Total cost, excluding overhead cost, for the business entity's knowledge management program per $1,000 revenue

This measure calculates the total cost, excluding overhead cost, for the business entity's knowledge management (KM) program, per $1,000 revenue. 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. The total cost, excluding overhead, is the sum of outsourced, personnel, system, and other costs. This measure is part of a set of Cost Effectiveness measures that help companies understand all cost expenditures related to the "develop and manage enterprise-wide knowledge management (KM) capability" process.

Benchmark Data

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Measure Category:
Cost Effectiveness
Measure ID:
106104
Total Sample Size:
476 All Companies
Performers:
25th Median 75th
- - -
Key Performance Indicator:
Yes

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Compute this Measure

Units for this measure are dollars.

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Total cost, excluding overhead cost, for knowledge management program, initiative, or service / (Total business entity revenue * 0.001)

Key Terms

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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).

Total annual revenue is net proceeds generated from the sale of products or services. This should reflect the selling price less any allowances such as quantity, discounts, rebates and returns. If your business entity is a support unit and therefore does not directly generate revenue, then provide the revenue amount for the units you support. For government/non-profit organizations, please use your non-pass-through budget. For insurance companies the total annual revenue is the total amount of direct written premiums, excluding net investment income. Note: Business entity revenue needs to only include inter-company business segment revenue when the transactions between those business segments are intended to reflect an arm's length transfer price and would therefore meet the regulatory requirements for external revenue reporting.

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.

Cost effectiveness measures are those in which two related variables, one of which is the cost and one of which is the related outcome related to the expenditure are used to determine a particular metric value.

The metric value which represents the 50th percentile of a peer group. This could also be communicated as the metric value where half of the peer group sample shows lower performance than the expressed metric value or half of the peer group sample shows higher performance than the expressed metric value.

For survey purposes, a business entity is defined as an entity that:

  1. performs significant aspects of the processes for the surveys identified, or
  2. is part of a cost or revenue center within the company.

Within your organization, diverse departments may be geographically co-located, with closely integrated operations that form part of one "business entity" which may be a great distance apart. When trying to determine if related parts of your operation should be considered a single business entity, look for the following characteristics:

  • Do they operate closely together?
  • Do they serve many of the same customers?
  • Do they support the same region or product group?
  • Do they share any performance measures?
  • Is data meaningful at a consolidated level?

Examples of business entity definition:

  1. A general ledger accounting unit located in Germany has two groups. One performs general ledger accounting for the corporate headquarters, which has three business units. The other group does general ledger accounting for one of the three business units. In spite of their geographic co-location, their roles are substantially different and consolidating their data into a single response would make it less meaningful. Each group should be treated as a separate business entity.
  2. Three business units within a corporation use a shared services center for accounts payable and expense reimbursement, but are self-supporting for the other financial processes. The best approach is to make the shared services centre a separate business entity for accounts payable and expense reimbursement, and to retain the three original business units for the other financial processes.
  3. A global manufacturing company has five plant locations, each manufacturing product and each with its own logistics operations. For purposes of completing a manufacturing and logistics survey, they should be treated as five separate business entities.

Measure Scope

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Cross Industry (7.3.1)

  • 13.5.1 - Develop KM strategy (11095)
    • 13.5.1.1 - Develop governance model with roles and accountability (11100)
    • 13.5.1.2 - Define roles and accountability of core group versus operating units (11102)
    • 13.5.1.3 - Develop funding models (11103)
    • 13.5.1.4 - Identify links to key initiatives (11104)
    • 13.5.1.5 - Develop core KM methodologies (11105)
    • 13.5.1.6 - Assess IT needs and engage IT function (11106)
    • 13.5.1.7 - Develop training and communication plans (11107)
    • 13.5.1.8 - Develop change management approaches (11108)
    • 13.5.1.9 - Develop strategic measures and indicators (11109)
  • 13.5.2 - Assess KM capabilities (11096)
    • 13.5.2.1 - Assess maturity of existing KM initiatives (11110)
    • 13.5.2.2 - Evaluate existing KM approaches (11111)
    • 13.5.2.3 - Identify gaps and needs (11112)
  • 13.5.3 - Design and implement KM capabilities (20965)
    • 13.5.3.1 - Develop new KM approaches (11114)
    • 13.5.3.2 - Design resource model for KM approaches (20966)
    • 13.5.3.3 - Implement new KM approaches (11115)
    • 13.5.3.4 - Leverage and enhance IT for KM approaches (20967)
    • 13.5.3.5 - Develop measures (20968)
  • 13.5.4 - Evolve and sustain KM capabilities (20969)
    • 13.5.4.1 - Enhance/Modify existing KM approaches (11113)
    • 13.5.4.2 -  Sustain awareness and engagement (20970)
    • 13.5.4.3 - Expand KM infrastructure to meet demand (20971)