September 21, 2014

Data as an asset

We all tend to assume that data is a great and glorious asset. How solid is this assumption?

*”Our assets are our people, capital and reputation. If any of these is ever diminished, the last is the most difficult to restore.” I love that motto, even if Goldman Sachs itself eventually stopped living up to it. If nothing else, my own business depends primarily on my reputation and information.

This all raises the idea – if you think data is so valuable, maybe you should get more of it. Areas in which enterprises have made significant and/or successful investments in data acquisition include: 

*Sadly, Cantor Fitzgerald later became famous for being hit especially hard on 9/11/2001.

And then there’s my favorite example of all. Several decades ago, especially in the 1990s, supermarkets and mass merchants implemented point-of-sale (POS) systems to track every item sold, and then added loyalty cards through which they bribed their customers to associate their names with their purchases. Casinos followed suit. Airlines of course had loyalty/frequent-flyer programs too, which were heavily related to their marketing, although in that case I think loyalty/rewards were truly the core element, with targeted marketing just being an important secondary benefit. Overall, that’s an awesome example of aggressive data gathering. But here’s the thing, and it’s an example of why I’m confused about the value of data — I wouldn’t exactly say that grocers, mass merchants or airlines have been bastions of economic success. Good data will rarely save a bad business.

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Comments

7 Responses to “Data as an asset”

  1. Jerry Leichter on September 22nd, 2014 7:25 am

    “Big data can’t save a bad business”: Of late, the casinos haven’t been doing so well either!

    — Jerry

  2. Joel Berman on September 22nd, 2014 4:10 pm

    I think data protection, both in the security sense and in the “backup and disaster recovery ” sense is a neglected area. Getting more without protecting it is irresponsible but common.

  3. Peter Fretty on September 24th, 2014 10:20 am

    Data — assuming its quality and complete – has enormous value to the analytical organization. Of course, this means devoting the resources to build the skills needed to adequately complete the necessary tasks. In a recent IDG SAS survey it was quite obvious that most organizations are not at that point yet with under 20 percent ranking their organizations at highly capable of any of the key requirements.

    Peter Fretty

  4. Venkat on September 26th, 2014 1:17 am

    Curt

    “Determining the value derived from owning, analyzing and using data is often tricky — but not always. Examples where data’s value is pretty clear start with:

    Industries which long have had large data-gathering research budgets, in areas such as clinical trials or seismology.

    Industries that can calculate the return on mass marketing programs, such as internet advertising or its snail-mail predecessors.”

    I’m somewhat surprised you havent mentioned Financial Services as the definitive proto-business for ‘data as an asset’ that predates internet advertising. Financial products are merely contracts of ownership or debt, i.e data, and profit is driven by identifying and reacting to data (news), and state is recorded/fabricated as data. Sure, you can buy and sell orange juice futures, texas sweet crude and pork bellies, but no-one in the industry makes anything from them other than money (data).

  5. Curt Monash on September 28th, 2014 7:48 pm

    Venkat,

    I think electronic-only products are different from data. Heck, for all practical purposes Linda’s books are electronic-only, but I don’t count them as data.

    Bloomberg’s data acquisition includes tediously digitizing the terms and conditions of various financial instruments. If they’re the only vendor doing that, then in some sense they own proprietary data about the bond/derivative/whatever. But that’s a very different thing from owning the financial instrument itself.

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