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What's data fungibility got to do with delivering business insight?

What’s data fungibility have to do with delivering business insight? No, really, I’m asking.

According to Burton Group analyst Lyn Robison, one reason CIOs are struggling to deliver business insight to the business — as opposed to information — is technology’s misguided relationship with data. IT professionals of a certain age, he said, tend to view data as “sawdust,” a byproduct of the processes that information systems so brilliantly automate.

“Many IT professionals still haven’t realized that we actually store this data and can do useful things with it,” said Robison, who presented his views at last week’s Catalyst conference in San Diego.

For process-oriented IT pros, data is an interchangeable commodity, to be shoveled into databases just as oil is pumped into steel barrels — or at best, organized by type like cut lumber in a warehouse, one plank as good as another.

“The real world is filled with unique things that we must uniquely identify, if we are going to capture those aspects of reality that are important to us,” Robison said. To be useful, data needs to be a snapshot of reality. Nonfungible assets, unlike fungible commodities, need to be identified individually. And the IT department needs to manage those identifiers so the business can zero in on the data that matters. Fungibility matters.

So, what’s fungible? Currency, for example, usually is considered fungible. One $5 bill is as good as another. Buildings are nonfungible. Transactions are nonfungible. Customers are nonfungible. When nonfungible assets are treated like fungible commodities, the consequence is “distortion and incomplete information,” Robison said.

A large university Robison worked with recently discovered it was paying costly insurance premiums for five buildings it no longer owned, because its information systems managed the university’s buildings as interchangeable, he said. A Florida utility company paid out millions of dollars to the families of a couple tragically killed by a downed pole’s power line — only to discover afterwards that another entity owned the pole. “The liable entity got off, because the utility poles around that metro area were not uniquely identified,” he said.

It turns out, however, that discerning the difference between fungible commodities and nonfungible assets is not as clear-cut a task as it might appear, Robison conceded. “Defining fungibility is something of an art,” he said. Just like in life, context is everything.

However, the bigger problem in managing data to deliver business insight, according to Robison, is that today’s enterprise systems do not identify nonfungible data assets “beyond silo boundaries.”

“Primary keys are used as identifiers, but are not meant to be used beyond the boundaries of any particular database silo,” he said.

After his presentation, I learned that Robison has developed something he calls the methodology for overcoming data silos (MODS), “a groundbreaking project structure for bridging data silos and delivering integrated information from decentralized systems,” according to his recent paper on the topic. You can hear Robison talk about using MODS here. Let me know what you think.

Oh, and how you distinguish between the fungible and the nonfungible.