Forward-thinking executives have begun measuring the value of their organization’s data assets to forge a data-driven culture that generates increased business benefits from data. These business leaders aren’t allowing antiquated accounting standards to stand in their way. It doesn’t matter that current accounting regulations such as IFRS and US GAAP generally prohibit reporting the value of data on balance sheets. They care about putting data to work.
When interviewing for the chief data officer (CDO) role at Highways England several years ago, Davin Crowley-Sweet recalls its CEO proclaiming that data and finance are “avatars of the business.” Anything you want to know about a business, the CEO said, can be learned from looking at the flow of data, not just its money. Crowley-Sweet expresses the same sentiment, if a bit more practically: “You can’t manage what you can’t see. And if you can’t see it to be able to release its value, then it’s just a sunken cost.” Never has this been more true than with a company’s data assets.
Measuring Data Using Lessons from the Cosmos
Since then, Crowley-Sweet has embarked on a journey to help his organization get a better grip on its data, differentiating the “I” from the “T” in IT by formally quantifying and communicating the value of the vast amount of information Highways England generates and collects. Highways England’s data comprises information on over 4,000 miles of road along with related structures like bridges, tunnels, drainage systems and technology assets including variable message signs, closed-caption television monitors and cabling.
Crowley-Sweet says it was never his intention to sell the company’s data or use valuation merely to prove business cases, but rather to change the culture to one in which all employees feel they are stewards and enablers of a valuable company asset. He also says, “We needed a language to explain data in a way that the business would understand.”
Taking a look at the Highways England balance sheet, Crowley-Sweet saw £115 billion in intangible assets (nearly half of its £300 billion valuation at the time) and pondered how much of that was attributable to the organization’s data. Through a rigorous process of mapping key data assets to business functions and their financial value, modulated by an assessment of each data asset’s potential market value, he proved that the organization’s data conservatively was worth £60 billion. Now he had the business’ full attention.
“If you're completely reliant on use cases driven exclusively by the business, you'll be limited as an organization,” Crowley-Sweet contends. “We knew data competence could solve a lot of our problems, but not exactly how,” Crowley-Sweet contends. To overcome the challenge of measuring these unknown unknowns, he and his team looked up from the black pavement and used black holes as a metaphor. Since black holes reflect no light, they cannot be measured by directly observing them, but rather by observing how they affect objects around them.
To date, Highways England has identified up to £1.2 million in business efficiencies revolving around its data “black hole,” dwarfing their spend on data valuation. One specific data valuation insight led to £20 million in savings from a £300,000 investment in optimized maintenance interventions.
Doing Away With Dataspeak
However, just using financial metrics as lingua data wasn’t enough. The organization had to begin putting data issues into business terminology. In addition to helping business people “speak data” data professionals are taught and encouraged to “speak business.” Since Highways England deals with physical infrastructure, specifically roads and road conditions, its data and technology professionals no longer talk about “data quality” but rather about “data conditions.” Using the language of business to discuss data is a subtle but brilliant way to bridge the communication chasm that exists in so many companies. “Effective data literacy, or data fluency, goes both ways,” instructs Valerie Logan, CEO and Founder of The Data Lodge.
Crowley-Sweet says he got tired of hearing businesspeople telling him “My data is rubbish!” without being able to describe what good data looks like. Talking about data’s condition and relating it to desired uses and outcomes compels them to think more deeply about what decisions they make. Indeed sometimes it helps them realize that they don’t know their business strategy well enough to articulate what kinds of data they need.
Herman Heyes, the CEO of Anmut who worked with Highways England on its data valuation initiative, noted that this is an executive suite issue as well, “Year after year, studies show data as a top priority for CEOs, yet their CAPEX and OPEX fixation has remained on the technology, not on the data.” Crowley-Sweet agrees, “Software and hardware are just what houses the gold, not the gold itself.”
Unintended Consequences and the Road Ahead
“In prior years, IT people maybe would get to talk about data at the end of a meeting if there was time,” says Crowley-Sweet. “Now they walk into the room as lions, not as lambs.” Data is front-and-center and is recognized to be as important as any other asset. He recounts how an individual on his team returned excitedly from one such meeting having unanimously secured additional investment. His response: “If you got all ‘yesses’ from them, the idea wasn’t innovative enough.”
In addition to educating and impressing its business people, Highways England’s own economists have opened their collective eyes to data’s value. Participating in the data valuation effort by adapting traditional econometrics to data itself has expanded their own thinking on data’s contribution to the business.
Now that data is acknowledged as a legitimate asset, it’s full-speed ahead for identifying innovative ways to push data’s value to new limits. Currently, Highways England is working on creating a digital twin of the business—not merely a 3-D map of the roadway network, but a representation of the entire network and its operation to identify needs for and the impact of new or updated infrastructure.
“Just as the Victorians initially built the roadways we're using today,” Crowley-Sweet shares, “I want to build a data infrastructure that people can benefit from decades from now.”
Highways England Company Limited (formerly the Highways Agency) is the government-owned company charged with operating, maintaining and improving England's motorways, major roads and related vehicular infrastructure.
Anmut is a boutique UK-based consultancy working with organizations to measure the value of and improve the return on their data assets.
The Data Lodge is a boutique US-based data literacy training, advisory and advocacy firm.
A version of this article originally appeared in Forbes.
Doug Laney is the Data & Analytics Strategy Innovation Fellow at West Monroe Partners, where he helps clients generate greater value from their information assets. Doug originated the concept of Infonomics and is the best-selling author of "Infonomics: How to Monetize, Manage, and Measure Information as an Asset for Competitive Advantage."
Doug is a former Gartner Distinguished Analyst and three-time Gartner Thought Leadership Award recipient, co-founder of the Deloitte Analytics Institute, adjunct professor at the University of Illinois Gies School of Business, and frequent speaker at industry conferences.