INFONOMICS: THE ECONOMICS OF INFORMATION
Understanding the value of information as a business asset BY DR HANLIE SMUTS DECISION makers at all levels devote substantial efforts to making appropriate and applicable organisational decisions. Theorists and practitioners alike consider decision-making to be a core managerial function and as business decisions must often be explained, the best motivation for this is to have reliable and consistent supporting information that shows historical trends that may be applied to predict future business outcomes. When considering these outcomes, then it is suggested that an organisation should design its structure and business processes to facilitate information processing and enable an information processing capability. When an organisation accesses accurate and complete information about the interrelationship between choices and consequences, then the organisation will be empowered to generate viable organisational strategies and ultimately enhance organisational performance! Of all the organisational resources such as people, finances and fixed assets, information is hardly ever included and probably the least well
TM
managed - if an organisation managed their finances as poorly as their information, they would probably be out of business. Traditional assets have application and transactional limitations which means they cannot be used simultaneously across multiple use cases or physical locations; fixed assets’ value decreases with usage. However, information assets are not impacted by these limitations, in fact, its value increases as it is applied and processed more, shared and manipulated. As information broadly meets the accounting definition of an asset, it is worth taking a closer look. Information, a misunderstood asset The organisational approach that measures the value of information by recognising, accounting and handling data as a business asset, is referred to as infonomics. Furthermore, organisations consider ways to optimally monetise the insights hidden in the data. They achieve direct monetisation through creating an informationbased marketplace and indirect monetisation by extracting value from information which informs
Dr Hanlie Smuts
the business and generates value within the organisation. Information drives these business processes and decisions.Gartner defines infonomics as “the emerging discipline of managing and accounting for information with the same or similar rigor and formality as other traditional assets and liabilities (such as financial, physical and intangible assets and human capital)”. Infonomics is the economics of information and it is increasingly inevitable for organisations to treat information as a real asset.
continues on next page...
