Data is revolutionising business, changing the way organisations work, the services they offer and the decisions leaders make. For many businesses, data has become the lubricant that allows markets to operate more seamlessly – allowing firms to better match supply and demand.
Data is also a disrupting force. Wherever you look, you see organisations being disrupted by data. In healthcare, in education and in politics, data has become an incredibly powerful asset. Yet interestingly, data is rarely thought of as an asset. That’s an important point and one that is worth reiterating – rarely is data thought of as an asset.
Back in 1975, up to 83% of a firm’s valuation was accounted for by its tangible assets – plant, equipment and inventory. Now, close to 90% of a firm’s valuation can be accounted for by its intangible assets – intellectual property, brands, goodwill and we would argue – data.
Data on customers – what they buy, when they buy and how often they buy? Data on employees – who they are and what skills they have? Data on suppliers – where they are, how reliable they are and what capabilities they have? Data on assets – who owns them, how are they using them and what state are they in?
Yet if this is true – if data is a key intangible asset – then how can the value of data be quantified and what would the implications for an organisation be if it knew the value of its data assets? Let’s start by thinking about data as an asset and what would happen if it was treated as such.
What are the implications of valuing data as an asset?
Anmut recently completed a data valuation for a company in the transport industry that owns and manages tangible assets to the value of £115 bn. The data valuation revealed that this company’s data assets are valued at £39 bn, around a third of the value of their tangible assets.
Now, if data is worth one third of their tangible asset value, then for every three hours they spend talking about their material assets, do they spend one hour talking about data? How about staff? For every three people working on maintaining tangible assets, do they have one person maintaining their data assets? What about governance and risk management – for every three hours spent on risk management for their physical assets, is an hour spent on risk management for data?
Move away from time and effort – think about focus. If data is worth one third of the tangible asset value then are we thinking carefully enough about where to invest? Do we spend £1 on data for every £3 we spend tangible assets?
Could we get a better return on investment by spending a little more on data – improving its quality and availability – thereby improving the management of tangible assets that depend on data. Could this mean that we have to invest less in tangible assets because data is allowing us to use the existing tangible assets much more effectively?
An alternative perspective – think about KPIs and reporting. For every three KPIs that relate to the tangible assets do we have one that relates directly to data? Are we tracking the right things inside our organisation?
If data is potentially one of your most valuable assets, shouldn’t you be treating it like one?
Organisations that have climbed the data maturity ladder usually benefit from market caps 4-6x that of their peers, who have yet to start treating their data as an asset.
The first step to managing this asset properly is understanding its value, so that appropriate investment, time and resources can be allocated towards it.
This is just the first blog in a series where we will continue to unpack these and similar ideas, asking if we really understood the true value of data, how would it change the way we thought about organisations and how we manage and lead them.
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