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Controlling knowledge management CHAOS

Controlling knowledge management CHAOS

Information is more freely and widely available than ever before, with literally billions of documents easily accessible electronically on anything from IT marketing practices to animal husbandry.

In the new millennium, successful enterprises will be those with the ability to manage ever-increasing amounts of data and maintain constant access to relevant and timely information.

`Knowledge as an asset is one of the greatest assets of an organisation. It's simple logic to say knowledge should be managed like an asset,' said Alex Paris, Asia Pacific regional manager for knowledge management vendor Insight Technologies.

With increasing globalisation and the growth in the information economy, good knowledge management is now more important than ever before.

According to analyst GartnerGroup, the growth in services and the marketing of goods as commodities mean corporate knowledge is now a company's only differentiating feature.

`It's important for many businesses because knowledge is what they sell,' said Neil McMurchy, Gartner's research director for enterprise applications. `More and more industries are based on services or consulting versus a physical product. Even in a hard product-based company, capturing the knowledge in people's heads will result in a better product.'

But what is knowledge management and can a technological solution solve what is fundamentally a business process?

Knowledge management has become a marketing buzzword in IT circles, but the exact definition is less clear.

GartnerGroup defines knowledge management as a management discipline, like financial management, rather than a technology.

`It's a business process for the management of an enterprise's intellectual assets,' McMurchy explained. `The discipline promotes an integrated and collaborative approach to the creation, capture, organisation, access and use of information assets. These assets are not just databases and documents but also the tacit knowledge and expertise of individual employees.'

Whilst technology-based solutions can only find the information stored electronically, true knowledge management is about utilising the knowledge possessed by staff, McMurchy added.

`Only 50 per cent or less of knowledge is in digital form. The other half is in people's heads. The challenge is how to get hold of that and create an environment where it is constantly updated. This is not a technology issue but a cultural and business problem.'

Insight's Paris agrees: `What we're calling knowledge management is the technology aspect, but there is also a massive cultural aspect. From a technology point of view knowledge management is seamless Web-based access to all explicit information assets, and managing tacit or intangible assets as tangible assets.'

Paris said that many vendors claim to be selling a knowledge management solution, whereas they are actually selling a component, such as a document management system, business intelligence solution or a search engine.

Charles Lattuca, general manager of knowledge management vendor Open Text, said good knowledge management gives employees an incentive to share information. `Knowledge management allows the know-how and processes of the lifecycle of an employee to be put on the network and shared with other employees. You can't force people to share knowledge but the system can encourage it.'

Gil Thew, managing director for DA Consulting Group, said that knowledge management is a natural progression from enterprise resource planning (ERP).

`ERP links a company's systems - debtors, creditors, general ledgers, payrolls - into one amorphous system. It's all there but it doesn't mean anything if nobody's looking. Knowledge management sorts it.

`It encompasses everything from coordinating dispatch of trucks to pick up and drop off goods at the same time, to coordinating the price of natural resources to buy low and sell high.'

Thew cautions, however, that there are several prerequisites to an effective knowledge management solution, such as good back-end systems, which are necessary to ensure accurate data (Thew likens bad data to `fighting a war with bad intelligence').

Adequate data management and hardware resources are required to store the information in a structured way; and the right software is needed to connect the information.

These three features already come in a good ERP system, but Thew believes the fourth and most crucial aspect is for the company to know what sort of knowledge it needs.

Indeed, some would argue that effective analysis and planning can sometimes replace the need for an expensive IT system.

Martin Harwood, general manager of Solution 6 Implementation Services (formerly CVSI), recommends identifing its needs before investing.

`An organisation should sit down before it invests and identify what information needs to be made available to the general enterprise,' Harwood said. `If you don't do this, you end up with a useless system. In fact, lots of organisations could benefit from knowledge management without investing in an IT system.'

Yet there are other compelling business reasons to invest in a good knowledge management system.

`Most Fortune 500 companies in the US have started implementing enterprise information portals,' Insight's Paris said. `The big boys have already accepted it as the way forward. It's not a question of 'should we do it', but 'why haven't we done it yet, because the competitor already has'.'

Paris believes an effective knowledge management system can save a company time and money.

`UK research shows that an organisation of 250 employees spend a combined total of 48 hours per day searching for information,' Paris said. `That's the equivalent of six staff. In organisations with tens of thousands of employees, they are spending a fortune. What knowledge management does is automate the information retrieval.'

DA's Thew is more blunt: `The advantage is survival.' Thew believes that economic rationalism and globalisation mean that knowledge management is now essential, rather than simply desirable.

Over the last 10 years companies have downsized, resulting in the widespread retrenchment of middle management and the merging of departments within a company.

`Middle management was the repository for a company's factual and cultural information,' Thew said. `Ten years ago there was a guy in the transport department who had worked there for years and knew it all and he was directing the show. Now it jumps straight from executive to supervisory management.'

At the same time, globalisation has increased the amount of information a company has at it disposal, but spread it over a wider geographical area.

`If you have a problem in Sydney, chances are they've had the same problem in Chicago,' explained Open Text's Lattuca. `You can solve the problem yourself, but if it's already been solved you can save time. Type the question into the system and it will tell you how Bill Smith in Chicago solved the problem. You could either use the information it gives you or call Bill Smith to talk to him.'

The rise of virtual organisations, connected by e-mail, and increasing business collaboration are two further reasons for effective knowledge management, Lattuca argued.

`We're moving towards business-to-business collaboration - organisations working in partnership with other organisations for a project,' Lattuca said. `If you can make documents available without having to send them, it improves the process.'

The technology might be new, but knowledge management has always existed in one form or another.

The major change now is that business managers are recognising the importance of knowledge as a corporate asset and investing in tools to manage it better.

`It's been around a long time,' said Gartner's McMurchy. `Applications like Lotus Notes are fundamentally about knowledge management. The tools are less important than the recognition at board level of the true value of knowledge. Knowledge is becoming a tangible asset.'

Thew said the technology was now only powerful and sophisticated enough to create an effective IT-based knowledge management system.

`We tried it in the 60s with Artificial Intelligence and we tried it in the 80s with Executive Information Systems,' Thew recalled. `Organisations put a whole lot of money into it, but the data never came out right, and it didn't take long for the board of directors to walk away in disgust. It's only now that ERP has given us enough information and the machines are big enough to do the simulations.'

Knowledge management systems eliminate the need for manual data entry, saving a company time and money, according to Paris.

`In the past there were lots of unstructured information documents and files dotted about the place,' Paris said. `When databases were invented, the sticking point was that someone had to manually classify the data. Now we're seeing a much greater emergence of the use of artificial intelligence to automate manual entry.'

But with so many vendors selling knowledge management solutions, what differentiates good knowledge management from the crowd?

`Everyone uses the term,' said Open Text's Lattuca. `Document management vendors all call themselves knowledge management vendors. The difference is ease and accessibility. If I'm in Melbourne and the information is in Sydney, I should still be able to get to it. Good knowledge management is proactive not reactive, and will come up with not only your own internal documents but also everything posted on the Internet.'

A good knowledge management system should have the ability to capture and differentiate between information types, full text indexing and searching capacity that yields relevant information, and a natural structure, Lattuca said.

The main uptake of knowledge management systems so far has been from bigger corporate and government organisations, but as the cost of ownership decreases in the future, the technology will move down the food chain.

`The heavy adopters have been state and Federal Governments - organisations with a tremendous amount of information,' said Solution 6's Harwood. `Banks and insurance companies run a close second. We're now starting to see the total cost of ownership (TCO) come down to the middle tier. As more and more dealings happen electronically, it will become absolutely ubiquitous.

But Open Text's Lattuca said he is already starting to see smaller organisations take up knowledge management systems.

`It's not necessarily just for bigger organisations,' Lattuca said. `I've just finished installing a knowledge management system for a company of 50 users.'

In Australia, the knowledge management market is expected to take off this year.

`Last year there was a lot of talk, but the expenditure was not huge,' admitted Insight's Paris. `We're expecting a big year this year. Now that Y2K is over, budgets are being freed up. Also there has been a lot of education in the marketplace and boards are allocating money to Web-based technology.'

DA's Thew added there was a need for marketplace education. `People don't realise the importance of knowledge management.' They've just finished Y2K, the GST is coming, and e-commerce is staring them in the face. But there's no point putting in an e-commerce system without knowledge management.'

In the information age, knowledge has become a company's point of difference and most valuable asset, and a good knowledge management system can help leverage that asset.

But technology is no substitute for good planning and integral to any knowledge management solution is changing work practices and corporate culture to allow the storing and sharing of knowledge.


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