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We’re continually instructed knowledge is essentially the most helpful asset in our digital financial system. But within the worlds of accounting and insurance coverage, knowledge is not a proper asset on the books. It isn’t an object with tangible worth, equivalent to a server or a constructing.
That standing feels uncommon as folks and firms purchase and promote knowledge merchandise, and there is a hyper-reliance on data-driven capabilities, equivalent to synthetic intelligence (AI) and superior analytics. Expertise and enterprise professionals should deal with knowledge as an indispensable and tangible asset of various worth, even when it is not on the books.
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“Why is it that an intangible asset like knowledge shouldn’t be within the firm’s stability sheet — a press release of the property, liabilities, and capital of a enterprise at a specific time limit?” wrote Prashanth Southekal, managing principal of DBP-Institute in a publish at CFO.College.
Southekal mentioned that figuring out the truthful market worth of knowledge is a problem. Organizations “battle to place a greenback determine each on the price of knowledge administration within the knowledge lifecycle — from origination to consumption — and the advantages that knowledge brings to the group.” Different components embody unsure depreciation and compliance questions.
As knowledge property are off the books, insurance coverage firms do not contemplate them “property” for which enterprises might be compensated, mentioned Doug Laney, innovation fellow at West Monroe, former Gartner analyst, and writer of Infonomics and Information Juice.
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Valuing knowledge property as property has been introduced earlier than courts for many years, Laney defined in a current keynote deal with at Information Summit in Boston. “The courts are confused,” he mentioned. “Some courts have guidelines that knowledge needs to be thought of property, as a result of they’re represented by bubbles on an optical disk, different courts have mentioned that knowledge should not be acknowledged as property, as a result of electrons have negligible mass.”
The worth of knowledge in accounting relies on guidelines formulated within the Thirties, when knowledge was saved on tangible items of paper. Insurers “usually are not going to acknowledge knowledge as a mass as a result of there may be nothing concerning the worth of your knowledge on our stability sheets. Principally, the keepers of what constitutes property and what constitutes an asset doubled down on their antiquated notions that knowledge is neither.”
With trendy organizations working on knowledge — and drawing earnings from knowledge and dropping earnings if knowledge is destroyed or stolen — these perceptions may change. Laney mentioned firms are even collateralizing knowledge property to again up monetary offers.
“More and more, firms which are knowledge wealthy and money poor are discovering they’ll get loans for his or her knowledge property,” Laney mentioned. “An organization that we partnered with has a fund that can difficulty that mortgage and has a valuation mannequin that can set up the extent of collateral. They’ve know-how that can sit in your techniques and truly escrow the information every day right into a safe cloud setting.”
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Laney mentioned the power to achieve the total potential from knowledge tends to be held again by a number of myths or misconceptions. Listed here are some laborious truths about knowledge monetization:
- Information monetization is not simply overtly promoting database information – Reasonably, it is an strategy that addresses how knowledge is managed, measured, and used to ship new sources of worth and income.
- Information is not the “new oil” – Not like oil, which is a commodity merchandise that’s “consumed a drop at a time, knowledge could be very totally different, a non-rivalrous, non-depleting, and pro-generative asset — which means it may be used concurrently and repeatedly in a number of methods,” Laney mentioned.
- Latent knowledge is a first-rate candidate for monetization – Laney mentioned knowledge that appears outdated or spent should still have worth.
- Information monetization goes by totally different names – Organizations might discuss with the strategy as “knowledge enablement or knowledge commercialization or knowledge product growth, no matter’s comfy,” mentioned Laney.
- Exterior knowledge might be monetized – “You’ll be able to monetize knowledge that comes from exterior sources as properly,” Laney mentioned. “We needs to be exterior knowledge to complement our personal and generate extra worth.”
The onus is now on professionals and managers who deal with and retailer knowledge to grasp the brand new dynamics knowledge monetization provides to their jobs. “It needs to be an ongoing or periodic course of,” Laney mentioned.
“Managing and measuring knowledge property go collectively,” Laney mentioned. “They are saying you’ll be able to’t handle what you’ll be able to’t measure, and you may’t monetize what you are not managing. We’re all doing so much with digital knowledge, however organizations usually are not measuring the influence of that. We’re not connecting the dots between the information that we use, and the outcomes — enhanced enterprise course of and efficiency. Simply as with every different asset that your group has.”
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Executives should advance knowledge monetization efforts, from working with the enterprise to producing and prioritizing concepts. Testing these concepts additionally must be a part of the method. Lastly, gross sales and advertising groups should be instructed concerning the worth of knowledge property. Laney mentioned there are two flavors of knowledge monetization, oblique and direct:
Oblique knowledge monetization:
- Bettering course of efficiency or effectiveness
- Decreasing threat/bettering compliance
- Creating new merchandise or markets
- Constructing and solidifying associate relationships
- Assetizing knowledge on the stability sheet by way of particular company constructions
- Publishing branded indices to advertise knowledge merchandise/providers
Direct knowledge monetization:
- Bartering/buying and selling with knowledge for non-cash business issues
- Enhancing services or products with knowledge
- Licensing uncooked knowledge by brokers or knowledge markets
- Promoting insights, evaluation, and studies
- Inverted knowledge monetization by way of referral/reseller preparations
- Collateralizing knowledge to safe loans
For anybody who doubts the advantages of leveraging knowledge property, have a look at the valuations of data-driven firms. “Firms which have enterprise knowledge governance applications, chief knowledge analytics, and AI officers, superior AI and analytics applications are favored by two to 1 over the others,” Laney defined.
“And firms which are knowledge merchandise firms, that make a dwelling promoting knowledge or licensing knowledge or knowledge derivatives of some sort, have market-to-book values which are thrice increased. After all, they’re making extra worth from an asset that’s not on the books.”
Disclosure: I used to be a speaker at Information Summit, an occasion talked about on this article.