This article was first published in the 3rd quarter 2017 edition of Personal Finance magazine.
CAPE TOWN - “Quality” has become a buzzword. But what does it mean? In simple terms, “meeting expectations”. Isn’t that what you want from your investments?
Whether you prefer to invest in the sectors or portfolios you know and trust, or the ones your adviser recommends, you need information. Information has reference to meaning and memory. Information relates to description, definition or perspective.
Today, information originates from from digital data. Data are facts and statistics collected for reference and analysis.
Quality digital data is the lubricant of the digital age and the Fourth Industrial Revolution. Digital transformation drives digital business. Quality digital data connects people, things and business.
“The key to doing it right is quality data. Quality data is the ‘new gold’,” SAP chief executive Bill McDermott was quoted as saying earlier this year.
Sophisticated academic research and conferences are dedicated to the “digital twin” (a dynamic digital representation of an industrial asset). The mapping of quality digital data to drive machine-to-machine communication and business intelligence is the highway of our future world.
The question facing investors is: how good is the quality of the data in company prospectuses and
investment factsheets? Is it a true reflection of the company’s health and forecasts? Does the information provide insight into the return I can expect?
Technology is changing rapidly. Take the evolution of the telephone, from the first landline, to the mobile phone, and then to the smartphone. Technology has enabled the smartphone to foster new business models, such as Uber and Airbnb. Who had the confidence to believe that these businesses would succeed, and invest in them? I believe this is just the beginning of a major paradigm shift that will be part of the Fourth Industrial Revolution.
If investment success is based on quality data, questions should be asked about the dimensions of data quality, as well as the ability of listed companies to produce quality data in their daily reports that reflect the organisation’s “digital twin” and the real investment expectations to be achieved.
A smartphone is completely useless without contact and location apps that are based on quality data – not only when the app is downloaded but also whenever it is updated.
The dimensions of data quality - accuracy, completeness, consistency, credibility and correctness – need to be measured in the enterprise environment and collectively assessed. Standards such as ISO 8000 for data-quality measurement and continuous improvement (supporting ISO 9001 process maturity) are being developed. These standards are aimed at enhancing machine-to-machine data exchanges to ensure quality data for information that supports investments.
Let us consider the quality of data provenance as a factor in quality investments.
Dr Salomon de Jager is the chief executive of the PiLog Group.
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