Why digital assets aren’t like physical or financial assets and why the housing sector struggles to get the most from its data.
Can you imagine that your properties needing to be repaired could be copied in an instant without cost and made available anywhere? No, neither can I.
Everyone in housing talks about assets – we all think we understand what they are and how they should be managed. Strangely, we are often talking about completely different things. Physical assets, property assets and fixed assets are like three blueprints of the same thing, but each captures an equally important but different viewpoint. Are we managing maintenance, housing or depreciation? Given the confusion around the existing assets, is it any surprise that the sector struggles with managing data as an asset?
The duck test
What is an asset? We all think we know what they are but it’s tricky to define. Ask three managers and you’ll get at least four answers. We could do worse that try the duck test: “If it looks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck.”
Let’s think about the things that housing providers consider as assets and the features that set them apart. Here’s my list of candidates to be considered as assets:
- Cash;
- Data;
- Intellectual property;
- Materials and other physical assets;
- People;
- Property
What are the important characteristics that distinguish them?
- Duplicated – it can be copied without significant cost or loss of quality;
- Maintained – regular maintenance is required;
- Owned – the ownership is clearly defined;
- Real – it must exist in physical space;
- Valued – it has a well-defined monetary value in the financial accounts.
The ability of data to be copied and shared without limit at no cost is unlike any other asset. That’s its greatest strength but it’s also a weakness if it’s not controlled, resulting in data breaches, inconsistent data and unmanageable storage needs.
Data never wears out or needs to be repaired. This is like other intangible assets such as cash and intellectual property. It’s also like people (well, we do retire, take holidays and need to visit the doctor, for example, but people generally tend to look after themselves). A corollary is that quality is exceptionally important; if it is created once and can be reused infinitely, then we may never replace it with a new, higher quality product like we do with physical things such as a boiler. Data’s value is intrinsic to its ability to be reused, so if the quality is right then it’s much more likely to be reused and reuse is more efficient as no work is needed to fix errors.
All assets except people and data have well defined ownership. For people, in a way, we own ourselves and are self-governing. But in the housing sector (and commonly elsewhere), data typically doesn’t have clear ownership, and that’s a big problem. Who has the authority to make decisions and decide the rules about property, financial and customer data in your organisation? Frequently nobody does, and when a decision is forced, such as when a new IT system is commissioned, somebody does their best to decide on the rules. This goes often awry because they haven’t considered all of the stakeholders who depend on that data or the rules are inconsistent across the different IT systems. This lack of governance can cause untold chaos, manual rework and expense.
Data doesn’t physically exist; like other intangibles, you can’t put your hands on it. And no, cash typically isn’t a wad of notes in a vault, more often it’s zeros and ones in a bank’s computer systems. Being virtual leads to enormous confusion if your data isn’t managed properly. You need to have a clearly defined master record for each kind of data you store. If not, how do you make sure you’ve updated the golden record and how can you demonstrate that your regulatory returns are based on the right data?
Cash, IP, materials and property are financially accounted for with clear rules and procedures, whereas people and data aren’t. Again, people are a special case, but data can be valued and is increasingly being monetised. Housing providers have very detailed and rich information and often they are giving it away freely to commercial organisations such as credit agencies. There are significant opportunities for housing providers to use data to target services to customers and optimise asset management, with substantial financial benefits.
What does good look like?
We’ve seen that data isn’t like the bricks and mortar world of housing. This helps explain why the sector has found managing data so difficult. The Regulator of Social Housing is increasingly interested in Registered Providers’ data – it’s a recurring theme of its publications, judgements and notices. Can you sleep easily, with the confidence that all of the data in your regulatory returns can be traced back to trustworthy facts in your systems of record?
What’s needed is a simple description of the data that’s critical to the organisation, who has authority to make decisions about it and what the rules are for handling that data – this is ‘data governance’. Although it’s standard practice in most other sectors, it’s relatively new to housing but it will become an increasingly important tool to manage data as an asset and for the assurance of good regulatory behaviour.
Andrew Morris is the managing director of Data Associates.
