Guest Column
Intro: It seems that recently we are running into more and more technology industry visionaries who are saying we now have entered the “Age of Information.” At the recent Harvey Spencer Associates Capture Conference, for instance, author Chris Surdak showed a slide "Information is the New Wealth" that listed the top six companies in the world by market capitalization. Apple, Google, and Microsoft, which he said basically specialize in "information management" topped the slide, followed by more traditional companies like Exxon Mobile, Berkshire Hathaway and PetroChina. The problem is, as AIIM Chief Evangelist John Mancini points out in his
excellent piece, there is no standard in place for measuring information as a
tangible asset.
Check it out:
By John Mancini, chief evangelist, AIIM
No company in the digital age could run without
it and it is arguably the most important asset any organization has—but how do
you put a price on information?
Intellectual property is listed as an
intangible asset in financial reports. But there is no line on the balance
sheet for information. No standard method or process for giving it a value, despite
the fact that we are churning out more and more information every day. To put
this into perspective it is estimated that Facebook users share around 2.5
million bits of content a minute. IBM estimates we create 2.5 quintillion bytes
of data every day.
Information is coming at us from
everywhere—from social media, purchase transactions, blogs, GPS data, sensors
etc. This list is endless. The consumerization of IT, cloud, mobile, and the
Internet of Things, have all contributed to a surge in big data that is
literally changing our world and the way we operate in it.
Information is now one of a company’s most
precious assets. When used correctly it can provide companies with a wealth of
insight about their customers and competitors that can give them a business
edge. Companies are investing heavily in protecting, securing, analyzing and
documenting this data.
Business leaders increasingly talk about how
information is their most valuable asset. Yet information still does not appear
on the balance sheet. As Doug Laney, vice president at Gartner so concisely
puts it: “We are in the midst of the information age, yet information is still
considered a non-entity by antiquated standards”.
In this age of digital transformation, it comes
as a surprise that there is no standard model for valuing information.
Accounting for information
As far as I can see, there is a growing gap
between the traditional ways we value organizations, in terms of the tangible
and intangible assets reported in financial statements, and the value the
market puts on organisations. The huge sums paid for some companies shows our
inability to measure and value the information assets of an organization.
According to Laney, in 1975 on average the
tangible assets of a corporation represented 83% of its value. Today that
number is 20%. Therefore, more than 50% of merger and acquisition exchange
simply can’t be accounted for.
Take for example Microsoft’s acquisition of
LinkedIn. Look at
the accounting value of LinkedIn—$3.2 billion in revenues—and compare it to the
price paid by Microsoft—$26 billion—and it doesn’t appear to make sense. We
immediately start asking the obvious questions: Are we on the verge of another
doc.com bubble? Why is the accounting
value of the company so different from its market value? Has Microsoft lost the
plot?
The
answer, I believe, is quite straightforward. The disharmony comes from our
inability to measure and value information assets in an organization. This is
reflected in the growing division between what we actually report about
companies and what we actually inherently know about them. But it is also
linked to the way we continually undervalue the investments companies have made
in creating, analyzing, protecting and storing their data to create real customer
value.
Finding a measure
The nearest thing we have to measuring information right now is ‘Infonomics’. This is essentially a framework for organizations to measure, manage, and monetize information as a real asset. But it has still to be taken on board fully by organizations.
Early
this year, in a bid to come up an answer to assigning a value to information,
AIIM brought together industry leaders in information management from the likes
of Shell and Gartner, to discuss
this pressing issue.
One
particular point soon became crystal clear—we need a standardized way to
measure the value of information, and we need it fast. Although most organizations now
understand how valuable their information is, they have no way of valuing it as
an asset. This is an important job for information professionals and
accountants to get to grips with over the coming months and years, and one that
AIIM will be devoting considerable energy to.
As business becomes more and more information
driven, it is imperative that there is a standard in place that can measure the
usefulness and monetary value of information. How this is to be done has still
to be decided. But it is a problem that isn’t going to go away.
For more information: www.aiim.org
