The Value of Data: What is your data worth to your Organization
Filed under: Business & Management, Email, Hosted Services, Managed ServicesIn my opinion, the key incite to glean from Pete’s article is that your data is probably worth WAY more than you think. In fact, it is likely the very life blood driving your organization.
Many of Endsight’s clients operate a service business. They count on the intellectual property locked in their email and business applications to meet their customers’ needs. For them, data is the business.
As Pete’s article notes, “The Department of Commerce has determined that 90% of companies which do not have access to data for more than 5 days go out of business within 1 year.”
By itself, that statistic is alarming, but in the Bay Area it’s further exasperated by this one:
On April 15 2008, the San Francisco Chronicle reported that The US Geological Survey believes “A strong and deadly earthquake is virtually certain to strike on one of California’s major seismic faults within the next 30 years”
I’ve reposted Pete’s article below and invite you to consider what kind of impact a “day without computers” might have on your business. If you find the impact as alarming as Pete, contact us and let’s talk about how we can help mitigate that risk.
I’ve embedded a slide deck to a free seminar Endsight has provided about disaster preparedness. If you belong to a professional association or business / community group that might have an interest in the topic, let me know and I’d be happy to present it. If you’d like more information about the presentation, Email me and I’ll send you a topic abstract.
The Value of Data: What is your data worth to your Organization
By Pete Heles, Founder/CEO Framework IT, LLC
What is your data worth?
This question is one that will have a unique answer to each and every entity in existence. There is no easy answer. This is obvious in the fact that this very question has been asked many times without a quantitative foundation for the answer. It is the objective of this document to assist you in better determining the value of your firm’s data, how to increase its value and ensure the ongoing retention of value.
In researching this question, there are several current themes for determining the value of an organization’s data. The most basic formula is the data of an organization is equal to one times annual revenue. This theory is supported by the fact that if a company’s data is lost or handed over to a competitor, the firm is worthless without it. This is a rather simple formula that points out a fundamental flaw in attempting to establish a universal formula for determining the value of data: The value of data has much to do with the type of organization.
A flower shop, a paint manufacturer and a not-for-profit cannot use the same formula. Think about a dental office: new data is established on each visit and the data collected from prior visits is mostly negated. In the dentist’s case, the security of the new data is far more important than the “old data” with the establishment of HIPAA Guidelines.
A flower shop has names, addresses, credit card information and transaction history. The credit card data is again important from a security risk stand point, but to say the value of a flower shop’s data is 1 times annual revenue seems to be grossly overstated, as the majority of the information can be collected from a variety of sources and the confirmation of credit card information can and should be done with each transaction.
The paint manufacturer on the other hand is very different. In the recent past, a specialty paint manufacturer was purchased by a sizable competing firm. Within 6 months of the acquisition over 90% of the acquired firm’s employees were terminated and all but 2 plants shut down. The data was the only thing of true value. The purchase price was 4 times annual revenue. Formulas and client data in the sole possession of the acquiring firm were deemed to have that significant value.
In today’s business environment Certified Public Accountants and the Federal Government determine the value of tangible assets. Merriam Webster defines tangible as “capable of being appraised at an actual or approximate value <tangible assets>.”
If a firm buys a list of names and addresses it is a business expense and the initial value is easily determined. That list becomes valuable data with use and definition by the firm for its profitable use. The additional data that is built along with the name that was purchased is of significant value. In theory, it is no longer an expense, but becomes an asset. Only the tangibility of value is at question.
There are other considerations that must be realized in determining the value of data. A basic factor in value is the cost to maintain and collect data. What is the budget for computers, software, support, and people in the data systems group at a firm. This is a statement, not a question, as this is a cost of data for any firm. If, in fact, that amount is treated as an expense, it must diminish the value of data by the same amount.
On the other hand, it has been determined by the management of the firm that the value of data will increase in an amount greater than the expense; otherwise it would be a bad business decision to incur that expense. Conclusion: the data processing staff at a firm is critical in increasing the value of the firm’s data. Unfortunately the value of data is too often determined by the purchase price of technology which is used to house the data. That is like telling someone the $1 bill in the $100,000 vault is worth a hundred thousand dollars! In 1978 when a 73mb disk drive was $38,000, was the data more valuable than today when a 300 GB disk drive is about $250? Be careful not to get caught in this determination of data value.
Issues for consideration
1. Is it goodwill? What is that in accounting terms?
2. Is a patent an asset, and how is the value determined?
3. Is data the same as intellectual property?
4. Increasing the value of Data
5. Protecting Data
6. Handling, use, and availability of Data
7. Misuse of Data
8. Where is the Data?
9. Role of individuals and Data
10. Assault on Data
11. Treating Data as an investment
The topics noted above are best answered by the key management of your firm with needed participation from both accounting professionals and lawyers. A strategy for the proper collection, use, protection, and ability to compound data and its value can be an eye opening project that WILL increase the awareness of and value to your firm’s data.
Before starting the process of determining the management of your firm’s data, take a minute to answer the following questions. If an employee took (embezzled) all of your company’s key client, vendor, and financial data to his new employer (a prime competitor of yours), what could the financial affect be to your firm?
If there were a fire (or other situation) that destroyed all the file servers in your data center, how long would it take for your firm to recover from this calamity?
What is the cost/loss per day to your firm if corporate data is not accessible?
What would the financial impact be to your firm if the data that was backedup could not be restored and had to be rebuilt from scratch? These numbers are actually larger than you initially estimate. The Department of Commerce has determined that 90% of companies which do not have access to data for more than 5 days go out of business within 1 year. Does this fact change the way you think about the value of your firm’s data? The protection and assured availability of your company data?
A thorough Business Continuity and Disaster Recovery Plan is a key part of ensuring the “Survivability” of your company in the event of a business interruption or serious data loss. It is estimated that less than 5% of unregulated* businesses have a current and thorough Business Continuity and Disaster Recovery Plan.* (Banks, financial institutions, and publicly held firms are some of the business types that are federally required to have a BC/DR Plan.)
As a business professional it is essential (and possibly legally required) that you protect your firm’s assets. After reading this article and answering a few simple (maybe complex) questions you should have a new appreciation for the value of your firm’s data and understand the need to be more proactive in the protection and assured availability of your data. Start the BC/DR Plan development process today.
12Could your CEO be One of the Bay Area’s Most Admired?
Filed under: Business & Management, General, Marketing, MediaIf you admire your CEO, I suggest that you give this a look. Accolades are always nice and this is an easy way to bring your business leader and your business to the attention of the San Francisco Business Times’ readership.
The San Francisco Business Times will honor 12 outstanding leaders of Bay Area enterprises in a special report, and at a gala awards dinner recognizing the Bay Area’s Most Admired CEOs Thursday, November 19 at the Hilton San Francisco.
Nominees must be present November 19 to receive the award. Nominees will be selected from the SFBT coverage area, including the counties of San Francisco, San Mateo, Marin, Alameda, Contra Costa and Solano.
No Comments »
A Great Idea: Third Thursdays are a fun way to impact employee morale
Filed under: General
Employee morale may not seem like a Bay Area IT Issue at first blush, but when you’re running an outsourced IT organization employee morale is of the utmost importance. It’s an intangible asset. When Endsight employees are feeling optimistic about the business, good things just start to happen. When employee morale dips, it can be really hard to catch a break.
Is Cloud Computing just Hosting by another Name? | Cloud Computing - InfoWorld
Filed under: Hosted Services, Managed ServicesIt’s an interesting question. As small businesses, we will need to make sense of “cloud computing” and to try to determine what sort of impact, if any, this new concept will have on our business. Eric Knorr’s take on the difference between cloud computing and hosting is interesting. I think it does a fair job of trying to distinguish between the two concepts, but as with most articles I read, this is geared more towards the enterprise IT department.
Check our Eric’s article: http://www.infoworld.com/d/cloud-computing/cloud-computing-just-hosting-another-name-453?source=IFWNLE_nlt_blogs_2009-06-15
Basically, “cloud computing” is the industry’s new description for IT resources such as e-mail, being hosted somewhere other than on a server that sits in our office. One of the distinctions between “cloud computing” and “hosting” is that with the cloud, we don’t have any idea where our data resides. I think a great example of a “cloud” application would be Gmail. We can log into our mail from a Webpage but we don’t have any idea where the e-mail resides exactly. This is because Google has low-cost servers located all over the world and they use sophisticated load-balancing technology that moves information and data around their computing grid. This approach allows us to use e-mail as a service, but it limits our control over the data.
Hosting is similar to cloud computing in at the IT resource resides outside of our corporate computing environment. But unlike cloud computing, we know exactly, where our data resides. Hosted Exchange, a Microsoft product, is a great example of this concept. With this approach, e-mail resides off site at a co-location facility. We know where the co-location facility is and we know, where the server or in many cases virtual server is located. The same load-balancing concept applies to hosting in most cases, but it’s on a much smaller scale. And it’s managed by the local hosting company or IT partner as opposed to Google. The solution is less distributed, but it affords us more control.
Regardless of what we call it or the specific architecture we apply there’s a good chance that our next major computing infrastructure upgrade will be to the cloud. There’s just too many good reasons not to move services such as e-mail, file servers, and database applications out of our server closet and into a data center:
1. Disaster Recovery / Business Continuity: Moving our key server infrastructure to the cloud allows us to take advantage of all of the disaster preparedness countermeasures built into an enterprise class co-location facility. These buildings are constructed to withstand earthquakes, fires, power disruptions and other “acts of God.” They employ both physical and technological security that meets the most stringent regulatory requirements and most of them feature backbone access to the Internet with multiple redundant connections. The end result is that if a disaster strikes our office, our computer systems weren’t there to be destroyed. So long as our employees can access to the Internet, they can access our computing infrastructure and get back to work.
2. Scalability: Moving our servers to an enterprise class server and storage array that uses virtual technology allows us to access only the computing power that we need. As our business grows, we simply add more computing power. We don’t have to worry anymore about buying new equipment or what we will do with that equipment after a particular project is done.
3. Reduce Capital Costs: The cloud gives us the ability to pay a fixed monthly fee for our server infrastructure as opposed to laying out tons of cash to purchase all the equiptment we need for a major network upgrade. Instead, we only pay for what we need.
The key point that I gleaned from Eric’s article is this. In the small-business space, many offerings will be cookie-cutter. (Like Gmail) Small businesses using this service will not have the rich feature set that comes with an implementation of Microsoft Exchange. In my experience, a cookie-cutter approach for something like e-mail will not work for the vast majority of small businesses. As we explore our options for hosted or cloud solutions we need to be able to customize the offerings and service levels associated with those offerings.
The good news is that we won’t have to make these decisions immediately. Microsoft relseased Windows Server 2008 and developers will soon be releasing business software maximised for the new platform. The best way to explore a hosted / cloud infrastructure is too include it as an option in our next major upgrade.
Endisght is already talking to a number of clients about this option right now. Feel free to contact us if you’d like to talk about it to.
No Comments »How to Win a Nobel Prize?
Filed under: General
I’ve been trying to find a purpose in the world lately, or at least one that garners quick recognition and ego stroking. Winning a Gold medal seemed plausible, until I thought about the intense level of exercise associated with that feat. It’s not that I’m lazy; I just care about my joints! Oh, and the minor fact that I gave up on competitive sports around the age of 16 and could be beaten by a child in most fields.
Then it occurred to me, I’m going to win the Nobel Prize! If Al Gore can sweet talk his way into taking credit for the internet and the discovery of global warming, then there must be something I can do? On my daily hour commute from 680 to 24 to 580 to 80 to Endsight in Berkeley, I noticed a billboard for the DaVinci exhibit at the San Jose Technological Museum (http://www.thetech.org/leonardo/) . This got me thinking about thinking.
Leonardo DaVinci has to be one of the sweetest people ever (and not cause he happens to also be the name of my favorite Teenage Mutant Ninja Turtle), but because how much came out of that noggin. I saw the Mona Lisa at the Louvre in Paris, read the DaVinci Code and rode on the DaVinci bandwagon for the past few years. He definitely would have won the Nobel Prize. Maybe I should invent a time machine, go back in time, give him a Nobel Prize and in the process win one for myself- two birds with one stone! (Probably should clear up that whole Priory of Scion, blood line controversy while I’m at it).
This may all seem too optimistic and slightly offensive to the people who have worked their butts off to achieve this prestigious award. But the story goes that in the late 19th century, US congress wanted to close the patent office because all that needed to be invented was invented! Point being, that people and society will never exhaust all resources and innovation needed for invention.
Just because I’m not Harvard trained, don’t work in a lab, or have the political PR machine that Al Gore has access to, doesn’t mean I can’t change the world. Homer Simpson had this same idea in a classic Simposn’s episode trying to “out invent” Thomas Edison. But it was his accidental invention of a six legged chair, stemmed from his laziness, which eventually led him to the feeling of success. So maybe the world will appreciate my desire for efficiency more than some deep athletic ability. My friends and I have come up with some pretty clever ideas while sitting in my apartment pondering the world. If only I had written those ideas down and acted on them…
And if this Nobel Prize thing doesn’t pan out, there is always an Oscar.
-Lauren DaVinci
No Comments »