Information Productivity Assessment Comparison With Peers To benchmark the Information Productivity potential of a firm calls for comparisons with look-alike firms that have been selected for similar characteristics, in comparable industrial sectors, with comparable employment levels and comparable asset ratios. The companies should be also chosen by their potential of becoming direct competitors or capacity to offer substitute products and services, even though they may operate in different industries or in different geographic areas. In selecting look-alike firms one should also look for a sufficient number of firms that are superior as well as inferior in financial importance. This makes possible an examination of metrics that are associated with patterns of success. Companies with negative Information Productivity characterize management that detract from shareholder value. Economic Value-Added Information Productivity Company A $52,283 31.51% Company B $11,574 30.96% Company C $13,611 19.57% Company D $194,710 19.08% Company E $36,349 15.05% Company F $49,458 10.81% American Industrial Corp. $101,300 8.98% Company G $9,927 7.26% Company H $4,308 5.69% Company I $6,127 4.49% Company J $-1,341 -0.17% Company K $-508 -0.44% Company L $-23,160 -3.65% Company M $-2,133 -6.84% Company N $-26,158 -12.94% Company O $-13,842 -21.93% Definition: Information Productivity Information Productivity is the ratio of Net Economic Output to the Information Inputs of a firm. This definition assumes that after payment competitive prices for the costs of goods, taxes and the shareholders' cost of capital, the residual Net Economic Output of a firm is entirely attributable to the productivity of its "coordination costs" spent on information management. Output is defined as the Economic Value-Added (EVA is calculated by subtracting from operating profits the cost of shareholder capital, which is equal to the cost of interest a firm pays for its debt.) The Information Inputs of a firm are defined as the expenses a firm incurs for Sales, General, Administrative as well as Research & Development. A more precise estimate of these costs can be obtained only from detailed accounting studies. Profits Net Assets Interest Rate   Information   Management American Industrial Corp. $190,084 $1,345,217 6.6% $1,128,122 Company A $358,675 $5,272,180 3.11% $1,020,280 Company B $44,672 $610,248 7.54% $767,566 Company C $53,539 $1,204,062 6.37% $635,253 Company D $59,219 $364,230 2.68% $457,308 Company E $66,894 $487,935 6.26% $241,518 Company F $21,598 $281,744 16.95% $202,109 Company G $81,282 $493,188 5.88% $165,918 Company H $13,066 $225,859 1.39% $136,717 Company I $18,649 $80,581 15.54% $136,316 Company J $19,242 $181,697 10.87% $116,694 Company K $7,096 $87,116 3.2% $75,692 Company L $43,090 $221,649 13.3% $69,556 Company M $-5,023 $99,877 8.83% $63,123 Company N $11,530 $-654 6.67% $37,382 Company O $10,208 $81,672 15.11% $31,162 Comparison of Information Management Ratios Comparisons of Information Management ratios of firms with superior productivity against the benchmarked firm offers diagnostic insights about opportunities for improvement. Companies with superior Information Productivity tend to show a consistent pattern of lower costs of goods, lower net assets, higher revenue and lower overhead (information management cost) per employee. Median Values for Companies Information Productivity Information Management / Cost of Goods Information Management / Net Assets Information Management / Revenue Information Management / Employee 6 Firms with Superior Productivity 19.33% 31.61% 32.51% 20.46% $36,747 American Industrial Corp 8.98% 155.65% 83.86% 51.00% $55,300 Comparison of Financial Ratios Comparisons of financial ratios of firms with superior productivity against the benchmarked firm offers useful insights about potential improvement targets. Companies with superior Information Productivity tend to show a consistent pattern of higher revenues per employee, higher revenue per net assets, higher revenue growth per years, higher market valuation per book assets (net assets) and a higher return on shareholder equity. Median Values for Companies ($000s) Revenue / Employee Revenue / Net Assets Revenue Growth / Year Market Value / Net Assets Return on Equity 6 Firms with Superior Productivity $162,899 184.1% 11.2% 183.6% 15.9% American Industrial Corp $108,437 164.4% 5.0% 223.0% 14.0% Download IP data input form to complete assessment. [ Back to Top | Info Productivity Assessment | IT Assessment | Knowledge Capital Assessment ] Security of corporate data protected for privacy and confidentiality. Contact info@strassmann.com for details. Copyright © 1999, Strassmann, Inc. All Rights Reserved. Information Productivity® and Knowledge Capital® are U.S. Registered Trademarks of Strassmann, Inc.