How IT Helps Leverage Intellectual Capital



Even when they are truthful, enterprises' balance sheets do not reveal some important aspects of interest to every stakeholder. Ask yourself whether the following factors are important when evaluating the future profits of an enterprise:

  • Corporate reputation
  • Brand awareness and brand loyalty
  • Customer intimacy (for example, satisfaction or loyalty
  • Supplier intimacy
  • Organizational or process excellence
  • Quality of "human capital"

None of these factors, however, will appear — at least in quantitative terms — in financial reports. Financial reports tell us mostly about the past. However, there are additional factors to help us forecast a company's financial performance. These are the "intangible assets," often referred to as "intellectual assets" or "knowledge assets."

In the western world's post-industrial economy, it has become difficult to evaluate companies without taking intangible assets into account. And this does not apply solely to "knowledge intensive" enterprises. For, as Thomas Stewart, senior editor at Fortune magazine, put it, "a ton of corn embeds 75 percent of knowledge; a barrel of oil about 50 percent." Even for typical brick-and-mortar businesses, acquiring and exchanging information about products has become at least as important as the products themselves. These are knowledge-based activities, distinct from the physical manipulation of raw materials to add value.







Businesses must balance traditional investments in hierarchical management systems with aggressive investments in making people effective. Leadership, collaboration and learning will unleash IT's economic value.
16 July 2002 |  Diane Morello   		 
 
 
 
 
 
 
 


In the post-industrial economy, most of an enterprise's value is rooted in intellectual capital. Methodologies are converging toward a common framework of definitions.
18 July 2002 |  Paolo Magrassi   		 
 
 
 
 
 
 
 


IT investments take many forms, which leads to complex processes for identifying and articulating the value created. IT investments require a multifaceted analysis of financial, nonfinancial and synergistic returns.
16 July 2002 |  Regina Casonato   Kathy Harris   		 
 
 
 
 
 
 
 


To accurately gauge IT's real impact on productivity, noneconomic dimensions — such as speed and convenience — must be added as a valuable part of output.
24 July 2002 |  Bill Rosser   		 
 
 
 
 
 
 
 




Through 2005, 50 percent of workplace investments will focus on the individual productivity of the knowledge worker. Most of the benefits of these investments will not generate returns for the enterprise.
17 July 2002 |  Regina Casonato   Kathy Harris   		 
 
 
 
 
 
 
 


Like any other asset, intellectual capital has a life cycle. To leverage intellectual capital for financial advantage, enterprises must understand how IT affects that life cycle.
16 July 2002 |  Colleen Young   		 
 
 
 
 
 
 
 


The Financial Accounting Standards Bureau's changes to intangible asset measuring rules will affect many high-technology providers. Whether the effects are positive or negative will depend on the vendor.
25 July 2002 |  Debra Logan