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Leveraging It To Improve The Utlisation And Value Of Intangible Assets

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Invited Presentation : The Value of I/T, December, 2002, Toronto, Ontario. ...

Invited Presentation : The Value of I/T, December, 2002, Toronto, Ontario.

This paper represents the author’s experience in ensuring that I/T provides
value and methodologies/processes for measuring same, in particular the value
that I/T imparts to intangible assets within the organisation.

The author will
illustrate this by case studies, showing how I/T has begun to better define it’s role
within ACRES International and improve I/T’s value contribution.

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Leveraging It To Improve The Utlisation And Value  Of Intangible Assets Leveraging It To Improve The Utlisation And Value Of Intangible Assets Presentation Transcript

  • Leveraging I/T to Improve the Utilisation and Value of Intangible Assets Leveraging I/T to Improve the Utilisation and Value of Intangible Assets December 12, 2002 Stephen W.A. MacLean, P. Eng. VAIT ACRES International 06/12/2008 1 Stephen W.A. MacLean, P. Eng. 2002/12/12
  • Leveraging I/T to Improve the Utilisation and Value of Intangible Assets Overview This paper represents the author’s experience in ensuring that I/T provides value and methodologies/processes for measuring same, in particular the value that I/T imparts to intangible assets within the organisation. The author will illustrate this by case studies, showing how I/T has begun to better define it’s role within ACRES International and improve I/T’s value contribution. 06/12/2008 2 Stephen W.A. MacLean, P. Eng. 2002/12/12
  • Leveraging I/T to Improve the Utilisation and Value of Intangible Assets Acres Group of Companies Engineering for a better world. www.acres.com 06/12/2008 3 Stephen W.A. MacLean, P. Eng. 2002/12/12 View slide
  • Leveraging I/T to Improve the Utilisation and Value of Intangible Assets Acres International Offices Worldwide Tehran, Iran CIPM Acres International Beijing, 21 offices across China North America MACE Mumbai & Chennai, India BKS ACRES Pretoria, South Africa INCA Santiago, Chile 06/12/2008 4 Stephen W.A. MacLean, P. Eng. 2002/12/12 View slide
  • Leveraging I/T to Improve the Utilisation and Value of Intangible Assets Acres has Worked in 117 Countries Worldwide 06/12/2008 5 Stephen W.A. MacLean, P. Eng. 2002/12/12
  • Leveraging I/T to Improve the Utilisation and Value of Intangible Assets ACRES Vision—Purpose To be a major contributor to the success of our clients, providing comprehensive solutions, utilising intellectual leadership & leading-edge technologies 06/12/2008 6 Stephen W.A. MacLean, P. Eng. 2002/12/12
  • Leveraging I/T to Improve the Utilisation and Value of Intangible Assets ACRES Vision—Values Client-focused Integrity A culture embodying competitive spirit, adaptability and profitability Committed to the sustainable well being of society Rewarding innovation, teamwork, entrepreneurship and performance 06/12/2008 7 Stephen W.A. MacLean, P. Eng. 2002/12/12
  • Leveraging I/T to Improve the Utilisation and Value of Intangible Assets VALUE : Etymology: Middle English, from Middle French, from (assumed) Vulgar Latin valuta, from feminine of valutus, past participle of Latin valEre to be worth, be strong Date: 14th century 1. a fair return or equivalent in goods, services, or money for something exchanged 2. the monetary worth of something : marketable price 3. relative worth, utility, or importance something (as a principle or quality) intrinsically valuable or desirable 4. 06/12/2008 8 Stephen W.A. MacLean, P. Eng. 2002/12/12
  • Leveraging I/T to Improve the Utilisation and Value of Intangible Assets I/T Value 1. Keeping the ‘lights' on 2. Productivity/process Improvements 3. Business/Asset Transformation 06/12/2008 9 Stephen W.A. MacLean, P. Eng. 2002/12/12
  • Leveraging I/T to Improve the Utilisation and Value of Intangible Assets I/T Value Today, the value provided by effective I/T can go well beyond cost reduction and increasing productivity. However, achieving the ‘basics’, which are so often not achieved, must be a priority in the much tougher business climate we live in today. Today, I/T has the potential to help transform the way businesses operate – to trigger massive changes in culture, process and the way people interact with one another. These changes can be akin to opening Pandora’s box if not managed properly. Even then, many of the significant benefits are intangible and very difficult to measure and comprehend. 06/12/2008 10 Stephen W.A. MacLean, P. Eng. 2002/12/12
  • Leveraging I/T to Improve the Utilisation and Value of Intangible Assets I/T Value Measurement Typically, organisations have used ROI as the measure for identifying and tracking project value. ROI is generally very hard to measure on I/T projects and, almost invariably, the ROI is generated from numbers created or assumed to justify the project. As a result, these numbers are rarely defenceable and are rarely confirmed after the fact. This is particularly true of large ERP and CRM projects and companies get a false sense of security that these huge projects will pay off as advertised – they rarely do. The numbers are often so impressive and/or so hard to understand or justify, that no-one questions them. Today, ROI is treated as a Rite of Passage, instead of the roadmap to/for success it should be. 06/12/2008 11 Stephen W.A. MacLean, P. Eng. 2002/12/12
  • Leveraging I/T to Improve the Utilisation and Value of Intangible Assets I/T Value Measurement However, the problem is actually deeper than this! According to Paul Strassman1 , there is no relationship between what a company spends on I/T and it’s profitability. Furthermore, every seven years, we have torn up what has gone before and started again. There have been, according to him, 8 cycles of build and scrap since 1946 and he has the data to prove it. Others, such as David Norton, one of the two original developers of the Balanced Scorecard methodology, have agreed that there isn’t a direct relationship between I/T investment and the bottom line. Clearly then, in the long term, across multiple projects and technology shifts, ROI is not the way to measure I/T value. 1 Financial Times : June 27, 2001 06/12/2008 12 Stephen W.A. MacLean, P. Eng. 2002/12/12
  • Leveraging I/T to Improve the Utilisation and Value of Intangible Assets I/T Value Measurement I/T spending, is, however, critically important to an organisation, but, it is in largely a catalytic role. I/T Spending promotes factors that clearly influence and determine profitability, but which are generally very hard to measure on their own. Factors such as : Competitive advantage Strategic positioning Organisational knowledge and competencies/learning Collaboration and knowledge sharing Management style and competencies Quality etc. …. In other words, intangible assets … 06/12/2008 13 Stephen W.A. MacLean, P. Eng. 2002/12/12
  • Leveraging I/T to Improve the Utilisation and Value of Intangible Assets Management skills Organisational capabilities Intellectual capital/knowledge External relationship capital This can be further broken down into : Brand equity/Reputation Alliances and networks Human capital Technology and processes Innovation 06/12/2008 14 Stephen W.A. MacLean, P. Eng. 2002/12/12
  • Leveraging I/T to Improve the Utilisation and Value of Intangible Assets I/T Value Drivers For Intangible Assets Integration Flexibility Ease of access to data Degree of collaboration Data is entered once and reused. Make it easy for customers to do business with ACRES ALL Applications/data are Web-enabled and accessible world-wide via VPN Forge and enforce an alignment between business Strategy and the I/T function. To make I/T valuation work, it MUST be embraced not just within the I/T department. 06/12/2008 15 Stephen W.A. MacLean, P. Eng. 2002/12/12
  • Leveraging I/T to Improve the Utilisation and Value of Intangible Assets Processes to ensure High I/T Value Incorporate an iterative, RAD prototype-based approach to the project. Practice a demonstration-based review process, both for working prototypes and incremental releases. Collaboration. Business and I/T collaborate on how best to implement or build the I/T product and what functionality the product should provide between iterations. Practice requirements traceability and use metrics to measure the quality of the system as it moves from a working prototype to a full product. 06/12/2008 16 Stephen W.A. MacLean, P. Eng. 2002/12/12
  • Leveraging I/T to Improve the Utilisation and Value of Intangible Assets I/T Value Metrics for Intangible Assets Since the proof of I/T value is in the products I/T delivers, the following metrics are product oriented : Collaboration : % Applications Web enabled % VPN used (out of available) % Vendors and Customers ‘networked in’ Integration : % Applications Integrated % Entities Integrated % systems use workflow triggers Workforce Competency : % workforce actively using new technologies/systems % workforce trained in new technologies/systems 06/12/2008 17 Stephen W.A. MacLean, P. Eng. 2002/12/12
  • Leveraging I/T to Improve the Utilisation and Value of Intangible Assets Case Study 1 : I/T Value Transfer Competitive Advantage : Re-use/Sale of internally developed software. ARSP™ (Acres Reservoir Simulation Program) is a general multi-purpose, multi-reservoir simulation program which determines the optimal allocation of water for each time-step. 06/12/2008 18 Stephen W.A. MacLean, P. Eng. 2002/12/12
  • Leveraging I/T to Improve the Utilisation and Value of Intangible Assets Case Study 2 : I/T Value Intellectual Capital : ACRES has made extensive use of our Intranet for knowledge capture. The Intranet and it’s embedded knowledge is available to ACRES employees worldwide through our VPN. 06/12/2008 19 Stephen W.A. MacLean, P. Eng. 2002/12/12
  • Leveraging I/T to Improve the Utilisation and Value of Intangible Assets Case Study 2 : cont’d I/T Value Intellectual Capital : ACRES has made extensive use of our Intranet for knowledge capture. This includes all employees’ c.v’s and voluminous amounts of project and marketing information. 06/12/2008 20 Stephen W.A. MacLean, P. Eng. 2002/12/12
  • Leveraging I/T to Improve the Utilisation and Value of Intangible Assets Case Study 2 : cont’d I/T Value Intellectual Capital : ACRES has made extensive use of our Intranet for knowledge capture. This includes policies, procedures for all aspects of the business. 06/12/2008 21 Stephen W.A. MacLean, P. Eng. 2002/12/12
  • Leveraging I/T to Improve the Utilisation and Value of Intangible Assets Future Web Portal Case Study 3 : * Vendors * Customers I/T Value Future e-Business Applications ot w & n io e A evi at EM R AIM C /CA nn Handheld D A A Devices Purchasing Document C Materials Manage- Manage- ment ment Corporate Data Human Resources Knowledge Benefits; Time & FINANCE Management & Attendance, A/R, A/P, G/L, Fixed Assets Payroll, Collaboration : Training, etc. Project Costing Opportunity ACRES has just Standardised Integration & Capacity Mgmt. Hub or API Layer selected an Planning s) s C pp n( es us li io in A Integrated to ca at us m tio lic f B pp o Management A ne t em t en n ag jec Li System an ro MP e-Mail Workflow Applications Data Warehouse MS EIS P3 Executive Information System PROJECT Not a complete picture 06/12/2008 22 Stephen W.A. MacLean, P. Eng. 2002/12/12
  • Leveraging I/T to Improve the Utilisation and Value of Intangible Assets Case Study 3, cont’d : I/T Value Customers Opportunity Opportunity Opportunity Opportunity 1 2 3 4 Corporate Project Management Knowledge Base Proposal Proposal Proposal Proposal Knowledge Management & Create Create Collaboration : Create Project Budget Resources Project Collaboration Capturing knowledge Project 1 Resource where it can be Schedule Project Project Project Contract 1 Activities Budget Team used by Work Internal Contract Revenue Bill Order Resources applications and Project 2 Rules Plan Plan Search used to drive Assign Project Project Project Engine Activities Budget Team actions Job External Search Resources increases the Contract 2 Project 3 Contract Revenue Bill Project Project Project value of the Rules Plan Plan Activities Budget Team knowledge and Resource Profile makes for better, more General T&E Invoices PO’s timely decisions Employee Employee Billing Employee Ledger Competencies Project Data Accomplishments 06/12/2008 23 Stephen W.A. MacLean, P. Eng. 2002/12/12
  • Leveraging I/T to Improve the Utilisation and Value of Intangible Assets Case Study 3 : I/T Value Knowledge Management & Collaboration : Web-based alerts and workflow automation increases collaboration & empowers action. 06/12/2008 24 Stephen W.A. MacLean, P. Eng. 2002/12/12
  • Leveraging I/T to Improve the Utilisation and Value of Intangible Assets Case Study 3 : I/T Value Knowledge Management & Collaboration : Web-based approval and manager- staff interaction, regardless of their physical location, increases communication and collaboration. 06/12/2008 25 Stephen W.A. MacLean, P. Eng. 2002/12/12
  • Leveraging I/T to Improve the Utilisation and Value of Intangible Assets Summary/Conclusions I/T projects, in particular large ones, are very difficult to justify and it is becoming increasingly harder to do so, as they demonstrate little, if any measurable impact on the bottom line. As a result, ROI is not a valid measure for ensuring long-term value from I/T projects. Instead, I/T projects which deliver value do so in largely a catalytic manner and promote factors that clearly influence and determine profitability. In addition, I/T projects which provide high value do so largely by improving the value and utilisation of intangible assets. ACRES has seen the value of it’s I/T investments in intangible assets, but has only begun enhancing them further and measuring that value. 06/12/2008 26 Stephen W.A. MacLean, P. Eng. 2002/12/12
  • Leveraging I/T to Improve the Utilisation and Value of Intangible Assets THANK YOU !!! QUESTIONS? 06/12/2008 27 Stephen W.A. MacLean, P. Eng. 2002/12/12