October 13, 2014


The Big Mystery: What's Big Data Really Worth? : A Lack of Standards for Valuing Information Confounds Accountants, Economists (VIPAL MONGA, Oct. 12, 2014, WSJ)

As more companies traffic in information and use big-data analytic tools to find ways to generate revenue, the lack of standards for valuing data leaves a widening gap in our understanding of the modern business world.

These intangibles are becoming an evermore important part of the global economy. The value of patents, for example, has become a major driver of both mergers and lawsuits for technology giants like Google Inc.,  Apple Inc.  and Samsung Electronics Co.  But those assets don't appear on company financial statements.

"We want some kind of accounting information about it, so you have a better idea of how companies are investing for growth," said Mr. Nakamura.

The issue isn't confined to the tech industry. Supermarket operator Kroger Co.  records what customers buy at its more than 2,600 stores and also tracks the purchasing history of its roughly 55 million loyalty-card members. It sifts this data for trends and then, through a joint venture, sells the information to the vendors who stock its shelves with goods ranging from cereals to sodas.

Consumer-products makers like Procter & Gamble Co. PG -1.56%  and NestlĂ© SA are willing to pay for those insights because it allows them to tailor their products and marketing to consumer preferences.

Mr. Laney and others estimate that Kroger rakes in $100 million a year from data sales. But Kroger executives are mum on the subject.

Kroger does say that it follows generally accepted accounting principles, which prohibit companies from treating data as an asset or counting money spent collecting and analyzing the data as investments instead of costs.

Posted by at October 13, 2014 5:50 PM

blog comments powered by Disqus