How to Justify IT Spend: Is Company Data an Asset or a Utility?

How do you justify investment in IT? That’s a commonly asked question for companies whose core business area is not technology. For many, it is a challenge to justify investment in technology. The primary purpose of IT, as some companies see it, is enabling the operation of the business. It’s not driving revenue. Every business, however, must ask an important question: is their company data an asset?

The problem compounds when IT departments are pressed to justify the expenses of managing data. This is especially challenging for small and mid-sized businesses with limited IT budgets. Managing data is often someone’s secondary responsibility. Perhaps someone in software development or infrastructure management is tasked to manage data – in their spare time.

Investment in data management is easily overlooked.

Is your company data an asset to be cultivated or a utility to be optimized?

A company’s response to this question is often a good indicator of the maturity of its data environment. It also reveals the foundation of the company data strategy.

Sometimes the company data strategy details a roadmap for leveraging its data as an asset… Fantastic!

Other times the strategy is implicit and defaults to ensuring that systems are secure and operating in terms that are acceptable to the business. Still good, but perhaps incomplete.

In some cases, though, the data structures are ignored completely until there is a major problem. No data strategy exists, and the omission threatens the business.

So, what do we mean when we ask if company data is an asset or a utility?

A utility is often defined as a good or service that is considered essential. An asset, however, could be considered anything that can be used to produce positive economic value.

Think of utilities for a business as those resources that a business wants to invest in just enough to operate the business. Assets, on the other hand, are valued inherently for their ability to be translated into monetary value. This white paper discusses in depth the importance and challenges of valuing your company data as an asset.

How does this concept apply to your data strategy?

Using data as a utility is a relatively reactive posture. Cultivating your company data as an asset is essentially proactive. In fact, to be forward-thinking with your company data, you must define your data strategy.

An analogy

Think of your company as a farm and the forces of nature as the data it needs to operate. The farm requires every natural element – sun, wind, rain – but it also can be threatened by them. Let’s think of wind specifically.

Now, wind is a powerful force with the potential to wreak all kinds of havoc. It is also a necessary and unavoidable force of nature. So, the first thing a farm needs to consider about the wind is protection against damage. This is fundamental. The owners might plant trees as a windbreak or position buildings and fields in the safest locations. They would avoid placing hazards that could cause damage to crops, livestock, or buildings during a storm. Thinking ahead, they would also make plans for how to mitigate damage in the event of a disaster.

We can think of this as security and disaster recovery for your data.

These measures are a significant first step. They are proactive in so far as they plan for storms and minimize threats. However, they do not consider how to leverage the wind as a resource to benefit the farm.

In time, the farmers start to consider harnessing the power of the wind to improve the farm and make work easier. They use the wind to aerate their greenhouse or to direct a controlled burn. They build a simple windmill for irrigation. At this level, the farmers see the wind as an asset and not merely as a necessary force of nature to contend with.

Consider this as entry-level business intelligence with ad hoc data retrieval.

In business, this is the realm of the complex Excel workbook, Access database, or Jupyter notebook. These tools are developed by the business to retrieve data through an ODBC connection and transform it into meaningful information to drive the business. While this approach is still fairly manual, businesses are empowered by using their data in this way without committing to large investments in infrastructure.

However, this approach is not scalable.

Back on the farm, the owners recognize that wind-power can only be harnessed in small, relatively manual ways without more financial commitment. To really leverage the wind, they must invest in infrastructure on the farm.  Our farmers begin to envision their whole farm and estate with the potential to be powered by the wind. They thoughtfully invest money into harnessing the wind to propel more than isolated actions. Instead, they look to fuel the farm with energy.

Here, businesses are aware of their company data as an asset and invest in systems and architecture for the purposes of reporting, business intelligence, and AI.

Finally, the farm grows to the level of a largely self-sufficient enterprise. It no longer fears the potentially damaging power of the wind, because it has continually increased its vigilance in managing threats. A solid disaster response plan exists for when the unexpected or unavoidable occurs. The farm has matured beyond manual inefficiency, and the wind is now fueling nearly every aspect of the ever-growing estate. The farmers even realize that the power they are harnessing from the wind can itself be monetized by selling power back to the grid or to nearby farms.

The investment pays off.

Companies see that they can turn their data into dollars in terms of driving profit and business efficiency. They may even see that they can monetize their data by selling it for use in machine learning or for partnering with other businesses. Their company data is leveraged as an asset.

Where to begin?

The downfall of strategic plans often comes in the implementation. Strategy sounds great. Company data as an asset? Wonderful. But if the rubber never actually hits the road, businesses can find themselves stuck.

So, how do you make sure your data strategy yields results?

Inform your decisions with your desired outcomes at every step. Start at the beginning with a strong foundation of security, disaster recovery, and database performance. Your data team must apply the principles of data management within the context of your company’s data strategy.

To go back to the farm analogy, where is your farm headed? Do you need to be careful about where you plant trees as windbreaks or locate the barn and shelters in order to leave room for future development of a wind farm?

By identifying your data strategy early (knowing that it will grow and change organically), your data team will be able to more thoughtfully advise you at the crossroads of your journey to enable your business to fully leverage company data as an asset.

What is your data strategy? Do you have a strategic roadmap?

In upcoming posts, we will dive further into some of the specific components of a thoughtful data strategy.

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