January 7, 2022
The Data Monetization Index (DMI) for Information Technology companies varies by industry and company:
- Application and Systems Software companies like Salesforce, Workday and ServiceNow have DMI’s in the range of 0.03% to 0.07% driven the valuation of product analytics and employee data
- Information Technology Consulting companies like Accenture, Cognizant and DXC have DMI’s in the range of 0.02% to 0.07% based largely on the valuation of employee data
- Microsoft has a DMI of 7.37% driven by the valuation of data relating to LinkedIn members, GitHub developers, product analytics, advertising-driven users and employees
- Apple has a DMI of 3.56% driven largely by their services business including App Store, AppleCare, Apple Music and iCloud
A higher DMI is generally preferable across companies and industries. By way of reference, internet companies have a higher DMI because most of their enterprise value is derived from data. For example, Google’s DMI is 93 percent as we will discuss in a separate blog.
- Data Monetization Index (DMI) = Data Valuation / Enterprise Value
- Data Valuation is the sum of the valuation of covered datasets including developers, product analytics, employees, user behaviors for advertising and members
- Enterprise Value = Equity Value + Long Term Debt – Cash, a key metric used in the investment community
- Product analytics data is user interaction behavior gathered by SaaS companies to help improve the quality of their products
The YDC team recently published a DMI for key Information Technology companies in the United States. Here is an example for Microsoft along with a benchmark for other companies in the industry.
The data valuation relies exclusively on publicly-available data sources such as SEC filings, industry research and comparable transactions from November 2021. The total value of data will likely be higher once additional datasets such as B2B customers and Microsoft gamers are covered. Going forward, we will be working to make the data valuation more real-time.