ARMAzonan NOV/DEC 2016 - WINTER ISSUE - Page 10

IG ACCOUNTING CONTINUED FROM PAGE 5 professionals, if organizations are to reflect insights, possibly leading to new product and their true value. IG Accounting continued on service innovations. page 10 Like cost accounting, there will be Having a solid IG program in place would multiple ways to approach Information seem to be the foundation for developing Accounting. approaches to a new field which should be called, Information Accounting. Doug Laney of Gartner writes that Microsoft's recent $26 billion purchase of This may be further along than most think. In LinkedIn was "all about the data" in that all 2013, the Compliance, Governance and the assets including buildings, hardware, Oversight Council (CGOC) published the, software, and even Lynda.com training "Information Economics Process libraries (purchased in 2015) all come down Assessment Kit." to one bottom line, the value of the data LinkedIn collects on its users. He goes on to Economics is not so far off from Accounting. And the CGOC report is all about what most write: of think of as IG. It discusses the declining "According to Gartner research, companies in the information product business have a 4 -5x higher market-to-book value than the average company. (Actually the ratio is what’s called a Tobin’s q). And thankfully for info product companies, information isn’t considered a balance sheet asset per value of information over time, stating, "To make way for new and more useful information, ensure businesses get value from data, control IT and legal costs, and lower risk and exposure, companies should dispose of unnecessary data debris." antiquated accounting regulations (GAAP), so they don’t have to report it." "In short, investors looooooove information product companies. They also love companies that leverage information to the hilt. Information savvy companies, according to our research, warrant a 2-3x higher q value than average." Good Information Governance (IG) requires that organizations value information as an asset. To do they must take steps to inventory their information holdings, classify and appraise them, and dial in the proper level of security and control for sensitive information. Once they are able to focus on the high value information, they can do the "fun stuff" using analytic tools to gain new 10 10