Deidre Paknad – Vice President, Information Lifecycle Governance Solutions, IBM
Many organizations recognize intuitively the qualitative benefits of improving how they govern information but have a difficult time quantifying these benefits or galvanizing their organizations forward. I’ve recently worked with a number of large organizations to go beyond Information Governance to improving Information Economics. This involves many of the concepts of governance but puts a focus on the economics – the value and the cost – of information. I use the term Information Economics to refer to understanding and extracting value, knowing and controlling cost, and, most importantly, aligning cost to value; an Information Economics practice can improve the profit margin on information.
This is both challenging and important because the value of information declines over time while the cost is constant and information risk rises over time. The widening gap between the value of the information and its cost and risk create a negative economic impact on any organization – the cost of information and the risk it poses exceed its value.
Certain types of retain or lose value faster than others and the value lifetime varies by industry as well. For example, the duration of time that product development information is valuable is a function of product lifecycles and the R&D cycle time to invent and bring a product to market. In the fast-paced consumer electronic segment where a new model comes out every 10 months and consumers replace their devices just as often, 6-year-old product design information is of little value as it is far outdated and the unlikely source of new innovation. On the other hand, aircraft lifespans of 30 years and the very slow customer turnover make 6-year-old product data of value to both the business and of interest to the regulators of the industry. In either company, the duration of time that back office information is of value is likely similar.
In many business functions and industries, regulators and government agencies require companies to keep data after it has lost its business value. In fact, the law was written to force organizations to act against their own interest to ensure that information the company would otherwise dispose is available for investigation or litigation. This regulatory requirement is a tax on the business – it is a cost without an offsetting benefit or value. Of course, companies have other duties to produce information in the event of investigation and litigation that apply to the total universe of potentially relevant information they have on hand when the investigation or litigation is anticipated or occurs (the duty to preserve evidence). As data ages, it is phenomenally expensive to gather, process, restore and review this information because the technology to restore and read it has long-since decayed, the location and nature of the data is difficult to distinguish without restoring it, and the context for understanding it completely absent. Gartner estimates the cost at $18,000 per gigabyte! Data that neither the business nor the regulators need is pure risk to the organization with tremendous cost exposure. At IBM, we are helping our customers improve information economics through continuous alignment of cost to information value. When orchestrated under a strategic program and sequenced by information economics principles, many of the activities traditionally associated with information and lifecycle governance are levers to ensure that the cost of information aligns with its value, that its full value is realized and that the risks information poses are managed cost-effectively.
There are three important inflection points over the value cycle:
1. Analytics – Even when information has value to the business, if business stakeholders aren’t able to extract and apply that value in the decisions they make, the value is lost (and it represents only cost to the organization). Most of us, however, lose the context of information we created ourselves very quickly and we lack context on information our colleagues may have gathered or generated that is of value in our decisions. Content analytics and big data analytics help organizations maximize value during the window of time in which it exists – this is essential to improving economics.
2. Cost and Volume Compression – As data ages out and loses value or the frequency of its relevance to the business, it’s important to compress its cost in parallel. This is particularly important when there is no business value and only a regulatory need to keep the data. As individuals most of us never consider over-paying our taxes, but organizations that over retain or over-spend on storing data for regulators are over paying their taxes! In other cases, data without value is inappropriately stored as if it is premium value such as test data and non-production instances, which clearly lack the same business value as their production counterparts. Archiving data to reduce its footprint and cost keeps the ratio of cost to value in line and tiering data to an appropriate cost point also drive information economics.
3. Defensible Disposal – When neither the business nor regulators need information any longer, dispose of it. Retaining it longer at any cost point is waste, unnecessary cost and risk. Over paying for useless data actually reduces the capital and resources companies can invest in maximizing information of value.
About the Author – Deidre is widely credited with having launched the first commercial applications for legal holds, collections and retention management and is a recognized thought leader in legal and information governance with numerous patents in the field. In 2004, she founded the CGOC (Compliance, Governance and Oversight Council), a professional community with over 2000 corporate members, to advance practices for governance, retention and eDiscovery. Deidre has authored many papers in the eDiscovery and governance field. She has been a member of several Sedona working groups since 2005 and co-leads the EDRM IGRM Initiative. She is a seasoned entrepreneur and executive with 25 years’ experience applying technology to inefficient business processes to reduce cost and risk. Deidre was inducted into the Smithsonian Institution for innovation in 1999 and again in 2000. Today, she leads IBM’s Information Lifecycle Governance business, which includes its eDiscovery, records and retention, archiving and defensible disposal solutions.