The Value of Data: The Odd Isolation of Little Items
June 17, 2016
I read “Determining the Economic Value of Data.” The author is a chief technology officer, a dean of Big Data, and apparently a college professor training folks to be MBAs. The idea is that data are intangible. How does one value an intangible when writing from the perspective of a “dean”?
The answer is to seize on some applications of Big Data which can be converted to measurable entities. Examples include boosting the number of bank products a household “holds”, reducing of customer churn, and making folks happier. Happiness is a “good” and one can measure it; for example, “How happy are you with the health care plan?”
One can then collect data, do some Excel fiddling, and output numbers. The comparative figures (one hopes) provide a handle upon which to hang “value.”
This is the standard approach used to train business wizards in MBA programs based on my observations. We know the method works, just check out the economic performance of the US economy in the last quarter.
The problem I have with this isolationist approach is that it ignores the context of any perceived value. I don’t want to hobble through the The Knowledge Value Revolution by Taichi Sakaiya. I would suggest that any analysis of value may want to acknowledge the approach taken by Sakaiya about four decades ago. One can find a copy of the book for one penny on good old Amazon. How’s that for knowledge value.
Old ideas are not exactly the fuel that fires the imaginations of some “deans” or MBAs. Research is the collection of data which one can actually locate. Forget about the accuracy of the data or the validity of the analyses of loosey goosey notions of “satisfaction”.
I would suggest that the “dean’s” approach is a bit wobbly. Consider Sakaiya, who seems to be less concerned with creating busy work and more with coming to grips why certain products and services command high prices and others are almost valueless.
I know that reading a book written in the 1980s is a drag. Perhaps it is better to ignore prescient thought and just go with whatever can be used to encourage the use of Excel and the conversion of numbers into nifty visualizations.
Stephen E Arnold, June 17, 2016
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One Response to “The Value of Data: The Odd Isolation of Little Items”
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Stephen, thanks for sharing the article. I very much appreciate and agree with your positioning. As you can tell from my blog, I was certainly not trying to propose an all-inclusive financial model. As you accurately pointed out, there are much smarter folks for developing a much more thorough, inclusive financial valuation model.
The goal of my blog was to get IT organizations to give some level of consideration to the “business value” of data with a very straight-forward (simple) process. IT organizations are constantly facing decisions about data. Most lack a process for determining the potential value of the data before putting that data into the data lake. Without such a process, they risk populating their data lake with “dead” data (leading to the “dead sea,” to quote one of my clients).
Hopefully your sharing of my blog will help IT organizations to give a bit more consideration to how and where data will be used to drive business value, and just how valuable that data might be.