Nordic Harmonized Knowledge Indicators; Putting IC into Practice
The Project rational
The need for assessment of intellectual capital is steadily increasing following the great fluctuation in the market value of IT companies during the last few years. When viewing the difference in book- and market value of companies, there should be an explanation to account for the value difference other than market expectations. IC reporting is aimed at explaining the intangible valuables in each organization.
The Nordic countries have shown an initiative by launching the Nordika and FRAME, for reporting and measuring IC. These projects have resulted in reports which have enabled companies to further external and internal reporting and increase the understanding of intangible assets.
This applies especially to SME“s which do not enjoy the same possibilities as larger organizations to explain themselves to the business environment and therefore do not share the same possibilities to raise funding/ venture capital on a fair basis that taking into consideration the intangible assets the company possesses.
"Nordic harmonized Knowledge indicators: Putting IC into Practice" is a follow-up project established around the need to harmonize methods for reporting IC assets to form a basis for external reporting and evaluation of IC. A major benefit of harmonizing key performance IC indicators, is their important relation to present popular organisational steering models such as Balanced Scorecard, Microscope Benchmarking, EFQM and ISO9001. IC indicators form a baseline for these models, so it is important that the rational behind the measurements and what the indicate is harmonized.
By harmonizing reporting, IC reporting and the addition of audited IC information to existing financial reporting, it is believed that SME“s have a better chance of realising the intangible values within their companies by providing a comparative platform for the mutual benefit for stockholders, investors and the financial community.
This project will be based on the results of NHKI preproject, the Nordika and FRAME IC projects and the Danish guidelines for IC reporting. As a result of a preproject a Nordic network of stakeholders in the Information technology sector has been established. The network agreed to continue with the work to produce harmonized indicators for reporting IC and forming a baseline for managerial business models.
The project will run in an iterative manner, involving 3 generations of companies, aiding them in reporting their intellectual assets and implementing appropriate managerial steering models and to enable them to use these models, in a cost-effective way. For further information about the pre-project visit "The preproject" section on this web.
An initiative on harmonizing indicators and IC reporting by The Association of Icelandic IT Companies will be used as an input for this project as well as other IC initiative from other Nordic IT companies associations.
The project is divided into four phases:
- Identifying indicators
- Deciding on meaning of indicators
- Preparation of results for dissemination
- Implementing indicators in participating companies with seminars and follow up
- External reporting of results from implementation
- Revision based on results
- Creating liaison network with accountants, consultants etc.
- Identifying proper management tools for participating companies
- Measurement of input in new models provided by harmonized indicators
- Evaluation of contribution, both to transformation process and economic
- Final report that gives an Open source framework for transforming SME“s into knowledge based firms
- Post project continuum
Proposed results from the project
The results will provide an Open Source Framework for transforming the knowledge-base of SME“s. It will produce a set of harmonized indicators for reporting IC thus forming a baseline for managerial business models. Harmonized IC reporting in Nordic IT companies will form a basis for more comprehensive Nordic actions that supports the use of such reporting and the value of use for those companies. Extended Nordic cooperation in the field of IC reporting between IT companies will help to make a strong Nordic knowledge base on the subject and conditions for increased productivity. Through cross-border coordinated initiatives in development, support and use, the climate for Nordic companies can be improved by common access to the Nordic interest groups, tools and data collection in the IC issues.
Harmonizing key performance indicators in IC reporting is a major asset to all stakeholders of such reports. Through cooperation the Nordic countries can have a strong influence on international development and exiting networks in the field of IC and make them more accessible and useful for Nordic companies as well as it could strengthen the competitiveness of the Nordic IT industry. The project will strengthen the position of the Nordic countries cato strongly influence international standardization in IC reporting.
- Phase One is expected to end in January 2004
- Phase Two is expected to end in October 2004
- Phase Three is expected to end in March 2006
- Phase Four is expected to end in May 2006
Please contact Asta Thorleifsdottir (firstname.lastname@example.org) project leader or Gudmundur Asmundsson (email@example.com) Federation of Icelandic Industries / Association of Icelandic IT companies for further information.