Lesley M. • In what way?

Gerald D. • Usually decision makers are trained to decide based on financial terms, however the ROI in these terms for KM is difficult to measure. see citiation in post http://geraldmeinert.blogspot.com/2011/03/knowledge-charter.html on ways to do so, but usually it is dificult. And at the same time you are asking usually for an investment in either time (for specific roles or spending on top of work for KM) or money (for tools).

Melissa L. • The original post doesn't make it clear that it is an excerpt from a page long essay by Alan O'Neill. Click on the title link to see it all or follow http://tallyfox.com/questions/text/should-knowledge-management-be-viewed-spend-save-or-return-investment

Ditte K. • Why should we count knowledge?
I know – it is a matter of return-of-investment (ROI). All right, let’s go for it: Do we measure knowledge in liters, kilos, dollars, meters...? As we normally invest in time and money, the ROI may be measured in time and money. Let us look at an example: A kid spends a week learning to bicycle. He scratch his knees and his daddy spends a full day running after the bike – the time spend altogether is 48 hours.
Now, what is the acceptable ROI? That the kid is able to run a bike for another 48 hours? 48 years?
We know this is not the point. The point is that the kid gets the pleasure of bicycling and the opportunity to move and meet friends. In Denmark he will bike to school, saving time and money and pollution for transportation – not only as a kid, this will last for the rest of his life, the ability to bicycle.
This is the key point. We spend time to learn to be able to know – and it does not disappear. The more we use the knowledge, the more we gain. Quite the opposite of money and other recourses, knowledge is everlasting, when it is internalized in our minds; and we cannot avoid utilizing what we know, when the knowledge has become a part of our personality. ROI includes the time, knowledge does not. ROI includes the limitation of recourses, knowledge does not. Still there is a requirement for measuring knowledge to make sure that the time and money spend on training pays off.

Individuals build up their knowledge not only by attending training also by experiencing and by reflecting. In Oracle we have a structured process for knowledge sharing and- creation: The After Action Reviews consisting of seven simple questions asked in a specific sequence. The foundation of this process is a mutual dialogue which is facilitated by a neutral facilitator. A team runs an After Action Review when they prepare a large scale bid, deliver a complex IT implementation, manage a high-cost event or other matters of high risk or high cost. The After Action Review itself is confidential, only the tangible output is shared with others i.e. the Action- and communication plan and the one or two topics that the senior management needs to know. The After Action Reviews make the organisation able to avoid repeating mistakes, repeat successes, innovate based on experienced needs, implement changes in working processes smoothly and increase efficiency. An After Action Review lasts for two to three hours and has 3 – 16 Delegates. We measure the numbers of After Action Reviews as well as the changes they have caused.

Organizations often measure the investment in knowledge creation: How many training days, how many certifications, how many PhDs? But what we need to know is how the investment influences the bottom line.
As the organisation needs to have the right knowledge available, it would make sense to measure
• Training days compared with failures in the production/services
• Training and experience compared with utilization
• Training and experience compared with sales target
• Number of knowledge sharing processes compared with
o Number of changed working processes
o Increasing efficiency
o Number of innovations

David G. • Interesting post, but I think we can do a better job of explaining the value of KM - just not ROI... Please see my blog for further details:

http://theknowledgecore.wordpress.com/2011/03/23/km-the-roi-myth/

Bruce D. W. • Why is it so hard to justify Knowledge Management To The People Who Make The Decisions? Having to justify to an organization why they should make a commitment to Knowledge Management (KM) is somewhat of a puzzling exercise.
Because of the common misunderstandings about what knowledge is. It is assumed and usually incomplete. Not all knowledge can be documented as words and symbols. When most people talk about knowledge management they mean the management of representations of knowledge. Reading a manual (representation of knowledge) about photocopier repairs does not necessarily make one capable of repairing the photocopier. If you own a photocopier repair business that is a fairly important distinction. How would knowledge management be applied in this situation. Of course it can be - but there has to be more than a cursory understanding of "knowledge" and not just the representation of knowledge - and where knowledge resides.
Should Knowledge Management be viewed as a Spend to Save or a Return On Investment? Neither. Employees treated as human beings given the opportunity to learn and apply knowledge through the course of their work make for good business - the trouble is employees tend to become commodities that have to "have things done to them". Unfortunately - "knowledge management" is commodified too.

Bruce D. W. • E.g. - new ways of knowing - http://www.tricycle.com/interview/contemplating-corporate-culture

Bruce D. W. • And http://www.relationshipmanagementinstitute.com/2011/02/how-do-informal-networks-deliver-value/