Increasingly, information is the stuff of our capitalistic cosmos that affects the orbits of so many enterprises. Data may be the dark matter that permeates the economy, but that shouldn’t stop us from formally measuring and managing it.  Imagine any enterprise unable to account for its inventory of finished goods and materials. This is the unfortunate circumstance for organizations that sell or leverage information. Established financial standards and econometric methods fail to enable quantifying this increasingly ubiquitous yet admittedly amorphous class of asset.  Until they do, or perhaps as a harbinger, this session will illustrate several methods enterprises can and should be using today to formally account for the value of their information assets.

 

Enterprises looking to make more intelligent investments in infrastructure, applications, processes, projects and businesses must first understand the potential and relative value of their information assets. As well, they need to understand the costs involved in managing and delivering that information.

 

In this session, Doug Laney discusses how organizations can quantify the value of their portfolio of information assets, leading to the improved strategic management of information as an actual enterprise asset.

 

Also visit the Center for Infonomics for additional presentations, interviews, discussions, tools and other resources on this topic.

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Doug - Here's the chat stream and questions:

 

Leif Edvinsson: Infonomics is a great label

Leif Edvinsson: It relats to the old Sofnomics from Japan in the early 1980´s

Leif Edvinsson: Softnomics Center was shaped in tokyo

Mary Adams 2: I love the infonomics label too!

Leif Edvinsson: Wat about the Liabilities versus Assets

Mary Adams 2 (privately): Cherie - are thee settings on the slides? We want anything automatic turned off...

Leif Edvinsson: Bad will or Sub Prime issues...

Mary Adams 2: Goodwill is just a plug number

Leif Edvinsson: IAS 38 states  what might be included

Mary Adams 2: Good case on patents and goodwill with the Google-Motorola acquisition

Leif Edvinsson: What aout the info gives a time advantage of certain value

Matthew Loxton: for an info assets "consumtion" maybe means it has become widely known and its role as a unique competitive advantage has diminished

Leif Edvinsson: So how do you see all the Elbit Assets  not being  apreciated...

Mary Adams 2 (privately): Great point Leif!!

Mary Adams 2: Great point Leif!

Leif Edvinsson: Add to the picture the evolution of  Intellectual Capital and the Navigator

Leif Edvinsson: 4 th dimension might be the IMPACT  dimension and Opportunity Cost.....which comibines Inof and Liabilities into Asset thinking

Eric Tsui (privately): Mary, could you hear Doug well? Do we need to ask him to fix the audio / Mic?

Daniel Messick: There is an active, although private, marketplace in patents and copyrights.

Gordon McConnachie: In a business  situation value in context is important ....how is this factored in?

Leif Edvinsson: Value cain is now more and more replaced by Value Star thinking, i.e 3 D

Mary Adams 2: I view cost as an important part of the equation. If you don't know the true cost to develop something, how can you accurately assess the return? Costs that are multi-year investments need to be tracked.

Leif Edvinsson: Method 3 seem to be the most intriguing....

Leif Edvinsson: Method 4 is much more of Knowledge Navigating aproach ...good

Mary Adams 2: This is applicable to all structural capital. It can be consumed without depleting it. That's the magic of the knowledge era.

Leif Edvinsson: Where do you rank Info advantage among these 6 Methods?

Matthew Loxton: I was hoping for three measures of which two were clearly unusable, having 6 is a nightmare!

Leif Edvinsson: What about Bench Learn versus Bench Mark?

Matthew Loxton: yes

Leif Edvinsson: Yes

Anne Marie Hoogland 2: yes

Peter Spence: yes

Filip Ivanišević: yes

Leif Edvinsson: Very interesting aspects in the presentation....

Muhammad Khalique: can u listen me?

Matthew Loxton: Oh, this is a better format!, please keep this layout

Muhammad Khalique: I would like to present my work

Matthew Loxton: I could never find that little button!

Eric Tsui: Mattew, you may need to raise hand, the button at the Left-bottom corner

Jayaraman Rajah Iyer: For Ken Jarboe: Ken, I shall be posting my response to your presentation o 12 May on bal Competition and Collaboration”

Anne Marie Hoogland 2: my Q is about a case in infonomics

Leif Edvinsson: Compare Inof Nomics with the core of Soft nomics in Japan, shaped by Min of Finance in 1980´s

Matthew Loxton: Need to go, sorry I couldn't listen to Doug's examples. Thanks all

Anne Marie Hoogland 2: have you valuated SAP as an info / BI system?

Leif Edvinsson: Yes, but it looks that we need to learn to measure the unknown instead of so called structured products from the Finance Sector. Just compare with Sub prime and the resent Greece situation, evolving during about some 10 years

Leif Edvinsson: Supplementry Balance Sheet is very good

Debra Amidon: Business Intelligence is now moving towrd Innovation Intelligence; and these models suggested by Doug are extremely useful.

Gordon McConnachie: The additional factor in both sub prime and greece is of course the question of fraud.

Leif Edvinsson: We developed both supplementary BS and Ic insurance in Skandia in 90´s

Anne Marie Hoogland 2: thanx

Debra Amidon: And Bench-learning is far more effective than Benchmarking. Monitoring Best Practices is so longer enough.

Leif Edvinsson: Thank you all....Happy Fuuture

Peter Spence: Thank you all, again, enjoyed the presentations

Leif Edvinsson: When next session?

Eric Tsui: Thank you for joining the meeting,  Mary and Gordon for hosting!

Doug Laney: I will address all these questions in the forum. Thanks everyone!

Anne Marie Hoogland 2: thank you Mary for Hosting with Gordon!

Doug Laney: I'm in Chicago

Leif Edvinsson: Greetings from Fitou

Anne Marie Hoogland 2: from Amsterdam

Jayaraman Rajah Iyer: Thanks Mary

Daniel Messick: Thank you Mary

Filip Ivanišević: Thank you! Greetings from Croatia

Eric Tsui: Thank you for all of you. See you!

Gonzalo: Thanks Mary! Regards form Buenos Aires

Doug Laney: Starting w Gartner officially next week.

- Yes Leif, you'll notice that IAS38 neither precludes nor excludes information assets as a type of intangible asset, however they are not mentioned either. And GAAP doesn't support the inclusion of information assets.

 

- Right Mathew, since info assets are not depleted when consumed, we like to discount their value as they become more ubiquitous, particularly among competitors. You see this in a couple of the value calcs.

 

- Great point Leif about adding the addition of intellectual capital to the slide on accounting innovations. Thanks.

 

- The topic of liabilities often comes up. In an accounting sense a liability is something owed (or an obligation). I don't see how an information asset can be an obligation. But in traditional vernacular an information (or any) asset's misuse/mishandling, can be a liability (i.e. result in negative value) -- but not the asset itself.

 

- Daniel, Yes because there are active markets for other classes of intangibles, I expect there will be one for information assets. As I mentioned there already are markets within groups of trading partners, e.g. discounts for sharing info. Commercial internet relationships are based on this. Tho to be sure, they're not public markets for info assets. Note that in the longer version of this session, I also predict the rise of "information service orgs" to parallel the rise of the banking industry. That is--organizations that store and give access to and interest on information assets. Cloud technology is a clear enabler of this.

 

- Gordon, Great question about factoring in "context." You'll see that several of the valuation models consider the relevance of information to (a) designated business process(es). Actually, it's worth investigating how accountants take context into consideration when valuing other intangibles.

 

- Leif, Yes I've seen and used value networks for traditional supply chains. I guess I'm thinking more of a value-add continuum as an information is first captured ("acquisition"), then goes through forms of transformation and integration ("administration"), then is made available for access ("application").

 

- Mary, Absolutely the cost side is important in understanding bottom-line value for any asset. This is why I think the acquisition>administration>application lifecycle is important to understand and measure for information assets...and considered in the Economic Value of Info (EVI) model.

 

- Mary, Yes it's interesting that some structural capital that has the same non-depletion consumption model is quantified under GAAP yet some (e.g. information assets) are not.

 

- Leif, Sorry I didn't understand your question about "info advantage." Also the one about "bench learn" vs "bench mark." Can you clarify?

 

- Matthew, We use certain models in certain circumstances where the underlying factors were known. And the first three are really non-economic--used for apples-to-oranges comparisons among types of information to set IM priorities. Think of the models as a toolbox. Use the one(s) that make the most sense for your situation and based on the availability of underlying factors.

 

- Debra, the application of BI for innovation is one of my main research topics now. I'd love to learn your thoughts on this.

 

Thanks everyone!  Happy to continue the discussion....    Doug.

Doug thank you both for the illuminating presentation and for the response to my and other questions. I feel the accounting world is stuck in the old paradigm of "fair market value" whereas for any business application the context is so important. These are quite different routes and as the work of Sullivan and McLean showed in their value measurement work there are now over 100 methods for placing a value on intangibles. http://npi.valuemeasurement.net/ 
Gordon, Thanks for pointing me to the NPI and VMRC. I have now listed them on the Center for Infonomics resource page. And I thoroughly enjoyed the NPI "Rediscovering Measurement" paper. This framework for defining and profiling measurement systems, I believe, has application beyond accounting--into the realm of business intelligence as well. And the pointers to other intangible measurement methods will keep me busy for a while!  Still, I see no indications of any real or proposed accounting treatment of information as an asset. I'm happy to have you reference/include my models in future revs of this paper and/or on the NPI site...and work with you to define them in terms of the NPI framework. -Doug

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