Wednesday, August 31, 2011

Time Value of Data

Value is an inherent way humans quantify entities. Whether thoughts or products, ideas or tools, their value to us heavily influences how our brains classify the entity. Forks and spoons are of higher value than sporks, cars over horse and buggy, computers over typewriters, and so on. One early lesson we study in Economics is that money the value of money is not constant. A dollar today is, under normal economic condition, worth more than a dollar tomorrow. We call this the Time Value of Money to show that the timing of earnings and payments should be optimized to derive the greatest overall value.

To me it's a very gentle leap of faith to combine the Time value of Money with the idea that data is the new currency: I call it the Time Value of Data. Today we assume data has the same value on day one as it does on day infinity. For some data that's true. However I argue for the vast majority of data it's value starts at a peak and rapidly falls off nearing zero for the majority of its life until deletion (whether by intent or accident). For example how much I earn per hour today is something I safeguard however I much I earned per hour as a reservationist at Disney World in 1990 is pretty unimportant to me (the answer - $6.35/hr which was $1/hr better than the theme park jobs because of the typing skills).

When it comes to data we are pack rats loading the data onto our computerized pack mules. However one has to consider the security, efficiency, and monetary cost of this approach. From a security point of view should we protect data of low value with the same vigor as data of high value? Instinctively I say no but I can find no examples in the wild that show this rational thinking to be true. Valuing all data equally robs us of a valuable metric for finding pertinent data. We have to look through all the muck to find the golden data we need which impacts our ability to answer questions efficiently. And lastly there is a cost to storing data when it's value is at or near zero. Is my life going to be improved knowing the details of my mortgage from 2000 when I've refinanced twice since then? Not likely but keeping those papers has caused me to have to purchase yet another filing cabinet.

I don't have the answers; at this point I can only ask the question. I'm not sure how we define the value of data and how we differentiate the levels of value. I do, however, believe this is a larger issue of organizations not rationalizing the data they keep and use. It's easy to calculate the cost side, it's difficult to define the value equation. In money we use interest rates and years in a well defined mathematical equation to determine the current or future value of a dollar. A dollar is a single entity, data is all over the board, so they are not equivalent. However I do believe in one rule which I use at home. If I haven't touched something in 6mo it should go into the attic. If it's not used within a year then I have to question it's value. There are some pieces of data that we value forever such as baby photos. But like digital medical images, I bet 98% of data is never touched again after it's first few weeks.

But today we pay for it for it's entire lifetime.

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