A revolution in the sharing of knowledge…

Transforming e-Knowledge
TABLE OF CONTENTS     Infrastructures, Processes, Capabilities, and Cultures   © SCUP 2003
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Value on Investment (VOI) — A New Benchmark

 

 


Chapter 5

Infrastructures, Processes, Capabilities, and Cultures

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Gartner introduced the concept of value on investment, driven by its observation that in the Knowledge Economy, intangible assets such as knowledge, networks, collaborations, and communities of practice are the source of most new products, services, and experiences. Consequently, managing and leveraging these so-called intangible assets will become an imperative for all kinds of organizations. Business and governmental organizations have been early adopters of these concepts. Gartner (2001) predicts that “by 2005, 50% of Fortune 1000 companies will identify an owner for workplace initiatives, formally track and manage intangible assets, and measure investment vs. value creation on these initiatives (0.6 probability).” Other learning enterprises are likely to be following close behind.

 

The intangibles tracked by VOI are roughly the same elements that are needed to change enterprises’ e-knowledge ecology. This suggests that most organizations can turn their existing processes for developing ICT infrastructure into a far more effective change agent by expanding the measurement standards from ROI to VOI. The following table compares the relationship between ROI and VOI concepts.

ROI is still an important component of VOI. In some tactical applications, ROI may be sufficient justification, by itself, to proceed with a technology investment. Consider the following examples from higher education settings:

     

Return on Investment (ROI)

 

Value on Investment (VOI)

ROI is the measure of the value of “hard,” tangible benefits from technology initiatives.

 

VOI is the measure of the total value of “soft” or “intangible” benefits derived from technology initiatives. ROI is part of VOI.

 

     

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  Knowledge-based initiatives are often unfocused and not linked adequately to business outcomes. Leveraging knowledge assets effectively requires well focused initiatives clearly linked to business performance.
Marianne Broadbent