There is a grey area in the organisational grey matter and it is shaping up to become a US$5.4 billion market by 2004. That's if you believe analysts at research group International Data Corporation (IDC).
One believer is Lotus Development Corporation, which recently renamed the grey area "a knowledge gap" and made its management the core focus of Lotus' new markets push. In fact, Lotus' president and CEO Al Zollar liked the idea so much he made knowledge management (KM) one of the three key elements of Lotus' short-to-medium term market strategy.
Last month, Zollar & Co. seized the occasion at LotusFusion, the Lotus partner business partner annual pilgrimage to Queensland, to announce they were going for the number one position in the KM market. They also said Lotus depends on its partners to help the company get there.
The trouble is the KM market is notoriously hard to define because knowledge management has become an all-encompassing term applicable to a variety of software products and corporate strategies. "It's a grey area," admits Christopher Crummey, director of technology at Lotus' KM products division. "But the interest in KM has never been higher."
That's because KM isn't exactly an application. Rather, it is a business objective of the information-rich business environment, or at least this is what it should be, according to Crummey. "What is information to you is simply data to someone else, unless you put it into context," he explains. "Sure, you need technology to make that happen, but it's business processes that make KM work."
What makes the KM such a promising market proposition is the fact that managing organisational grey matter is one of the biggest challenges facing companies in the information age. These days, corporations must make the information residing in its databases, file servers, Web pages, e-mails, ERP and CRM systems accessible to all employees to allow better business decisions to be made throughout the enterprise. IDC research shows the inability to do so could cost a company up to $US9,000 per year per employee, and that's a good selling point in anyone's book.
The emphasis on information access leads most organisations that are addressing their KM needs to start by reviewing their corporate portals. Corporate portals excel at providing access to a wide variety of structured and unstructured data sources through a single, usually personalised, Web-based interface. But in leaving the consolidation and analysis of the data to the end-user, portals typically fall short of meeting the ultimate goal of KM, which is to help end-users make better use of organisational knowledge.
In practical terms, this translates into a need to develop what Dale Chatwin, director of the Australian Bureau of Statistics (ABS) Knowledge Management Initiative, calls the second generation KM, consisting of a variety of vertical data access and management solutions. "The first generation KM was technology-centred in that it aimed to change the way employees think about their work," explains Chatwin, who is part of the team responsible for making the ABS one of the most advanced users of KM in the world. "But we are now moving towards the second generation KM which focuses on support collaboration and enabling people to make decisions or innovate."
But where is the market?
This shift is likely to be the primary driver of the KM market movements over the next couple of years, according to IDC. Apart from enterprise information portals, IDC has identified intellectual capital management software, corporate learning and knowledge exchange platforms as the main areas of KM growth in terms of revenue. IDC predicts the demand for the development of these applications will overtake the infrastructure segment within the next 12 months, forcing market consolidation in the process.
According to Brian McDonough, senior research analyst with IDC's Knowledge Management Program, this spells more good news for the channel. "[The] KM access offerings promise to increase return on investments in human capital and knowledge management infrastructure software," he says. "They are also forcing vendors to build partnerships so the myriad of technologies at their disposal can be used together to better serve organisations seeking to integrate access to information and applications."
In fact, the second generation knowledge management push is almost entirely dependent on business partner involvement. "For us, this is not an infrastructure sell, but an investment in the second generation knowledge management technology," agrees Lotus' Crummey. "We are providing the core infrastructure and are looking to our partners to extend that technology into customer specific solutions."
But for that to happen, the channel will have to learn to understand the cultural aspects of knowledge management. "Consultants tend to push technology, rather than business solutions on the market," ABS' Chatwin explains. "But to be successful in implementing a KM solution, you need people with IT skills who understand business changes and cycles, because one of the main methods of KM implementation is story-telling and understanding the way information is used."
(Trouble)shooting business problems
According to Shawn Callahan, client services director at Lotus' Professional Services division, there are two types of customers in the KM market. "First, there are the KM seekers who look for [a] full range of capability. They represent around 40 per cent of organisations out there," he explains. "Sixty per cent of the market is populated by business problem solvers who are cynical about KM."
While both groups are trying to solve the same problems, Callahan believes it is the second group of customers that should be easily "won over" by business partners, because most companies in this space don't have the resources to employ a specialist in knowledge management. "In a sense, they [the channel] will then be competing with the big six [management consultants]," Callahan says, "But if they become just a pragmatic solution provider and provide solutions for document management, content management and portal development [they will] then provide the same solutions that make up a KM solution at the high-end and will be [perceived to be] fixing business problems."
However, what Callahan sees as an opportunity could also represent the main impediment to the SME channel's involvement in this market, for, as a "discipline that systematically leverages information and expertise to meet business objectives", knowledge management dangerously smacks of ERP. Historically, ERP was an area both the channel and end-users found difficult to warm up to precisely because ERP claimed to be fixing business problems while requiring a significant amount of business process change in order to do so.
Lindsay Durbin, product marketing manager of Baltimore Technology's Content Security Group, believes the answer to is to think small, focusing on areas such as business intelligence that allows solution providers to turn data blurbs' into useable information. "From the user perspective, knowledge management is about making decisions based on data," explains Durbin. "The job for the systems integrator is to enable their customer to analyse their data in a more intelligent way and put it into a useable format."
According to Durbin, business intelligence solutions might just be the answer, for, although not generally considered part of the KM stable, BI (business intelligence) provide the in-depth analytical capabilities needed to turn raw data into actionable knowledge. "If you have a business that uses the Internet, you're automatically able to KM-enable them," says Durbin. "For systems integrators, this means that they can use widespread and commonly used B2B or messaging platforms and turn simple things such as e-mail into valuable data."
Small or large, with the compound annual growth rate of 31 per cent and partnering opportunities for the taking, knowledge management might just be that foray the channel needs to revive its faith in the value of new markets. So, when Lotus' Zollar announces he intends to pull off an SAP-inspired blitzkrieg in the knowledge management space, the channel should take notice for two reasons. First, the KM vendor brigade needs a significant infantry corpse if it is to conquer the corporates with yet another culture-changing technology model. And, second, when someone's in as much need of reinvention as Lotus is, you'd be safe to assume they did their homework.