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Empowering the Information Enterprise: Data: Liability or Asset?

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hanks to ever-advancing software and hardware information applications such as radio frequency identification (RFID) tags and their electronic storage capabilities, organizations are awash in data. With this data comes responsibility - the responsibility to collect, process, generate and store data, which is nearly endless with such immense data volumes.

While capabilities such as RFID facilitate efficient inventory management or 24x7 online sales order processing, the value of the data changes once it has been stored. What is done with the data after it has been captured and stored determines whether it is a burden (liability) or a benefit (asset) to the organization.


Empowering the Information Enterprise:
Data: Liability or Asset?

online columnist Jonathan Wu Column published in DMReview.com
August 30, 2007

By Jonathan Wu

Thanks to ever-advancing software and hardware information applications such as radio frequency identification (RFID) tags and their electronic storage capabilities, organizations are awash in data. With this data comes responsibility - the responsibility to collect, process, generate and store data, which is nearly endless with such immense data volumes.

While capabilities such as RFID facilitate efficient inventory management or 24x7 online sales order processing, the value of the data changes once it has been stored. What is done with the data after it has been captured and stored determines whether it is a burden (liability) or a benefit (asset) to the organization.

It is important to understand that for generally accepted accounting principles, asset and liability are defined terms in the accounting profession. An organization cannot recognize data in its financial statements as an asset unless it has been purchased, such as the acquisition of a customer list from another organization. In addition, data cannot be recognized as a liability unless it is a debt or financial obligation to another organization that can be valued. For purposes of this article, the commonly used non accounting references of liability to represent burden and asset to represent a benefit are used.

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