Doug Laney, author of the best-selling book Infonomics: How to Monetize, Manage, and Measure Information for Competitive Advantage, recently joined West Monroe as an Innovation Fellow to empower data fluency for the firm’s clients. We spoke to Doug, a data expert with more than 30 years of experience, on the importance of data, how to accurately measure and extract value from it, and opportunities for organizations that may be missing the mark to benefit from it.
As a former IT industry analyst with Gartner, I spoke or met with nearly a thousand clients each year. West Monroe’s reputation preceded itself. Its clients seemed almost giddy about their relationship with the organization. And the interactions I had with West Monroe leadership over the years like advisory sessions and briefings really stood out among all the others. The first thing I noticed was what great listeners they are. There’s not a more standout quality in a great consultant than the ability to listen, being open to new ideas, and truly engaging someone else.
Then the stars just aligned. While I was working on my book and publishing on how organizations should measure, manage, and monetize their data as an actual asset, West Monroe took an active interest in the concept of valuing data, particularly as part of an M&A transaction. And the discussions about me joining got underway in earnest after my wife and I met Technology Director Greg Layok at a champagne tasting dinner last winter.
I think the biggest mistake business leaders make is to consider data an IT asset. Sure, data is generated by applications and sits in databases, and maybe in the 1980s and 90s this tight coupling of data and technology was inescapable. But today there’s every reason to think about, manage, and deploy data and technology separately. Business leaders must become the designated trustees and advocates of corporate data assets, not just the recipients of pretty pie charts and dashing dashboards.
Most data has nearly infinite uses and benefits beyond its original purpose. Don’t rely on your IT department to come up with new data-driven value streams. The business has to do that. Even better, perhaps it’s high time to split up the IT organization altogether to create separate “I” and “T” departments to manage and deploy information and technology as distinct assets.
I keep going back to monetizing the organization’s data assets.
Data is by far the most underutilized resource most companies have.”
And by monetizing I don’t just mean selling them. That’s only one of several ways to generate new value streams from data. Data’s not “the new oil” as others may tout. Data has unique economic properties that make it comparably more valuable than other kinds of assets.
When we work with clients to identify underutilized data, or what we call “dark data,” then take them through a process to conceive new ways to deploy it, we typically identify dozens of new sources of value. These include new revenue streams, measurable process improvements, reduced risks, increased compliance, improved partnerships, enhanced products and services, barter opportunities, or marketable data products themselves. And often just the top three to four ideas, when further analyzed, demonstrate the ability to generate hundreds of millions of dollars in net benefits.
My hypothesis is that business leaders continue to default to treating data as an IT asset because current accounting principles don’t allow companies to recognize the value of their data on the balance sheet. Until you measure the value of any asset, you’re not going to manage it well. And until you manage data with the same discipline as other assets, you can’t maximize its economic benefits.
So while in most cases you can’t put data’s value on the balance sheet, you can create a supplemental balance sheet that measures the cost, market value, and contribution to income for the business’s key data assets.”
Shedding this kind of light invariably leads to improvements in data’s quality, governance, accessibility, and utility.
My main takeaway is that any aspiring authors should do something very, very nice for their significant others and family before holing up to write and becoming completely miserable to deal with. My wife told me afterward that if I ever write another book it will have to be titled, “How I Used Big Data to Find My Next Wife!”
Seriously, the main theme of the book is that too many organizations are caught in a spiral of failing to measure the value of their data, therefore being unable to get the resources to manage it effectively, and as a result are unable to generate sufficient ROI on their data. Infonomics is about reversing this curse. It’s also an examination of how to apply well-honed, traditional asset management principles to data.
We data professionals have been making up this stuff for decades without paying homage to or borrowing from the way physical assets, financial assets, and even human capital are managed with incredible discipline. And for those thinking about new data-based business models or how to really capitalize upon the unique qualities of data, there’s a section in the book examining how traditional economic principles must be adapted for businesses to thrive in the information age and digital economy.
Yes, actually I have gotten my wife’s permission to write another one. Over the past several years, while researching how organizations derive value from data, I compiled more than 500 real-world examples of data and analytics in action—being used to innovate or generate measurable benefits. So I have selected a hundred or so of my favorite stories and summarized them. The book is meant to be more inspirational than instructive, and more of a reference than a read. I’m hoping the book will either inspire or shame business and IT leaders to start wielding their business’s data better.