Valuing Corporate Intelligence as a Financial Asset

Companies focus their efforts on supporting their most important assets – it’s just common sense.  Software to track Inventory, Fixed Assets, Cash, and Accounts Receivable have been a staple of ERP systems for decades.  In fact, well run companies, their employees, and their corporate cultures are fully oriented around the maintenance and integrity of these assets.  So, what is corporate intelligence? And how is it an asset?  Here goes…

Corporate Intelligence is the vast array of data about customers, prospects, leads, sales opportunities and all the related emails / notes / activities / appointments documenting every interaction.  Examples of these interactions might include:

  • A sales rep visits a prospect several times and learns that the otherwise strong-willed decision maker consistently becomes quiet and meek when the CFO joins him in a meeting
  • A customer has poor payment history, but has many important contacts in their strong business network, now it’s time to renegotiate their pricing

Corporate intelligence builds up over time – each time a customer gets a call, each time a salesrep visits a customer, and each time a customer issue is discussed internally.  This data exists in all companies and it’s often all over the place – in Outlook / emails, handwritten on paper, entered in the ERP system as sales order with notes, and, scariest of all, it’s in the heads of various team members.

 

Now let’s look at simple way to value corporate intelligence for an example company:

A small firm has a team of 5 employees who spend an average of half their work day engaged with customers and sales prospects, in various sales, customer service, and lead generation activities. Each team member’s salary including all company-paid benefits and taxes is $80,000 per year. You see where this is going – since they spend half their time on this the cost of gaining corporate intelligence increases by $200,000 per year (half the $80,000 salary / year, times 5 employees). Here’s the rub, employees engage in work that adds value to the company so the value of this corporate intelligence must be higher than the cost. The higher this value, the higher the company’s profit. The value to the organization should be much more than the cost or those employee efforts should be re-directed. So, using a conservative productivity ratio of 50% then the value of the corporate intelligence increases by $300,000 per year. Three years out the value is almost $1,000,000 (less write downs for customers who go out of business). Obviously, these numbers differ for every organization, plug in the numbers that make sense for you. Also, this is focused on labor, and doesn’t include overhead, marketing costs, and dozens of other small investments; a full accounting just increases the value of the firm’s corporate intelligence.

Now we’re beginning to look at the corporate intelligence as an asset, up there with inventory and AR. Ok there is no ‘Corporate Intelligence Valuation Report’ to tie against the GL, but we’re now considering the value of the organization’s collective knowledge about their market as a vital asset.

The next step is to shift the corporate culture to first respect, and then fully organize and best utilize corporate intelligence. But that’s another blog, stay tuned!


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