Applied Infonomics: How to Measure the Net

Value of Your Information Assets

FOUNDATIONAL Refreshed: 30 June 2021 | Published: 5 March 2020 ID: G00463621

Analyst(s): Alan D. Duncan, Lydia Clougherty Jones

Data and analytics leaders, including chief data officers, should use
Gartner’s infonomics calculations to measure the value and cost of
information assets, identify opportunities for business innovation, manage
information assets better, and foster a more data-driven business culture.

FOUNDATIONAL DOCUMENT
This research is reviewed periodically for accuracy. Last reviewed on 30 June 2021.

Key Challenges
■ Information is not currently recognized by the accounting profession as a balance sheet asset or
liability, which means few organizations have a true sense of the net asset value that information
represents or could generate if optimally managed and deployed.
■ Most organizations are investing in data and analytics capabilities; however, those that take a
formal approach to measuring the resulting business value are still in the minority.
■ Data and analytics leaders, including chief data officers (CDOs), struggle to demonstrate the
economic benefits of key information-management-related initiatives, such as master/metadata,
data quality/governance, information architecture, information infrastructure upgrades and even
analytics.

Recommendations
Data and analytics leaders, such as CDOs and others, seeking to drive business value from their
data and analytics strategies should:

■ Explicitly quantify and communicate the formal valuation of information as an asset by adopting
infonomics best practices.

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 ■ Better prioritize and support investment in data and analytics initiatives, while managing the
resulting liabilities by measuring the key quality attributes of information, its relevance to key
business processes and impact on business key performance indicators (KPIs).
■ Establish a standard methodology for measuring the financial value of their organization’s
information assets — as if they were balance sheet assets and liabilities — by partnering with
their chief financial officer (CFO).

Table of Contents

Strategic Planning Assumptions............................................................................................................. 3

Introduction............................................................................................................................................ 3
Analysis.................................................................................................................................................. 8
Gartner’s Foundational Infonomics Measures for Information Asset Valuation....................................8
External or Direct Economic Measures......................................................................................10
Internal or Indirect Measures.....................................................................................................15
Liability measures..................................................................................................................... 21
Gartner Recommended Reading.......................................................................................................... 30

List of Tables

Table 1. Sample Calculation — Market Value of Information..................................................................11

Table 2. Sample Calculation — Economic Value of Information............................................................. 14
Table 3. Sample Calculation — Intrinsic Value of Information.................................................................16
Table 4. Sample Calculation — Business Value of Information.............................................................. 18
Table 5. Sample Calculation — Performance Value of Information.........................................................21
Table 6. Sample Calculation — Cost Value of Information..................................................................... 24
Table 7. Sample Calculation — Waste Value of Information...................................................................26
Table 8. Sample Calculation — Risk Value of Information......................................................................29

List of Figures

Figure 1. Objective Measures of the Value of Information Assets.............................................................4

Figure 2. Data Value Versus Data Liability................................................................................................6
Figure 3. Foundational Infonomics Measures for Information Asset Valuation.......................................... 8

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 Strategic Planning Assumptions
By 2021, the prevalence of equity analysts valuing organizations’ information portfolios in valuing
businesses themselves will spark formal internal information valuation and auditing practices.

By 2022, 30% of leading organizations will formally adopt infonomics practices and value their
information assets, maintaining a balance sheet for internal purposes.

By 2022, 90% of corporate strategies will explicitly mention information as a critical enterprise asset
and analytics as an essential competency.

By 2022, 30% of CDOs will partner with their CFO to formally value the organization’s information
assets for improved information management and benefits.

Introduction
According to Gartner’s Fifth Annual Chief Data Officer Survey, respondents’ organizations
increasingly regard information as an asset. However, there is still a very mixed perspective as to
whether organizations have any financial view with respect to the measurement of its value (see
Figure 1).1

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 Figure 1. Objective Measures of the Value of Information Assets

■ Approximately a quarter of survey respondents are now pursuing at least one formal method of
measuring the business impacts and/or value of their information assets (whether by measuring
business process impacts, tying business opportunities to specific datasets and analytical
models or defining and tracking metrics of the delivered business stakeholder outcomes).
■ Less frequently, some survey respondents even have profit and loss accountability.
■ However, almost half of respondents (43%) do not measure the business value of their
information assets in any formal or objective manner (a combination of “value delivery is not
formally measured” and “no objective measurement of information assets”).

For many years, traditional businesses have had a systematic set of processes and practices for
deploying, operating and disposing of tangible assets and some forms of intangible asset. Physical
assets, financial assets and even certain intangible assets such as patents and copyrights are

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 inventoried, measured and valued on balance sheets. Since the early 20th century, public
companies have been required to report the value of their assets.2 Even the workforce, regarded as
“human capital” since the 1960s, is also measured, valued and reported by most organizations.3

So why not information?

We find that information meets the formal, established criteria of a balance sheet asset. Accounting
standards bodies (for example, the American Institute of Certified Public Accountants [AICPA], the
Financial Accounting Standards Board [FASB] and International Financial Reporting Standards
[IFRS]) each define an asset similarly as having the following characteristics:

■ Owned and controlled by an entity as a result of past events

■ Exchangeable for cash
■ Can generate economic benefits for that entity.

However, to date, formal accounting practices (for example, generally accepted accounting
principles [GAAP] and IFRS1) still prohibit the capitalization of information assets on financial
statements. Even as the value of other intangibles, such as copyrights, trademarks and patents, is
measured and reported, that of information — an increasingly critical asset for organizations in
every sector — is not. Although international accounting standards for valuing information have
been openly discussed by the aforementioned standards bodies, no formal guidelines for doing so
are likely to be introduced in the near future. Nonetheless, financial analysts have begun to value
organizations based in part on the richness and impact of their information assets and information-
related capabilities.4,5 We expect this trend to evolve into such financial organizations valuing the
information assets themselves.

Gartner contends that adopting formal methods for measuring the net asset value of information is
a significant step for most of our clients in realizing the potential benefits of their available
information assets. The old adage “You cannot manage what you do not measure” is very apt in this
case. Hence Gartner’s continuing research on the themes of infonomics and data monetization in
working with our clients, accounting and economics professionals to develop and implement
practical approaches to measuring, managing and monetizing information as an asset.

Infonomics is the emerging discipline of managing and accounting for information with
the same or similar rigor and formality as other traditional assets and liabilities (such as
financial, physical and intangible assets and human capital). Infonomics posits that
information itself meets all the criteria of formal company assets, and, although not yet
recognized by GAAP, it is increasingly incumbent on organizations to behave as if
information were a real asset.

Data monetization refers to the process of using data to obtain quantifiable economic
benefit. Internal or indirect methods include using data to make measurable business

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 performance improvements and inform decisions. External or direct methods include
data sharing to gain beneficial terms or conditions from business partners, information
bartering, selling data outright (via a data broker or independently), or offering
information products and services (for example, including information as a value-added
component of an existing offering).

By a similar rationale, if infonomics enables us to quantify the potential value of data and analytics,
then it is also necessary to evaluate the potential liability valuations of data to bring new economic
significance to each dataset.6 Data and analytics leaders, including CDOs, should collaborate with
CIOs, CFOs, chief information security officers (CISOs) and security and risk management leaders
and endorse this emerging financial analysis of data liabilities (see Figure 2):

Figure 2. Data Value Versus Data Liability

■ It is generally accepted that data has realized value when it is explicitly used in decision making
or to fuel business operations, and the resulting business actions can demonstrate a
measurable effect, provided a full cost analysis is also included.
■ Infonomics also contends that data has a probable value if there are initiatives that are being
worked on with an expectation of a particular outcome, less expected costs.
■ There is also potential value, even when data is not currently in use (for example, with dark data;
see Note 2). This is similar to other kinds of recognized intangibles (for example, inactive, but
still valid, patents or trademarks). At this stage, the potential value will only have associated the
sunk costs to date.

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 ■ Waste occurs when avoidable negative results accrue costs, or liabilities, through unanticipated
events or processes — business losses, inefficiencies, quantifiable lost opportunity, regulatory
fines, reputational impacts through lost customer trust, poorly implemented programs, and so
on.
■ Risks are potential for negative events that could lead to a liability — these risks have been
identified and have planned mitigations, or are a combination of costs associated with
acquisition, storage, processing, security, etc. If these costs are not yet accounted for, then they
are intangible.

Measuring the value of information can yield other benefits as well, including:

Business benefits:

■ Increased economic benefits from one of the enterprise’s underutilized resources if

appropriately invested in.
■ Consistent understanding of the value of all assets for executives — not just GAAP assets.
■ Improved corporate market valuations.
■ Positive impression on investors and potential business partners.
■ Direct data monetization through selling or bartering with it.
■ Transformation into a more data-driven business (specifically with regard to decision making
and process automation and optimization).
■ Information-related innovations used to develop new products and services.

IT-related benefits:

■ Improved information management.

■ Smarter prioritization of information-related initiatives such as data governance, analytics,
business intelligence, data science, data retention and archival.
■ Creation of a common language for IT, business leaders and the CFO to communicate about
information.
■ Proof of the benefits of IT, information-related and business initiatives.
■ Increased information culture, which leads to improved information-related discipline.

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 Analysis
Gartner’s Foundational Infonomics Measures for Information Asset Valuation
To assist our clients in putting infonomics principles into practice, Gartner has developed a variety
of foundational measurement calculations for quantifying the value of an information asset (see
Figure 3):

Figure 3. Foundational Infonomics Measures for Information Asset Valuation

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 ■ External or direct economic infonomics measures are used where business value generation
can be measured clearly and explicitly in financial terms, such as when the data itself is sold or
traded as an information product or service, or is otherwise directly attributable to improving the
success of the business model (see also “Essential Product Management Practices to Monetize
Data and Analytics Assets”).
■ Indirect or internal value generation measures are typically applicable where the emphasis is
on identifying and targeting opportunities to further improve the current business operating
model by affecting the effectiveness or efficiency of extant business processes without
fundamentally altering the core business proposition (see also “How Chief Data Officers Can
Succeed by Driving Measurable Business Value”).
■ Negative impacts and liabilities can affect an organization financially in different ways. They
may arise from such factors as poor data quality, system failures, data loss, data security
breaches, privacy enforcement, noncompliance or even accidental processing incidents (see
also “Develop a Financial Risk Assessment for Data Using Infonomics”).

Information assets are not currently formally recognized on the corporate balance sheet and are not
part of an organization’s financial reporting. However, Gartner’s infonomics measures can still be
applied in collaboration with other parties to establish and communicate the value of their
information assets. This type of analysis may then be used to help improve efforts related to data
collection, management and deployment — and, as such, it is not so much the measures
themselves that are as meaningful, but their use to establish the principles of measuring the
business value of data. The focus should be on using these infonomics principles to communicate
the enhancement or impairment of the value of information over time.

A few other factors should be noted:

■ Information should not be valued at the unit or record level. In most cases, this level of
granularity is unnecessary and time-consuming. These measures generally work best when
treating a class of information (for example, customer data, product data, maintenance data,
call center data, or employee data) as a portfolio.
■ While it may be easier to apply these models to specific datasets, organizations will likely find it
more beneficial to apply them to logical groupings (portfolios) of related information assets.
■ Gartner proposes multiple means to measure information asset value to suit various needs and
circumstances. Which measures an organization uses and when depends on its business
objectives.
■ Some measures will be used as lagging indicators to evaluate and monitor current known
business scenarios, while others are applied as leading indicators to identify, model, determine
and drive strategic and tactical business change.
■ It may be necessary to evaluate and apply several different measures in combination for the
benefit of different IT, information, financial and business leaders, or for different kinds of
information assets.

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 ■ When adopting a financial approach, we strongly recommend soliciting the support and
involvement of the organization’s CFO and financial functions.

External or Direct Economic Measures

These infonomics measures are useful to organizations that need to determine how information
assets perform compared to other assets; what to invest in their collection, management, security
and deployment; and how to express their value when used in business transactions (for example,
mergers and acquisitions, data syndication and consortia, information bartering).

These economic models are variants on established asset valuation models that are used by
valuation experts and accountants to value traditional assets. However, these models have been
adapted to accommodate one of the nuances of information’s unique characteristics: information is
not depleted when consumed.

Market Value of Information (MVI)

Overview

This method looks at the financial value of data as a salable product or service in an open
marketplace. Typically, such explicit and direct data monetization is transacted among trading
partners in return for cash, goods or services, or other considerations such as preferential contract
terms and conditions. Yet, increasingly, companies are selling their data outright via hosted
exchanges and marketplaces (for example, Advaneo, Data Republic, Dawex, Qlik DataMarket) or
industry-specific data brokers (for example Dunn and Bradstreet, Equifax, Experian, LexisNexis,
DNV Veracity).

Generally, this market value method is not applicable for most types of information unless it is
licensed or bartered. However, as organizations become more sophisticated and aggressive at
leveraging their information externally, they should consider this approach.

Formula

Our modification of this traditional method recognizes that most information is not actually sold
(specifically, ownership transferred); rather, it is licensed. Therefore, we have included a factor for
the diminished marketability of information as it becomes more ubiquitous to the marketplace. This
is represented as a variable discount factor (represented as an inverse premium) applied to a
hypothetical ownership transference (exclusive price) of the information asset.

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 Implementation

Use the MVI when considering monetizing information via sale or barter, or more direct monetization
methods (see “Applied Infonomics: Seven Steps to Monetize Available Information Assets”).7

Traditional market analyses methods for determining market sizes can also be used to determine
the number of likely information licensees (buyers). Additional surveys of potential licensees can
determine the premium factor, by asking “What premium (multiple) over any given licensing fee
would you pay for exclusive access to or outright ownership of this data?”

Ideally, MVI should also be used in conjunction with the economic and/or cost value of information
(EVI and CVI) measures (see below) to determine the exclusive price — specifically, how much the
owner organization might demand to transfer complete ownership of (or exclusive rights to) the
information asset to another entity. Then it should be determined or estimated how many probable
parties will license this data over the average life span of any given record.

Example

This example considers the marketability of an organization’s customer loyalty data and is inspired
by investor claims as reported in a 2015 Wall Street Journal article.

Table 1. Sample Calculation — Market Value of Information

Type of Exclusive Addressable Percent of Probable Ownership MVI

Data Price Market Size Market Sold Number of Premium
to Over Licensees Over
Average Licensing
Life Span of
Data

Customer $1,000,000 5,000 20% 1,000 700x = $1,000,000*1000 /

loyalty organizations 700
program = $1,428,571
data

Source: Gartner (February 2020)

This example illustrates what we generally expect: an MVI that is a small multiple of the
information’s exclusive value. This is because the knowledge among potential licensees about the
general availability of the data almost cancels out the number of licensees (specifically, the number
of probable licensees is similar to the data ownership premium). However, an organization can
achieve exponential MVI multiples when its data becomes an essential industry standard
information product (for example, credit bureaus, financial data brokers, market research
organizations).

Variations

■ Consider net present value (NPV) of the anticipated cash flows.

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 ■ Consider the situation in which information’s ownership is transferred — although this is rare.
■ Run the model for different combinations or refine and package the information asset
combinations.
■ Consider limiting the number of licensees to yield a lower premium factor.
■ The market value of an information asset may be determined simply by assessing a current
market for comparable forms of data.
■ Consider measuring scarcity (see the IVI measure) in determining the premium factor.

Benefits and Challenges

Benefits: The MVI is most useful for determining the value of a saleable or barterable information
asset. It can also be useful for determining the price point for an information product, or it can also
be adapted to ensure acceptable licensing fees are set for another organization’s information
product.

Challenges: The MVI is not particularly applicable or useful for nonmarketable information assets. It
includes highly subjective factors that may require extensive market analysis. The exclusive price for
an information asset may be difficult to determine or estimate.

Economic Value of Information (EVI)

Overview

This method generates the net financial value of an information asset by applying the traditional
income approach for asset valuation, then subtracting the information’s associated life cycle
expenses. Like the PVI (see below), this method empirically calculates the information asset’s actual
value. As such, it is more of a trailing indicator than a leading indicator of information value —
unless the first revenue term can be estimated adequately.

The EVI considers the realized change in revenue when a particular information asset is
incorporated into one or more revenue generating processes.8 Then the cost to acquire, administer
and apply the data is netted out.

Formula

Where:

■ Revenuei = Revenue generated using the information asset (informed group)

■ Revenuec = Revenue generated without the information asset (control group)

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 ■ T = Average expected life span of any given information instance or record
■ t = Period of time during which the EVI experiment or trial was executed

Implementation

EVI requires running a trial over a period of time. In this method, the value is expressed in monetary
or revenue terms rather than a ratio, and the life span of the information asset is factored in.

First, measure the difference between how much income is generated with versus without using the
information. Then, subtract the life cycle costs of the information. (Refer to the CVI measure below
for guidance on computing life cycle expenses.) Finally, multiply this sum by the ratio of the
information asset’s life span (T) to the duration of the trial (t).

In determining the EVI, it is important to keep all other aspects of the revenue process constant
during the trial.

Example

In this example, we determine the net economic benefits of e-commerce network performance data
and social media trend data:

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 Table 2. Sample Calculation — Economic Value of Information

Type of Informa- Revenue With Revenue With- Data Acquisition Data Adminis- Data Applica- Data Life Trial Dura- EVI
tion the Data out the Data Expense tration Ex- tion Expense Span tion
pense

Revenuei Revenuec AcqExp AdmExp AppExp T t

E-commerce net- $25,000/month $22,000/month $500/month $250/month $1,200/month 6 months 3 months $2,100
work performance (amortized)
data

Social media trend $28,000/month $22,000/month $1,000/month (li- $200/month $2,000/month 12 months 3 months $11,200
data censed)

Source: Gartner (February 2020)

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 In the first example, capturing and taking advantage of e-commerce network performance data,
ostensibly to optimize website performance, yields a $3,000 monthly gross benefit with $1,950 in
information life cycle expenses for a monthly net income of $1,050.

In the second example, licensing and incorporating social media trend data, perhaps into marketing
and/or the product recommendation engine, yields a $6,000 monthly gross lift for $3,200 in added
expenses for a higher net of $2,800. However, since the utility of the social media data is longer, its
EVI is much greater. Given competing IT priorities, incorporating the social media data seems to be
the better bet.

Variations

■ Simply calculate the revenue difference, regardless of estimated expenses.

■ Assume a constant data life span.
■ Include discounted cash flows for longer life span information like customer contact data.
■ Substitute economic stimulus for revenue for public sector organizations.

Benefits and Challenges

Benefits: The EVI is an empirical analysis of the contribution of information to the top and bottom
line. There is no need for a functional analysis, other than to establish information-related expenses
when data is duplicated and/or applied in multiple ways.

Challenges: The EVI requires a live experiment and the ability to estimate the expense of
information. Many traditional business leaders are still uncomfortable with the contemporary
concept of experimenting with revenue-producing processes. The EVI is a trailing indicator,
although results can be used to prioritize IT and business initiatives.

Internal or Indirect Measures

The internal/indirect infonomics measures are particularly useful for organizations or departments
that are not yet ready or have no pressing need to ascribe a full monetary value to their information
assets. These models are useful for evaluating an information asset’s quality and potential-versus-
actual utility to help improve business strategies and execution. They may also be useful as leading
indicators of an information asset’s potential for external/direct economic benefit.

Intrinsic Value of Information (IVI)

Overview

The intrinsic value of information is its presumptive benefit that enables broad comparisons across
information classes, regardless of how the information may currently be used. This method gauges
how correct and complete the information asset is and how likely other organizations are to have it.
That is, higher quality and available information that is more proprietary or exclusive has greater

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 potential value. This method can be useful to prioritize information-related investments among
differing information sources or initiatives. For example, the IVI is particularly useful to guide data
quality or security-related efforts and investments.

Formula

IVI is a function of:

■ Validity — Percentage of records deemed to be correct.

■ Completeness — Percentage of total records versus the universe of potential or supposed
records.
■ Scarcity — Percentage of your market or competitors that also likely have this same data.
■ Life cycle — Reasonable usable life of any given unit (record) of the information asset (e.g., in
months).

Implementation

This measure is ideally suited for use by data stewards to compare the potential utility of multiple
types of information, or for tracking the improved (or degraded) potential of particular information
assets over time. The optimal IVI is a 1.0 (specifically, perfect data accuracy and completeness with
no copies or versions of any part of this data available outside the organization). For information
with a high IVI, organizations may want to increase or ensure its broad availability and use.

For information with a low IVI, organizations may want to redouble data governance and quality
efforts (see also “Drive Data Quality Improvement From a Foundation of Metrics” for ways to
measure these and other data quality attributes).

Example

Table 3. Sample Calculation — Intrinsic Value of Information

Type of Information Validity Completeness Scarcity Life Cycle IVI

Customer Support Records 0.85 0.95 0.00 24 months 19.4

Customer Contact Information 0.62 0.67 0.33 36 months 10.2

Source: Gartner (February 2020)

In this example, the company’s customer support data has greater intrinsic value than its customer
contact data. Therefore, irrespective of specific business uses, customer support data usage should

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 perhaps be prioritized over and above customer contact data. Alternatively, the customer contact
system and processes might demand more attention on improving the data they capture.

Variations

■ Include subjective or objective measures of data quality such as timeliness or precision.

■ Determine completeness at either record level or dataset level and introduce factor weightings.
■ For value comparisons more in line with established information theory, substitute ln(life cycle),
where life cycle = > 1, and ln(scarcity), where scarcity > 1.

Benefits and Challenges

Benefits: The IVI is the simplest of the information valuation models to use. The data quality factors
can be determined via automatic profiling and a basic market understanding. It can help you quickly
compare the potential of different information assets, identify data quality, data privacy or
information governance issues, or identify data that perhaps should not be retained.

Challenges: The IVI does not consider relevancy of data (actual or potential) to any actual business
purpose.

Business Value of Information (BVI)

Overview

This method considers the utility of an information asset within the context of actual business usage
(unlike the above IVI method). It addresses how good the information is, how applicable it is to the
business, and how up to date the information is.

This method of calculating information value is handy to get a quick take on information’s potential
real-world benefit. For example, when there are competing business priorities, this model can be
used to align the associated information-related priorities.

Formula

BVI is a function of:

■ Relevance — How useful the information could be (or is) to one or more business processes (0
to 1).

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 ■ Validity — Percentage of records deemed to be correct.
■ Completeness — Percentage of total records versus the universe of potential or supposed
records.
■ Timeliness — How quickly new or updated instances of the data are captured and available to
be accessed.
■ Where n = the number of business processes or functions that make use of the information
asset.

Implementation

To implement this method, it is handy to have a general breakdown of business functions

throughout the organization. This can be as high level or detailed as you consider practicable.
Measuring the gap between information’s actual value versus its potential value (specifically, using
actual versus potential Relevance estimates) can quickly identify opportunities for better utilizing
your “ dark data” (see also “Toolkit: Assessing Key Data Quality Dimensions”) for ways to measure
various data quality attributes.

Example

Table 4. Sample Calculation — Business Value of Information

Type of Sales Maintenance Ordering Validity Completeness Timeliness BVI

Information Process Process Process
Relevance Relevance Relevance

Sales 0.50 0.20 0.90 0.99 0.96 0.80 1.21

Transactions

Weblog 0.80 0.10 0.30 0.95 0.99 0.98 1.11

Source: Gartner (February 2020)

In this example, sales transaction data has a slightly greater business value index than weblog data,
mainly because it is considered to be of much higher relevance in product or material ordering.
Considering the use of these types of data across a broader range of processes might further
distinguish their business value.

Variations

■ Include other data quality metrics.

■ Use different ways of determining relevance (for example, survey, data usage analysis).
■ Measure accuracy, completeness and/or timeliness relative to each business process rather
than in general.

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 ■ Consider the BVI of different information for only a single business process of particular interest.
■ Include factor weightings.

Benefits and Challenges

Benefits: The BVI relates data to actual business value. It is relatively simple to implement and can
consider actual versus potential scenarios. This model is useful to identify “dark data” and make
“defensible disposal” decisions.

Challenges: Business relevance can be highly subjective and may demand a time-consuming
functional analysis to determine.

Performance Value of Information (PVI)

Overview

This approach looks at the realized (or estimated) impact of an information asset on a business
objective that is represented as key performance indicators (KPIs). This answers the question: How
much does having this information improve business performance? In short, it requires running a
controlled experiment (or conjecturing one), but this method results in a definitive, empirical value
measure.

As a trailing indicator of information value, this method may be less useful than the IVI or BVI
models for prioritizing information-related initiatives or determining potential information value.
However, it is a preferred approach for measuring realized business benefits against established
business metrics and as a leading indicator of information asset’s financial value.

Formula

The PVI is a simple ratio that calculates KPI improvement by incorporating a given information
asset, extrapolated over the usable life span of any given instance of data.

Where:

■ i = Business process instances using the information asset (informed group)

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 ■ c = Business process instances not using the information (control group)
■ n = The number of different KPIs measured for the test
■ T = The average usable life span of any data instance
■ t = The duration over which the KPI was measured

Or for more complex business scenarios with multiple KPIs, the overall PVI can be expressed as the
mean of their individual PVIs:

Implementation

Using the PVI model ideally requires running a controlled experiment in which certain instances of a
business process incorporate a certain information asset that other instances do not i.e., applying
the principles of A-B testing. A positive PVI demonstrates that the data is valuable for this process;
a negative PVI indicates that the additional data somehow impedes the process. In determining the
PVI, it is important to keep all other aspects of the revenue process constant during the trial.

(For further recommendations on selecting business KPIs, see “The Gartner Business Value Model:
A Framework for Measuring Business Performance” and “Digital Business KPIs: Defining and
Measuring Success”)

Example

A simple example of this method is the scenario in which one target marketing campaign makes use
of information about customer preferences and behavior, while another otherwise identical
campaign does not make use of this data. After a period of time, the performance of these two
groups is compared.

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 Table 5. Sample Calculation — Performance Value of Information

KPI With Additional Data Without Additional Data Data Life Span Trial Duration PVI

Number of leads 6,000/month 4,500/month 24 months 3 months 2.67

Number of sales 120/month 55/month 24 months 3 months 9.45

Revenue per order $40/month $45/month 24 months 3 months (0.89)

Overall PVI 3.74

Source: Gartner (February 2020)

In this example, the new data has the biggest impact on lead, and negatively affects the revenue per
order. Perhaps the new data somehow encourages the promotion of lower-revenue offerings or
targeting of lower-income customers, or discourages the purchase of multiple products.

Variations

■ Measure single or multiple KPIs.

■ Eliminate the time variables.
■ Incorporate or avail the new data in various ways.
■ Test alternative information sources for a single KPI to determine which one provides the most
benefit.

Benefits and Challenges

Benefits: The PVI yields hard, empirical measurements that are an excellent predictor or proxy for
financial measures. It introduces a real-world scenario without the need for business-function level
analysis.

Challenges: The PVI requires running one or more experiments, potentially involving system or
process changes. The way in which data is integrated into the process affects the outcome. It does
not take into consideration the expense of incorporating the data into a process.

Liability measures
Even where data and analytics leaders have embraced the idea of information being an form of
asset, an array of challenges inhibits transformation from concept to reality. This makes assessing
the value and the risk associated with specific data assets challenging, especially as responsibility
for data monetization valuations, based upon full liability analysis for acquisition, storage,
processing, analyzing, security and privacy as well as business risk assessments are naturally split

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 across different business roles such as chief data officer (CDO), chief information security officer
(CISO), data protection officer (DPO), chief risk officer (CRO), CIO, etc.

The ability to evaluate different business liabilities and risks and assess their effect and impact over
the short and long terms, may affect those choices, and can be investigated using Gartner’s
financial data risk assessment (FinDRA; see “Develop a Financial Risk Assessment for Data Using
Infonomics”).

Cost Value of Information (CVI)

Overview

This method simply assesses an information asset based on the financial expense required to
generate, capture or collect it. It can also be used to calculate the replacement cost if the data were
to be rendered unrecoverable.

Aspects relating to the actual or anticipated impacts to the business of an information asset being
rendered unfit for purpose (for example, poor data quality), unavailable (for example, damaged, lost)
or stolen (specifically, copied) are addressed within the waste and risk value of information (WVI and
RVI) measures below.

As with other kinds of intangibles, the CVI is preferred by accountants when there is no active
market for the information asset and its contribution to revenue cannot be determined adequately.

Formula

Where:

■ ProcExp = Annualized cost and expenditures of the process(es) involved in capturing and
storing the data.
■ Attrib = Percentage of process expense attributable to capturing the data
■ HedgeExp = Cyberinsurance expenditure associated with protecting the dataset from failure or
loss
■ ProtExp = Cybersecurity capital and operational expenditure costs associated with protecting
the dataset and ensuring its availability and continuity for business process operations

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 ■ T = Average life span of any given instance of data.
■ t = Time period over which the process expense is measured.

Implementation

The process expense and proportion attributable to information capture can be tricky to ascertain,
given that it may be collected in the course of business operations, in which case it is normally
expensed. If the proportion of the process allocated to the acquisition of that information asset were
determinate, this amount could ostensibly be claimed as an asset value instead of being expensed
(current accounting regulations notwithstanding).

Example

In this example, we consider the cost value of acquiring data (without it having been stolen,
damaged or lost):

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 Table 6. Sample Calculation — Cost Value of Information

Type of Data Process Expense Percent of Process Attributable to Data Cybersecurity Cost per annum Data Life Span (T) CVI
Acquisition

Equipment maintenance $2,000,000/year 10% $50,000 3 years $750,000

Source: Gartner (February 2020)

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 The equipment maintenance process costs $2 million per year and it is determined or estimated
that 10% of this expense goes toward capturing and collecting this data. Therefore, $200,000 worth
of data is captured per year. With costs per annum for cybersecurity run to $50,000 per annum,
giving a total of £250,000 per annum. Since the data has a usable life span of three years, we value
it at $750,000.

Variations

■ Consider the amortized expense of physical process assets, plus their ongoing operational
expense (including labor) in determining the overall process expense.
■ Include the inventory carrying costs (administration expense) of the data in addition to its
acquisition expense.

Benefits and Challenges

Benefits: The CVI is the best means of estimating direct and quantifiable information replacement
cost and negative business impact if lost, stolen or damaged. Accountants prefer this method, as it
offers a more conservative and less volatile approach for initially communicating what data is worth.

Challenges: Some factors require estimation and subjectivity. Remember that these costs are most
likely expensed already, so the CVI merely expresses the value of information in terms of shifting it
from an expense to an asset.

Waste Value of Information (WVI)

Overview

This method assesses the actual business liabilities that have accrued as a result of inefficient
business performance arising from poor data quality. Data-attributable avoidable waste occurs
when negative results incur extra costs, or liabilities, through unanticipated events or processes —
material business losses, inefficiencies, quantifiable lost opportunity, regulatory fines, reputational
impacts through lost customer trust, poorly implemented programs, etc.

Formula

Where:

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 ■ MoneyImp = Total of financial impacts attributable to each instance of inaccurate or incomplete
information, per process affected (such as sales orders canceled because of incorrect contract
and delivery data, or incorrect distribution of revenue between participating business partners).
■ RemedCost = Proportion of extra business process expenses attributable to each instance of
poor data, per process affected (for example, due to duplication of efforts, unused resources or
fines), and the remediation costs associated with rectifying.
■ MissedOpp = Sum value of business opportunities that were lost as a result of misinformation
(such as new cross-sell opportunities that were not identified because customer data from
different departments was not shared and correlated).

Implementation

WVI is complementary to process improvement methods such as Kanban, Kaizen, Six Sigma and
Lean, and provides a means to quantify the results of such initiatives.

A balanced view is required to take into account the opportunity value of data as well as the waste
incurred. WVI should be used in conjunction with BVI and PVI measures to fully understand the
business context, make operational business decisions and identify process improvement
opportunities.

Example

In this example, we consider the waste value of data in a manufacturing supply chain, where usable
raw materials are lost and unused due to bad maintenance of the inventory master data:

Table 7. Sample Calculation — Waste Value of Information

Type of Data Waste Type Process Expense

Inventory master data Unused materials $250,000

Inventory master data Downtime $50,000

Inventory master data Sales opportunity lost $300,000

WVI $600,000

Source: Gartner (February 2020)

Over a three-month period, $250,000 worth of raw materials was left unused because the stock
keeping units (SKUs) for the materials were wrongly assigned when the delivered goods were
receipted. The production business function was therefore unaware that the materials were available
and reordered additional raw materials. Additionally, because the production line manager was of
the understanding that no raw materials were available, the production line was left idle for periods
of time until new raw materials could be ordered, incurring $50,000 in operational costs in the

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 meantime. Further, a client took their new order for completed goods worth $300,000 to a different
supplier because the sales team had been informed that the order could not be fulfilled in time.

Variations

■ Consider the amortized expense of physical process assets, plus their ongoing operational
expense (including labor) in determining the overall process waste.
■ Include the inventory carrying costs (administration expense) of the data in addition to the waste
caused within the business process itself.

Benefits and Challenges

Benefits: The WVI is the best means of estimating the negative business impacts arising from data
quality challenges where data is not fit for the intended purpose.

Challenges: Some factors require estimation and subjectivity. Cultural implications mean that any
WVI findings could be perceived by staff as criticism, blame or threat.

Risk Value of Information (RVI)

Overview

This model can be used to assess and mitigate the potential business risk and negative impacts to
the business as a result of damage, loss or theft of an information asset. Data-attributable risk
occurs when there are undesirable factors that could lead to waste but have not yet materialized.
These risks have been foreseen, identified and enable plans for appropriate mitigations, and their
impact costs can be calculated and business investment options assessed.

This method assesses the foreseen business liabilities that could potentially occur as a result of
ineffective or inefficient business performance related to data, but that have not yet materialized.
These liabilities may take the form of potential business losses, inefficiencies, quantifiable lost
opportunity, regulatory fines, reputational impacts through lost customer trust or poorly
implemented programs.

The potential cost of reputational or competitive risks should also be considered if, for example,
information is exposed publicly, misused or stolen by competitors.

An optional term that considers the impact to the business if this information asset were rendered
unavailable (for example, damaged or lost) is also included.

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 Formula

Where:

■ Lossesp = Total of potential lost benefits that could accrue due to uncollected revenue, added
costs and missed opportunities across different business processes, where mitigations could
be put in place to improve data ahead of time and offset these.
■ Reputationp = Proportion of potential damages to the business reputation and market presence
arising from data-related failures (e.g., data breaches, privacy and data protection failures, loss
of customer trust).
■ Breachp = Sum value of any incident response costs (e.g., forensic analysis, investigations,
auditors, legal, etc.), regulatory sanctions, penalties and fines that would arise from data-related
failures. (e.g., GDPR non-compliance, data breaches).
■ Unavailabilityp = Any predicted or foreseen potential for losses that would accrue arising from
the business’s inability to operate for a period of time, within each business process that makes
use of the dataset (e.g., business function shutdowns).
■ ReplaceCost = Expenditure associated with having to rebuild the entire dataset in the case of
catastrophic loss.

Implementation

Risk identification and mitigation is always hard to pin down, as factors of likelihood also need to be
estimated. Different parties may disagree about the level of exposure. Additionally, appetite to
properly manage and mitigate data risks may be low due to factors such as overconfidence or
ignorance about data matters.

A balanced view is required to take into account the opportunity value of data as well as the risks.
Use RVI in conjunction with MVI and EVI measures to fully understand the business context and
make strategic business decisions.

Example

In this example, we consider the risk value of data in a European bank, where customer information
is maintained and used to drive sales, marketing and operational banking processes:

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 Table 8. Sample Calculation — Risk Value of Information

Type of Data Risk Type Potential Expense

Customer Master and Transactions GDPR fines €153,000,000 (4% of revenue)

Customer Master and Transactions Lost business €4,000,000,000 (~20% of customer base)

Customer Master and Transactions Compensation €2,500,000,000 (€2,500 per ~1M customers)

RVI $6,520,000,000

Source: Gartner (February 2020)

The European bank has total revenue of approximately €20 billion per annum. Should a major data
breach occur, this could result in the bank being fined up to the maximum of 4% of its revenue
under the provisions for noncompliance with the European General Data Protection Regulation
(GDPR) — €153 million.9

However, the fines accrued would be relatively modest in comparison to the potential impacts of
reputational damage caused by the breach — significant ramifications for customer confidence and
trust, with potential to cost the bank up to 20% of its customer base — and the associated revenue
— in churn to other competitors. Further, compensation owed to customers affected by the breach
could reach €2.5 billion (approximately €2,500 per customer, for up to one million customers).

The overall risk value of the data is therefore assessed to be €6.52 billion.

Variations

■ An evaluation of the likelihood of each impact area will moderate any decisions on how much to
invest in mitigating and managing any risk exposure.
■ Consider time dependencies based on factors such as the lifetime business utility of each
dataset and the risk amortized over this timeline.

Benefits and Challenges

Benefits: The RVI is the best means of calculating the investment needed to mitigate potential
liabilities relating to data.

Challenges: This area may fall within the remit of the chief information security officer (CISO), chief
risk officer (CRO) or IT security team, and may be distributed between them. They may not be fully
versed in data management and governance practices, which is necessary to understand,
communicate and manage these risks.

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 Gartner Recommended Reading
Some documents may not be available as part of your current Gartner subscription.

“Applied Infonomics: 7 Practices for Chief Data Officers to Monetize Information Assets”

“Essential Product Management Practices to Monetize Data and Analytics Assets”

“Applied Infonomics: Calculations and Actions for Cost Optimization of Data and Analytics”

“How to Monetize Data Assets With Your Data and Analytics Service Provider”

“What Manufacturers Can Learn From Tesla on Data Monetization”

“Monetizing Payments Data”

“The New Money: Help Your Clients Turn IoT Data Into Monetizable Data Products”

“3 Ways to Monetize Data and Analytics”

“Case Study: Data Monetization Through Data Product Development (ZF Group)”

“Case Study: Data and Analytics Monetization With Knowledge Graphs and AI (Turku City Data)”

Evidence
1 Gartner’s 2019 Chief Data Officer study was conducted to explore the business impact of the CDO
role and/or the Office of the CDO. The research was conducted online from September through
November 2019 among 293 respondents from across the world. Respondents were required to
have the title of CDO or CAO, or to have the responsibilities of an executive level D&A leader in their
organization (in the case of organizations without an official C-level D&A title). The survey sample
was gleaned from a variety of sources (included LinkedIn), with the greatest number coming from a
Gartner-curated list of over 2,000 CDOs and other high-level data and analytics leaders. The study
was developed collaboratively by Gartner D&A Analysts and the Primary Research Team. (Note:
results of this study do not represent global findings or the market as a whole but reflect sentiment
of the respondents and companies surveyed.)

2 Examples include generally accepted accounting principles (GAAP) and International Financial
Reporting Standards (IFRS) for U.S. corporations. Financial reporting laws in many other countries
also were established in and around this time.

3Economics Nobel laureate Milton Friedman and his colleague Gary Becker at the University of
Chicago pioneered the concept of managing labor and workforces with the same discipline as
corporate assets,. They coined the term “human capital” in their book of the same title.

4 KPMG’s 2015 report, “Data and Analytics: A New Driver of Performance and Valuation,” reveals
how financial analysts view the impact of data and analytics strategies on market value. The report
indicates that nearly a quarter of financial analysts have already changed their investment opinion of
the companies they follow and have revalued them, specifically based on the company’s data and

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 analytics strategy. Additionally, almost half of financial analysts indicate they will do so in the next
24 months.

5However, since most information assets are more like current assets than fixed assets, in that they
have a limited operational life span (less than one year), they shouldn’t normally require a net-
present-value (NPV) calculation.

6M.G. Harvey and R.F. Lusch. “Balancing the Intellectual Capital Books: Intangible Liabilities.”
European Management Journal. February 1999.

7There are similarities, although the Market Value of Information (MVI) model should not be
confused with the financial industry standard Market Value Add (MVA) formula, which calculates the
difference between the market value of a firm and the capital contributed by its investors. The MVI
does not consider cost of capital but could be adapted to net-out information life cycle costs.

8There are similarities, although the Economic Value of Information (EVI) model should not be
confused with the financial industry standard Economic Value Add (EVA) formula, which calculates
an estimate of profit more than the return required by investors (or the profit earned less the cost of
capital). The EVI does not consider cost of capital, but rather the information’s life cycle costs.

9 It may be interesting to note that within the provisions of GDPR, there is a minimum fine of
€20,000,000 — so the potential expense begins at this number and ends at 4%. “€20,000,000, or in
the case of an undertaking, up to 4% of the total worldwide annual turnover of the preceding
financial year, whichever is higher.” For further details, see Article 83 of EU Regulation 2016/679.

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