cdo vision: the value of data
TRANSCRIPT
#CDOVisionwww.cdovision.com
Moderator: Tony ShawCEO, DATAVERSITY
Moderator: John LadleyPresidentIMCue Solutions
All content copyright 2015 IMCue Solutions LLC 0
Metrics for Information Management
Starter
Can data or information cost your company or organization
$$$$$?
Is there a broad economic impact of data and
information?
If you answered “yes”, show me how much?
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Objective
Understand the wide variety of options available to CDOs and other TDJ –types for measuring the value of data and EIM
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What does Information Asset really mean?
Metaphor– Example from Thomas C.
Redman, Ph. D.
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Accounting reasons:
If it is an asset, then it has a probability of generating future value
It is distinct from financial and material assets
Compliance with Financial Accounting Standards Board Statement No. 142 — measuring intangible assets
Practical reasons:
Information affects the organization in visible and most likely measurable ways
Value is, in its own way, a means to manage priorities
All types of risks need to be managed
Information management will offset technology debt
Why worry about information’s value?
4Content property of IMCue and FSFP, Copyright 2013 Reproduction prohibited
Why usage holds the key:
The “algebra” of RWhere C= Create, U= Update, D = Delete, R = Read
If Value = Usage , and Usage = R,then Value = R If Information Value = R, Information Costs = C + U + D Unless information is used (read) it has no value other than the sunk cost to produce the data, or the cost to get it back if lostThe EIM / DG business case happens where data is used, or is misused
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IM/DG business
case: R > C+U+D
Intellectual property also fits this approach
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How to look at information measures
Info
rmat
ion
Valu
e Balance Sheet
Asset
Tangible
Intangible
Liability
Risk
Allowance
Technical Debt Equity
Income Statement
Income / Returns
Cost of Ownership Efficiency
Effectiveness
Program Progress
Program Effectiveness
EIM Value
DG Value
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INFORMATION VALUATION
Components of relative value Relative value category
Relevance Relative importance to your job
Importance Relative contribution to overall business success
Accuracy Relative importance of accuracy of data to business success
Completeness Relative importance of all elements of this content being available
History Relative importance of keeping history
Volume Relative amount of events or transactions required to provide useful analysis
Variety The different data types and sources, drawing from structured and unstructured content
Volatility Relative effect of changing of values or instances
Latency Relative importance of making this data or content available
Methodology to value information assets • Align business direction with information needs Align to business needs
• Identify what information needs to be valued Identify assets
• Classify the identified itemsClassify assets
• Determine valuation philosophy Define philosophy
• Determine valuation approachDetermine approach
• Collect and calculate values Execute valuation
• Present to business leadership Present results
• Confirm understanding and approval to useConfirm support
• Embed into regular planning processes Repeat 9
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Selecting an Information Valuation Method
What is yourobjective for
valuinginformation?
Focused on improving information management discipline
Focused on improving information’s economic benefits
Intrinsic Value of Information (IVI)
How correct, complete and exclusive is this data?
Business Value of Information (BVI)
How good and relevant is this data for specific purposes?
Performance Value of Information (PVI)
How does this data affect key business drivers?
Cost Value of Information (CVI)
What would it cost us if we lost this data?
Economic Value of Information (EVI)
How does this datacontribute to our bottom line?
Market Value of Information (MVI)
What could we get from selling or trading this data?
Leading Indicator
Trailing Indicator
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The value of information to a business process: How good is the data? How applicable to the business or a particular business process is it? How quickly can we get fresh data to the point of the business process?
Information asset valuation:Simple Method: Business Value of Information (BVI)
Variations• Include other objective or subjective measures• Weight information measures as appropriate• Assume latency (timeliness) is a given
Notional
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(Business process = Online offer to website customer)
Our customer transaction data is of the most potential value to us in dynamically adapting the visitor’s website experience.
Information asset valuation: ExampleBusiness Value of Information (BVI)Simple Method: Business Value of Information (BVI)
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Technical Debt
Organization accumulate technical debt by doing code poorly
Poor IM also generates technical debt
No time to design
Business conditions require we proceed
What’s Layering?
Now we know how we should
have done it
Del
iber
ate
Inad
vert
ent
Reckless PrudentSteve Garnett-Technical Debt Strategies 2013 Ripplerock
Technical Debt from IM
Examples – The increasing cost to
clean up poor data quality
– Excessive costs from mis- aligned BI
– The cost of not being able to count how many customers you have
The interest is still accumulating! And will until you reign in bad habits and build data reserves
Data standards slow me
down
Business pressures require we proceed
What’s a taxonomy?
The cost of BI and data handling is
silly
Deliberate
Inadvertent
Rec
kles
s
Prud
ent
Information Debt Example (simplified)
Initial cost Total Recurring
TOTALS
Business area outsources an analytic function to a cloud vendor5 year license commitment
$25,000 $100,000 $125,000
Cost to integrate newexternal data into 3 interfaces, 5 years support
$45,000 $5,000 $50,000
Total cost for “quick fix” $70,000 $107,000 $177,000
Internal cost to have IT build a quality solution
$100,000 $5,000 $105,000
Information Debt $ 72,000
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SOME SIMPLE METRICS
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Efficiency Total cost of IT / Party (Customer, Member, etc.) End User Labor / Number Users Total BI/DW Budget / Total Users, and / or Support Number of interfaces, File feeds Cost per Interface DG / Compliance cost divided by Total Income DG / Compliance cost vs. risk reserves / premiums Budget / TB (GB) Benchmarks
– Number IT tools– Maintenance budgets– License costs– Training costs
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Risk Categories
• Liquidity Risk
• Credit Risk• Market
Risk• Cash Flow
• Regulatory Penalties
• Cost to adhere• Opportunity
Cost
• Competition
• M&A
• Supplier exposure
• Employee turnover
• Loss of Info
Operational Strategic
FinancialRegulatory
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Risk Threat metrics
– Cost per downtime event – Loss of customer confidence
Financial Risk– Liquidity– Operational costs– Equity / market value reduction
Legal Compliance– Potential penalties per subject area – Litigation fees over time
Improvement
Operating Income by Knowledge Worker – Operating Income for year divided by number of
Knowledge Workers – Knowledge worker is defined as someone who uses
information to make decisions and take actions that cause the fulfillment of objectives, reads information
IM Project NPV – The net present value of the cash flow expected from IM
projects over 5 year planning horizon IM Portfolio NPV
– Net present value of the current information assets expressed as pro-rated portion of free cash flow
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Summary
Measurements of information value and effectiveness are viable
There are many many options to present the value of an information program
Saying it cannot be measured is not an option
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THANK YOU!Questions?
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All content copyright 2015 IMCue Solutions LLC 23
Building Value Through Information Asset Management™
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