Data is NOT the new Oil .. The “Data Asset” is Really Different

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I recently presented a seminar at an event called “Data, the vital organisation enabler” Information is at the Heart of ALL of the Business during which I raised the question,

“Is the data asset really that much different from other assets?”

Chris Bradley, Information Strategist, Data Management Advisors Ltd; [email protected]
Chris will be speaking at the Enterprise Data & Business Intelligence and Analytics Conference Europe 19-22 November 2018 in London on the subject, “Data Modelling for Big Data” and is also teaching “Information Management Fundamentals” 3-5 October 2018 in London

We hear copious amounts said that Data is an asset, it’s got to be managed, few people in the business understands us and so on.

Don’t get me wrong, I’m not trying to cast any doubt on the importance of data as an asset, but I wanted to raise the level of debate from a subliminal nod to a conscious examination of the characteristics of different “assets” and to compare them with the ‘Data asset”.

But before I go on much further, I want to challenge the often-heard statement “Data is the new Oil”.  Having studied Chemical Engineering at University and worked for 38 years in Data Management in the Oil Industry (Aramco, BP, ExxonMobil, Shell, Statoil, Total to name a few), I now really believe that Data is NOT the new Oil.

Sure, the catchy phrase may be trying to indicate that we have a Data economy vs an Oil economy, or maybe its that Data is the lubricant of modern business, or maybe that there are Data “mega firms” that control much of our lives like the Oil mega-firms.  However, while it is catchy the analogy risks spreading a misunderstanding of on all counts.

We’ll see later in this paper a comparison between Data and other Assets, but let’s drill in deeper to Oil 😉 and look at different characteristics of this Asset.

Supply:  There is a fixed amount of oil on the Planet.  We also have Oil Shale, Oil Sands, Hydraulically Fractured Gas, Algae and so on.  So yes, there is still plenty remaining, and we certainly haven’t discovered all of it.  But without a doubt its supply is finite.  However, data is virtually limitless. Its sources and provision are plentiful. So, thinking of Data “supply” its more like sea-water than oil.  In fact, there is so much of it that our main worry is how to sensibly get value from it rather than how to find it.

Copyable:  Whilst we may be able to synthesise certain lubricants (I run my race car with synthetic oil) Oil is not readily copyable.  However, as we know Data can be copied, and copied, and copied (with all of the resultant Governance issues that throws up), however the digital fidelity of the copy remains constant.

Using the Asset depletes it:  As a petrol head both my race-car and hot road car have the unfortunate tendency to drink fuel whenever I put my foot down.  Not great mile per gallon, but with all that power I get plenty of smiles per gallon.  So, when the fuel is used – it’s gone.  Similarly, if we have Oil fields in the North Sea, the licence owner will have control of the oil there, but once it’s used up, it’s gone.

Data however can used and used and used again.  The use of data doesn’t deplete it.  Also, the same data can be used by different people for different purposes (and without good Data Management also leads to Governance issues).

Value: It is most certainly usual practice to give a value to oil (the $70 barrel for example).  The value of Oil is known on the commodities markets and has a real, identifiable asset value.  The practice of giving a real monetary value to Data is relatively immature (albeit growing).  A small number of companies have a P&L entry for “Value of Data” and this trend is increasing.  It’s in a similar position to where “Value of Goodwill” was on Balance sheets 20+ years ago, yet now its common practice.

Process to Yield Value:  Although as noted in “Value” above, Oil has an established value, it is true that both data and Oil need to be processed in order to yield something of greater value than the raw base asset itself.  With data, we have the well-established data value chain (Data > Information > Knowledge > Wisdom (Insight).  With Oil the products that emerge from processing can include Petrol, Diesel, Asphalt, Tyres, Antiseptics, Refrigerant or Plastic.

Control:  Who controls the Asset?  We hear constantly in the press about identity theft, the use and abuse use and abuse of personal data. Indeed, there are even regulations that state how personal data may be legitimately used – although that won’t deter foreign powers trying to influence elections. Few people have a clear understanding about the digital footprint they have left online, a quick look at “what does Google know about me” will probably shock many.  Theoretically Data can be controlled by the user.  With Oil, who can remember the 3-day week & the power that OPEC exerted on the world?  With the Oil fields in Alaska or the North Sea its mostly the Oil company who decides how much to extract, how to process it, where to deploy I, how much they sell it for and, who they sell it to.  With my PII data its up to me who I give it to and now there is even legislative assistance to help you see what is held about you.

Speed of Innovation:  Who can fail to be amazed at the speed with which Data usage and Analytics has evolved and innovated over the last 5 years.  Reinvention and innovation are key in Google, Amazon, Apple, Facebook and other large data centric companies.   Don’t get me wrong, the Oil industry has innovated also, Directional Drilling, Hydraulic Fracturing, Bio Fuels to name a few, however the pace and the imperative to do so is different.

The superficial notion that Data is the new Oil is unhelpful.  Although abundant, Oil supply is finite.  Data is infinite.  Oil gave us material for the industrial economy.  Data is pervasive and powers a post-industrial economy.  Data companies increasingly influence, control, and often redefine, the nature of our business and private lives, rather than power our cars, planes, air-conditioning and central heating.

Assets & Characteristics

So, if Data is NOT the new Oil, how does it compare to other assets?  What are some of the characteristics of core assets in the business?  And, if as we all say data IS one of those key assets, how, (if at all) do these characteristics differ in the “Data asset” compared with other the other assets that we frequently encounter in our organisations?

So first of all let’s have a think about some other “assets”?

I have selected 7 other assets many of which are regularly seen across a variety of businesses, and I have tried to compare them with the “Data Asset”.

The assets I’ve selected for this comparison are:

  1. Oil
  2. Money
  3. Blood
  4. People
  5. Property
  6. Materials
  7. Intellectual Property (IP) and of course
  8. Data

The characteristics of the assets themselves required more consideration.

After much thought and batting the notion around with others I settled upon these 5 characteristics:

  1. Is the asset Copyable, i.e. without resorting to the realms of science fiction “replicator” machines
  2. Does use of the asset in some way deplete it
  3. Is it straightforward, and/or usual practice to ascribe a monetary value to the asset
  4. Is the asset a real tangible thing or an abstract concept
  5. Does the asset have to be processed in some way to yield value

Now I’m sure that I could have come up with further asset types and asset characteristics, and I may well do so as this analysis develops, but for now these are the ones that I start with.

Analysis

So let’s analyse these assets against the characteristics & see what (if any) conclusions we can draw from it?

Oil

We have already discussed this in more detail earlier.

Money

You cannot (legitimately) copy money. People with children will probably have had the discussion that the ATM is not a “money tree”. We can move money out of our possession really easily with Apple Pay, Contactless cards etc, however earing it in the first place isn’t so easy. Using money depletes it, and naturally you give a value to money. It’s mostly a real concept being underpinned by Gold stock, and doesn’t have to be “processed’ to deliver value.

Blood

Blood isn’t copyable in the mainstream (although as we speak blood substitutes are being trialled), and use of it depletes it (it has to be re-cleaned & oxygenated after use). It’s not too difficult to ascribe a value to it, and it is a real concept. Finally it has to be processed by our organs to yield value.

People

People as we know them are not copyable (although biological cloning is possible). I’ve said that use of people does not deplete the resource as we can apply our skills & intellect many many times. However as we all know, people do age and limbs and minds fade so perhaps this should be answered as “partly true”. It’s not widespread practice to ascribe a monetary value to a person except in a few cases (e.g. professional sportsmen). People are real and without trying to get too philosophical, they have to do something to yield a value.

Property

Property such as buildings are not copyable. Sure you can have a plan for a building & use that several times, but it’s using different bricks, is on a different site and so on. The Eiffel Tower in China is a fake! Using a property does slowly erode it, things wear out and need to be maintained. Property does have value & it’s usual practice to give it such. Property is a real concept, but doesn’t have to be processed to generate value.

Materials

So here I’m talking about raw materials. Again, without a sci-fi replicator they are not copyable, and just like a match the act of using them depletes them. Most materials have a monetary value easily ascribed to them, for several that’s the basis of the commodities market. They are real not abstract things and pretty much for the most part have to be processed to yield a value.

Intellectual Property (IP)

IP is not legally copyable. IP thrives on being reused so is not depleted by use. There is frequently a monetary value allocated to IP and much like a thought or an idea it’s mostly an abstract concept. Finally, IP must be used (processed) to gain real value from it.

Data

So what about data; how does this stack up against the different characteristics of these example asset? Data is copyable; with digital media any number of copies can be taken without the data being degraded. Using data does not erode it or make it wear out. Sure the relevance of the data may decrease over time but it does not wear out. Whilst there is much talk about “monetizing” data, this is still not a widespread practice but will no doubt become some in the future. Data is an abstract concept since its representing something else. Data needs to be utilised by processes to have value (and conversely processes must have data to operate upon).

Conclusion: IS the data asset REALLY different?

Having looked at these 8 different assets, and the 5 characteristics is there anything that jumps out at us?

If we look for assets which have the same values of characteristics as those for the “data Asset” then we’re going to be disappointed.

Of the 5 characteristics, 3 of the assets (MoneyProperty and Materials) have zero common values with Data.

2 of assets (Oil and Blood) have one common characteristic value shared with “Data”.

Intellectual Property (IP) has two common characteristics.

Heading the pack with three common characteristics is the People asset.

It’s interesting to note though, that there aren’t any of the assets that share 4 let alone 5 of the characteristics as we see in Data.

Summary

1. Information IS different to the other assets that we encounter;
2. ALL of the business depends on Information;
3. The quality and management of information can affect the very existence of an organisation; and
4. You ignore Information Management at your peril.

Thus, it is probably reasonable to conclude that:

The Data Asset IS different to other business assets that we encounter.

Furthermore, as described in my white paper all of the business depends upon data for its wellbeing.

Unfortunately, we still encounter organisations where the various disciplines of Information Management are not understood (or more frighteningly are knowingly not addressed).

Indeed, Professor Joe Peppard wrote

“The very existence of an organisation can be threatened by poor data quality.” 

So yes if as we suggest here that it is different, then the management of the data asset requires specific skills and capabilities; enter the Information Professional.

Wise organisations are realising that Information really IS a vital asset, it IS worthy of being managed professionally, and yes it IS different.

Christopher Bradley has spent 35 years in the forefront of the Information Management field, working for leading organisations in Information Management Strategy, Data Governance, Data Quality, Information Assurance, Master Data Management, Metadata Management, Data Warehouse and Business Intelligence. Chris is an independent Information Strategist & recognised thought leader. Recently he has delivered a comprehensive appraisal of Information Management practices at an Oil & Gas super major, Data Governance strategy for a Global Pharma, and Information Management training for Finance & Utilities companies. Chris guides Global organizations on Information Strategy, Data Governance, Information Management best practice and how organisations can genuinely manage Information as a critical corporate asset. Frequently he is engaged to evangelise the Information Management and Data Governance message to Executive management, introduce data governance and new business processes for Information Management and to deliver training and mentoring. Chris is Director of the E&P standards committee “DMBoard”, an officer of DAMA International, an author of the DMBoK 2.0, a member of the Meta Data Professionals Organisation (MPO) and a holder at “master” level and examiner for the DAMA CDMP professional certification. Chris is an acknowledged thought leader in Data Governance, author of several papers and books, and an expert judge on the annual Data Governance best practice awards. Follow Christopher on Twitter @inforacer.

Copyright Chris Bradle, Data Management Advisors Ltd

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