The type of significant decisions that drive businesses, big and small, in their attempts to better react to customers’ needs have increasingly been driven by big data. Big data refers to “the recent wave of electronic information produced in greater volume by a growing number of sources (i.e., not just data collected by a particular organisation in the course of normal business)”1 and is being touted as a business transformation that allows a company to turn customer information into real profit.2 More than simply a new technology that allows for the monitoring of this information, big data involves the organization and, more importantly, the utilization of actionable customer insight to inform a predictive, real-time business plan.3 In addition to using this type of information to drive decision making, some companies are deriving value from simply selling the data to other companies.4 As companies find more success in utilizing big data as a tool to realize increased profits, the importance and consequences of big data analytics will continue to increase.
According to a 2014 survey of over 1,100 senior executives from around the world, 64% of senior executives stated that big data has changed the way decisions are made at their organizations.5 An additional 25% of the executives stressed that while big data was not yet involved in the decision making process, their company was planning to use big data to help make decisions going forward.6 While the most data-driven companies may receive the benefit of improved decision making,7 over one-third of C-suite8 executives in North America admit to possessing insufficient skills to use the available data.9 The inability to use the available data creates a new opportunity for other businesses to offer big data analytics. One Silicon Valley start-up, Adatao, which recently raised thirteen million dollars in an effort led by venture capital firm Andreessen Horowitz, has already signed with telecommunications and finance customers to increase the usability of their data.10 Unless and until executives learn to fully harness the power of this big data themselves, the need for big data analytics will continue to grow.
While big data has already proven beneficial, its actual value is not easily measured. No one truly knows data’s precise worth because there are not accepted guidelines for measuring the data’s value.11 In aggregate, it has been estimated that corporate holdings of this type of data, along with other intangible assets that do not appear on a company’s financial statements, could be worth more than eight trillion dollars.12 Twice, the Financial Accounting Standards Board has been unsuccessful in reaching a consensus regarding evaluation of intangible assets.13 However, due in part to this lack of consensus, investors in those tech companies that rely on data to collect much of their value, such as Facebook and Google, suffer from a lack of information.14 This informational void could prove deleterious to effective corporate governance and oversight. Additionally, though some maintain that assigning a static price to an asset with such a dynamic value would be unwise, such a concrete valuation is necessary during such transactions as mergers and acquisitions. 15
In this way, big data, which can be so beneficial to various business ventures, can also provide difficult hurdles to the completion of various legal transactions. Perhaps it is time for the Financial Accounting Standards Board or some other entity to provide a consensus method to best evaluate such assets.16
The Economist Intelligence Unit, Gut & Gigabytes: Capitalising on the Art & Science in Decision Making 2 (2014) [hereinafter Gut & Gigabytes], available at https://www.pwc.com/gx/en/issues/data-and-analytics/big-decisions-survey/assets/big-decisions2014.pdf. ↩
See Bill Schmarzo, Big Data: Understanding How Data Powers Big Business, at xxi (Carol Long et al. eds., 2013), available at http://site.ebrary.com.proxy.lib.umich.edu/lib/umich/reader.action?docID=10768980. ↩
See Vipal Monga, The Big Mystery: What’s Big Data Really Worth?, Wall St. J., (Oct. 12, 2014, 7:39 PM), http://online.wsj.com/articles/whats-all-that-data-worth-1413157156 (describing the way a supermarket is able to earn additional profit by tracking the purchasing history of their customers and selling the information to vendors). ↩
Gut & Gigabytes, supra note 1, at 25. See also Rebekah Mintzer, Is Data Influencing C-suite Decision Making?, Corporate Counsel (Oct. 8, 2014), http://www.corpcounsel.com/id=1202672640553/Is-Data-Influencing-Csuite-Decision-Making?slreturn=20140924130032. ↩
Gut & Gigabytes, supra note 1, at 25. ↩
See Mintzer, supra note 5. ↩
C-Suite is a “widely-used slang term used to collectively refer to a corporation’s most important senior executives.” C-Suite, Investopedia, http://www.investopedia.com/terms/c/c-suite.asp (last visited Oct. 25, 2014). ↩
Gut & Gigabytes, supra note 1, at 36. ↩
William Alden, Andreessen Horowitz Invests in ‘Big Data’ Analytics Firm Adatao, N. Y. Times Dealbook (Aug. 7, 2014 10:01 AM), http://dealbook.nytimes.com/2014/08/07/andreessen-horowitz-invests-in-big-data-analytics-firm-adatao/. ↩
Monga, supra note 4. ↩
See id. (quoting to agency spokeswoman Christine Klimek as saying that in the last month, “members of the advisory council again advised the board to research [intangible assets, such as big data].”). ↩