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.

1. 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

2. 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

3. 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

4. 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

5. 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

6. 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

7. 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

8. 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

9. 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

10. 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

11. 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

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

13. 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

14. 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

15. 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

16. 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

17. 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

18. 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

19. 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

20. 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

21. 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

22. 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

23. 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

24. 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

25. 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

26. 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

27. 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