Continuing with the Data as Asset series, in this posting I explore the negative side and what can happen when data becomes a liability. Physical assets such as buildings, equipment, or even money, can become a liability if not managed properly; buildings can become unsafe to work in, machinery can be dangerous to operate, and business investments can turn into money-sinks. Similarly, data and information systems can also be assets that provide economic value to the enterprise or they can be liabilities that destroy value or put the business at risk if not managed well. Here are three common scenarios.

Too much data is a liability. For example, data that is in your production systems but not being used can cost a lot of money and act as a money-sink. According to Wikipedia, disk storage costs have seen a reduction of 36 thousand times since 1989. The problem is that the volume of data being stored has just about kept up with the cost savings. Most organizations these days measure their disk farms in terabytes and increasingly in petabytes. Even with storage costs around $2,000 per TB these days, this is still serious money (note: a 1TB drive for your PC may cost about $200, but a high performance RAID configuration for your mainframe will be about 10x).

The storage cost of your production environment is just the tip of the iceberg. All the unused data also gets replicated to one or more test environments and to the data warehouse. It also needs to be backed up which requires extra backup tapes, labor and storage. Furthermore, it impacts business by slowing down end-of-period processing and real-time transactions. Finally, all that extra data increases compliance costs, data quality analysis and resolution times. When you add it all up, it doesn’t take long before the costs of unused data is in the range of millions of dollars per year. Check out some of Informatica’s Data Archive Resources if you’re not convinced.

Wrong data is a liability. As the many stories at www.doyoutrustyourdata.com show, data can be liability as well as an asset. Examples range from sending life insurance renewal notices to dead people, misplacing a decimal point and selling products at a fraction of their cost, or simply writing off tens of thousands of dollars because the sales system doesn’t reconcile with the accounting system.

Data you can’t find is a liability. A good case in point is the data management woes at Commander Communications in Australia. As stated in this news report, “…a large number of orders were simply lost. The company’s computer systems were in such a mess that it failed to lodge its accounts on time and was suspended by the stock exchange, in the last straw for the stock price.” It was soon after this report that Commander went out of business largely due to their challenges in integrating systems and managing data. While not all data management disasters have such dramatic outcomes, the instance of failures is not uncommon. Furthermore, compliance and legal cases are common in many industries For example, medical products companies, financial organizations, and insurance companies to name a few are often challenged to defend themselves against decisions made 10 years ago or more. If you can’t find the data quickly when you need it, it can cost millions in fines or damages.

To bring this back to the theme of the blog series, data is an asset if managed properly with adequate governance, skilled resources and appropriate tools. Don’t let data become a liability for your organization.

Come back next week for the final posting in the data asset series in which I look to the future.  In the meantime, please keep those comments coming.