Pakm paper

International Conference on
Practical Aspects of Knowledge Management

Developing a Model for Linking
KMS and IC Measurement

Mário Paulo Pinto

Polytechnic Institute of Porto

1

Agenda

 Introduction
 Intellectual Capital (IC) Measurement Models
 IC Measurement in Portuguese Organizations
 Knowledge Management Systems (KMS)
 The Proposed Model
 Model Validation
 Conclusions

Mário Paulo Pinto
Maria Filomena Lopes
Maria Paula Morais 2

Introduction: clarifying the problem
 KMS and IC Measurement System are normally viewed as separate and
discrete systems, without linkages and connections.

Organizational knowledge

Strategic perspective Operational perspective

IC measurement Gap KMS
system

 Linking them can facilitate the evaluation of the benefits and the impact of
KMS in the value creation

Mário Paulo Pinto

IC Measurement Models Review
IC Measurement Model
Skandia Navigator
Balanced Scorecard  IC Components
Intangible Assets Monitor
Intelect Model  IC measurement metrics
Intellectual Capital Index (stock & flows)
Nova Model
Intangible Value Framework
IC Rating
Intellectual Capital Rating
Heng Model Human Structural
Meritum Guidelines
Danish Guidelines
Capital Capital
Value Chain Scoreboard
Chen, Zhu & Xie Model
40 metrics
Intellectus Relationship 70 metrics
Technology Broker
Citation-Weighted Patents
Capital
Inclusive Valuation Methodology
Total Value Creation
The Value Explorer 33 metrics
The 4-Leaf Model
Mário Paulo Pinto

IC Measurement in Portuguese Organizations

 A study was conducted in Portugal based on a
questionnaire

 Two main aims:
 To know the current practices of Portuguese organizations
relating with IC management & measurement
 To complement the IC metrics systematization with a
practical perspective

Mário Paulo Pinto

IC measurement in Portuguese organizations
HUMAN CAPITAL
Metrics Services Industry Metrics Services Industry

% employees of full-time X X Motivation index X X
% employees of part-time X X Employees satisfaction index X X
% temporary employees X X Nº of employees X X
% specialized employees X X Nº of expert employees X X
Absenteeism rate X X Nº of managers X X
Alternation rate X X Average IT literacy X
Average age of employees X X Average staff literacy X X
Years on company service X X Time spent in training X X
Distribution by age group X X Investment in training programs X X
% male and female X X Nº employees in training programs X
Experience index X X Value added per capita X X
Initiative capacity X X Profits by employee X X
Innovation capability X X Employees turnover X X
Leadership index X X

Mário Paulo Pinto

STRUCTURAL CAPITAL

% critical processes in compliance with X Nº accesses to organizational bases X
manuals
% critical processes with procedure X Rate of knowledge distributed X X
manuals
Process efficiency index X X Diffusion of best practices X
Information systems capacity X X Rate of knowledge accessed/reutilized X
Nº of certificate products X Nº projects in collaboration with external X X
entities
Quality performance (ISO 9000) X X Protocols with innovation entities X X
Nº of tested products X X Nº projects with partners X X
PCs by employee X X New business opportunities identified X
Employees satisfaction index X X New products X
Nº customers per employee X Upgrading projects X X
Employees alternation rate X Employees until 40 years X X
Hours in development X X Innovation capability X X
Hours in training X X Nº innovative ideas that generate new X
products/services

Mário Paulo Pinto


STRUCTURAL CAPITAL (cont.)

Investment in training X X Investment in TI per employee X
Investment in new methods and X Administrative expense per X X
processes employee
Investment in relationship with X Administrative expense/total X X
stakeholders revenues
Investment in IT X X Investment in new competences X X
Investment in IS X X Productivity rate X X

Mário Paulo Pinto

RELATIONSHIP CAPITAL

% small, medium, high customers X X Average time between first contact X
and close transaction
Customers geographic distribution X X Customer visits to the company X X
Average duration of customer X X Business alliances and partnerships X X
relationship
New customers/customers lost X X Company image X X
Orders repetition frequency X Market share in segment X X
Customer satisfaction index X X Investment in marketing X
Nº of customers X X Customer relationship investment X X
Nº of lost customers X X Investment in TI X X
Nº customers /employee X X Revenues per customer X X
Nº of customers claims X X Administrative expenses per X
customer
Sales rate to new customers X X Annual sales per customer X X
Sales rate to new markets X X

Mário Paulo Pinto


 IC metrics identified
 27 metrics for human capital
 36 metrics for structural capital
 23 metrics for relationship capital

 Considerations
 There aren’t strongly differences between the metrics identified
by service and industry organizations
 These metrics will be used to complement the metrics
systematization

Mário Paulo Pinto

KMS Classification

 Business intelligence
 Collaboration systems (groupware)
 Competence management systems
 Corporative portals
 Document management systems
 E-learning systems
 Expert systems
 Knowledge discovery systems
 Knowledge maps
 Workflow systems

Mário Paulo Pinto

The proposed Model
Strategic Objectives &
Success Factors
A MODEL FOR LINKING KMS AND IC MEASUREMENT
intangible assets
Identifying

IC measurement
Realigning critical intangible assets with strategic objectives

IC measurement model
model and selected metrics

Cause-effect relationship
KMS categories
Identifying

Knowledge
Management systems

Measures provided by
Measures provided other systems
IC measurement
measurement
KMS with IC

by KMS
Integrating

system Other
systems

Financial systems

ERPs & CRMs
Quality systems
IC measurement

Others
report
Evaluating
results

Mário Paulo Pinto

Strategic Objectives &
Success Factors A MODEL FOR LINKING KMS AND IC MEASUREMENT SYSTEM
IC MEASUREMENT MODEL
IC MEASUREMENT MODEL
Identifying intangible
Intangible assets
Intangible assets
Human IC metrics
assets

capital
IC measurement model and
Metrics Human capital
specification selected metrics
Structural capital
Relationship capital
Structural Relationship
capital capital
Realigning critical intangible assets with strategic objectives

KNOWLEDGE MANAGEMENT SYSTEMS

Corporative portals
KMS categories

Corporative portals
Collaborative systems IC MEASUREMENT SYSTEM
Identifying

Collaborative systems
Intangible
Expert systems assets
Expert systems
Workflow systems
Workflow systems
Measures Measurement
E-learning systems provided model
E-learning systems Measures
by KMS

Measures provided
Competence management systems Metrics

by other systems
Competence management systems

Knowledge discovery systems systems
Integrating KMS with

Knowledge discovery
IC
IC measurement

Business intelligencesystems measurement
Business intelligence systems

Knowledgemaps
Knowledge maps
OTHER SYSTEMS
OTHER SYSTEMS
Document management systems
Document management systems

Financial systems
Quality systems
Financial systems
IC measurement report

ERPs & CRMs
Other sources
Quality systems

Other sources
ERps & CRMs
Knowledge
Knowledge Knowledge
Knowledge Knowledge
Knowledge Knowledge
Knowledge
creation
creation storage
storage distribution
distribution application
application
KNOWLEDGE MANAGEMENT LIFE CYCLE
KNOWLEDGE MANAGEMENT LIFE CYCLE
valuating

Measures provided by KMS to quantify IC
metrics: methodology
IC MEASUREMENT

IC measurement Survey from
models Portuguese organizations

theoretical approach practical approach
IC metrics
systematization

Measures provided by KMS to quantify IC metrics

KMS CATEGORIES

Main Issues & functionalities

52 software tools from different KMS categories were analyzed

Mário Paulo Pinto

metrics
KMS categories Measures provided by KMS

-Rate of knowledge availability
-Rate of knowledge accessed/reutilized
Knowledge Maps -Contributions to organizational knowledge base (#)

-Rate of knowledge reutilized/distributed knowledge

-Contributions to organizational knowledge base (#)
-Projects in collaboration with external entities (#)

-Projects developed in collaboration with other workgroups (#)

Collaboration Systems -Rate of best practices diffusion

-Questions reported and answered in forums (#)

-Rate of knowledge distributed according employees profiles

-Expert employees (#)

-Experts with specialization degree (#)
-FAQs accessed (#)

Expert systems -Contributions from experts: rolls, best practices, advices, suggestions (#)

-Rate of expert knowledge reutilized

-Contributions to organizational bases (#)

Mário Paulo Pinto

metrics

-Critical processes completed without errors (%)
-Critical processes in compliance with manuals (%)

Workflow systems -Processes upgraded (%)

-Processes completed in time (%)

-Automated business processes (%)

-New patents (#)
-Patents in registration (#)

Knowledge discovery -Years average of registered patents

systems -Rate of knowledge reutilized in new contexts

-New ideas to upgrade products, services or processes (#)

-New business opportunities identified by innovation processes (#)

-E-learningtraining programs (#)
-Hours spent in training programs
E-learning systems
-Employees with specialization degrees based on e-learning programs (#)

-Rate of employees in training programs

Mário Paulo Pinto

metrics

-Employees by group age (%)
-Average age of employees

-% of female and male employees

-Rate of absenteeism

Competence -Rate of employees rotation
management systems -Employees with advanced degrees

-Employees satisfaction index

-Average years in service

-Average literacy & average literacy in IT

-Recent employees (less two years) (%)

-Market share in the segment
-Rate of investment in new markets

-Geographic customers distribution

-New costumers/costumers lost (%)
Business intelligence
-Rate of sales to new markets

-Rate of sales to new customers

-Customers distribution (%): small, medium, big customers

-New business opportunities captured

Mário Paulo Pinto

metrics

-Accesses to knowledge repositories (#)
-Contributions to knowledge repositories (#)
Document management
-Rate of knowledge accessed/reutilized
systems

-Rate of knowledge distributed according employees profiles
-Rate of knowledge distributed/applied
Corporative portals -Rate of knowledge accessed/reutilized

Mário Paulo Pinto

Model validation

 The model has been evaluated by an expert panel
in order to test his validity.
 A questionnaire was sent to 40 experts (researches,
practitioners and consulters)
 It includes 9 questions with a five-point scale
 14 valid answers were received, corresponding to a
response rate of 35%

Mário Paulo Pinto

Model validation
Scale Totally Much Little Nothing Don’t
Questions know
1. Do you consider the model useful? 46% 54% 0% 0% 0%
2. Do you consider the model
comprehensive? 15% 77% 8% 0% 0%

3. Do you consider the model complete?
0% 50% 33% 0% 17%

4. Do you agree with the model components?
8% 84% 8% 0% 0%

5. Do you consider the model structure
coherent? 8% 92% 0% 0% 0%

6. Do you agree with the IC measurement
model component? 31% 61% 8% 0% 0%

7. Do you agree with the KMS component?
15% 85% 0% 0% 0%

8. Do you agree with the IC measurement
system component? 8% 84% 8% 0% 0%

9. Do you agree with the measures provided
by KMS to quantify the IC metrics? 8% 76% 8% 0% 0%

Mário Paulo Pinto

Conclusions

 The model is an attempt to show the KMS contribution to the
IC measurement, filling the gap between these systems

 It contributes to evaluate the success (benefits) or failure of
KMS initiatives

 It enables a more automated and systematic IC measurement

Mário Paulo Pinto

Conclusions and future work

 Future work
 Improve the model specifications
 Model validation through case studies

Thank you for your attention!
Mário Paulo Pinto
Email: mariopinto@eseig.ipp.pt

Mário Paulo Pinto

Pakm paper

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