What Does Return on Data Assets Mean?
The return on data assets is a measure of how efficiently an organization is able to generate profits from their inventory of data. Creating visual representations of the data is one emerging technique to help company owners make sense of the immense volumes of raw data within their organization. By having data properly represented, company owners make better business decisions such as revenue lines that can be leveraged, costs that can be eliminated, or divisions that should be shut down — all of this creates value, and ultimately leads to higher returns and a higher sales multiple when selling a company.
Divestopedia Explains Return on Data Assets
A company's data assets are often overlooked when assessing the more familiar return on assets (ROA) calculation. Companies spend significant dollars every year on computer systems, automation and software. Data is a byproduct of these investments with the accumulating inventory of data often being overlooked as it does not show up on a traditional balance sheet as an asset. However, this data inventory represents an enormous opportunity for companies to create value by properly compiling it into visual representations or "dashboards" that show trends, key performance indicators and general opportunities. The compiling of data into understandable reports is a current trend in software applications, where owners can maximize value in their businesses by increasing their returns on data assets.