Data as an Asset
Introduction:
According to the European Commission, the value of personalised data – just one class of data – will be one trillion euros, almost 8% of the EU’s GDP.
Data can be extremely valuable if the right conditions are met.
For the data to have value it must satisfy some basic premises: It must be under the organisation’s control – the organisation must have rights to use the data in a way which is compliant with laws, whilst also protecting the data and restricting access to it by others.
It must promise probable future economic benefits – use cases capable of driving incremental future cash flow which must be identifiable and definable – a data asset may be made up of specific files or specific tables or records within a database.
Assuming an organisation invests the time to create an inventory of its data, the value of that data lies in its ability to allow an organisation to generate future economic benefit (‘data monetisation’).
Challenges to Making Data an Asset:
Many understand that data is the new gold—yet despite massive investments, many companies struggle to mine and refine it successfully. There are many reasons, including data fluency, complex and siloed system architectures, access controls and policies, cultural issues, and interoperability issues across the business.
Only 17 percent of organisations say they are very or extremely effective at maximising the value from the data they hold.
—Harvey Nash/KPMG CIO
How to Make Data an Asset:
To capitalise on data as an asset, organisations will need to become more data driven—and data fluent.
To reap data’s full benefits, it’s imperative to invest in programs to upscale the data and analytics skills of staff across the business and set baseline expectations for data literacy and usage throughout the organisation.
To supply the information the business uses to inform decision making, data must first be made available. Typically, data curation is carried out by data engineers and data architects, who create and manipulate & join an array of data sets, tables, and systems. Thereafter the data is visualised to enable self-serve decision making.
The Below 4 Steps will Support Data Asset Ambitions:
1. Create a data value proposition grounded in business imperatives
Data enables business strategy - it’s not a business strategy itself. Before an organisation moves forward with data initiatives, there needs to be a well articulated value proposition that holistically describes the challenges, problems, or hypotheses that data will help address.
2. Clarify functional accountabilities built into the operating model
Successfully using data as a valuable business asset requires clear accountabilities and spans of control for key technology leaders—and buy-in from those leaders.
3. Start the organisation’s journey toward data literacy
Data literacy is critical for creating a strong data driven culture and enabling the business to make the best use of data.
4. Manage the cultural shift
Digital transformation and embracing a data-driven way of doing business represents a fundamental cultural shift for most organisations and that shift needs to be managed effectively. New ways of working, tooling, and governance will be introduced at every layer of the organisation. Stakeholders across the enterprise will need to understand how data will change the business, from decision making to delivery and beyond.
Types of Value Creation from Data:
The income approach: measures the incremental cash flows which the use cases are expected to generate.
The cost approach: data which is purchasable from a buyer.
Summary:
Organisations are under increasing pressure to invest in data assets, either organically or through acquisitions. Assessing those investments robustly and making the right strategic decisions requires an understanding of data valuation methods and value drivers. As a key feature to unlock business strategy and subsequent value, especially pertinent in the context of Artificial Intelligence, expect more companies to place increasing emphasis on data.
References:
https://assets.kpmg.com/content/dam/kpmg/xx/pdf/2019/10/data-as-an-asset.pdf
https://www.pwc.co.uk/data-analytics/documents/putting-value-on-data.pdf
https://anmut.co.uk/why-youshould-be-treating-your-data-as-an-asset/