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Re: Why accounting doesn't account for data
  • 10/27/2014 9:12:14 AM
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@Lyndon. I think it might be a stretch to think that a court will rule that data has value to an individual, that is unless some other court has already established that data has value to a corporation. Where I could see a court assigning value to corporate data would be in something like a stockholder suit in relation to low-priced merger or perhaps a civil suit associated with a data theft. Even then it could take years to become accepted as law of the land with appeals etc.

I just think it's likely to happen some day, given our "information economy".

 

Re: Why accounting doesn't account for data
  • 10/27/2014 7:52:36 AM
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..

In this blog post, Jim writes


... I hate to break the news to accounting profession members, but someone is going to figure out how to place a value on data if they don't. I'll suggest two sources for that valuation.

One is something that A2 Editor Beth Schultz discussed in It's Your Data -- Own It & Earn From It, which would be that consumers place a value on their personal data. That comes down to, "I control it and where it goes, or I stop providing it to anyone." Could that provide a baseline for the worth of data?


 

The problem I see is that the preponderance of the data about us used by companies is derived from either their observation of us (e.g., tracking our shopping behavior in their stores or online systems) or what we have to provide to access perks like credit cards, coupons, loyalty cards, etc. Then there's all that data about us that government agencies have available for sale because it's a nice extra source of cash for budget-constrained public agencies.

It will be interesting to see this all litigated. But I'm not expecting to celebrate big rulings in our favor.

 

Re: Data's value
  • 10/17/2014 12:22:15 PM
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"How one organization assigns an accounting value to data is likely to be quite different from how its fiercest competitor does it... or how an organization in a different sector does it. At least until international accounting standards bodies get their hands on it, the value of data will continue to be highly subjective -- and mostly apples to oranges."

@Terry,

I have to disagree with this, at least from what I've experienced at 2 places I've worked at and in regards to web metrics. I think from industry to industry, there could be some discrepencies in how one company views a metric vs how another views it.  However, if we're talking about companies within the same industry, everyone is well aware of what the other person is doing with pageviews, time on site, ad impressions, email open rate, etc. and uses this knowledge as both a motivating factor and a yard stick to measure successes/failures.

Data as an asset
  • 10/17/2014 12:18:47 PM
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"I had trouble grasping why data -- just call it information -- isn't treated as a corporate asset."

@Jamescon,

At my previous and current places of employment (both corporations), I've actually found that there's a lot of weight behind and interest for data.  Especially data as it pertains to email, since email is an important means of interacting with our customers and giving them the information they need to essentially spend more money with us.

3 jobs ago the place I was working at didn't really pay too much attention to anything other than pageviews, but that was about 10 yrs ago at this point, and times have certainly changed.

Re: Data's value
  • 10/16/2014 12:05:05 PM
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I like the analogy to the values associated with mailing lists. It's true that some lists populated with names of people in certain economic situations and buying habits were more valuable. If today's data shows a company that Person X falls into that upper economic strata, buys alot, and meets a certain level of activity on social media, isn't their name worth more to a list buyer or to the company that holds their data?

Re: Data's value
  • 10/16/2014 8:49:17 AM
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It will be interesting to see if standards might be set up for valuation of data. A tricky part might be when some trade secret values are imputed. In the days of wide use of mailing list data, those names and addresses certainly had a defined value, and so why not a valuation of moderen data on customer likes and dislikes, and the huncreds of data points collected by companies now?

Data's value
  • 10/15/2014 11:49:11 PM
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How one organization assigns an accounting value to data is likely to be quite different from how its fiercest competitor does it... or how an organization in a different sector does it. At least until international accounting standards bodies get their hands on it, the value of data will continue to be highly subjective -- and mostly apples to oranges.

Re: Why accounting doesn't account for data
  • 10/14/2014 4:11:28 PM
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@jedijd. Thanks for joining in the conversation. Interesting point about past value and current. Perhaps with data we can look at a company's track record and the type/amount of data that they maintain, and assign some current value based on past performance and trends. At least we can keep asking questions, and maybe fuel some movement on this matter.

Re: Why accounting doesn't account for data
  • 10/14/2014 12:10:49 PM
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That quote also raised my ears. Why would it even by the accountant's job to definte data longevity? The data folks should be able to define the lifespan, and provide them with the importance of any data they may need to utilize.

Why accounting doesn't account for data
  • 10/14/2014 9:47:43 AM
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Speaking as an accounting professor who also practices law, this is a great question that goes to heart of accounting -- reality and perception. If balance sheets were meant to reflect value, then internally-developed data should clearly be recognized as an asset. But the accounting profession is conflicted over its mission: Is it to show current values? Or is it to provide an historical account of management stewardship? Non-accountants want accounting to show current value. Accountants prefer the safer, more "conservative" historical cost.

The author wrote: "According to sources who spoke with the Journal, attempts to value data have failed because accountants don't know how to do things like define a lifespan for data -- which we know can be minutes or years -- or to identify what makes a data set unique." I only partly agree.

While it is true that data lifespans and "uniqueness" can be hard to measure, these factors don't prevent accountants from recognizing externally purchased data as an asset. What keeps internally developed data off the books is the historical cost concept, a short-hand for verifiability. The notion is that a purchase transaction with an independent counterparty provides better validation of the value of the data than the company's own measurement. Once the data's value is validated through an external transaction, it shows up on the books. Until that happens, however, the data remain hidden in the background with many other forms of internally developed intellectual property.



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