True. Model documents are expensive. Even worse, they have a negative ROI when you are billing by the hour. If the model saves you a hour (or more) of drafting that is time that will not appear on the bill. (I will ignore collect-ability and quality since they are not meaningfully measurable.)
Switch to fixed billing and flat fees, then the investment in form documents is truly an investment that can yield a measurable financial return. That hour (or more) of drafting time saved makes the engagement that much more profitable for the firm.
VMaryAbraham
· 1 month ago
Doug -
You're right that a fixed fee billing structure makes the benefits of model documents more intuitively obvious. Nonetheless, my point about checking premises remains. We won't know for sure that a model has been helpful unless we can actually identify and measure the impact of that model. Alternatively, we'll need solid and consistent anecdotal evidence that a particular model was helpful. Are firms ready to do that kind of due diligence review?
- Mary
Swan
· 1 month ago
Agree with you completely that the full cost of ownership should be evaluated on any investment, KM or otherwise. Benefits are great, but there is rarely a free lunch. Usually there is cost involved. If that cost outweighs the benefit, it's a non-starter.
This sounds simple, but especially with KM, there are often a lot of soft benefits that are hard to quantify. Though we try, there are many assumptions compiled that rarely are accurate. Many initiatives in a large organization will claim that they will cause or caused the same benefits.
Nonetheless, we should always strive to quantify costs and benefits the best we can.
VMaryAbraham
· 1 month ago
Swan -
Given the "soft benefits" of KM, it may be hard to actually quantify the full cost of ownership. Nonetheless, knowlege mangers are not off the hook. We just have to work harder to be sure we have a defensible way of explaining and substantiating the costs and benefits of KM. But even if we can't nail down every last item, I suspect that simply making the effort will prove beneficial.
All Comments
True. Model documents are expensive. Even worse, they have a negative ROI when you are billing by the hour. If the model saves you a hour (or more) of drafting that is time that will not appear on the bill. (I will ignore collect-ability and quality since they are not meaningfully measurable.)
Switch to fixed billing and flat fees, then the investment in form documents is truly an investment that can yield a measurable financial return. That hour (or more) of drafting time saved makes the engagement that much more profitable for the firm.
You're right that a fixed fee billing structure makes the benefits of model
documents more intuitively obvious. Nonetheless, my point about checking
premises remains. We won't know for sure that a model has been helpful
unless we can actually identify and measure the impact of that model.
Alternatively, we'll need solid and consistent anecdotal evidence that a
particular model was helpful. Are firms ready to do that kind of due
diligence review?
- Mary
This sounds simple, but especially with KM, there are often a lot of soft benefits that are hard to quantify. Though we try, there are many assumptions compiled that rarely are accurate. Many initiatives in a large organization will claim that they will cause or caused the same benefits.
Nonetheless, we should always strive to quantify costs and benefits the best we can.
Given the "soft benefits" of KM, it may be hard to actually quantify the
full cost of ownership. Nonetheless, knowlege mangers are not off the
hook. We just have to work harder to be sure we have a defensible way of
explaining and substantiating the costs and benefits of KM. But even if we
can't nail down every last item, I suspect that simply making the effort
will prove beneficial.
- Mary