Companies to be valued on information assets by 2021

By Dylan Bushell-Embling
Monday, 13 February, 2017

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By 2021, companies’ information assets will be a key component of determining the value of a business, Gartner predicts.

Gartner analyst Douglas Laney said that while in the big data era information arguably meets the formal criteria of a business asset, present-day accounting practices disallow organisations from capitalising on it.

“Even as we are in the midst of the information age, information simply is not valued by those in the valuation business,” he said.

“However, we believe that, over the next several years, those in the business of valuing corporate investments, including equity analysts, will be compelled to consider a company’s wealth of information in properly valuing the company itself.”

Already companies demonstrating information-savvy behaviour, such as hiring a chief data officer, command higher book-to-market ratios than those that don’t, Laney said.

“Anyone properly valuing a business in today’s increasingly digital world must make note of its data and analytics capabilities, including the volume, variety and quality of its information assets.”

Another trend associated with the rise of big data is an increase in the number of patent applications involving algorithms. Gartner predicts that global algorithm patent applications will reach 250,000 by 2019, a tenfold increase from five years ago.

The number of patent applications mentioning algorithms somewhere in the document meanwhile grew to more than 100,000 in 2016, and this is on track to reach nearly 500,000 by 2020.

China has a commanding lead in terms of algorithm patents, with Chinese businesses and universities accounting for 33 of the 40 organisations patenting the most algorithms the past five years. IBM was the only western company to make the top 10.

Image courtesy of Mark Morgan under CC

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