Working with data reveals its value

Interest is reviving in the concept of the database as an asset that can be valued on the balance sheet. With the potential return of heat to the equities market, investors are looking for new places to put their money. Companies that can demonstrate a strong data-driven culture that generates profitable customer relationships could mark themselves out as a target.

David Reed

In the booming economy of the post-War modern era, brands made their breakthrough as a corporate asset. From Apple to BA and Coca-Cola, much of the share price value placed on leading companies is explained solely by the brands they own.

With the dotcom explosion (and despite the subsequent collapse), the concept of intellectual property made it onto the balance sheet, too. Create a piece of software or a web-based service and you have a highly investable business. Microsoft was the first example of that model and has since been joined by Google.

Data could soon make its debut because there are few other ways to explain why some brands are being valued so highly. Want to understand the staggering valuation being placed on Facebook – despite not being a publicly traded company? Look no further than the data it holds on users and their relationships with each other.

“Sainsbury’s recent results are suggestive of what can happen when you fuel up a business with customer information”

That step will depend on accountants and number-crunchers in the City agreeing how to do it. Until then, data’s value is seen only when it is put to use. But then it can realise substantial returns for the companies which invest in it.

Sainsbury’s is a prime example of that. Two years ago it lured Andrew Mann – this month’s profile subject – away from arch-rival Tesco. It is well known that the commitment to data inside Sainsbury’s was never as deep as at the other chain. Getting somebody of his calibre signalled a shift in that attitude.

Results for the grocery chain since then are suggestive of what can happen when you fuel up a business with customer information. That view is even more persuasive when you consider that Sainsbury’s recent success has been achieved without the massive land bank that allowed Tesco to colonise so much of England’s retail landscape. Data has not been the only factor in its return to prominence, but it has been a major part of that success.

Getting investment into data assets, including the single customer view, remains challenging. Even when it has been created, there is every chance that the financial director will come looking for yet more evidence of a return on investment. That, too, is an emerging discipline. But when you go looking for it, you can find all the proof you need that working with data generates far more value than trying to do without.

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