From Zero to One Hundred

From Zero to One Hundred

At General Motors enterprise architecture is a dynamic, living process dependent upon integration with related enterprise process disciplines.

When General Motors corporation chief architect Richard Taggart first met the guru of intangible assets Baruch Lev a few years back, the idea of capturing intellectual capital (IC) was in its infancy, and enterprise architecture (EA) a mere rug rat.

Even so, when Taggart hit Lev's annual Intangibles forum in New York to present details of GM's architectural journey, the two men immediately saw the synergies in their work. And fellow enterprise architects have been experiencing "ah-ha!" moments whenever Taggart tells them about it ever since.

"The two fields haven't really been connected," Taggart says. "Enterprise architecture is quite honestly a fairly new practice. The whole idea of intellectual capital - there's not a lot of work done there either. The two fields really haven't discovered each other yet, but I do believe it's inevitable because what they want to do in intellectual capital management is to find ways of capturing the knowledge that's in people's heads and the resources that work in a company, and to leverage those resources better around the company. And what architecture allows you to do is to make explicit the implicit."

That capturing and conquering intangibles is becoming an imperative is indisputable. In a June article in the Harvard Business Review, Professor Lev, who might well be called the grandfather of intangibles, charges both investors and managers with underestimating the value of R&D and other intangible investments, and says the failure has seen managers shift resources away from research and towards investments, forcing undervalued corporations to face higher than necessary capital costs.

The author of several books, including Intangibles: Management, Measurement, and Reporting, Financial Statement Analysis: A New Approach and Accounting and Information Theory, Lev says corporations need better ways to value their intangibles, must shift their mind-set to viewing intangibles as assets rather than costs, and should find the optimal amount and timing to disclose information to prevent losing competitive edge.

Lev also testified on accounting issues in the Enron case before the Committee on Energy and Commerce of the US Congress, where he placed part of the blame for Enron's woes on the fact that current accounting systems are geared for an industrial era-based economy of tangible assets, they record only past transactions and they ignore intangible assets, unexecuted obligations and risk.

Taggart says he is confident EA can fill that void, and has developed an Intellectual Capital Maturity Model building on EA standards and principles to prove it. Over the past few years, while Lev was theorizing about IC, Taggart has been managing the development, integration and rationalization of enterprise architecture across GM's business, infrastructure, application development efforts and operational architecture functions. He has also overseen the creation and management of the corporation's Information Technology Standards, assuring that the life cycle of the technology investment is aligned with GM's strategic business goals.

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