Measuring the Financial Impact of Knowledge Management: APQC

An article on the APQC site by Nadia Uddin summaries the recent address by APQC President, Carla O’Dell on the financial impact of knowledge management. Headlines include:

“Leading companies recognized by Teleos as the Most Admired Knowledge Enterprises are able to show a total return to investors for the period from 1992 through 2002 of 17.9 percent, compared to 9.1 percent for the U.S. Fortune 500 company median. By measuring the financial impact of knowledge management, companies including Amazon.com, Dell Computer, General Electric, IBM, Microsoft, 3M, the U.S. Navy, and Xerox are able to prove that knowledge management leads to bottom-line results. Based on APQC’s 2003 benchmarking report Measuring the Impact of Knowledge Management, O’Dell said that the median financial impact of knowledge management was $15 million with a range of $7 million to $200 million.”

I have seen similar results before. The validity of results like these naturally comes from the details of the measurement approach but they are consistent with prior findings. There is usually a solid financial impact for KM efforts that are aligned with business processes when the impact on these processes can be determined and measured. APQC has consistently provided helpful publications and metrics on knowledge management. I have purchased a number of them and find them offering some of the most useful guidedance.