Can you imagine losing all business data including your accounts receivable, project data and customer information? What would you do? As business owners with years of expertise in our field, we are proud of the many projects we have completed, the clients that we have long relationships with and the incredible education and project experience of our key staff. For any firm that has been in business for many years, the information about our projects and people is captured in multiple documents, reports, resumes and proposals within our business.
Multiple databases may capture significant company information about your company. If you have a project accounting database to capture time and expense on your projects, there is a significant amount of detailed data about each of these projects. You may also have other data sources including a CRM database, HR system, proposal and photo library or Outlook that captures a wealth of information needed and used every day to manage projects, people, maintain client relationships and win new business. What is the value of all of this important data?
Most firms do not recognize or put adequate value on their project data, and therefore do not protect its integrity, security or preservation in an adequate manner. The intention for this article is twofold – to try and help you put a "price" or value on your project data, and help create an urgency around assessing and improving the disaster recovery methods employed by your firm.
While we know there is a value to our experience and the projects our firm has completed, we do not show this asset on our balance sheet with a dollar value. For a firm that has been in business a long time or worked on many high profile projects, the value could be significant. These projects help us win many new projects and gain notoriety and publicity. We use this information daily when bidding new projects and analyzing our performance and profitability to determine where to cut costs or change the scope of a contract.
For a firm with 10 years experience, averaging 25 employees over the years, the data could be valued in the ballpark of $ 250,000! This is based on personally witnessing many clients that have lost their data, and the incredible cost of re-creation. Losing data is more common than you might think. During my 23 years of software consulting, firms lost data due to fire, hardware failure, software failure, theft, backup failure, sabotage and viruses.
While many of our clients recognize the value of their past project data, we are constantly astounded by those clients willing to "start over" and not convert their own past project history when converting to a new system. For example, in 2008, we had two of our Deltek FMS clients lose all of their system data. In both cases the cause was hardware failure with malfunctioning backups. Our consultants saw first hand the huge amount of work and unbelievable cost of trying to re-create this data from old reports, invoices, bank statements and timesheets.
But losing the data is just a small part of this disaster experience. Our clients now lack the ability to bill on time or collect outstanding receivables, as well as track costs on their current projects. These costs added up exponentially. Because of payroll and billing deadlines, these clients had to get up and running as quickly as possible. They faced challenges due to incomplete information. Both the financial and intangible costs of this scenario were intense. Our goal is to help our clients avoid this type of business disaster.
Measuring the business value of your project history and the cost to replace lost history will help you identify how important this data is to your firm. Our company has developed a questionnaire to help our client's value their historical data. The questionnaire identifies critical information about your firm such as number of years in business, number of and duration of projects, employees, number of years of historical data available and the types and complexity of projects you have completed or are in progress. It will also identify the number and types of proposals generated each year, the types of data being tracked in addition to basic accounting (HR, Govt. Compliance, Payroll, etc) and the diversity of experience of your team. Once this data has been accepted, you will begin to understand the value your data provides to your firm each month, and the cost to replace it (or opportunity cost of not having it).
This data must be protected and knowing its true value to your firm will hopefully help you make better decisions about future data conversions, software upgrades, internal controls, security, disaster recovery, virus protection, possible mergers and acquisitions and hardware purchases. Although this historical business asset can not be reflected on your balance sheet, you can start to Incorporate the belief that this valuable asset is critical to your firm's practices and decisions.
The intention for this article was not to scare you. It was to help you recognize the tremendous asset that your firm has because of all of the amazing project experience in your system. It is also meant to motivate you to determine the value of this data and do everything you can to protect it just like you would any other asset of this amount.