WM-data is today the biggest of the Swedish listed independent computer software and consulting companies, after a decade of unprecedented growth. The main reason for the success is a deliberate strategic policy of focusing on corporate knowledge build up, customer relations and competence development. WM-data has pursued a knowledge focused strategy ever since its foundation more than 25 years ago.
WM-data attributes its rapid growth to the fact that it lacks central head quarter functions, like marketing and HR. It consists of a "web" of quite independent subsidiaries and a very small top management team. The aim of the corporate structure is to support creativity and enable close customer relations; the ideal size should not exceed 50 employees per work environment. Top management keeps a tight control supported by a management information system.
WM-data considers financial measures useless for management control and has designed a system of non-monetary indicators, based on the indicators in the Intangible Assets Monitor, which top management uses to follow up their operation on a weekly, monthly and annual basis. WM-data uses traditional indicators like return on equity and return on investment only at group level.
WM-data´s Financial Performance 1985 - 1995 |
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| 1985 | 1995 | Average increase 1985-1995 |
|
| N:o of employees | 273 | 3040 | 27% |
| Turnover MSEK | 148 | 3260 | 36% |
| Net Profit MSEK | 31 | 316 | 26% |
| Market Value MSEK | 155 | 4300 | 39% |
| 1991 | 1995 | ||
| Return on Capital Employed | 38.5% | 39.5% | |
| Return on Equity | 37.8% | 32.7% |
Although WM-data does not use traditional financial indicators to control operations, there is nothing "wrong" with WM-data´s financial performance, on the contrary, it is one of the most profitable computer consulting firms in Europe.
The market value of WM-data´s intangible assets can be calculated as the difference between the market value of the shares and the net book value (or equity).
WM-data´s Intangible Assets are valued at 250 SEK per share, compared to an equity (or net book value) of only 50 SEK per share. With such huge intangible assets, WM-data has chosen to focus its management information system on monitoring the intangible assets, using the non-monetary indicators outlined in the Intangible Assets Monitor.
The core "control element" in WM-data´s information system is the "Revenue Creating Person" (RCP). They are the consultants and all other staff that work directly with customers. Non-RCPs are administrative staff. The proportion of non-RCPs must never exceed 10%.
Source: Annual Report 1995
Another target figure is staff turnover, which WM-data endeavours to keep within a band of 7-10%. WM-data´s operations require some turnover of skills, but it must not be too quick. Whereas the company has to make a strenuous effort to keep staff turnover below 10% in the boom years, during the 1990-93 depression in Sweden it increased its personnel turnover encouraging internal job rotation. Considerable resources are allocated to social activities to foster loyalty, for instance by engaging the families as "members" in the extended "WM-data family".
Source: Annual Report 1995.
WM-data recruits actively from universities in order to prevent the median age to creep upwards, the median age of all employees is 34 years. A balance in age and experience is considered crucial, in the fast moving world of computer consulting.
Source: Annual Report 1995.
WM-data has recruited a a large number of new employees in the last two years, so the seniority of the staff has decreased and the proportion of "rookies" is quite high. Rookies are generally less efficient, because they do not know their way around in the organization. They are also more likely to leave, so a high proportion of rookies is likely to increase the staff turnover.
Source: Annual Report 1995.
Rookies are however also valuable in that bring new competencies to the company, so particularly in computer industry, they are the means to keep up with the changes. Depending on the nature of the industry a low level of professional experience is therefore not necessarily a drawback.
Source: Annual Report 1995.
Efficiency in the subsidiaries is measured as profit per RCP (up from TSEK 101 to TSEK 137 in 1995) and value added per RCP, (increased by a fraction of a percent to TSEK 648 in 1995). The chart below shows the development in the value added per RCP.
Source: Annual Report 1995.
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