I recently read two different blog posts on measuring intangible benefits of IT (information technology) projects. The first by Paul Ritchie More On Intangible Benefits and the other by Tabrez Khan A Case for IT’ s Non-financial ROI.

Both bloggers make the case that intangibles are important but very difficult to measure. I agree that they are important but think it is unfortunate that they are seen as so hard to measure. The field of intangibles and intellectual capital provide a number of important ideas that can be applied in IT business cases. Here are a few.

IT is Intangible: To start with, it is important to recognize that IT is itself a (mostly) intangible investment. I say this because much of IT spending is not capitalized on the balance sheet but, rather, expensed on the income statement. Any analysis of the costs of a project ends up happening outside the accounting system because so much of the spending simply gets expensed.

The only reason for mentioning this is to remind those in IT that intangibles are not something to be ignored or dismissed. They are actually at the heart of almost every business today. Roughly 80% of the value of companies today is intangible, that is, not on the balance sheet. IT is a big part of that. So IT should embrace the study of intangibles.

Intangibles Gain Value From a System: Another important point is that intangibles do not have much stand-alone value. Their value comes as part of a system. Most IT implementations cannot be picked up and moved to another company without a lot of work. This is because they exist in a larger context of the work patterns and skill of the workers that use them. Continue reading »