Foreword

It’s often remarked in passing that information is an asset, but the conversation doesn’t go much beyond that. But this book and the many useful examples it contains are evidence that assessing and optimizing the monetary value of information should go well beyond casual commentary. Information has become like oil, timber, precious metals, or buildings—even endowed with certain economic characteristics these others do not. Information is worth big money, and those who don’t exploit its value are leaving valuable resources on the table. Strategists and business leaders must become fluent in the economics of information, and they’ve come to the right place to do so.

You’ll find more content herein than from any source about this important topic, and Doug Laney has been thinking clearly about it for many years. But let me condition your expectations: don’t expect a magic formula for converting information to money. Conversion of an item of information to a specific monetary value has always been difficult and highly situational. The value of information depends heavily on the context—the buyers and sellers, the time and place, and the multiplicity of ways to evaluate it. Information is worth what someone will pay, is worth more to some than others, is worth less as it ages, and so forth. Peter Drucker once famously defined information as “data endowed with relevance and purpose,” and those attributes are notoriously subjective.

In other words, information is shifty stuff that is difficult to pin down in an economic sense. And as Laney points out early in the book, it can be easily copied and distributed. As economic assets go, it’s one of the tougher types from which to extract value. Nonetheless, this book makes it clear that the effort to do so is worthwhile.

You may also be thinking that determining the value of information is most important when you are selling it outright. But that is only one of many ways to think about information value, and as Laney points out, an often problematic one. Companies that sell entirely different types of products or services often find it difficult to begin selling information. Fortunately, this volume is replete with examples of other valid ways in which companies can make money or make themselves more valuable by harnessing their own—or in many cases, others’—information.

The book also exposes and delves into a glaring oversight of the information profession, one that has plagued the industry and businesses for decades: the lack of an accepted set of standards for information management. Laney explores several other disciplines for which such methodologies exist, from physical asset management to library science, and posits how data leaders should heed and adopt a similar set of formal practices—starting with his clear-cut set of “Generally Accepted Information Principles.”

No matter what difficulties pop up in the field of infonomics, even more opportunities pop up alongside them. The great thing about this book is that it takes a multi-faceted and interlaced approach to the economic value of information—monetizing, managing and measuring its value (perhaps the “3Ms” of infonomics will take their place alongside the famous “3Vs” of Big Data—volume, variety, and velocity—a tripartite alliteration that Laney also coined). There is scarcely an organization (or even an individual) that can’t benefit from embracing and adopting these concepts.

Those infonomics adopters might make information more valuable in a wide variety of ways. Perhaps they will add insight and context to their data by mixing in other information. They may add value through analytics—describing what’s already happened, predicting what will happen next, or prescribing what the next step should be. Some organizations will embed information and analytics into products and services. Or they may simply better portray the value of their organization through information, increasing its market value. The possibilities are almost endless.

I view this field of infonomics as being in its earliest stages. You can’t yet get an academic degree in the topic, and you won’t find many “infonomics departments” within organizations at this point. Most IT people have been too technical in their focus to consider these issues in any detail, and most strategic thinkers haven’t focused enough on the specific economic value of information to pursue the topic effectively.

This is good news for you, dear reader. If you give this book the careful attention it deserves, you’ll become a scarce and valuable commodity—an expert on the business and economic possibilities of information. Information is probably going to become an even more valuable asset over time, and you too will only become more valuable as a creator, explainer, and maximizer of that value.

Thomas H. Davenport
President’s Distinguished Professor of IT and Management, Babson College
Research Fellow, MIT Initiative on the Digital Economy
Author of Competing on Analytics and Only Humans Need Apply