exploit the vast amounts of data – Big Data – that are constantly being generated by the Internet of Things (IoT), social media platforms, websites, and other sources. As confirmed by a recent Capgemini EMC Big Data report, most business leaders fear that their companies will actually become irrelevant if they fail to maximize the power of information. As companies grow more and more data-driven and data-dependent, new issues arise concerning how information in today’s economy is, or should be, valued.
Information as an Asset
According to Generally Accepted Accounting Principles (GAAP), data has no value. According to Wall Street, however, data is worth trillions. In fact, Alphabet, the parent company of Google, is the most highly valued company in the world. This, without doubt, is not based on its real estate holdings.
Putting a dollar figure on data is challenging under traditional accounting methods for a number of reasons. Accountants classify data as an intangible asset, which implicates various considerations under GAAP. In addition, unlike some other forms of property, the value of information may largely depend on who has it. Data can be more valuable in the hands of a company that knows how to sell it or use it to make better decisions, derive business intelligence, develop additional streams of revenue, or more personally bond with consumers.
Despite these concerns, what investors (and hackers intent on stealing information) appreciate is that information is an asset. While data may be considered too intangible by accountants to value, it is now all too well-known that information-related mishaps, including data breaches, compliance violations, and mismanagement, can lead to quite tangible liabilities in the form of damages, fines/penalties, and increased storage and litigation costs. In addition, C-Suiters have lost their jobs, corporate boards have been sued, customers have walked away, and bad press has dogged enterprises in the wake of an information misstep.
A Call for Governance
The time has come for companies to treat information not as an afterthought but in the same way they treat other corporate assets. Information should be proactively managed like cash or other tangible assets, with thoughtful policies, processes and procedures that reflect corporate goals and ensure compliance.
Information governance is no longer the responsibility of the IT staff or a small team of records managers. Instead, it should be an integral part of every process maintained by the organization. This effort should include guidelines for use, information asset tracking, security, risk management, risk transfer, lifecycle management, and active and informed executive and board oversight, just like the capital governance processes entities routinely employ for more traditional assets.
Effective governance enables companies to make better use of their data and avoid associated risks and liabilities. It enables them to differentiate themselves from competitors and to more successfully engage in today’s information economy.