Is data an asset or a liability?

The analogy of data being new oil is used a lot, with the idea that you somehow “found it” and all the sudden, you are rich. I’ve also seen a statement that data is an asset because it has real and measurable value. It slightly suggests that collecting data might be somehow similar to owning an office building – if you don’t do anything it still increases in value.

I believe we should start thinking about data as a liability.

Collecting data is similar to taking a loan and having it sitting in a current bank account. You just slowly pay it back but with an interest.

“But we don’t pay for the data we have.”

You do, every day, with every action. All systems must manage more data, all processes and workflows need to capture more information. Every piece of information entered into a system by a human is though trough. System integration and any change become more time consuming and more prone to an error. You’ll start to have more problems with data being out of date or conflicting. And those are just operational issues, not regulatory or security risks.

Imagine you have just bought your customer data segmentation from a third party to support targeted marketing campaigns.

You need to store it somewhere, maybe integrate it into your CRM system/s. You need to manage access and document the data somehow. You need to analyze it and make sure it is correct. Then you have a window of opportunity to use that data until it is out of date, hence you need to keep refreshing the data if you want to use it further. You need some data quality checks, so you don’t make a silly mistake. And then this process repeats.

And now imagine not using the data for two years. It doesn’t feel like an asset, does it?

Thinking about data as a liability rather than assets might change the way how intentionally we work with data. Saying “We just need to collect all the data.” is pretty much the same as saying “I’m going to take a loan as big as possible.”, but not doing anything with it.

But liability is not always bad.

You can have liability because you have founded a new business or bought a car or a house for your family. Let’s start to think about how do you take the loan sitting in your current account and buy a van to support growth of your delivery business, put a deposit on an office or hire a first employee.