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Your Data as an Asset and How to Protect it
November 19, 2021
When you think of everything your business owns, do you think about your data? You should, because your data is one type of intangible asset you do own, in addition to branding, relationships, non-revenue rights, and intellectual property.
According to a 2020 Ocean Tomo study, the intangible assets market – it includes trademarks, patents, and intellectual property data – grew from 68% to 84% from 1995 to 2015. This type of asset currently makes up more than 90% of the S&P 500 market value. This is an incredible number, and it’s a good reason to consider how your company protects and values its intangible assets, especially data.
What is an enterprise data asset?
An enterprise data asset, or company data asset, is a specific type of intangible asset made up of data. Data is collected or purchased for the purpose of generating revenue for the company, typically after it’s processed into a new type of information. Common examples include documents, databases, files, applications, and systems.
Diane Gayeski, Ph.D., professor of strategic communication at Ithaca College, and principal of Gayeski Analytics, a corporate communication and learning consultancy, explains that there are specific types of data that businesses should consider an asset, including:
Documented employee know-how, techniques, and processes
Diane continues: “Think of it this way: if someone wanted to buy a company, they could rather easily replicate its ‘bricks and mortar’ and even its products, but intangible assets (like knowledge, data, reputation, culture, brand, etc.) are almost impossible – or at least very expensive – to replicate. As more companies are 'knowledge-based’ companies, these assets are of primary importance.”
Even with this information, studies show that most business intangibles, including data, aren’t reported on balance sheets. Modern accounting standards require that intangibles are matched to a transaction that then helps support their value. As a result, up to 34% of the total worth of publicly traded companies around the world may be in undisclosed value, such as these intangibles.
Data vs information
Another challenge is that data really only has value if you can turn it into something else. Treating data as an asset requires some differentiation between data and information.
“It is the conversion of data into information – data converted to a format that facilitates a decision maker’s ability to make a more effective decision – that drives data’s ultimate asset value and facilitates its ability to generate new business opportunities or reduce fraud, waste, and abuse.”
With this definition, data may not have any value for someone unless they know what to do with it and if it can be turned into information. This is why the same data set for company A may not have any value for company B if only company A knows how to use it or why it was collected.
The value of data
In simplest terms, data is often a path forward for a company in terms of growth or evolution. Roman Golod, CTO and cofounder of Accelario, explains the value of data.
“Beyond the product, data is actually the crown jewels of the SMB,” Roman says. “Leveraging the data effectively allows SMBs to strengthen their customer relationships, transform clients into delighted customers, and ultimately increase the bottom line.”
Accessibility vs security
Data should be easy to access, manage, and interpret at the company level, because it’s often what makes the best products better and data-based services useful for consumers. However, this creates a challenge for businesses who need to keep that data safe from bad actors.
Your security should include layers of permissions and safeguards, even for employees. The balance is tricky and the rules evolve all the time, but small businesses are not exempt from security best practices.
Security is paramount for businesses of all sizes
Roman explains, “Regulation and privacy apply to SMBs as well as major organizations, and they need to treat their data similarly to ensure regulatory compliance, using tools like masking on-the-fly to protect their data both on-premise and in motion.”
“Ransomware is a major concern, too,” Roman continues. “You need to protect your data at all levels, including testing environments. Ultimately, SMBs must comply both with global regulations and simultaneously protect their own data.”
Why data integrity matters
There’s another aspect of data protection that goes beyond worrying about hackers. Protecting data sets from harm through pollution or the inclusion of “bad” data is a real concern. If your data isn’t very good, is it worth anything at all? Worse yet, could it compromise the products or information you create with it?
Reliability is key
The CPA Journal stresses that reliability is critical. It defines reliability as a measure that “rests on the faithfulness with which it represents what it purports to represent, coupled with an assurance for the user that it has that representational quality.”
Data must pass through controls and regulatory processes to remain reliable. As a result, you may need to postpone using new systems, such as those that use AI or machine learning, until you have total data control. This creates tension between the desire to pursue tech advancements and the need for reliable data, which business owners have to assess on an ongoing basis.
How to protect your data
As an SMB, what steps can you take to consider data as an enterprise asset? You can start by ensuring your data is secure, because secured data has the most value.
“Privacy and security are most critical,” Roman says. “First, they need to reach out to an IT professional and/or database expert who can help them address the challenges. Also, tools like sensitive data search (SDS) can provide a better understanding of the sensitive data that is exposed. Database experts can provide added value when building and executing the plans to secure the data.”
Get help where you need it
Smaller companies may not have the internal resources to take on new data security challenges, so knowing how to reach out is essential. As a company grows, it's possible to bring more data protection tasks in-house, but SMBs shouldn’t wait until they hit scalability goals to start prioritizing their data.
Even if you temporarily use a third-party professional to help, it’s better than doing nothing. In fact, depending on your industry, you may be legally required to act now.
Banking, insurance, and medical are just a few of the industries with existing guidelines in place for how to manage, store, and transmit sensitive data. It's possible that your industry trade group and recommended vendors from industry associations already have the know-how to secure your data according to your specific industry compliance requirements.
Importance of strategic asset management
Valuing, protecting, and handling data wisely won't just happen as an afterthought. It must be developed as a corporate strategy and shared across all business units as part of the company culture. Each person in the data chain must adhere to and believe in this strategy. So, how do you begin?
Start with accounting
Your accounting methods should recognize big data assets in their registers, similar to what you do for physical assets. You can create accountability for this data when you have an inventory of all your data assets. The CPA Journal recommends creating a list of all data assets, including their location and how each data segment aligns with organizational goals.
What if you find bad data?
During this process, you may find data that has no value in the overall mission of the company. Review this data for usefulness. If it has no value, consider discarding it.
Throwing away data may not make sense to some business owners. However, you need to store and protect data, which means there’s a cost to keeping it. Does bad, outdated, or useless data warrant the price? Evaluate the return-on-investment of keeping the data before getting rid of it.
The perks of good data management
When you implement and maintain good data management practices, your organization accomplishes several goals.
First, you’re ensuring your data’s security. Your data may include customer information, patents, and vendor relationship agreements, so it's imperative that you protect it against loss, corruption, or theft. Second, when you protect that data, you help to protect your business’s reputation and profitability.
How to avoid poor data management
What does poor data management look like? It includes leaving the data-handling decisions to just one department in your company. While it may seem that an IT department should have the authority to make these data decisions, your company’s leaders need to provide input on how to process and use that data for company-wide activities.
The CPA Journal concludes that “Maintaining a ‘silo’ style of data management results in ineffectiveness, including multiple sources of data, tolerance for poor data quality, no trust in data as a source for decision making, no collaboration across departments on data quality and usage, unclear roles and accountabilities over management of data, and overall poor data governance.”
If there was ever a time for leadership to collaborate, it’s when discussing and managing data.
Can you trust the data?
Data management helps with one other vital part of your company: it ensures the data is useful for stakeholders. If your employees or vendors suspect the data you store and share isn’t high quality, they will be reluctant to use it. Without this data, they may make poor decisions or miss crucial opportunities.
A reluctance to use data can also stunt your company’s trajectory. This is particularly true for forward-thinking leaders who pride themselves on AI or machine learning programs or who use their analytics daily to increase profitability and technological aptitude.
If you want to have more confidence in your efforts, consider incorporating a formal asset management data strategy into your company planning. You probably have the data already, so why not use it properly?
About the Author: Linsey Knerl is a contributing writer for HP Tech Takes. Linsey is a Midwest-based author, public speaker, and member of the ASJA. She has a passion for helping consumers and small business owners do more with their resources via the latest tech solutions.
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