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The Value of Knowledge Management 343

KM health and progress. The fi nal stage will usually consist of a combination of dif-
ferent metrics in order to show the value added across the organization and for its
different stakeholders.
As to how we should measure KM, there are a variety of anecdotal (e.g., one-off
stories or anecdotes garnered from employees) to quantitative (e.g., statistical and
mathematical analyses of large data sets such as a survey questionnaire administered
to two hundred people) to qualitative measures (more in-depth interpretative
approaches, such as interviewing ten people several times to gather narrative data that
is then thematically organized). Quantitative measures assign a numerical value to an
observable phenomenon and provide concrete evidence such as causality or fi nancial
metrics. Examples would include usage metrics from the company intranet, the time
spent accomplishing a task with and without KM (the latter being a baseline) and time
saved, for example, on product development or in answering client queries. Qualita-
tive measures provide more context and details about the value (e.g., perceptions),
which are often diffi cult to measure quantitatively. Qualitative measures can serve to
augment quantitative measures by providing more interpretation and more meaning
with respect to the data. Anecdotal data consists of “ serious stories, ” for example, an
interviewee describing a lesson they learned or an innovation they made use of. All
stakeholders love stories and they often help make a metrics report or presentation
“ more human. ”

KM Return on Investment (ROI) and Metrics

There are a variety of methods to assess how well KM is succeeding (milestones and
formative evaluation) and how well KM has helped attain organizational goals (out-
comes and summative evaluation). KM metrics include quantitative, qualitative, and
anecdotal methods. Each method presents different advantages and disadvantages and
often, a combination of different measure may be called for.
Many businesses are fi nding that in order to gain buy-in from senior management,
they need to prepare and present a solid KM business case. Unfortunately, traditional
accounting standards do not provide the guidance necessary in valuing all intangible
assets ( Lev 1997 ). The International Accounting Standard Number 38 named “ Intan-
gible Assets ” only discusses patents, copyrights, goodwill, and research and develop-
ment costs ( IASC 1998 ). Nothing is mentioned about employee knowledge, best
practices, or investments in training. Despite the diffi culty in valuing such intellectual
capital, it remains one of the more important KM techniques to learn and to apply in
practice ( Brown and Woodland 1999 ). Traditional fi nancial statements would not