Ahead of the curve
Infonomics: the disruptive tech
In 2001, when terrorist attacks toppled the World Trade Centre in New York City, those who insured their data ran into a problem. Underwriters had expected to cover the equipment the data was stored on, but not the data itself. Very quickly, insurance houses changed their contracts to explicitly exclude electronic data. Soon, accounting standards followed to exclude the capitalisation of electronic information on balance sheets.
Today, most accountants continue to treat data as such and companies are following their lead. But such actions sit out of touch with what is happening in today’s world, which is immersed in data. Infonomics is the discipline of seeing the true asset value of such data, both internally and sold as a product, and there is growing support for this view in enterprises.
Gartner has been very bullish on infonomics. It coined the phrase in the ‘90s and is vocal about data’s growing role as a business asset. Supporting this is the 35% of respondents in a Gartner IoT survey who are selling or planning to sell data collected by their products and services.
Although the practice can at times create unsavoury headlines, such as Facebook’s data recently being exposed, it’s the dominant revenue stream for many technology platforms, including Google, as well as more traditional businesses. For example, retailers are increasingly selling point-of-sale data to consumer goods companies. Some give it away for free, such as Uber does with its traffic data for cities. In return, it gains closer partnerships and goodwill from municipalities.
Forrester is also big on infonomics, but for slightly different reasons. It regards the discipline as a way to help companies realise how valuable their data actually is. This can profoundly change attitudes around security. Gartner has a similar view, saying good infonomics (both in understanding and trading with data) can feed into IT budgets and business initiatives.
Few companies apply their physical asset reporting and management practices to data. Yet as data shows its worth as a revenue stream, many executives will be tempted to leap in with both feet. This will place the company’s technologists and risk managers at odds with the business because data management is a regulatory and brand reputation minefield.
Yet it’s almost inevitable, so CIOs and their peers need to be much more proactive. They will need to start treating data as an asset and coax the rest of the business to do the same. Policy and processes should reflect this. Data should be functionally and culturally no different than any other asset.
Doing so will be tricky, especially since, on paper, data is not treated as an asset. It’s not quantified in balance sheets. But that’s a mere formality – the trends of treating data as a differentiating asset or something that can be monetised are growing strong. Leaders who educate themselves around infonomics will be ready when, not if, this change happens.