Semantic Investment Needs A Balance Sheet Line Item

The Hidden Shareholder Boost From Information Assets by Douglas Laney.

From the post:

It’s hard today not to see the tangible, economic benefits of information all around us: Walmart uses social media trend data to entice online shoppers to purchase 10 percent to 15 percent more stuff; Kraft spinoff Mondelez grew revenue by $100 million through improved in-store promotion configurations using detailed store, chain, product, stock and pricing data; and UPS saves more than $50 million, delivers 35 percent more packages per year and has doubled driver wages by continually collecting and analyzing more than 200 data points per truck along with GPS data to reduce accidents and miles driven.

Even businesses from small city zoos to mom-and-pop coffee shops to wineries are collecting, crushing and consuming data to yield palpable revenue gains or expense reductions. In addition, some businesses beyond the traditional crop of data brokers monetize their information assets directly by selling or trading them for goods or services.

Yet while as a physical asset, technology is easily given a value attribution and represented on balance sheets; information is treated as an asset also ran or byproduct of the IT department. Your company likely accounts for and manages your office furniture with greater discipline than your information assets. Why? Because accounting standards in place since the beginning of the information age more than 50 years ago continue to be based on 250-year-old Industrial Age realities. (emphasis in original)

Does your accounting system account for your investment in semantics?

Here’s some ways to find out:

  • For any ETL project in the last year, can your accounting department detail how much was spent discovering the semantics of the ETL data?
  • For any data re-used for an ETL project in the last three years, can your accounting department detail how much was spent duplicating the work of the prior ETL?
  • Can your accounting department produce a balance sheet showing your current investment in the semantics of your data?
  • Can your accounting department produce a balance sheet showing the current value of your information?

If the answer is “no,” to any of those questions, is your accounting department meeting your needs in the information age?

Douglas has several tips for getting people’s attention for the $$$ you have invested in information.

Is information an investment or an unknown loss on your books?

Comments are closed.