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What is the most important asset in your organization? Your infrastructure? Your highly trained people? A specialized tool you’ve created? While any of these things might be your most important asset, it’s important not to overlook the value of data in helping you create and achieve competitive advantage.
Now I must tell you, I’ve spent many years in corporate consulting. So I tend to hate phrases like “create competitive advantage.” However in this instance, capturing and using data to better understand your own business and external environment can help set your enterprise apart from those companies that are sans a clue.
But first it takes a shift in mindset in treating data as a valuable asset. Data captured by retailers, airlines, financial firms and others is not listed as an "asset" on the company balance sheet. Data, unless you actually pay to purchase it, isn’t a current asset like inventory or a fixed asset such as land, furniture or an item that depreciates.
Instead, your good accountant will tell you that data is an intangible asset that falls in the category of intellectual property, goodwill, patents and the like. Because data is intangible it’s often overlooked as a valued asset—especially by your financial teams.
However, companies all over the world are starting to understand the power of data, and how to leverage it to, as Thomas Davenport calls it, “compete on analytics.”
In fact, we’re entering an era where more companies are actively managing and using data to make timely and relevant decisions about customers, suppliers, products, partners and business trends. The ability to collect, analyze and act on data is helping companies as diverse as Harrah’s, Norwich Union, Continental Airlines and others drive differentiation.
There seems to be a barrier however to treating data as a corporate asset. Too often data is locked down in corporate silo’s, trapped on someone’s laptop, stowed in spreadsheet, or managed in a departmental database. There’s often little process for the “care and feeding” of data, ensuring its usefulness to an entire organization.
Let’s put aside the business value of treating data as a valuable asset—there’s also a regulatory compliance element. Companies are facing myriad compliance requirements from Sarbanes Oxley, Patriot Act, HIPAA and others. I’d hate to be the CFO signing off on financial statements when I knew my data wasn’t as fresh, clean and accurate as it could be.
If you recognize that your data is indeed a very valuable corporate asset, what are some the barriers you’re encountering to ensuring its usefulness—not just to your marketing department, but your entire organization?
Marketing consultants, what are you doing to alert your clients to the value of data, to understand customers better than your competition?
Is your organization using the power of analytics to compete more effectively against incoming and entrenched competitors? If so, how?
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Comments
Paul,
Excellent post. And I completely agree. We often recommend gathering, analyzing and acting on data.
Unfortunately, clients react much the same way they do to creating, launching and managing strategic planning. They prefer immediate gratification to long-term success (although they wouldn't desribe their business practices that way).
Posted by: Lewis Green | 07.31.07
Lewis, thanks for commenting. You're right about thinking strategically. You gotta learn to block and tackle before you play football,---if you want to win.
It's tempting to skip the hard stuff and fundamentals and go straight to easy stuff. Managing data properly isn't for the faint of heart, but it's a fundamental business practice for success.
Posted by: Paul Barsch | 07.31.07
Paul,
Another great post--I always enjoy your insights and your writing, BTW.
You are so right in stating that data is a valuable, intangible asset for every business. Having worked for companies large and small for over 25 years in marketing departments, I have one caveat. It's very important for each business to determine which data are truly important and worth tracking and which data aren't, if we are going to encourage marketers to read these reports and view them as actionable.
Let's face it: no one reads three or four large computer-generated reports filled with a lot of information we simply don't need. That feeds a reluctance to read just about everything in organizations. I've seen this scenario over and over again. So let's just work first toward generating meaningful data and reports. Then, management personnel will be eager to read reports and assimilate the data they contain as integral to their ability to do a better job in servicing the customer.
On another note: assessments should be made as to which data should be shared by multiple corporate departments, and then be made available to the proper personnel. But let's try to avoid the information overload scenario. Please.
Posted by: Claire Ratushny | 07.31.07
Paul,
This is an important post. Thanks. Companies tend to look at their tangible assets, first, since these are quantifiable. Intangibles are much harder to quantify, aren't they? Yet, as you point out, the intangibles such as valuable data, human capital and brand valuation are among the most important elements in any business. Let's hope this opens some eyes and makes business people consider and act on your post.
Posted by: Ted Mininni | 07.31.07
Claire, you are right about information overload. I think the key to eliminating unwanted information is to closely align initiatives (marketing, technology or the like) with the business. If the business doesn't need it, drop it. If the report wouldn't be valuable to someone in the business, allowing them to make better decisions about customers, competitors, or company operations--drop it. Walking hand-in-hand with business needs is a key to making data valuable.
Posted by: Paul Barsch | 07.31.07
Ted, I was just on a Forrester webinar where they described how it took one company six years to get exec buy-in and fund the implementation of a database/data warehouse to track customer interactions and build analytics to help the business.
I think you'd be hard pressed to find a company that doesn't think using technology to help improve customer centricity is a winning idea. As you said, "action" is a different story.
Posted by: Paul Barsch | 07.31.07
In reading Claire Ratushny's comment, I thought of the classic hierarchy used in the Knowledge Management discipline. Data is a collection of facts. Information is data that tells a story and makes sense. KNOWLEDGE is information transformed into useful actions and lessons-learned to inform future actions. One real challenge is finding ways to transform the piles of raw data into true knowledge. The next challenge? Getting that knowledge to all the folks that need it, when they need it, in the way that they need it. Perhaps it's because of these challenges that so few companies are serious about properly stewarding those data.
Posted by: Claire F. Kuhl | 08.01.07
Claire Kuhl, you make some great points. It's been challenging for me to put my finger on it. Every CEO knows the value of getting the right information to the right person at the right time, allowing them to make better decisions about how to run the business or serve customers. Reality, er, breaking out the checkbook is a different story.
The ROI is very clear, there are countless case studies where companies have harvested the power of analytics to create competitive advantage--just take a look at any of Tom Davenport's work for examples.
Posted by: Paul Barsch | 08.02.07
Hey! It is really good to go through your post and your concern regarding how valuable the data is. Same feeling I do have in my mind as I am working in a healthcare field and I do know how important is to maintain confidential data in more secure and safe and sound way which is one of the very important asset.
Posted by: Mike | 08.03.07
I enjoyed your article. It reminded me of something I thought I should share - something many don't know about data collected after a visit to an auto body repair shop. In the world of auto collision repair the results of customer satisfaction surveys are heavily manipulated by a variety of entities, each with their own agenda. Here is a link to an article I wrote where I revealed that auto repair quality is usually NOT scored on CSI surveys. Seems stupid not to score the thing of highest value in customers minds. Rather, they are asked simpler questions - like, "Were the bathrooms clean?" so shops can get a good rating that will encourage insurers to continue sending patrons. I think you will agree that this article is an eye opener. It gives the perfect example of the point you convey - that businesses don't place enough importance on the value of consumer feedback. Read: http://www.safecollisionrepairs.com/appiesnet/wordpress/2007/02/22/auto-repair-quality-not-usually-reflected-in-csi-scores/
Posted by: David Williams | 08.07.07
Mike and David, thank you for commenting.
Mike, there is regulation protecting data security and privacy for healthcare in the US (HIPAA), so that's covered. Many healthcare organizations are not yet HIPAA security compliant but they're getting there.
What's more fascinating is how hospitals and insurers are using patient data (with permission) for care management and improving the overall health of individuals. That's treating data as a valuable asset and putting it to good use!
Posted by: Paul Barsch | 08.07.07
I would like to introduce one website which I recently discovered a very good http://www.compliancehome.com/topics/HIPAA website which provides all the useful information regarding all the rule and regulation of HIPAA and also recent happenings, webinars, conferences, articles, product and much more
Posted by: compliance advisor | 09.20.07