Percentage of total cost for knowledge management program, initiative, or service allocated to external/outsourcing costs directly associated with KM

This measure calculates the percentage of total cost for the knowledge management (KM) program, initiative, or service allocated to external/outsourcing costs directly associated with KM. KM is responsible for organizing an entity's knowledge base; determining the kind of specialized knowledge an entity possesses, and which elements of this collective knowledge are beneficial; capturing and maintaining this knowledge; and granting access to this library of information. External/outsourced cost refers to the total cost of outsourcing a specific process to a third party, except one-time charges for any type of restructuring or reorganization. This measure is part of a set of Supplemental Information measures that help companies evaluate additional variables not covered elsewhere for the "develop and manage enterprise-wide knowledge management (KM) capability" process.

Benchmark Data


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Measure Category:
Supplemental Information
Measure ID:
Total Sample Size:
469 All Companies
Key Performance

Compute this Measure

Units for this measure are percent.

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(External/outsourcing costs directly associated with KM program / Total cost, excluding overhead cost, for knowledge management program, initiative, or service) * 100

Key Terms

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Process Cost Components

Total cost for a process, process group, or function consists of the following five components.

Internal/In-house operating cost consists of the first four components (personnel, systems, overhead, and other).

Personnel Cost

Personnel cost is the cost associated with personnel compensation and fringe benefits of employees (i.e., those classified as FTEs which includes both full-time and salaried/hourly employees) contributing to each respective process. Personnel cost should include all of the following costs.

Employee Compensation: Includes salaries and wages, bonuses, overtime and benefits.

Fringe: Includes contributions made towards the employees' government retirement fund, workers compensation, insurance plans, savings plans, pension funds/retirement plans, and stock purchase plans. This should also include special allowances, such as relocation expenses and car allowances.

Systems Cost

Systems costs include all expenses, paid or incurred, in conjunction with:
Computer hardware or computer software acquired by the organization or provided to the organization through service contracts.

Any related costs to process, service and maintain computer hardware or computer software. The costs of providing and maintaining services for each applicable process (e.g., computer system(s) processing (CPU) time, network/system communication charges, maintenance costs for applications and data storage). This includes the costs related to LANs, WANs, etc. This does not include one-time costs for major new systems developments/replacements. Consultant fees should not be included in depreciation of new system implementations. Include only those costs that occur more than six (6) months after implementation, as normal system maintenance costs. Any systems cost (e.g., maintenance) which is outsourced to a third party supplier should be captured in the separate cost category labeled outsourced cost.

Systems cost should include all salaries, overtime, employee benefits, bonuses or fees paid to full-time, part-time or temporary employees or independent contractors who perform services relating to computer hardware, computer software, processing or systems support.

Overhead Costs

For the purpose of this study, provide the total actual overhead costs for the year related to the specified process. These are costs that cannot be identified as a direct cost of providing a product or a service. Include the primary allocated costs such as occupancy, facilities, utilities, maintenance costs, and other major costs allocated to the consuming departments. Exclude systems costs that are allocated, since these will be captured separately as systems cost.

Other Cost

Other costs are costs associated with the specified process, but not specifically covered in personnel cost, systems cost, overhead cost and outsourced cost in this questionnaire. These other costs include costs for supplies and office equipment, travel, training and seminars. Include the cost of telephones, except for that portion captured in systems cost.

External/Outsourced Cost

In determining outsourced cost, include the total cost of outsourcing all aspects of the specified process to a third-party supplier. Exclude one-time charges for any type of restructuring or reorganization. Outsourced costs should also include costs for intracompany outsourcing (i.e., reliance on a shared services center or other business entity).

Supplemental Information

Supplemental information is data that APQC determines is relevant to decision support for a specific process, but does not fit into the other measure categories such as cost effectiveness, cycle time, or staff productivity.

Measure Scope

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Cross Industry (7.3.0)

  • 13.5.1 - Develop KM strategy (11095) - Creating a plan for managing the organization's knowledge base. Determine what kind of specialized knowledge the organization possesses, which elements of this collective knowledge can prove beneficial, how to capture and maintain this knowledge, how to grant access to this library of information, and how the organization should proceed.
    • - Develop governance model with roles and accountability (11100) - Developing a structure for the governance of the organization's collective knowledge. Gather, maintain, and make accessible the collective knowledge base. Develop a standard procedure for the conservation and perpetuation of the organization's knowledge. Create policies for the usage and maintenance of this knowledge. Establish specialized roles.
    • - Define roles and accountability of core group versus operating units (11102) - Clearly determining the roles and responsibilities of all personnel involved in the management of the organization's corpus of knowledge. Flesh out the roles and responsibilities of the KM core group, as well as the operational staff involved in the upkeep of the knowledge management program.
    • - Develop funding models (11103) - Analyze the organization's current approach to funding. Learn from the funding approaches of peer organizations. Evaluate the revenue potential and costs of those short-list funding models. Select funding models to implement.
    • - Identify links to key initiatives (11104) - Identifying any links that exist between the strategy for knowledge management and any other functional areas. Determine any correlations that exist between the strategic road map for the knowledge management and any other functional areas. Study each function's/unit's attributes.
    • - Develop core KM methodologies (11105) - Creating core knowledge management procedures and methodologies. Initiate developing a strategy, planning, execution, and improvement.
    • - Assess IT needs and engage IT function (11106) - Determining the IT needs for developing the knowledge management strategy, and collaborating with the IT function to implement the strategy. Assess requirements for technologies such as computer hardware, software, electronics, semiconductors, internet, and telecommunications equipment in order to effectively build and implement the strategy for knowledge management.
    • - Develop training and communication plans (11107) - Creating plans for KM training plans and conveying the knowledge management strategy within the organization. Create training programs, sessions, and activities in order to familiarize employees and management with the concept of knowledge management.
    • - Develop change management approaches (11108) - Creating approaches for effectively administering the changes in knowledge management. Design an approach that transforms individuals, teams, and the organization to a desired future state represented by the change.
    • - Develop strategic measures and indicators (11109) - Establishing measures and indicators for evaluating the performance of the knowledge management function. Define key performance indicators such as the amount of knowledge assets created and number of knowledge projects undertaken.
  • 13.5.2 - Assess KM capabilities (11096) - Assessing the maturity of the existing initiatives in knowledge management, and evaluating existing KM approaches. Identify the gaps and needs in order to enhance the existing KM approaches. Develop and implement new KM approaches.
    • - Assess maturity of existing KM initiatives (11110) - Evaluating if initiatives are effective or should be discarded. Design a framework for assessing maturity, typically from Level 1 (undefined), Level 2 (repeatable), Level 3 (defined), and Level 4 (managed) through Level 5 (optimized).
    • - Evaluate existing KM approaches (11111) - Evaluating existing procedures, policies, and guidelines for knowledge management. Study and examine the organization's approach against industry best practices by benchmarking, competitive analysis, etc.
    • - Identify gaps and needs (11112) - Assessing the KM approach evaluations in order to identify any gaps or needs. Compare the performance of the KM approach against the desired or expected performance, as well as against the standard knowledge management industry approach.
  • 13.5.3 - Design and implement KM capabilities (20965) - Creating knowledge bases and other repositories to preserve and develop company expertise, and to train new employees.
    • - Develop new KM approaches (11114) - Designing new policies, procedures, and guidelines to support knowledge management.
    • - Design resource model for KM approaches (20966) - Creating a model to describe resources and approaches to organization's knowledge management. Establish standards and guidelines to be followed.
    • - Implement new KM approaches (11115) - Implementing new policies, procedures, and guidelines to support knowledge management.
    • - Leverage and enhance IT for KM approaches (20967) - Using existing technologies to improve organization's knowledge management processes. Research available third-party offerings. Develop proprietary solutions. Employ knowledge engineers, data scientists and other relevant personnel.
    • - Develop measures (20968) - Creating metrics that can be used to systematically describe KM approaches and capabilities. Choose applicable scales, benchmarks and units of measure. Determine required precision and error rates.
  • 13.5.4 - Evolve and sustain KM capabilities (20969) - Developing resources for improved knowledge management and knowledge engineering.
    • - Enhance/Modify existing KM approaches (11113) - Leveraging KM evaluations and identified gap to enhance existing approaches.
    • -  Sustain awareness and engagement (20970) - Developing awareness about available knowledge bases and promoting their use to maximize their impact.
    • - Expand KM infrastructure to meet demand (20971) - Augmenting available resources to better leverage the offerings of the organization to serve existing clients and to expand the client base.