Can You Measure the Value of Knowledge Management?

Many organizations still struggle to measure the gains that KM promises to offer. Executives are rightly asking, "What investment are we making in KM? Is it enough? Too much? What are we getting for our money?"

  The intangible nature of knowledge itself causes some KM practitioners to assume that the effects of KM will also be intangible. However, APQC has not found that to be the case. According to our research, firms can and do effectively measure the impact of KM. In fact, those who invest the most and measure most rigorously are achieving a financial return on investment (ROI) of approximately two dollars for every dollar spent per participating employee--a healthy ROI by any standard. These returns are added to valuable intangibles such as increased sense of belonging, faster socialization of issues and change, cross-fertilization of ideas, and so on.

In the next section, you'll find five tips for establishing effective KM measurement systems. We'd also like to point you to some great free articles in APQC's Knowledge Base: "Effectively Measuring Knowledge Management" (2007) and "Measuring Knowledge Management Efforts at Caterpillar" (2003). 

More in-depth information and examples can be found in APQC's 2003 best practices report Measuring the Impact of Knowledge Management, which delineates measurement best practices and provides examples from leading organizations such as IBM and Halliburton. (Note: If your organization is an APQC member, Measuring the Impact of Knowledge Management is available to you at no cost, but even non-members can download the free executive summary.)

If you're interested in measuring a specific aspect of your KM program or want to learn more about how measurement works in a particular industry or type of organization, we recommend perusing APQC's library of KM case studies, almost all of which showcase how the featured organizations assess KM impact.

Click here to learn five tips for establishing effective KM measurement systems.