Thursday, November 10, 2005

Intangible Assets = 10 times Physical Assets

The Enterprise Metadata blog includes the following quote from a Harvard Business Review article entitled Information Technology and the Board of Directors, written by Richard Nolan (an emeritus professor of business at Harvard Business School and a professor of management and organization at the University of Washington Business School in Seattle) and Warren McFarlan (a Baker Foundation Professor and the Albert H. Gordon Professor of Business Administration emeritus at Harvard Business School):
The board needs to understand the overall architecture of its company’s IT applications, systems, components, and asset management strategy. The first step is to find out what kinds of hardware, software, and information the company owns so as to determine whether it’s getting adequate return on its IT investments. Physical assets are fairly easy to inventory while intangible assets are not.
The authors estimate that intangible assets (like product know-how, reuse, employee training & experience, etc.) are worth ten times the value of physical assets, Although the latter are far easier to measure using Asset Management products to track physical assets, the real value resides in Technology Architecture which is where the intangible assets get captured and communicated.


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