Keep up with the partners

Gustin Partners | May 27, 2016 |

Managing Information as an Asset – Part 1

By Thornton May
Futurist, Senior Advisor with GP, Executive Director & Dean - IT Leadership Academy

In the Paleolithic Age, to survive you needed to know how to hunt and gather. In the Agricultural Age, to prosper you needed to be able to farm. In the Information Age, to be successful you have to be able to manage information as an asset. Where in the financial pages, news broadcasts and blogosphere/social media can one find comparative assessments of how well or how poorly publicly traded organizations manage information assets? The answer is nowhere and this has to change.

Two Industries Have to Evolve or Die
The most important resources in the economy today are data, information, content and knowledge. The accounting industry [Generally Accepted Accounting Principles GAAP] has failed to come up with an effective measurement methodology for valuing data, information, content and knowledge. Standard accounting practices in the US and internationally do not provide for the capitalization of information – i.e. they do not offer a mechanism through which information can be added to the balance sheet as an asset. Information and information management competence do not show up on contemporary balance sheets. This has to change.

Doug Laney, a respected analyst at Gartner tells his clients that post 9-11-2001, the insurance industry essentially said, “Well, wait just a minute, we'll pay you for the value of the hardware you lost but as far as we're concerned, electronic data isn't considered property.  After 9-11, the insurance industry actually changed the language on the general liability policy used by most commercial insurers to explicitly exclude electronic data from coverage.”  This has to change.

Emersonian Self-Reliance
In the absence of institutional assistance/guidance organizations are going to have to figure out how to manage and exploit the value of information on their own. Presently, most organizations do not know how to value their information assets. This has to change.

Information is a unique asset. Its value is not absolute but contingent depending on context, decisions and actions taken. Having knowledge and the time frame for acting on that knowledge need to be measured.

One of my favorite “we knew but did nothing story” deals with the discovery/non-discovery of inheritance. Gregor Mendel, a monk living in an abbey in Brno (now in the Czech Republic) experimented with peas.  “He began to discern patterns in the data — unanticipated constancies, conserved ratios, numerical rhythms. He had tapped, at last, into heredity’s inner logic.”

Eight years later [1865] Mendel wrote a paper, which he published in the yearly Proceedings of the Brno Natural Science Society. For four decades Mendel’s information asset — “the study that founded modern biology,” effectively disappeared.

The intelligence community was designed to treat information as an asset and they are challenged. In The Secret War: Spies, Cyphers and Guerillas 1939-1945 Max Hastings shares “Intelligence gathering is inherently wasteful. Perhaps one-thousandth of 1 percent of material garnered from secret sources by all the belligerents in World War II contributed to changing battlefield outcomes.” Add two more problems. One is the familiar “signal-to-noise ratio”: How to unearth that shiny nugget in a mountain of rubbish? Two, even if spies find it, leaders must act on the information.
Since the early days of IT in the 1940s, valuing information assets has been a challenge.

Laney at Gartner has stepped into this measurement void with “infonomics.” In the absence of an institutional norm one might use an economic measure called Tobin’s Quotient - the ratio between the replacement cost of a given company’s reported assets and its market value. Laney discovered that companies identified as ‘information-centric’ [i.e., those which treated information as an asset] had an average Tobin’s Quotient of 2.4 – more than twice the overall average. “The finding suggests that if you want to potentially double your market value, become more information-centric,” says Laney.

Ambiguous Responsibility for an Ambiguous Asset
Who should lead the charge to information-centricity? Who will guide the organization’s “manage information as an asset” campaign? Which executive and which department are responsible for managing the organization’s information assets?


One Boston Place
Boston, MA 02108

Phone: (617) 419-7144


42 Berkeley Square
London W1J 5AW, UK

Phone: 44(0)20.7318.0860
Fax:     44(0)20.7318.0862