Wednesday, March 17, 2004

Repost from Knowledge_Management@yahoogroups.com

--- In Knowledge_Management@yahoogroups.com, "Ken Standfield" wrote:
>
> Proving the business case and ROI for KM is essential for the wide
> spread adoption of KM within organizations. Without hard figures, KM
> projects become a "nice to have, but not essential" project. If the
> robust metrics are used, KM projects become a "must do, must support,
> and must fund" project.
>
> I'm interested in speaking to group members who are interested in the
> subject of measuring the financial benefits of KM and creating the
> business case for KM.
>
> Best regards,
> Dr Ken Standfield,
> www.intangibleStandards.org

Ken:

One paper you may want to consider is Bontis and Fitz-ens (2002). "Intellectual capital ROI: a causal map of human capital antecedents and consequents" Journal of Intellectual Capital. 3(3). 223-247. A preprint is available at

http://www.business.mcmaster.ca/mktg/nbontis//ic/publications/JICBontisFitz-enz.pdf


It seems that a number of KM projects proceed in to the trap of ROI (see http://www.darwinmag.com/read/030102/roi.html for discussion of ROI limitations). ROI as a tool was developed to evaluate tangible assets and works quite well for solid assets such as machine tools. If we are to believe our KM pundits, however, KM involves both social aspects and technology.

Business units involving both technology and social considerations aren't new to organizations. In fact, most staff positions--such as legal counsel or accounting--involve these aspects yet don't have to use financial metrics to justify their existence.

As I a thought experiment, I suggest exploring how accounting or law departments justify their existence. Do they require metrics? Why? Why not? What historical antecedents led to their reified existence within organizations? Can KM evolve in a similar manner?

Cheers,
George


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