Look through the balance sheet of a major corporation and you will see some surprising things that get labeled as assets and liabilities.
In my opinion, data should be on the balance sheet as well, and it should be considered an asset. What are assets, if not things that can be monetized or liquidated for value?
As more companies begin to realize the benefits of analyzing the mountains of data they have accumulated, many are beginning associating a value with that data. After all, if we can quantify “Goodwill”, surely we can do so with data. To my knowledge standards such as GAAP do not yet account for valuing data, but hopefully they will in the near term. Even if it doesn’t become part of the “official” accounting for the company, I think there are certain benefits to recognizing a value for data, not the least of which is that management can measure how effectively the company is turning data into value.
However, this is anything but straightforward for a lot of managers. Data is an abstract, not physical, and valuing it can be difficult at best. To begin the process, I’d recommend asking yourself the following:
- How do we (or can we) monetize this data?
- If we no longer had this data, to what extent would revenue or profit be negatively affected?
- Assuming a market existed where we could buy this data, what would we be willing to pay?
- What would we be willing to pay to keep it out of the hands of our competitors?
These are just some examples that come to mind, but surely some of you have considered this before. What would you add to the list?