Infonomics
Infonomics is recent term to describe the study and emergent discipline of quantifying, managing and leveraging information as a formal business asset. Infonomics endeavors to apply both economic and asset management principles and practices to the valuation and handling information.
The word is a composite of “information” and “economics.”
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[edit] Origination and History
In the late 1990s, then META Group and now Gartner IT industry analyst Doug Laney coined the term Infonomics to describe his proprietary research and consulting around quantifying information’s value and defining its management as an actual enterprise asset.[1]
Laney’s work builds on and intersects with other disciples including:
- Claude Shannon’s Information Theory
- Paul Strassman’s work on valuing IT
- macro economics
- asset valuation
- asset management
- intangible assets
- Generally Accepted Accounting Principles
[edit] Principles
[edit] Information is an asset
The primary principle of infonomics is the recognition of information as an enterprise asset. Although generally accepted accounting principles (GAAP) as yet do not require the reporting of information assets on the balance sheet, infonomics deems that organizations acknowledge that information is more than merely a resource.
[edit] Information has value
While it is generally accepted that information has value when used in decision making or to fuel business operations, infonomics posits that information, just as GAAP-recognized assets, has a definitive value even when not in-use. The accounting definition of a balance sheet asset being an item of ‘’potential future economic value’’ applies as well to information.
[edit] Information’s value can be quantified
Similar methods for quantifying the value of accepted intangible assets can and should be applied to valuing information assets. These valuation (finance) methods include as applicable and relevant: market approach, the cost approach, and the income approach. As well, non-economic valuation methods that quantify information’s relative value, business process relevance and data quality-related value have application in helping organizations make strategic information-related IT and business decisions.
Doug Laney has developed both economic and non-economic information valuation models which he has deployed for clients and lectured on at various business schools.
[edit] Information’s value should be used to budget IT and business initiatives
IT and business related initiatives that leverage or secure information assets should be budgeted against the quantified economic value of the information and the cost to acquire, administer and apply the information. Currently such initiatives tend to proceed without this degree of fiscal diligence.
[edit] Information’s realized value should be maximized
Infonomics valuation exercises typically disclose that information is a vastly underutilized asset and that organizations should consider opportunities to improve their capture and deployment of information in generating top-line and bottom-line benefits. This includes decision-making, business process automation, innovation, and even the packaging and direct marketing the organization’s information assets.
[edit] Information should be managed as an asset
Traditional physical and financial assets have a definitive lifecyle and procedures for their effective handling throughout. Infonomics principles suggest that organizations should apply their own expertise, policies and practices in asset management toward the management of information assets.
[edit] Potential benefits of Infonomics
Benefits of applying infonomics principles and practices include but are not limited to:
- Improving the collection, management, governance and usage of information throughout the organization
- Instituting an organizational culture that values information to the fullest extent
- Quantifyably justifying and validating the ROI of information-related business or IT initiatives
- Determining how much to spend on information security for each class of information asset
- Being able to claim (or assessing) a premium corporate valuation during mergers and acquisitions negotiations
- Assessing contract risks due to their lack of or inclusion of indemnification against the loss, damage or misuse of electronic data
- The future potential for securing loans using information assets as collateral
- Improving the organization’s ability to trade its information assets for goods or services
- Improving relations with customers, employees, suppliers and partners by sharing more and improved information with them
- Improving the organization’s ability to package and market information assets as a saleable product
[edit] Thought Leadership
Throughout the 2000s Doug Laney and his colleagues developed and deployed information asset valuation models, information auditing methods, and information asset management practices.
In 2010 Laney formed the Center for Infonomics, a non-profit think tank to collaborate on and further the principles and practices, and the associated the Center for Infonomics LinkedIn Group. The same year he began lecturing on Infonomics at leading business schools[2][3][4][5][6][7][8] holding Infonomics workshops[9] and conducting press interviews on the topic.[10]
John Ladley, Laney’s former colleague, author and expert on enterprise information management also collaborates on infonomics research and lectures on the topic.
[edit] Alternate and Incidental Usages of the Term
Examples of other organizations using the “infonomics” moniker in one form or another include:
- Maastricht University offers a specialization in Infonomics that combines economics and business with a focus on information, networks and information technology.
- The Association for Information and Image Management (AIIM) published an online newsletter entitled “Infonomics” for almost two years, folding in early 2010.[11]
- An Australian IT corporate governance consultancy can be found at http://www.Infonomics.com.au
- The Infonomics Society aggregates research and publications on a variety of business, technical and other topics.
- Infonomics Ltd is a UK based economic policy consultancy.
- Infonomics Consulting is a German sales consultancy.
[edit] Related External Resources
- What is Enterprise Information Management (EIM) by John Ladley, Morgan Kaufmann, 2010
- Information Driven Business: How to Manage Data and Information for Maximum Advantage by Rob Hillard, Wiley 2010
- How to Measure Anything: Finding the Value of Intangibles in Business by Douglas W. Hubbard, Wiley 2010
- Intangible Assets: Valuation and Economic Benefit by Jeffrey A. Cohen, Wiley 2005
- Value Driven Intellectual Capital: How to Convert Intangible Corporate Assets Into Market Value by Patrick H. Sullivan, Wiley, 2000
- Information Payoff: The Transformation of Work in the Electronic Age by Paul A. Strassmann, The Free Press, 1985
[edit] References
- ^ META Trends, META Group, December 1999 (out of print)
- ^ Indiana University Kelley School of Business, http://www.indiana.edu/~msisa/msisa/node/227
- ^ MIT Sloan School of Management, http://mitiq.mit.edu/IQIS/Documents/CDOIQS_201177/Papers/05_01_7A-1_Laney.pdf
- ^ Drexel University iSchool, http://www.ischool.drexel.edu/home/about/calendar/details/?event=1987
- ^ University of Illinois
- ^ University of Georgia's Terry College of Business
- ^ University of Virginia's Darden School of Business
- ^ Depaul University
- ^ The Economics of Information and Principles of Information Asset Management, TDWI, 10 Nov 2010, http://events.tdwi.org/Events/Orlando-World-Conference-2010/Sessions/Sunday/Infonomics.aspx
- ^ Tech Innovation Radio interview with Doug Laney, 10 October 2010, http://www.mytechnologylawyer.com/cgi-bin/FormManager/WebForms.pl?Action=Home_Radio&ID=214&Session=
- ^ http://www.aiim.org/Infonomics/About-Infonomics-Magazine.aspx
