Somewhere Over The Rainbow

Systematic Software Engineering (Systematic) is a Danish software house that develops and sells technical system solutions, products and support primarily to ministries of defence but also increasingly to industry, as well as transport and service companies. Systematic was founded in 1985 and in the last three years has grown rapidly from 130 employees in 1999 to 320 in 2003 including subsidiaries in the UK and USA. In 2001/2002 the annual sales amounted to 25 million euro. It is the stated aim of Systematic to develop its core business areas from primarily being a supplier of defence systems to increasingly becoming a supplier also to civilian markets. In recent years there has been a steady increase in the proportion of civil contracts with Electronic Patient Journals and electronic trade and security systems being the core business areas.

nitiating knowledge management

The first steps towards publishing an intellectual capital statement were taken in 1998 at the same time as efforts were also made towards process improvements in software development. As a major achievement the company was in 2002 certified at level 3 according to the Capability Maturity Model (CMM) Ð'- an American model developed to systematically improve software development processes Ð'- and it is still investing heavily in this area where e.g. more than 9000 engineering hours were spent on enhancing efficiency and improving internal processes in the last six months. It is the stated aim to obtain the level 4 certification in 2004, which will bring the company into the absolute European elite since only 10 European companies meet such documented quality and maturity standards.

Systematic intellectual capital report is concerned with management's efforts to influence the structure of the firm's knowledge resources. It is not about the value in monetary terms of the firm's intellectual capital, but more about its management's efforts to develop knowledge resources. Systematic management sees the intellectual capital statement as an alternative to the traditional annual report, and most symbolically at the end of the intellectual capital statement, the reader will find a two-page version of the annual financial statement. In this way the financial statement is presented as a supplement to the intellectual capital statement, and compared with the financial statement, the intellectual capital statement is a colourful and an expressive form of communication.

Systematic wants to be amongst the best in its fields of operation. This puts increased emphasis on continuous improvements and innovation, which must be achieved without losing sight of the day-to-day business. As an example of the projects carried out by this firm, Systematic was in March 2002 awarded a contract for more than Ð'Ђ 16m for the delivery of a Mission Planning System that will form an essential part of the future NATO-wide Air Command and Control System (ACCS). The order was received after more than four years of sales effort. The firm explicitly state that one of the reasons that they won the contract was due to its extensive capability in knowledge management. This achievement emphasises the need to maintain focus on knowledge management.

The intellectual capital report

Following the Danish guideline for intellectual capital reporting, Systematic identified four managerial challenges within knowledge management:

Ð'* Partnership with customers

Ð'* Software process improvement

Ð'* Recruitment and retention of employees

Ð'* Competence development

With software process improvement being the connecting thread. The four management challenges are described in substantial details in intellectual capital report and we will