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Overheard: The Net Value of Data


an Information Management interview with John Ladley

John Ladley, president, IMCue Solutions

As a veteran consultant, you've taken exception to the idea that there is an intrinsic value to information.

We've been told many times that information has intrinsic value, and I flat out disagree with that. The only intrinsic 'anything' your data has is the cost you have incurred to have it spin on disk. Value really happens when you use data or content to do something. It either creates an action that gets you toward fulfilling a goal or it helps you make a decision that fulfills a goal. Either way, the key is using the content or data to get something done.

So how do you literally value data?

You can take a net value approach using a simple accounting equation. On the cost side, I'd use the CRUD model of create, read, update and delete, and your actual cost for each of those things along with another entry to account for the modern need for cleansing or moving data. That's the right side of the equation. On the left, you have the value derived from reading the data reflected in some measure of improving financial or other performance. If the value of reading the data is not equal to or greater than the sum of the costs, you are failing.

How do you put a value on reading information?

Well, you take all the projects IT has to support, look underneath to see which ones require analytics, which ones require master data management, take all those and put them into a pile. Then you look at what the return on those projects is supposed to be. A lot of companies don't know this, by the way, which tells you something, but you'd add up all the numbers you have and then come up with a net present value for that.

How does that look to your clients?

On one side, when you compare that cost to what you want to spend on governance and information architecture, you see it's a drop in the bucket, hell, let's go ahead and do it. It happens every time. On the other side, you see your users build thousands of Access databases and then gripe that they don't have the information they need.

What does that tell us?

I'm not saying that all end users don't know what to do with the data they have, but we've let the pendulum swing to where IT departments find themselves caught in a vicious cycle of requests and delivery of data, where they bear the pain and suffering for the poor quality and timeliness of data they're spending all their time pumping out. I've come to this through real work and not hearsay; several clients have found that in the last five to 10 years we've gone overboard giving access to information. Because we haven't been able to deliver a well-managed product, we've just given access to everything. Business says, "You guys are terrible, give us access to everything and we'll figure out what to do with it." Well, if you're doing that and calling information an asset, you're not managing that asset very well. A lot of companies have that completely backwards.

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