Information costs now account for 3% of revenues
Over the last 20 years, information has become the lifeblood of most organizations, providing insights and context to shape strategies and inform decision making. Couranto research indicates that, on average, organizations spend up to 3% of their annual revenues on third party information. By comparison, prior to the Covid shutdown, Amex found that corporate travel accounts for approximately 1% of revenue.
3% is significant and it comes off the “bottom line”, but who is managing this expense in your organization? Who is making sure you get value for money and measuring the return on this investment? How can you maximize your buying power, leverage economies of scale and use technology to consolidate this category spend, on an e-procurement platform for example?
Have organizations lost control of their information costs?
In the past, many organizations retained a centralized department for handling this critical asset. The corporate information center was a centralized hub for the acquisition, management and distribution of information. Over the last 30 years, though, technology has eroded the need to curate information this way. The internet is everywhere and information is ubiquitous, creating the perception that some of these corporate library functions are redundant. Ironically, now, in the midst of the information-based Fourth Industrial Revolution (as defined by the World Economic Forum), the costs and potential benefits of effective information management have multiplied exponentially.
Good information was not, is not and will never be free.
The most common misconception is that information is free. Far from it. Organizations are spending more on information than ever before. Organizations need robust sources of information to support and inform their decision making, monitor competitors, identify market opportunities, measure their effectiveness and profitability and manage or mitigate risk.
In the past this was done using a small number of large suppliers providing multiple streams of information through a centralized team. Today, in an increasingly sophisticated and connected world there is a plethora of suppliers offering specialized sources to cater to every nuance of a market or industry. The internet has enabled new suppliers to come to market by removing barriers of entry, most notably cost. The result is that most organizations continue to do business with a few large players, but they are augmented with a long tail of smaller, niche providers catering to the hyper specific needs of the business. Our experience suggests that up to 80% of suppliers account for about 20% of information spend.
Is this the perfect storm?
Many organizations are waking up to a dilemma. Having reduced, removed or otherwise delegated their capacity for managing information, they need to figure out how they can control this spend category. Managing a burgeoning spend on products that has been delegated and defrayed across their businesses is a massive challenge. Unlike other functions and categories, there may not be anyone assigned to “own” information strategy, policies or procedures. Without this ownership, affiliates, departments and individuals use their own devices to acquire what they need to be successful. This self-serve approach is difficult, but not impossible to control.
If you have moved this category into “the too onerous to manage” pile, Couranto can help. Couranto is a strategic information and market data sourcing partner that can maximize the return on your investments, control cost, leverage volume, mitigate risk, improve margins and maximize profits. Do you want to bring this category under control?