Infonomics – A primer

Hopefully by this stage most CIOs should be familiar with the Infonomics concept. This is an interesting topic and one that should rank as high as BI / Data Analysis in our priority list. Most of us (CIOs) will agree that two of the central pillars of CIO management responsibilities are data production and security. As such; how much is the data we are so carefully protecting worth to their respective organizations? Is this even strictly a financial exercise? Should the value of corporate data be considered a corporate asset and as such be reflected in a corporate balance sheet? 

For the most part, information is not an asset from an accounting or legal perspective which (of course) has large implications in insurance claims realm. The complexities can be staggering as most companies continue and enhance their BI and Big Data Strategies in the expectation of achieving future economic benefits. The direct implication is that Big data initiatives do not necessarily convey a realized value but rather a future potential value. 

Investments required in any Big Data project can be easily (or relatively so) quantified such as labor skills, analytics software, database and storage considerations. These are (of course) tangible assets that belong in the balance sheet. Now the data itself can be valued similar accounting and reasonably straightforward accounting valuation practices such as cost, market or income approaches. The cost base uses data replacement standard. The income approach uses income stream accretive (increase or decrease to the future corporate income streams). In the case of market approach, expectations of future marketplace valuation must be taken into account. 

Now, after all that. What is Infonomics? Infonomics is a relatively new economics area which considers information as new asset class. Some of the basic tenants of Infonomics are:

• Information should be managed as an asset
• Information’s value can be quantified
• Information’s net realized value should be maximized
• Information’s value should help budget IT and business initiatives

The ability to treat data as an asset can open up potentially interesting business opportunities. For example; the Kroger Co is generating incremental revenue of approximately $100 USD by selling its inventory and point-of-sale data as a syndicated (blended) data provider. Albertson's is another American supermarket chain has also entered into the blended data business area. 

The potential ramifications of Infonomics can go beyond the CIO realm as this area can help bridge the gap with finance and business as a common economics language is developed. As such companies of all sectors and sizes can see themselves as information management companies.

More information can be found in my blog at International CIO.

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