Monday, 27 May 2013

What's It Worth to You? Determining the True Cost and Value of Information


We invite and encourage contributions to our blog from our network of consultants to share their expertise relating to Information Management best practices. The commentary that follows below is from Valarie Findlay, an independent security consultant with HumanLed Inc. The commentary focuses on an exploration of the challenges associated with the cost of maintaining and valuing information assets.

In 2009, the Treasury Board of Canada issued a directive to ensure effective recordkeeping practices that enable departments to create, acquire, capture, manage and protect the integrity of information resources of business value in the delivery of Government of Canada programs and services. 
The directive addresses the identification of information resources of business value based on analysis of departmental functions and activities, the establishment and implementation of key methodologies, mechanisms and tools that support departmental recordkeeping requirements, proper documentation of recordkeeping practices of accountability, stewardship, performance measurement, reporting and legal requirements, and timely communication with departmental managers and employees on the risks associated with poor recordkeeping.
This article explores an inferred but often overlooked exercise – the determination of the true cost (storage, security, disposition, etc.) of information recordkeeping, the value of that information and why it’s important to go beyond the longstanding standards of sensitivity and classification (secret, top secret, etc.) of information. (For the purposes of this article, recordkeeping refers to the creation, duplication, storage, security and overall management of information.)
Understanding the value of information and the costs associated with it are generally notional concepts and establishing measurable criteria is an exercise unto itself but it is feasible to develop this into a modeled approach which can be implemented into any departmental system, independent of technology. Industry and private sector have already recognised valuation as a critical step in not only justifying spending on recordkeeping initiatives but also to ensure that the value of information is congruent with the countermeasures applied to storing, sharing and securing it.
First, let’s take a look at the cost of recordkeeping and what industry findings on recordkeeping and information management have revealed.  

The Keeping Cost: Hidden and Unburdened Impacts

Companies spend a significant amount of their revenue on managing document production, distribution and associated devices – IDC estimated that it is up 10% of revenue or budget. A recent study by BAE Systems discovered that “about 80% of all workers waste an average of half an hour every day, retrieving information while almost 60% expend an hour or more duplicating the work of others”. An InfoTrends/CAP Ventures Study indicated that organizations estimated spend an average of 3% of their annual revenues on duplication - copying, printing and faxing; other research reveals that actual document expenditures (including hardware, supplies, and “people” costs) averaged 6% of annual revenues across all industries. 
An independent breakdown of the data revealed that only 10% of office document burdened costs relate to equipment, supplies, and service expenses - for every $1 spent on equipment, supplies, and service, another $9 is spent on other burdened costs: IT support and infrastructure, procurement, facility costs, end-user interaction time and document management expense. [1] Finally, IDC estimates that an organization with 1,000 knowledge workers wastes between $2.5 - 3.5 million a year in superfluous or erroneous document related activity.[2]  

To bring this spending into perspective, ask yourself: would you go to the same lengths – effort and cost – to secure and protect a possession that is of no appreciable or inherent value, as you would for one that is? We do this all of the time in recordkeeping and information management: we hoard information and data as if it were all of the same business value often with the overused refutation, “space is cheap”. But it is more than space that makes up the cost of recordkeeping and information management. 

True Value: The Courage to Peel the Onion

In formulating information value, meaningful criteria is crucial, therefore, I utilize the Seven Laws of Information[3], among other industry mainstays, and develop categorical elements that increase and decrease the value of information and then I apply the cost of that information as a formula to establish it as a cost-valued asset.[4] As an example, the Seven Laws of Information state, in general, that, all information would follow these Laws:

  1. The sharing (where it is deemed to be required and necessary) of information multiplies its value; the more people who use it, the more value/benefit can be extracted from it.
  2. The duplication of information does not increase its value but instead increases the costs associated with it and replication and redundancy increases maintenance costs. Therefore, the need to duplicate and store multiple copies of information acts as a decrease to its value.
  3. The more integrated information is or where there is a dependency on it by other information, the more valuable it is.
  4. The more accurate information the more valuable it is.
  5. Unlike most assets, information is subject to reverse depreciation in that the more it is used, the more valuable it becomes;
  6. Unlike most assets, information is subject to the laws of abundance;
  7. Overabundance reduces information value. Psychological evidence shows that humans have a strictly limited capacity for processing information and when the amount of information exceeds these limits, information overload ensues and comprehension (Lipowski, 1975) and decision making ability degrades rapidly at the saturation point (O’Reilly, 1980; Driver and Mock, 1975; Jacoby et al, 1974).
Based on these laws of information comparative value and cost criterion can be developed into a model that follows a prescriptive framework that reveals the cost benefit and return on investment. But it doesn’t stop there: this data should then become the “business case” used to drive and apply counter measures, such as operational, infrastructure, policy and procedure controls and enhancements to help management implement optimum information management best practices. In this climate of cost savings, government and business can no longer afford to dismiss the importance of revisiting and properly assessing information value and recordkeeping costs and auditing current, long-standing practices for appropriateness and effectiveness. Often change will not occur until “the pain of staying the same exceeds the pain of making the change itself”.

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Valarie Findlay is an independent security consultant with HumanLed Inc. and holds several security accreditations and is completing her Masters degree in Terrorism Studies. She can be contacted at:

[1] Assessing & Benchmarking Document Costs: Developing a Future Strategy
[2] MetricsStream
[3] D. Moody, 2004-5; Glazer, 1993
[4]Peter Walsh and Daniel Moody, Measuring The Value Of Information: An Asset Valuation Approach
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