A New World Order: From Debits and Credits to Policies and Catalogs
When medieval Europe moved towards a monetary economy it became necessary for merchants to account for multiple transactions financed by bank loans. In 1494 Luca Pacioli a Franciscan monk conveniently published the first known work on double entry bookkeeping. This simple concept of debits and credits has been the mechanism behind the financial systems that measure value and the success of corporations (and individuals) for over half of a millennium. Unfortunately, it has failed to account for too many other things of value that impact corporations and affect our communities such as customer value, clean air and water, affordable housing or endemic diseases. Now the world has moved to a data-driven economy and the traditional systems of financial debits and credits is limiting our progress towards solving many of the worlds seemingly intractable problems such as climate change, poverty, eradicating disease, or improving the quality of life.
I was trained as a mathematician and engineer where solving problems was often done by working backwards from the solution or breaking down the problem into simpler ones. But there is another way problems are solved somewhat serendipitously which are not necessarily predictable or deterministic. For example, who could have predicted the impact of the Internet in affecting societal change? I’m sure the inventors behind the Internet did not predict the extent at which it would affect our lives in so many ways. The Internet enabled e-commerce which clearly has changed the way we conduct business but even e-commerce is still based on the old system of double entry bookkeeping to measure value and success. So how can we measure value in this data-driven world to affect change and address many of the problems we face today in our businesses and communities?
Luca Pacioli advanced a foundation of our modern financial institutions by publishing his ideas on double entry bookkeeping with little sense, I’m sure, of its impact it would have over the last 500 years. Perhaps a new system of bookkeeping that catalogs data and measures its value across many dimensions can have as great an impact over the next 500 years. A system such as this while simple in concept can be quite revolutionary when common policies are implemented to govern data that is tracked and managed in such a catalog. Consider corporate policies ranging from those of necessity such as GDPR and those of responsibility such as community welfare. The extent to which these policies succeed in achieving their goals can only be accomplished when policies are linked to data and the subsequent value chain that follows data as its produced and consumed across the enterprise. This is only possible if the data is cataloged, tracked, enriched, and managed within an enterprise-wide data catalog. For example, consumers are becoming more socially aware of the impact their purchases have on the environment and on the welfare employees throughout the supply chain and in third world countries. An appliance manufacturer that intelligently manages their enterprise data will be able to better compete not just on product quality and price but also on social impact (e.g. lower carbon footprint) and through new business models that improve product function and customer experience (e.g. lower energy and water consumption, an intelligent refrigerator that automatically manages your household shopping list)
When more companies around the world adopt enterprise data catalogs and systems that govern their data I predict we’ll witness the unpredictable benefits of a new world order of value creation. Corporate and community values will align with the goals of the business and the fiduciary responsibility of managing their data. To learn more about why data catalogs are a foundation for any data-driven digital transformation initiative, download your copy of Gartner’s “Data Catalogs Are the New Black in Data Management and Analytics”