Data is Like Gravity
In High School physics class we learned that all the forces in the universe are based on four fundamental interactions; the strong and weak nuclear forces, the electromagnetic force and the gravitational force. Gravity is unique compared to the other forces in that a) it interacts with ALL particles, and b) its power is cumulative and can grow to infinity (i.e. black holes are arguably the most powerful objects in the universe). So what does this have to do with data?
In a business context, assets are the fundamental forces that drive business value. Assets that provide the fuel for business include money, property, plant & equipment, people and data to name the most common. Data, like gravity, has some unique characteristics when compared to the rest. All assets other than data have limits. At some point, the resource becomes fully consumed or 100% utilized and any attempt to push it beyond that point results in a zero, or even negative, return-on-asset. Not so for data. Data does not get “used up” regardless of how often it is accessed. And it impacts ALL aspects of the business.
The more data is shared, the more value can be derived. For example, a history of what products a customer has purchased is useful to a sales function, but it can also be used to improve marketing campaign effectiveness and customer service. When combined with data from other functions, it can also provide insights for improving product quality and packaging, developing new service offerings, improving product delivery, and generally enhancing the customer experience. Each incremental use of the data provides incremental benefits without limitation.
For this reason, data is worth more than money; if you know how to use it. You need to learn how to combine and integrate the data, how to govern and control it, and how to transform your business to take advantage of it.
Obtaining value from financial assets can seem easier than extracting value from data. This is not because money is a more valuable asset, only that the methods for leveraging it (e.g., investing in productivity improvements, earning interest, capital gains, dividends) are more well known as every MBA graduate or Finance major can attest to. Unlike generally accepted accounting principles (GAAP) which every Accountant knows, the equivalent generally accepted information management principles that provide the same sort of guidance don’t yet exist. Industry frameworks such as ITIL provide some standards for IT Service Management, but they are still largely silent when it comes to managing information from a business perspective.
Just like gravity, too much data may not necessarily be a good thing. A black hole might be powerful, but nothing can escape it – not even information. The trust and usefulness of data to support certain processes will degrade over time if you don’t control it or let it run wild. Big Data technology does indeed drive down the cost of storage which may lull you into thinking you can just save everything. But a mass of unmanaged and unclassified data can present a data black hole from which it is virtually impossible to extract useful information.
I’ve probably pushed the physics analogy far enough so I’ll stop here. Stay tuned for my next blog where I will delve into the three competencies needed to maximize the business value of data; Integration Competency, Information Competency, and Business Transformation Competency.