With changing business trends, it is imperative for businesses to stay on pace with cotemporary business practices and trending technological innovations. IT executives and business leaders value their company’s information as most important assets. Financial analysts and investors favor information-centric and information-savvy businesses. However, most of the businesses refuse to benefit from this value as they neglect intelligent collection, processing and storage of required information in their business repositories. If these organisations wish to become information-savvy, they must first recognise information as an actual asset. To start valuing information, companies must decide on certain metrics for assessing information quality characteristics, its relevance to the business and certain performance indicators.
Information Valuation Models
In general, six main formal information valuation models determine specific value and purpose of information to the organisation. As per these models, information can provide either foundational or financial value to the organisation.
- Under foundational measures, the information can have an intrinsic value, performance or business value for the organisation. The collected data needs to be complete, correct and exclusive. It must hold relevance to the certain purpose for which it was collected in the first place. This data, when properly processed to obtain required information must effect required business drivers. The main focus of these measures is to improve information management disciplines.
- Similarly, for financial value can be in the form of cost, market or economic value. Such models allow businesses to make decisions based on the collected attributes. Specific information, if lost can immensely cost the business. The Market value of the collected information would do good for the business if this information were further sold or traded to third parties. Thus the financial measures focus on improving economic aspects of the business.
Information Valuation models
Government and businesses, these days are collecting more and more information regarding our interactions with them. They create value and business intelligence by utilising specific information for their management and operational processes. Here, it is important to consider the usability, utilisation and usefulness of information in the context of business value. Further usability of this information has a positive impact on certain factors such as effectiveness, satisfaction and efficiency. Different business adopts different means and valuation models for obtaining value from certain information extracted from their operational processes. The main reason that businesses adopt such methods is to retrieve more effectiveness in their decision-making processes.
The key importance of information is that it allows businesses to make informed decisions by presenting and interpreting certain data collected for the purpose. Information collected for customers can be interpreted in the form of metrics that specify their engagement with the business operations. By analysing these metrics, executives can provide better alternatives for customer engagement. Thus, the value of information can not only be obtained by collecting it and storing it in the repositories. Businesses required performing some actions based on the information analysis. For example, if managers perceive poor customer ratings and satisfaction, businesses can implement required changes for improving these factors. Therefore, information must be appropriately reviewed for driving actions that can improve certain business operations and gain best possible outcomes.
Value of information is solely dependent on how the information is used. Further, this value can be assessed by the value of making decisions that are supported by the collected information. For a better understanding how the value of the specific type of information can be assessed, a systematic comparison can be made for the captured information. As per the first dimension, organisations are first required to consider whether they demand quality or quantity of the information collected. Secondly, they must determine an appropriate structure to interpret this information from different viewpoints. Finally, there must be an appropriate criterion for evaluating the significance of the collected information.
Approaches for Information Value Assessment
Organizations adopt different means for assessing the value of the collected information or for assessing the value of information that they are still considering to extract from their business processes.
- Organizations these days consider it most critical for implementing the most up to date information technology and telecommunications integral to their business operations for automating the process of retrieving and utilising the most relevant information.
- Businesses may also maintain Information libraries to determine effective criteria that they can apply to a certain type of information. They are an efficient storage and retrieval information repositories.
- Sometimes, businesses make use of Information Resource Management principles for accounting, planning and cost management in the context of information needs.
- Then, business executives may apply Organizational Theory for assessing the most relevant and accurate data that can assist in the decision making processes.
- Economic Theory of Information is also applied for controlling both the quality and quantity factors of the extracted information. This means that organisations are required to collect an optimal amount of information for making effective business decisions.
Thus, it is critical for businesses these days to determine most effective valuation and value assessment for maintaining a competitive edge in the industry. They must consider information as the most important asset and implement best models for analysing the collected information. If affordable, technologies such as Big Data and Analytics can be implemented for assessing information coming from different business processes ad customer engagement. Transparency will be gained over internal processes for reviewing causes of operational issues. Executives can take immediate steps toward resolving these issues. This will drive significant business growth and progress.