Data & Infonomics

This is the third in a series of papers and develops a practical solution providing a framework for privacy preserving data sharing, addressing technical challenges as well as data sharing issues more broadly. It builds on the 2018 ACS Report, Privacy in Data Sharing: A Guide for Business and Government, expanding the concept of a Personal Information Factor and introducing a Utility Factor with worked examples.

Download the report here

 

Infonomics is the discipline of valuing Information Assets and it is based on the idea that information is an enterprise asset that should be counted and managed.  This article explains why Infonomics is becoming increasingly important.

Information Assets (data, information, published content and knowledge) are arguably an organisation’s most vital and strategic resource.  Providing the right data to the right people at the right time is critical to every business activity, every business process and every business decision.  Information Assets are the only ones that cannot be replaced if lost or destroyed.  They are foundational to all high-profile business solutions and technology enablement: to analytics, artificial intelligence and machine learning; cyber-security; cloud computing; Blockchain and the Internet Of Things; and almost any form of innovation and disruption.

Unlike other physical or even financial assets that can only be used once then are used-up, any Information Assets can be used again and again, and be used a multitude of ways simultaneously.  And wherever information is used, it typically generates more valuable information.  In this way, Information Assets are a non-depleting, non-rivalrous, and regenerative resource.  Organisations that capitalise on these properties are the ones that are winning – and they are winning big today.

In 1975 intangible assets contributed 17% of the value of the S&P 500; today (2015) it is 84%[i].  In the early 1950s the share of corporate market value attributed to book value was well over 80%; today (2013) it is just over 40%.[ii]   Welcome to the Information Age and the Data Economy!  Business leaders who don’t recognise the need to treat their information as an actual strategic business asset are positioning their organisations for failure.  It’s trendy for executives and others to spout on about data being “the new oil”.  But when we hear this, it’s a signal that they just don’t get it.  They don’t get that information has economic properties that make it orders of magnitude more valuable than oil.

Despite the value of Information Assets and the contribution they make, according to executives of a US based law firm and an Australian oil and gas producer that have discussed the problem with us, if their organisations were to manage their money the way they manage their data, they would be ‘broke in a week’. When I asked why, they both replied to the same effect that, anyone in their respective organisations would be able to spend any quantity of money at any time for any purpose without authority and without having to report on it because that is the way they manage their information.  That is, money would walk out of their organisations in wheelbarrow loads.  There is a fundamental disconnect here.

In the words of Julius Sumner Miller, “Why is this so?”  Doug Laney, pioneer of the discipline of Infonomics notes that, ‘information isn’t considered a capital asset by current accounting standards and regulatory bodies (e.g., GAAP, AICPA, and FASB)’ and is not recorded on the balance sheet. [iii]  It naturally follows that, ‘stinking at information management may seem overstated.  But when compared to the rigor and process and discipline with which other ‘balance sheet’ assets are managed, the attention paid to information assets pales.’ [iv]

Experience Matters and the University of South Australia have been addressing this disconnect with their research into the Barriers to and benefits of managing Information Assets effectively.[v]  Findings from the research support Doug Laney’s views; they provide evidence that one of the greatest barriers to managing Information Assets effectively is Justification, in all its manifestations.  Observations include: there are few catalytic events or burning platforms; compliance and risk management are burdensome; other priorities prevail; the cost of managing Information Assets well and the benefit of doing so are unknown and are not recorded on the Income Statement; the value of information is contextual and is not recorded on the Balance Sheet; benefits are intangible, intertwined and difficult to crystallise; inefficiency is often rewarded; and the management of Information Assets is boring.

But if Information Assets had a value that was recorded on the balance sheet, the disconnect, and our associated problems, would vaporise in an instant.  Infonomics analyses the production and consumption of information and the transfer of money to produce, sell or obtain it.[vi]  Doug Laney explains: [vii]

Infonomics is the concept and practice of treating information as an actual corporate asset.  Everyone talks about information as one of their organization’s most critical corporate assets but scant few actually behave as if it is.  That is, they don’t monetize, manage or measure it with nearly the same discipline as their physical or financial assets – or even their human capital.  In fact, most companies treat their office furniture with greater asset discipline than their information…perhaps because even in the midst of the Information Age the accounting profession refuses to recognize information as a balance sheet asset.

Laney says, ‘for most practical purposes it makes perfect sense (and dollars) to monetize your information in a variety of ways.’ [viii]  Infonomics posits that information should be considered a new asset class in that it has measurable economic value and other properties that qualify it to be accounted for and administered as any other recognised type of assets – and that there are significant strategic, operational and financial reasons for doing so.  Infonomics provides the framework businesses and governments need to value information, manage it and wield it as a real asset.[ix]  It allows organisations to transform from just using information to optimising it.  It also allows organisations to better understand, gauge and financially leverage the benefits from managing Information Assets well.

Laney discovered Infonomics when he was at Gartner.  After the 9/11 terror attacks on the twin towers, clients lamented to Doug not only the tragic loss of life but the loss of their data.  They told him that their businesses had submitted claims for their data to insurance companies which refused to honour those claims by arguing that electronic data wasn’t a type of property covered by their policies.

So he researched the definition of an asset in an old accounting text and he researched balance sheets in the online financial database EDGAR.  He found that although information meets all the criteria of an asset, because it is not included in the balance sheets, it is not recognised as such.  And so the penny dropped.  Information doesn’t have a value.  Therefore, it can’t be measured.  You can’t manage what you can’t measure.  And you can’t monetise what you can’t manage.

Over time Laney and his colleagues developed and adapted models for measuring information’s value – in a variety of ways and for different purposes.  They have explored how to manage information as an actual asset by applying asset management approaches from other fields.  They have designed approaches to monetising any Information Asset that takes advantage of its unique economic properties.  And they have begun exploring how traditional economic concepts like supply and demand, marginal utility and price elasticity must be tweaked to apply to Information Assets.

The value of Information Assets is contextual.  In an oil and gas producer, seismic data is extremely important to a Reservoir Engineer because they use that information to do their job.  But it is also useful to the Director of Investor Relations because they have to sell the company to the investor community.  And it is of value to the Chief Financial Officer who has to determine how much (s)he can spend to develop the resource and still make a profit.  And after 10 years and the well has been capped, that seismic data may no longer be of use to the Reservoir Engineer.  So Information Assets will have a different value according to different professions, different levels of seniority and different time frames

Because the value of Information Assets is contextual, and because different organisations have different corporate objectives and measurement approaches, one size does not fit all.  To address that issue Laney has developed six models for valuing information that fall into two categories, namely Foundational Measures and Financial Measures.  The models are:

1.     Foundational Measures

a.     Intrinsic Value of Information – how correct, complete and exclusive are the data

b.     Business Value of Information – how good or relevant are the data for specific purposes

c.      Performance Value of Information – how do the data affect key business drivers

2.     Financial Measures

a.     Cost value of Information – what would it cost if the data were lost

b.     Market value of Information – what could the data be sold or traded for

c.      Economic value of Information – how the data contribute to the bottom line

Each of the models has its own formula, an equation for determining the value of the organisation’s Information Assets.

Applying a value to Information Assets allows executive management to see them for what they really are – a vital and strategic resource to be managed, deployed and exploited.  It allows them to be managed the way other assets are – with effective governance, leadership, management and business behaviours.  It allows the fundamentals of good asset management to be applied – a framework, measurement, reporting and management tools, clear responsibility for the management of those assets and unavoidable accountability.

And from our research, the potential business benefit of good Information Asset management is in the order of 20% business improvement per year.[x]

Infonomics is a discipline that is well worth investigating.

James Price,  Founder and Managing Director, Experience Matters

 

[i]            Ocean Tomo, Valuing Intangible Assets,September 2017.

[ii]           Baruch Lev and Feng Gu, The End of Accounting and the Path Forward for Investors and Managers, 2016

[iii]          Doug Laney, Infonomics: How to Monetize, Manage, and Measure Information as an Asset for Competitive Advantage, 2017, 20.

[iv]          Ibid.

[v]           Nina Evans, and James Price, Barriers to the Effective Deployment of Information Assets: An Executive Management Perspective,  Interdisciplinary Journal of Information and Knowledge Management (IJIKM), 7:177-199.

[vi]          https://searchcio.techtarget.com/definition/infonomics.

[vii]         Note iii.

[viii]         Ibid.

[ix]          Information Governance World Issue 1 Volume 1, 50.

[x]           https://www.experiencematters.com.au/wp-content/uploads/2019/04/Benefits-of-managing-Information-Assets-well-190412.pdf.

 

He taonga te tuakiri: āianei, haere ake nei

New Zealand’s Identity Conference 2019 was the fourth in a series of conferences that began in 2008.  The conference was held at the Museum of New Zealand Te Papa Tongarewa, Wellington, on 26 and 27 August 2019.  The conference purpose or ‘big idea is to look at the identity-related problems of today and the solutions of tomorrow’.  Carol Feurriegel recounts some of the highlights from the conference.

 “Identity is a complex and sensitive area. It reflects our sense of self and it is also at the heart of relationships between people and organisations. Our Identity is our taonga” to quote Professor Steve Warburton, in his keynote address as Chair of the Identity Conference 2019 on Monday 26thAugust. It is fitting that the premier event that takes a multi-disciplinary perspective on Identity is held at Te Papa Tongawera, Museum of New Zealand in Wellington.

“Taonga” means ‘treasure’ in Te Reo Maori. It can be applied to anything that is prized, anything that is of value including socially and culturally valuable objects, resources, phenomena, ideas and concepts.

Identity is a concept that is honoured in Maori culture. It is customary when people meet to share your ‘pepeha’ or your introductory speech, based on your ‘whakapapa’ your genealogy. To the Maori and to many other indigenous peoples, your identity is intrinsically linked to your relationships with both the land (whenua) and with people (tangata).

We are now living in an age where technology is often the substrate on which our identity is established, validated, used legitimately and sometimes manipulated, misrepresented and stolen outright. Huge amounts of data and information are generated and flow throughout the digital economy and we need our identity in order to benefit from the many services and products that are available online, to earn a living and even to have a social life.

Identity has become what we say, what other people say about us and now in the age of the Internet of Things, our identity also includes whatever interactions we have in the cyber-physical world with technology.

These were the challenges and issues that were addressed by the expert speakers at the Identity Conference who ranged from Digital Services Minister, Kris Faafoi who deftly dealt with a tricky and anonymous sli.do question by peering into the auditorium and asking the enquirer to stand up and elaborate – which he promptly did! Proving to everyone that communication and clarity is sometimes better face-to-face.

To the New Zealand Privacy Commissioner, John Edwards who spoke eloquently about the emergence of ‘Identity politics’ and its links to the fear that drives groups to try and control the identity of others. He urged us to remember “Who I am does not take away from who you are or could be”.The Commissioner also had a shopping list of things for preserving dignity and autonomy in the face of digital encroachment including more regulation, ‘spanning, for example: antitrust consumer rights anti-competitive practices privacy, electoral integrity.’

 

A response on a global scale is required.  Looking at the Christchurch Call for Action, the Commissioner said, ‘one need that became evidence was an industry clearinghouse of some kind for identifying content that we can all agree ought not to be available.  You can find the transcript of the Privacy Commissioner’s address here.

 

To academics like Professor Tahu Kukatai, an expert on indigenous data sovereignty who spoke about the Maori concept of ‘tikanga’, an ethical governance approach. Noting that governance regimes like the EU’s General Data Protection Regulation (GDPR) is individualized and doesn’t speak to the group rights and interests (whakapapa) identified by indigenous peoples. Nor does western governance embrace other indigenous concepts such as non-human identity, the identity of place which has a spiritual dimension for indigenous people recognising the interconnected relationships between people and places.

 

Other speakers included Kashmir Hill, a technology journalistworking for services like the New York Times and Gizmodo. Kashmir described two of her recent research articles. The first on the Internet of Things was called “The House that Spied on me”.

 

To prepare for this article Kashmir spoke about filling her house with every internet-enabled device she could obtain, from the commonplace Smart TVs and digital assistants, to the less common internet-enabled bed, toaster, fridge and dishwasher. She also found (but didn’t purchase!) more unusual gadgets like internet-enabled sex toys which being blue-tooth controlled, are apparently designed for ‘remote’ relationships. Kashmir collaborated with a technologist who created a special router for her home to harvest all the data traffic plus identify what data could be sold to data brokers. Her analysis of the data traffic was very revealing and also very disturbing for her and her young family.

Kashmir found that every single internet-enabled device in her home was sending data to its manufacturers even when they were not in use.

The Smart TV sends data to data brokers on viewing preferences, the fridge and other kitchen devices captured and sent data on temperature, usage and performance and the digital assistants sent a constant stream of ambient information to their networks.

None of the data traffic was visible to the users in the household and it reinforced the message that with the Internet of Things – even if you pay for the device you are still the product.

 

Kashmir’s second article she talked about was her experience of ‘Blocking the Big 5’. This was her attempt to divorce herself from the Big 5 technology giants – Amazon, Facebook, Apple, Microsoft and Google. To do this she collaborated with another technologist to build the equivalent of an internet ‘Faraday cage’ – a special router to block the published IP address ranges of the Big 5. Her results were fascinating.

She found Amazon the hardest to get away from – 30% of websites no longer worked as many other applications and services use AWS (Amazon Web Services) as part of their service architecture including Netflix, EBay and CNN. Kashmir’s experience was, ‘Amazon is so dominant that it quickly became clearly that it was impossible to avoid, in both the real and digital worlds’.

Facebook wasn’t as bad as Amazon, but it meant that Facebook-owned applications like What’sApp and Instagram ceased to work. She found that many conversations had moved into the digital world almost exclusively. During the research she missed important events in her social circle including the death of friend’s spouse which caused great embarrassment.

Facebook owns your social network data and social isolation is the result of severing the connection – without friends you don’t have a social network.

With Apple, contacts became the biggest issue. Apple is like a gated community and your AppleID is the key – when you were inside you became part of the conversation but once you were outside it became very difficult to participate or to get you data out – exporting your list of contacts to a non-Apple device was particularly difficult.

Kashmir found Microsoft can’t actually be blocked in the real world and that it wasn’t just the affiliated apps like Linkedin and Skype that stopped working. It was also car navigation systems and many point of sale (POS) applications which are powered by Microsoft products.

With Google, identity became flashpoint. It was easy to replace Google for things like search and calendars, but it became much harder when it came to mapsbecause many other services like Yelp, Uber and Lyft use Google in the background. However, many other services also use Google for identity verification and validation including Dropbox who wouldn’t believe she was a human being – because she couldn’t be verified as legitimate traffic (not a bot) via Google. The implication being that you aren’t a person unless Google says so.

The internet also became slower when she cut the Big 5 out of her life. Not only because other sites load assets like fonts, trackers, analytics etc. from Google but in general the internet is a much less pleasant experience without the benefit of the wealth of behavioral data the Big 5 have on you.

There were also a number of excellent panel discussions over the two days of the conference which covered topics including DNA and profiling, Self-sovereign Identity, Artificial Intelligence and Biometrics and more which were all valuable, informative and challenged the audiences thinking and perceptions around the changing role of identity and the value of truth, privacy, fairness and inclusiveness in our connected digital future.

The ever-entertaining NZ Chief Archivist, Richard Foy provided the closing key-note address on Public Records, Private Lives on the last day of the conference. Richard is a Te Reo-fluent kiwi of Asian descent and a huge Star Trek fan. Richard discussed the interesting questions of – Who am I? Who are we as a nation?   He entertained the audience with his recounting of the interesting, funny and sometimes unexpected facts he unearthed about his own identity when he tried to trace his family tree through the archival records in his care, including life under the Aliens Act 1948.

 

Richard closed with a thought-provoking comment, he said,

“Our national identity is captured in our memory and the stories we tell that define us. Identity is about making decisions about our future. It is our human right to define who we are and it’s about much more than just its expression in a set of credentials”. 

 

Carol Feuerriegel

IGANZ Advisory Board Member