Welcome to the third edition of Ideas
– a magazine that celebrates the
ideas that power business success
in Canada today.
Knowledge management is the focus of
this issue of Ideas. Businesses today are
becoming increasingly more agile by imple-
menting knowledge management practices,
which are formal, directed processes that
determine what information an organization has
that can benefit others in the company, then
devising ways of making it easily available.
With the need to gain and maintain a
competitive advantage in today’s marketplace,
the desire to rapidly exploit opportunities for
electronic commerce and the rise of the digital
economy driving business today, the ‘sharing’
aspect of knowledge management has become
essential for Canadian businesses.
According to a recent Ipsos-Reid survey,
a majority of Canadian business leaders indi-
cate that knowledge management practices
have created value by improving organizational
effectiveness, delivering customer value, and
improving product innovation and delivery. The
study also shows that two thirds of Canadian
companies practicing knowledge management
believe it has given their organization a com-
petitive advantage.
I hope this issue of Ideas is beneficial to
you and your business, and helps to provide
even better service to your own customers. If
you have any comments about this publication,
please feel free to send a message to the e-mail
address below.
Frank Clegg
President
Microsoft Canada Co.
Email: [email protected]
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contents
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12
Ideas Magazine is published for Microsoft Canada Co. by Plesman Communications, 25 Sheppard Ave. West, Suite 100,Toronto, ON. M2N 6S7
Published May, 2001
For Advertising and Publishing Inquiries:
Joe Tersigni 416-733-7600
E-mail, [email protected]
Mailing Inquiries: [email protected]
The views expressed in this magazine are those of the contributors for which Microsoft Canada Co. and PlesmanCommunications accepts no responsibility. Readers should take appropriate professional advice before acting on any issueraised. Reproduction in or part without written consent is strictly prohibited. * Copyright rests jointly with Microsoft CanadaCo. and Plesman Communications and is shared with the respective Microsoft partners on pages 20, 22, 24, 26 and 28.
Microsoft, The Microsoft Logo and "Where do you want to go today?" are registered trademarks of and/or trademarks of theMicrosoft Corporation in the US and/or other countries. *2001
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9
4
4 A wealth of knowledgeOrganizing, moving and sharing intelligence
5 The Web of knowledgeInternet-based KM resources
8 The culture of knowledgeAn environment of free and equal sharing
12 KM ROI Accounting for the value of knowledge
14 The value of knowledgeA primer on knowledge management technology
16 The language of knowledgeKnowledge management from A to Z
22 Partners in knowledgeTim Chandler, Intel Canada
Andrea McGrory, KPMG Consulting
Jim Goodfellow, Deloitte & Touche
& Carl Drodge, Deloitte Consulting
Dave Gendron, Compaq Canada Inc.
32 Five on fiveOur panel of experts shares its views
34 Gems in the hype and fogThe things that count for knowledge
Customer Agreement #1872362
issuethree4
featureby Martin Slofstra
It was in 1959 in a book called The Landmarks
of Tomorrow that highly respected manage-
ment guru Peter Drucker first coined the
term knowledge worker.
At the time, Drucker predicted this
knowledge worker would slowly take over, and
in fact, form a full one-third of the workforce
by year 2000. It was also a prediction filled
with promise.
"The majority of knowledge workers will
be paid at least as well as blue-collar workers
ever were, or better," he wrote. "And the
new jobs offer much greater opportunities to
the individual."
But it wasn’t just the worker. The biggest
implication was that the economy would also
change, from being organized around the flow
of things and the flow of money to the flow
of information.
Well, more than 40 years later, not only
have Drucker’s thoughts proven true, he has
inspired many more others to think in
similar terms, effecting major changes in not
just the worker but how the entire organiza-
tion functions.
More than just knowledge workers, we
have knowledge-based organizations, a knowl-
edge economy and a knowledge society. To be
certain, there is now a wealth of knowledge on
the topic of knowledge.
But it begs a question, what’s new here?
And more to the point, what must the modern
organization do if it wants to become a vital
part of the growing knowledge economy?
Well, most recently, we have the idea of
knowledge management, which implies that
while the information that knowledge workers
create may be abundant, it still needs to be
organized, moved, and most important of all,
it needs to be shared.
As good as any place to start is the CEO.
In his book Business@The Speed of Thought,
Microsoft chairman and CEO Bill Gates writes:
"A company’s high level executives need to
believe in knowledge sharing, or even a major
effort in sharing will fail. Leaders must show
they are not themselves locked in an ivory
tower, isolated from everybody else." A good
portion of the book is devoted to institutional
intelligence, or what Gates refers to as corpo-
rate IQ. "By corporate IQ, I don’t mean simply
having a lot of smart people at your company
— although it helps," writes Gates, rather, "cor-
porate IQ is a measure of how easily your com-
pany can share information broadly and of
how well people within your organization can
build on each other ideas."
But it can’t be just at the top.
In his book Working Knowledge, Thomas
Davenport stresses knowledge should be
everybody’s business, not just senior manage-
ment. "Planning managers, business analysts,
design and manufacturing engineers, market-
ing professionals and even secretaries and
clerks are the most important managers of
knowledge," he writes. "They all need to cre-
ate, share, search out and use knowledge in
their daily routines." In this sense, knowledge
management must be part of everybody’s job.
Another major new trend is the sharing
of this knowledge not only within but also
outside of the organization and out to the
customer. In the just-released book The
Relationship-based Enterprise, Ray McKenzie
writes: "Knowledge sharing reaches a new level
when customers become partners of the enter-
prise. To converse effectively with customers
and clients, however, there must be freer
knowledge and information sharing." How
might this work? An essential quality of good
sales people and a web site is that they know
how to share information freely, quickly and
at low cost. "They know what information to
We have the idea of
knowledge management,
which implies that while
the information knowledge
workers create may be
abundant, it still needs to
be organized, moved, and
most important of all, it
needs to be shared.
A wealth ofknowledge
5issuethree
issuethree
feature
6
T he recent attractiveness of the term knowl-
edge management appears to have been
prompted by three major forces, according
to the Knowledge Management Resource Centre
(www.kmresource.com): Increasing dominance of
knowledge as a basis for organizational effectiveness;
the failure of financial models to represent the
dynamics of knowledge and; the failure of informa-
tion technology by itself to achieve substantial ben-
efits for organizations.
An Ipsos-Reid study of medium and large-sized
Canadian organizations suggests knowledge man-
agement has been a success in most organizations
that have implemented the practices.
Knowledge management practitioners say it has
improved organizational effectiveness, delivered cus-
tomer value and added to product innovation.
The positive impact of knowledge management
also extends to employee satisfaction according to 88
per cent of organizations. Sixty-six per cent reported
a positive impact on employee retention and in gain-
ing a competitive advantage in the marketplace.
The top three KM processes in place are the
development of an Intranet, creating events for
sharing knowledge in the organization and the use
of groupware.
One in five organizations with KM in place
state the Internet and intranets are the sources they
turn to for KM information.
According to the study, organizational culture
plays an important role in the successful implementa-
tion of knowledge management practices and two
in five companies believe it has a very big role in
its success.
Overall, more than half of organizations have
knowledge management in place.
Just over two in five organizations with knowl-
edge management practices in place have a chief
knowledge officer or similar position specifically dedi-
cated to gathering, distributing and leveraging organi-
zational knowledge.
Among companies with knowledge management
in place, the most commonly implemented broad-
based processes involve creating networks for transfer-
ring information between employees, followed by for-
mal procedures for employees to communicate lessons
learned from projects to other employees and creating
databases of best practices.
Other top growth areas include knowledge audits
and procedures for retaining the knowledge of depart-
ing employees.
One in five organizations with KM in place state
the Internet and intranets are most important to its
success followed by data warehousing.
Internet-based knowledge management resources
are extensive, lending creedence to the concept that
the value of information is in its being shared. The
following examples are a good start to managing
the knowledge.
share, how, when and why; and they now the
value that sharing creates."
In his book Digital Capital, Donald
Tapscott equates knowledge with capital.
"Simply put, digital capital results from the
internetworking of three types of knowledge
assets: human capital (what people know),
customer capital (who you know, and who
knows and values you), and structural capital
(how what you know is built into your busi-
ness systems)."
Despite a spate of recent books on the
subject, there is still a long way to go. “The
tools to manage knowlege are still in their
infancy,” says Derrick de Kerkhove, a professor
at the University of Toronto and director of
the McLuhan program in culture and technol-
ogy. Still, “it’s hard to ignore the rapid progress
of search engines, our first real go at KM,” he
adds. “Even word processing is a form of KM
and that is certainly useful in the real world
of business.”
Consider De Kerckhove among those who
think Drucker’s early predictions will prove
true but he adds a cautionary caveat.
“There are obviously as many people who
are neither equipped nor interested in knowl-
edge working as there are people who are not
interested in working at all. I think what
Drucker has in mind is that the ratios of the
number of people who work in different sec-
tors of the economy are rapidly changing in
favor of those who deal with information.”
Evidently, the idea of knowledge worker,
and knowledge management, is about to move
into the mainstream. ■
by James BuchokThe web of knowledge
7
The Knowledge Management Resource Centerwww.kmresource.com
A comprehensive collection of KM resources, each of themreviewed and briefly described. Knowledge management can besearched in 17 departments and a bookstore. The KM Bookstore letsyou browse 148 titles on KM and related topics and you can also buybooks at a discount and have them delivered to your doorstep.
The site is an excellent source of quotations on knowledge man-agement including this from Thomas A. Stewart, a member of the boardof editors at Fortune Magazine: "Because knowledge has become thesingle most important factor of production, managing intellectual assetshas become the single most important task of business."
Knowledge Shopwww.knowledgeshop.com
Contains a wide range of papers and reference material related toknowledge management, quality and creativity. The site also offers TheKnowledge Management Mug, a black coffee mug with gold wrap-aroundtext quoting knowledge management practitioners on their definitions ofknowledge management. Quoted are: Charles Savage of Knowledge EraEnterprises Inc., Karl Erik Sveiby of Sveiby Knowledge Associates and theUniversity of Melbourne, Debra Amidon of Entovation International,Charles Armstrong of Know Inc., Hubert Saint-Onge of Clarica, RobertLogan of Gutenberg and Howard Eisenberg of Syntrek.
KMTOOLwww.kmtool.net
This Web site came online in May, 1999 as a resource for planningknowledge management projects which it defines as those that promotesharing and use of knowledge such as ideas, expertise and best prac-tices. It has grown in into a community representing professionals inover 40 countries. A page called ‘What Is KM?’allows sharing of inter-esting links, reading materials, and vendor information. Suggestions,news and ideas can be sent directly to KMTool. It also offers a glossaryof knowledge management terms.
Knowledge On-Line UKwww.knowledge.org.uk
"Knowledge has no tangible corporate value; it rarely appears onthe balance sheet and carries no tax benefit or burden," opinesKnowledge On-Line UK. "But for many organizations, " it continues "it isthe greatest (and sometimes the only real) asset that they possess."
Knowledge On-Line regards itself as the central informa-tion and communication forum for chief knowledge officers and knowledge workers worldwide. It lets youtap into the thoughts of leading knowledge practi-tioners and thinkers.
A link to "Meet the Knowledge Gurus" providesthe thoughts of the people who are shaping theknowledge era. You can also participate in a com-munity of practice. A section called "TheKnowledge World is Opening Up” tracks careeropportunities in the knowledge community.It also contains extensive archives ofnotes and tapes from knowledgemanagement conferences.
The BizTech Network www.brint.com/km/whatis.htmProvides a seven-point business and technology managers' checklist:1. View the organization as a human community capable of providing
diverse meanings to information outputs generated by the techno-logical systems, instead of the traditional emphasis on commandand control.
2. De-emphasize the adherence to the "way things have always beendone" so that such prevailing practices may be continuouslyassessed from multiple perspectives for their alignment with thedynamically changing external environment.
3. Encourage diverse viewpoints by avoiding premature consensus onissues that need deeper analysis of underlying assumptions.Often, viewpoints of persons with differing backgrounds and expertise can provide a much broader focus that is essential for completely grasping the essence of the core issues, particularlywhen the changing context demands a fresh look at what was yes-terday defined as a "benchmark" or a "best practice."
4. Encourage greater proactive involvement of human imaginationand creativity to facilitate greater internal diversity to match thevariety and complexity of the wicked environment.
5. Give more explicit recognition to tacit knowledge and relatedhuman aspects, such as ideals, values, or emotions, for develop-ing a richer conceptualization of knowledge management.
6. Implement new, flexible technologies and systems that supportand enable communities of practice, informal and semi-informalnetworks of internal employees and external individuals based onshared concerns and interests.
feature
7. Make the organizational information base accessible to organiza-tion members who are closer to the action, while simultaneouslyensuring they have the skills and authority to execute decisiveresponses to changing conditions.
Buckman Laboratorieswww.knowledge-nurture.com
Buckman Laboratories is a manufacturer of chemicals for aqueousindustrial systems and works with industries worldwide in chemical treat-ment technologies. The company established a knowledge managementWeb site as a resource for the worldwide knowledge management com-munity including practitioners, newcomers, academics and students.
A link to the Buckman Room provides links to the knowledge shar-ing efforts at Buckman Laboratories itself including downloadable arti-cles. A starter kit recommends materials for those beginning to learnabout knowledge management including a short list of references.
There is a ‘library’ containing articles and links to journals, Websites and other references. Related links include culture change, lead-ership, measurement and information technology and an events board.
eKnowledge Centerwww.eknowledgecenter.com
The Knowledge and Innovation Management Certification TrainingProgram is believed to be the largest KM Certification program in theworld designed to provide education and support to serious KM practi-tioners. More than 1,000 professionals are enrolled in the program,representing more than 500 organizations and governments worldwide.The program covers the management of natural and artificial knowledgesystems in business settings. There are two ways to receive training: e-learning with a four day face-to-face workshop or self-paced e-learn-ing only. The e-learning only option includes an online workshop that simulates the training provided in the face-to-face workshop. The
face-to-face and online workshops are designed to train KMprofessionals on how to plan, analyse, design, manage
and monitor a KM initiative. The goal is to give hands-on exposure which will enable
participants to add value totheir companies and clientsthe day they return to work.
During the program, partici-pants network with other KM professionals from around theworld, receive research supportand gain access to an onlineknowledge response center.
Ernst & Youngwww.businessinnovation.ey.com/mko
Ernst & Young's Managing the Knowledge Organization consortiumbrings together a community of academics and researchers to developa greater understanding of how businesses can better use knowledge tocreate value.
The current focus is on identifying and creating the frameworks andtools essential to a knowledge-based approach to business.
In order to encourage participants to think out of the box, MKObrings thought leaders into the conversation. The Ernst & Young Centerfor Business Innovations attempts to provide a common base fromwhich the consortium goals and activities build.
In this community, participants with diverse backgrounds, experi-ence and perspectives come together at conferences and workshops toengage in the forward thinking conversations and activities. The benefits result from participants’ willingness to share what they are learning and apply their collective experiences and insights to emerging chalenges.
Microsoft's Vision and Strategies for Knowledge Managementwww.microsoft.com/business/km/resources/vision.asp
As the volume of a company’s business grows, it needs a scalable,
flexible way to leverage intellectual assets into decisive action. It's not
enough for the knowledge to be "out there" — it needs to get into the
hands of every decision-maker, in a time frame and format they can
use. The primary goal of knowledge management is to deliver the intel-
lectual capacity of the firm to the individual knowledge workers who
make the day-to-day decisions that in aggregate determine the success
or failure of a business.
The Microsoft .NET platform is proposed as representing building
blocks to allow organizations to increase their organizational IQ. Ease of
integration removes the walls around "data jails" and frees employees
to act on relevant information. According to Microsoft, the familiarity of
its tools for developers and knowledge workers reduces the need for
training and keeps performance levels high.
Links to Microsoft's vision and strategies for knowledge manage-
ment and an overview of knowledge management provide articles, prod-
uct information and details of events where one can learn more about
the latest developments in KM.
A link to Microsoft’s digital dashboard reveals how to share corpo-
rate, personal, external and team information using the digital dashboard
resource kit 2.0. Microsoft case studies show examples of real world
solutions with details on partners, products and services. ■
issuethree8
feature
In an epsiode of Gilligan’s Island our
hero stumbles upon a bush bearing
seeds that enable him to read peoples’
minds. He shares the seeds with the other castaways and they discov-
er they’re all thinking spiteful thoughts about each other. The moral
is that a group working together can only do so in an environment
where information can be shared freely and equally. In other words,
there has to be a culture for sharing knowledge.
Every company has its own culture. People create culture and no
two are exactly alike. Everybody brings their own unique set of char-
acteristics and knowledge into a work environment. The key is to fos-
ter an environment where others can tap-in and share the knowledge
and intelligence of all employees. The technology to facilitate a knowl-
edge management environment must then tap into that culture. Or,
does the technology require the company to adopt a new culture?
One theory, says Cheryl Carleton, an analyst at IDC Canada,
"is that you can't change the culture of an organization, that you’re
stuck with what you have and you have to select the knowledge man-
agement technology and processes to suit that existing culture."
Hiring new people that fit in with a company’s cultural ideal, then,
9issuethree
featureby John Shoesmith
The culture of knowledge
Clara Angotti,vice president of marketing for
Sage Information Consultants
issuethree10
feature
can only change culture. The flip side, she adds, is that "culture can
only be changed if there is a willingness at all levels of the organiza-
tion to discard established cultural norms. Organizations need to
create climates of trust and security for that will ultimately drive
innovation — and innovation is the ultimate knowledge manage-
ment goal."
The culture argument often begins and ends with the basic tenets
of human nature. For example, there can be a natural resistance by
people in a shared work environment to share the knowledge one has
accumulated over a work life
about the business, customers
and other related work items.
It’s not surprising that an Ipsos-
Reid survey on knowledge man-
agement reveals a strong agree-
ment with the statement
"knowledge is to be used for per-
sonal advantage" skews towards
organizations without a knowl-
edge management system in
place. In fact, 41 per cent of sur-
vey respondents either some-
what or strongly agree
that individuals in their
organizations tend to
view “knowledge as a
source of power,” compared to
57 per cent who either strongly
or somewhat disagree.
But most companies feel
they’re already on the right
track. In the same Ipsos-Reid sur-
vey, 89 per cent of respondents
believed their organization has a
culture that encourages and pro-
vides opportunities for commu-
nicating ideas, knowledge and
experience internally.
Still, there can be a stigma about sharing information, says Clara
Angotti, vice president of marketing at Sage Information Consultants,
a Toronto-based e-business consulting firm that builds leading edge
technology solutions, including business intelligence tools that are
part of a comprehensive knowledge management environment.
"Some want to conceal as much as they can so they can be the stars of
the organization," she says. Companies must, therefore, create the
proper internal culture to best facilitate a strong knowledge manage-
ment environment. This is not about teaching new employees how to
use the photocopier or showing them where the bathroom is: it’s
about sharing information about customers and about how the busi-
ness runs.
One way to build that environment, says Agnotti, is to create
incentives for employees, to make it a reciprocal process. "It’s a real
give and take," she says. "Unless you think you’re going to get some-
thing back that will help you do your job, there will be resistance,
otherwise people will feel they’re just feeding knowledge into a hole,
that they’re not retrieving any knowledge back."
What’s more, those incen-
tives have to be real. "The whole
altruistic way of people sharing
knowledge for the pure goodness
of the organization, well, those
types of things are not good
motivators." IDC’s Carleton
agrees. "You have to address
issues like motivating people to
share their knowledge with
incentive programs that will
reinforce positive sharing behav-
iour and create an environment
of trust."
Angotti believes
another way to create an
environment where
employees want to share infor-
mation and knowledge is to
provide powerful but easy-to-
use technology tools to end-
users. "Unless you have a tool
that makes finding information
easy, there is usually some resis-
tance. If you’ve chosen poor
tools and people are searching
for information on an intranet
and they’re not finding it, some-
one will do that once or twice and then won’t go back."
It’s an obvious philosophy, but it doesn’t always translate across
every company and industry. Even in work environments where the
natural cultural tendency is to share as much information and knowl-
edge as possible, technology can be the roadblock. Take health care,
for example, which is a hugely information-intensive sector.
"There’s so much knowledge being created in the medical world,"
says Doug Campbell, the strategic architect for Alberta Wellnet. "If
you spent an entire week just trying to keep up with all the informa-
tion out there, you could easily do that and still be running behind."
Although he says the desire to share information is there, it’s not
always easy to enable it.
Part of the problem, he says, is the health field "is still very much
an oral culture. They talk to their peers and they’ve said, ‘I’ve tried this
drug and it really works well under these conditions,’ or there’s a lot
of journals and literature about treatments. It’s very much a sharing
culture from that perspective, but that doesn’t translate into informa-
tion management."
Creating the technologies to take advantage of this natural ten-
dency is the challenge. Organizations like Alberta Wellnet help. It acts
as the umbrella organization for a series of province-wide and region-
al initiatives to build an integrated health information network in
Alberta that will facilitate improvements to the delivery of health
services to Albertans by improving access to health information.
But the organization can only do so much, says Campbell. And
medicine is changing rapidly. People tend to have more than one
doctor, creating the need for the sharing of a patient’s medical histo-
ry among different doctors so they’re all working from a common set
of information. As a result, there is a growing need for facilitating that
information transfer. Campbell says one cultural aspect that has to be
changed is the resistance to the technology that will help facilitate
improved knowledge transfer of medical information.
"There’s resistance, there’s skepticism," he says. It’s not that
physicians are intimidated by technology — for example, most doc-
tors are keen on using the latest high-tech diagnostic tools — but
some have yet to put the technologies and the networking that will
bring more automation and improved transfer of medical files into
their practice. "Doctors are very adept at using technology in their
jobs, but it’s information management that they really haven’t
adopted as a discipline that they think will add value to the practice."
But culture aside, funding is also a major issue. "Most physicians,
despite what people think, don’t have a budget to buy the necessary
technology." Providing the right technology will always be para-
mount, but the success or failure in creating an environment for
knowledge management comes from the top. "Management teams
tend to understand that knowledge in people’s heads is a competitive
advantage," says Angotti, "and if they ever lost it, that would be a
huge blow."
It’s a message even our Gilligan can understand. ■
11issuethree
Clara Angotti says she’s never seen anything like it.
"It’s phenomenal the amount of interest we’ve seen in a
product that isn’t even officially out yet," says the vice
president of marketing at Sage Information Consultants about
Microsoft’s SharePoint Portal Server, which will be widely available
in June. "It shows you the pent-up interest in these kinds of knowl-
edge management tools."
SharePoint Portal Server is a flexible intranet portal solution that lets
users locate, collaborate and produce information. It provides a rich,
customizable out-of-the-box "digital dashboard," allowing users quick
access to business-critical information throughout an organization.
Some of SharePoint Portal Server features include scalable enter-
prise search using Microsoft's search technologies and an inte-
grated document management solution. "It has a really great
indexing and searching capability," says Angotti. For example,
when a user conducts a search – and searches can be done on a
company’s intranet, Word documents, even on a company’s e-mail
system – it comes back with what’s called Best Bets.
Some of the other features in SharePoint Portal Server include
subscriptions, category browsing and extensibility using third-party
digital dashboard Web Parts. Customers can also extend SharePoint
Portal Server and add additional Web application functionality.
Serving up knowledge
feature
A very big role
A moderate roleNo role
whatsoever
Role of Corporate Culture in KM
40%
12%48%
TARGET: Business & IT Decision Makers Organizations with 50 or more PCs
Source: Ipsos Reid
issuethree12
featureby Erik Heinrich
KMROI
Dr. Nick Bontisassistant professor of
strategic management,McMaster University
A n epiphany of sorts came to Nick Bontis one day while
employed as a securities analyst for the Canadian Imperial
Bank of Commerce. Why, he wanted to know, did the market
value of so many high-tech companies so greatly exceed their book
value? After all, everything he had ever been taught, and logic told
him that market price divided by book value should always equal
one. But here were dozens of companies on the stock market where
market price not only consistently exceeded book value, but did so in
multiples of ten or more.
That got Bontis thinking, there must be some way to better assess
a company’s true worth given that the value of these companies was not
based solely on physical assets they possessed but also on the knowl-
edge in their employee’s heads. Tte dilemma : How could this newfound
value be measured, and how could this be expressed in financial terms?
There simply was no accounting for the value of knowledge.
After giving the topic some more thought, Bontis decided to
return to his studies and completed a Ph.D. at the University of
Western Ontario’s Ivey School of Business. There, he wrote what he
13issuethree
says was the first doctoral dissertation on intellectual capital, and the
idea that intangible assets such as employee experience and expertise
have real value that can be measured.
Bontis, now a professor at McMaster University and president of
a software firm, spends a lot of time thinking about how to measure
knowledge. And to be sure, there is no shortage of ways. One such
measure could be e-mail volume which could be viewed as an indica-
tor of knowledge sharing versus knowledge hoarding. Another might
be human capital effectiveness, defined as the revenue and profit per
employee, “I can come up with a million measures,” says Bontis. But
ultimately, the ones that matter are the ones that can be combined
with financials. “All measures end up as dollars,” he says. The trick
then is figuring out how much to invest in a knowledge management
(KM) solution that delivers the goods, while at the same time mea-
suring the related return on investment (ROI).
"Increasingly customers are wanting to understand the business
value behind a technology investment," says Peter Rakoczy, director of
Microsoft Consulting Services in Canada. "A few years ago, it was
more a leap of faith. But today a business discipline has evolved
around technology decisions."
Traditional accounting methods, designed to capture the value of
transactions and physical assets, lack meaning in the new economy,
where intellectual property can be a competitive advantage.
For example how do you put a value on a KM solution that
enables a company to blow its competition out of the water by slash-
ing in half its time-to-market with a breakthrough product? Or how
do you measure the value of discovering lucrative market niches you
never knew existed?
It may be difficult to attach a dollar figure to these kinds of
things. But they are nevertheless critical to long-term survival in the
Web economy.
The good news is there are companies out there that have suc-
cessfully calculated the value of investing in KM solutions, and they
are shining a light for others to follow. Not only that, they are help-
ing IT professionals provide answers to bottom-line-oriented bosses
who like to ask: What am I getting for all this money I’m spending?
"Results vary from company to company," says John Carnduff,
chief strategy officer with Navantis Inc., a Toronto-based company
that specializes in integrating KM solutions. "But the return can easi-
ly exceed 10 times the original investment."
A case in point is Shell International Exploration and Oil (SIEO),
a unit of multi-national resource giant Royal Dutch/Shell Group of
Companies. SIEO, based in The Hague, Netherlands, invested $6 mil-
lion in a KM solution over a period of three years beginning in 1997.
The point of the exercise was to facilitate an improved exchange of
knowledge and information among some 10,000 employees in
numerous offices scattered around the global.
To that end, SIEO created three working communities (surface,
sub-surface and wells) for its core operations, and another 10 com-
munities for support functions such as finance, procurement, human
resources and health, safety and the environment.
After conducting a review of its operations in 2000, SIEO conclud-
ed its KM solution was generating annual benefits of at least $300 mil-
lion — 50 times the original investment in its first full year of operation.
"We hook up people who are working in related disciplines
around the world so they can problem solve and share ideas," says
Arjan van Unnik, head of SIEO’s KM initiative. "But the trick is to go
further than connecting people in the same disciplines. We get excel-
lent cross-fertilization among, for example, pipeline engineers and
corrosion engineers. This exchange of ideas means more complete
solutions, and that’s how we get great value."
But how exactly did SIEO come up with its ROI figure? The short
answer is random sampling. SIEO looked at the questions being asked
by drilling and production engineers in its wells community. It then
asked a random sample of those engineers to estimate the value of
answers they received thanks to the KM solution and extrapolated
those values to the entire community based on the total number of
questions asked.
[ ]Story telling is very important in creating a buy-in for KM initiatives. And when you calculate
your ROI, revise your final estimate downward substantially so it can stand up to any challenge.
YES - ROI41% ROI (mean)
5%
NO 84%
Source: Ipsos Reid
YES - dollar savings$41,278 saved (mean)
7%
Don’tKnow4%
Have you been able to calculate return on investment of a dollar amount in process savings due to your organization’s
investment in knowledge management processes?
Impact of KM on Process Savings
issuethree14
A primer on knowledgemanagement technologyby Erik Heinrich
Advances in information technology over the last ten years have
made it possible for companies to collect a staggering amount of
data about virtually every aspect of their business, from suppliers
and customers, to call-centre activities and accounts receivable.
The question is: What do you do with all this knowledge once you have
it? As the quantity of information has grown by leaps and bounds, so too has
the need to manage it. After all information is not much good to anyone if it
just hogs space on desktop computers and servers. And that’s why knowl-
edge management (KM) has become the cornerstone of any organization’s
IT strategy.
John Carnduff, chief strategy officer
with Navantis Inc., says the automation
of document-handling is one of the
biggest advantages of KM technology.
“It frees people up to do higher-value
work,” says Carnduff. “And that adds to
the existing knowledge base of a compa-
ny.” For example, if a worker spends
three minutes retrieving a document
instead of one hour, that’s 57 minutes
he can use to add value to a project as
knowledge expert.
"Knowledge management is about capturing the intellectual property
of an organization and leveraging it across as many people as possible," says
Peter Rakoczy, director of Microsoft Consulting Services in Canada.
Rakoczy divides the intellectual capital inside companies into three
categories: tacit knowledge, which resides in people’s heads, explicit knowl-
edge, which is stored in document form, and potential knowledge, which
a company may or may not recognize it has.
Each of these categories requires a different KM tool for a company
to fully leverage its business value. For example tacit knowledge is best
exchanged between people using collaborative KM solutions such as
e-mail and instant messaging. Explicit knowledge is best served by a doc-
ument management system that allows people to conduct random search-
es across a variety of platforms based on a key word or phrase.
And finally, potential knowledge, the toughest nut to crack, is
normally accessed using an on-line analytical processing (OLAP) tool that
enables management to drill down into databases and flip information
around on a multi-dimensional matrix. This type of exercise can spot
important trends and uncover information gems that lead to swift busi-
ness decisions, and ultimately better ways to have an organization’s
intellectual capital deployed.
A similar procedure was carried out in the other
communities and at the end of the exercise, SIEO had a hard
ROI number.
Going forward, SIEO is no longer concerned about ROI
because the KM solution has paid for itself many times over.
And while the cost of operating the technology is expected to
be about $12 million in 2001, that figure is a fraction of the
incremental benefits, beyond the $300 million already calcu-
lated, SIEO expects to reap in the coming years.
For example, SIEO expects its KM solution to result in
a quicker roll-out of technologies worldwide, continued
improvements in the dissemination of best practises, lower
training costs and a closer working relationship with business
partners who will be invited to participate in the various com-
munities over time.
What advise does van Unnik have for a company about
to take the KM plunge? "Look for success stories," says van
Unnik. "Story telling is very important in creating a buy-in for
KM initiatives. And when you calculate your ROI, revise your
final estimate downward substantially so it can stand up to
any challenge.
Ontario Power Generation, a supplier of 85 per cent of
the electricity consumed by the country’s most populous
province, is another company that has embraced KM as the
key to its future. It made the decision in 1999 when it realized
it had to streamline and standardize document management
in the run-up to deregulation in the energy sector.
At the time, Ontario Power Generation, which employs
15,000 people and operates 80 generating stations, had more
than 100 document-management systems in place. Because of
the complicated nature of its IT infrastructure –— which
includes more than one ERP system inherited from its prede-
cessor Ontario Hydro — it was unable to install a single elec-
tronic document management system across the entire com-
pany. Instead it invested $8 million in three separate solu-
tions: one for its nuclear group, one for its fossil fuel and
hydro-electric groups, and one for its corporate group.
It’s too early to say how big an ROI Ontario Power
Generation can expect to reap from its investment in knowl-
edge management, but if the corporate group is any indication
it will be substantial.
Roll out of EDMS technology in the corporate group —
which employs 3,000 people in a variety of support functions
including legal counsel, HR and regulatory affairs — began in
February and is expected to be completed by year’s end. "
We need to practise what we preach," says Cathy Walker,
The valueof knowledge
Carnduff: KM “frees people todo higher-value work.”
15issuethree
feature
manager of document management solutions at Ontario Power
Generation. "And right now we’re in the process of doing just that."
The initial benefits will largely stem from the simplification of
e-mail communication. For example, employees will all work from the
same version of a centrally-stored document, rather than sending as
many as 5,000 copies of the same document to each other as an
e-mail attachment.
This will save space on company servers and cut down on the
propensity of people to print out attachments. Combined with a tool
that forces people to save e-mails on their desktop or post them
to a shared directory, Walker estimates annual savings will be in the
six-figure range.
That’s not bad for a $1 million investment, but it doesn’t stop there.
Indeed, the biggest bang for
the buck will come from
time saved. "Some 50 to 60
per cent of a knowledge
worker’s time is spent look-
ing for information," says
Walker. "If you can cut that
in half you get huge produc-
tivity improvements."
Within the corporate
group of Ontario Power
Generation, this kind of
reduction would result in
about 26,250 hours saved
per week, the equivalent of
14 person years. Assuming
an average annual salary of
$60,000, that translates to
savings of $45 million a year.
This kind of figure
dovetails with a study
released by Framingham,
Mass.-based research firm
IDC that estimates the knowledge deficit per employee in Fortune 500
companies is expected to rise to $8,775 in 2003 from $7,500 in 1999.
With so much data supporting KM solutions, why have more
companies not jumped on the KM bandwagon?
"In 1999 everyone had their heads down over Y2K," says Wayne
Simpson, president of Mississauga, Ont.-based 80-20 Software Canada,
a distributor of KM solutions. "Now that the upgrades have been
completed, companies are wondering what to do with their new IT
infrastructures. One obvious answer is adding KM software because
unstructured data is growing in leaps and bounds."
Says Microsoft’s Rakoczy, "KM doesn’t always have to be a huge
investment. There is often an opportunity to leverage the technology
you already have."
Bontis argues that all it takes is a fractional amount of improve-
ment or knowledge flow to make a significant contribution to the
intellectual capital utilization of a corporation. Some bottlenecks are
technological, not everybody has access to e-mail, for example, but in
general, cultural and organizational barriers can also come into play.
To that end, Bontis is already thinking about the next stage of KM,
and new types of measures.
Phase two of knowledge management, he believes, will come
from the integration of human resources and IT. “Asking what we can
do to get the best efforts from employees is probably the most com-
plex question business
managers have to ask them-
selves,” he says. And fur-
ther to that, it is a human
resources question not a
KM or an IT question.
“The bottom line is very
important, but we need
to come up with methods
that encompass qualitative
measurements in addition
to quantitative.”
Bontis says that
according to a major
research study which
looked at employee values,
commitment and satisfac-
tion at 26 large organiza-
tions, the major finding was
the importance of leader-
ship. “Employee behaviours
are a reflection of manage-
ment’s behaviours. If you
have a knowledge hoarding problem in your organization, the symp-
tom is probably found in your boardroom.” Add to that, says Bontis,
the number one reason people are leaving organizations is that they
feel their talent is not being leveraged enough. Again, it’s an HR and
KM issue.
Companies are recognizing the important role KM solutions play
in helping define their competitive advantage. Now they are also able
to measure the significant savings and benefits these solutions gener-
ate to arrive at an ROI any chief executive can feel good about. And
that’s the key to any successful KM strategy. ■
issuethree16
Knowledge Management from A to Z
Artificial IntelligenceDevices and applications that exhibit human intelligence and behaviorincluding robots, expert systems and language processing. It alsoimplies the ability to learn or adapt through experience.
Asset ManagementLeveraging the cost of ownership of patents by maximizing the potentialof their use for further innovation and using proper analy-sis of a portfo-lio's worth to provide the strongest immediate returns.
Best PracticesSharing work and experiences using technology to archive written workin repositories. Also creating opportunities to capture tacit knowledge.
Business IntelligenceA set of concepts, methods and processes to improve business deci-sions using information from multiple sources and applying experienceto develop an understanding of business dynamics.
CephalicThe approach to decision-making found in command-and-control orga-nizations that route decisions through a central brain or "head."
Core RigidityOpposite of core competency. Defining any core competency too nar-rowly may turn it into a core rigidity. Core rigidities are unques tionedassumptions about an organization's products, policies, or positioningwhich lead to complacency and inhibit new innovation.
Corporate AmnesiaThe loss of collective experience, embedded tacit knowledge and accu-mulated skills, usually through excessive downsizing and layoffs.
Corporate InstinctA company's collective sixth sense. Corporate instinct enables a company to respond instantaneously to market opportunities, cus-tomer needs and competitive manoeuvres.
Digital Nervous SystemThe computing infrastructure used to inform and support the decision-making process of an organization.
Discontinuity of KnowledgeA phenomenon that occurs when experienced knowledge workers movefrom one position to another (inside or outside of an organization) with-out having adequate time of knowledge manage-ment facilities totransfer their tacit knowledge to co-workers.
Effective EngagementThe process by which prospects and customers interact with an organi-zation (customer support, sales, etc.) in a manner that allows forincreased customer satisfaction and increased opportunity.
Explicit KnowledgeOne of the two types of knowledge, whose taxonomy was most notablyespoused by Michael Polanyi. Explicit knowledge is knowl-edge that iseasily codified and conveyed to others.
Free AgencyThe lowest level of granularity in a free market work force. Free agentsare effectively organizations of one, which come together temporarily toform project-based alliances.
The languageof knowledge
21issuethree
Human CapitalThe collective value of an organization's know-how. Humancapital refers to the value which results from the investmentan organization must make to recreate the knowledge inits employees.
Knowledge BazaarA form of knowledge market in which sellers are essentially undiffer-entiated and buyers assume all quality and serviceability risks.
Knowledge Chain Corporate instinct stems from the flow of knowledge through fourdefinitive stage in this chain: Internal awareness, internal respon-siveness, external awareness and external responsiveness.
Knowledge ConciergeA title adopted by some organizations for individuals who have theresponsibility of facilitating the transfer of knowledge across com-munities of practice.
Knowing EnterpriseAn enlightened organization that uses its instinct and self-awareness;an enterprise that has intimate, constantly renewed knowledge aboutitself, its capabilities and opportunities.
Knowledge Half-LifeThe point at which the acquisition of new knowledge is more cost-effective and offers greater returns than the maintenance of existing knowledge.
Organizational AbandonmentThe process by which new innovations replace current productsbefore the current product is out of its profit zone.
Return-on-TimeA metric for assessing if a knowledge chain is working. Since instinctreduces the time required to go through this cycle, it increases acompany's velocity and return-on-time.
Suggestive SoftwareSoftware that is able to deduce a user's knowledge needs and sug-gest knowledge associations that the user is not able to make.
Tacit KnowledgeOne of two types of knowledge. Tacit knowledge is experiential know-howbased on clues, hunches, instinct, and personal insights; distinct fromformal, explicit knowledge.
Touch PointsThe priority areas for the application of knowledge management; typical-ly interactions with customers, suppliers and employees.
Velocity of InnovationThe rate at which an organization is able to conceive of and introducenew product to market. Innovation is driven by business markets that arebattling time to beat their competitors to the next product innovation.
Virtual OrganizationA company without walls and without many permanent employees; it relieson contractual relationships with suppliers and a contingent work-force.
Virtual TeamA recombinant structure for work that pulls people and resources togeth-er quickly to solve a particular internal or external problem.
Work CellA collection of roles within an organization that crosses functional barriers. Individuals in these cells are distinguished by their flexibility and adaptability.
WorkflowOne of the tools used for the creation of process assets — a proactivetoolset for the analysis, compression and automation of business activities.
The languageof knowledge
issuethree22
partnerby Tim Chandler
On the edgeTim Chandler is the e-business data center solutions manager for Intel Canada
Good news, bad newsToday’s economy is truly information driven.
Getting the right information to the right people at the
right time is a key to success in virtually every corner of
the global marketplace. Knowledge management can
help to understand customers, tighten up a supply
chain or launch an innovative new service — but only
if information can be extracted, analysed, organized,
understood and shared. Unfortunately, in the current
hyper-competitive climate, information is good
news/bad news proposition.
The good news is that there’s more information
available than ever before. E-businesses are collecting
and storing terabytes of customer data: spending
habits, demographic profiles, Internet usage patterns,
you name it.
As a result, the size of the average decision support
system (DSS) database is estimated to be in the midst of
a 24-fold increase in just three years. And that’s just
looking at one indicator.
The bad news is that there’s so much information
that it can be downright counterproductive. In a flood
of e-mail messages, documents, presentations, faxes,
voice mails, databases, enterprise resource planning
(ERP) systems and Web pages, employees have a hard
time finding what they need when they need it.
Companies are hard pressed to convert that infor-
mation into more insightful analysis, faster decisions
and better businesses processes.
Meanwhile, the flood of information continues to
rise, and the e-business economy increases the need for
knowledge management practices to share information
and collaborate across the entire supply chain.
The ability to successfully manage information —
to retrieve what’s important and filter out what’s
not, to access it "just in time," as needed, and share
it with a diverse community of users — is becoming a
critical differentiator.
In the fast-changing global economy, success goes to companies that are quick to spot emerging
opportunities and make the most of them. To help them do that, companies are collecting more data
than ever before. But without the right knowledge management tools, it’s hard to transform a tidal
wave of documents, mail messages, databases and Web pages into a competitive business edge. Now,
advances in business analysis, visualization and collaboration—running on a balanced architecture with
powerful PCs—provide new ways to extract, organize and communicate valuable information.
Seeing is believingA wide range of knowl-
edge management approaches,
from document management
systems to corporate-wide re-
engineering efforts, are aimed
at solving the information
problem. As well, a number of
established and newer knowl-
edge management practices
are receiving more and more
attention. (See chart).
These range from the
ubiquitous Internet/Intranet
solution to workflow, and
although adoption rates vary
widely, all have a future.
More recently, a new and
emerging technology offering
solutions is business analysis
and visualization (BAV) tools.
BAV adds value to data min-
ing, business intelligence (BI)
and other applications that
produce structured data, by
analyzing the data and presenting 3D visualizations and animations
of the results.
Companies are collecting massive amounts of customer data, and
state-of-the-art business intelligence applications can churn through
the data.
But before a company gets any practical value out of the results,
it has to understand them and their implications—and it has to do it
in Internet time.
Market forecasts based on historical data can be useful, but more
often, what a fast-paced business needs is to see what happened today,
so it can make adjustments and have an impact immediately.
Advanced business analysis and visualization provide the knowl-
edge management solution. While simple charts and graphs have
been used to enhance database, DSS and spreadsheet analysis for
years, a new generation of BAV applications takes advantage of today’s
more powerful PCs and net-
works to transform analytical
data into dynamic, interactive
visual displays.
Gleaning insightsEmployees using these
tools are better able to explore
data relationships and depen-
dencies, to identify trends
and exception conditions,
and also, to analyze and
understand the implications
drawn from studies of billions
of customer transactions and
data points.
Businesses, in the mean
time, are better equipped to
explore market intelligence,
analyze trends, understand
their customers and examine
the likely impact of business
decisions.
Knowledge management,
specifically BAV technologies,
are used by more and more companies to gain a competitive edge in
a variety of ways.
For example, e-commerce companies can analyze traffic patterns
and sales results and evaluate the effectiveness of promotional efforts;
phone companies can spot patterns that indicate attempted fraud;
brick and mortar retailers can glean insights from consumer behav-
ioral analysis and use them to launch innovative e-commerce
sales and marketing strategies; and banks are now able to develop
sophisticated techniques for identifying high-value customers that
will enable them to offer a more complete portfolio of financial and
investment services.
Taken altogether, this new generation of knowledge management
applications and practices are becoming an integral part of
making Canadian companies more competitive within the global
business environment. ■
23issuethreeissuethree
KM Practices Receiving Attention
Based on what you have heard others sayand/or what you may have read about, whatKnowledge Management practice would you sayis receiving the most attention these days?
Inte
rnet
/In
tran
et
Sha
ring
Inf
orm
atio
n/id
eas
Dat
a W
areh
ousi
ng/
Dat
abas
e M
anag
emen
t
Col
labo
rati
on
Doc
umen
t M
anag
emen
t
Trai
ning
Gro
upw
are
Pro
ject
Man
agem
ent
Wor
kflo
w
Cus
tom
er S
ervi
ce/Sup
port
Oth
er
DK
/N
S
[ ]Today’s economy is truly information driven. Getting the right information to the right
people at the right time is a key to success in virtually every corner of the global marketplace.
15%
9%
5% 5%4% 4%
3%
1%
24%
16%16%
20%
Source: Ipsos Reid
issuethree24
partnerby Andrea McGrory
However, many companies are finally beginning
to realize the true value of this untapped wealth of
knowledge. And the timing couldn’t be better, as the
growth of e-commerce is making it more important
than ever for companies to act now to harness this
internal power.
The e-commerce revolution is impacting business
on several fronts:
• Customers are expecting timely customized service
anytime, anywhere;
• Employees are reeling from the demands of doing
more, faster with the same resources and are seeking
balance between their work and personal lives; and,
• Businesses are being forced to be ever more adaptive
and innovative.
In the online world, broken processes are instant-
ly transparent to your customers, business partners and
employees. This means we need to work smart and let
knowledge be the essential ingredient in every aspect of
e-business – knowing your customer, building smart
products, being organizationally smart and leveraging
and building employee knowledge.
Where to Start?Recent surveys conducted by Dr. Nick Bontis,
Assistant Professor of Strategic Management, McMaster
University, and one of Canada’s leading KM experts,
reveal the average business leverages less than 2% of its
intellectual capital. Imagine the productivity gains if
we could just double this.
Becoming a knowledge centric business is not easy.
A good starting point is to look from the outside in.
This is very much an external re-engineering exercise
that requires senior management involvement. People
at the front are critical to manage the in and out flow
of information. Every employee should understand
how their job links to the customer.
"We are bombarded by data which is often just
useless information," says Bontis. "We are starving for
knowledge that we can convert to wisdom."
Knowledge at workAndrea McGrory is a principal with KPMG Consulting.
K nowledge is power, so the last thing workers want to do is have their power usurped
by giving up what they know. Luckily for them, they haven’t had to really worry about
this. In fact, according to recent studies, only two per cent of what people know is being
leveraged in the workplace.
Current Non-Users of KM
ANTICIPANTICIPAATED USETED USE
Are there any plans toimplement KnowledgeManagement practiceswithin your organiza-tion within the next 12 months?
PERCEIVEDPERCEIVEDIMPORTIMPORTANCEANCE
In your opinion, do the decision makers in your organizationagree that sharingemployees’ acquiredknowledge mightimprove the efficiencyof many processed and tasks within the organization?
Don’t Know 7%
NO61%
Source: Ipsos Reid
NO6%
YES91%
YES32%
Don’t Know 3%
A B
A
B
issuethree26
journey for your company, you need to take a moment to
understand basic KM theory.
Essential currencyMany executives have the mistaken impression that
the goal of knowledge management is to create a set of
electronic filing cabinets.
Yet KM should be viewed as an asset that embodies
more than the capturing and organizing of data and
information.
That’s because "knowledge", used as a widely-applied
concept, has the potential to draw information from an
array of sources. Information is found, for example, in
books and databases. Yet knowledge, an essential curren-
cy in today’s competitive business world, also resides in
people (the human capital in any organization): their
skills, intuition and judgement used to solve problems. In
addition, knowledge is inherent in the ability to capture
and manage information contained within an organiza-
tion’s technology.
Intellectual capitalEssentially, therefore, knowledge manage-
ment is the management of an organiza-
tion’s intellectual capital and consists
of three major components. These are:
strategy; people and processes; and
supporting technologies.
The three components of KM function
can also be represented as three faces of a
cube, representing the potential capacity of
the system.
T here is a general consensus within large organiza-
tions today that their management team does not
have proper access to the information needed to
effectively manage and direct the business. Further,
many of these organizations have heard of the concept of
knowledge management (KM) and think perhaps it
is something that can
enhance their compet-
itiveness. Yet, there
seems to be confusion
as to exactly what KM
encompasses, and fur-
ther, exactly how it can
be aligned to an organiza-
tion’s own business strategy.
But before considering the KM
partnerby Jim Goodfellow & Carl Drodge
A voyage of discovery
Jim Goodfellow is national director, innovationand knowledge management, Deloitte & Touche.Carl Drodge is the practice leader for data warehousing services at Deloitte Consulting.
27issuethree
[ ]KM is a journey of discovery. It starts with making the commitment to undertake what can
be an exciting, yet challenging journey toward creating new value in your organization. Each
step along with the way offers the chance for new insights and learning.
• Strategy determines what knowledge is needed to create value for
customers, solve business needs and how this knowledge can be
used to achieve a competitive advantage. This is the "business
imperative" face of knowledge management.
• People and processes is composed of two key facets: production
(which is the acquisition, creation and capture of information)
and consumption (which is how information and knowledge is
used to acquire new customers and deliver services).
This is the "who does what" face of knowledge management.
• Supporting technologies consists of how information technolo-
gies (software and hardware) , together with data management
techniques, are used to manage the information stored in the
system or linked to external systems. This is the "technology"
face of knowledge management.
Greater urgencyIn a global knowledge economy, such as we are now expe-
riencing, organizations cannot create value for their clients
with yesterday’s news. So the need for reliable, trustworthy informa-
tion has taken on a new urgency.
Added to his challenge is the new imperative for information to
be "current."
Knowledge is changing rapidly and needs to be captured, digest-
ed and transferred internally, or communicated externally to clients,
in a timely (sometimes almost instantaneous) manner.
Moreover, the new economy’s focus on margins, productivity
and innovation has shifted the processing of information more than
ever on to suppliers.
Concurrently, as clients demand more for less, the role of KM
takes on greater emphasis as organizations work to maintain their
competitive lead.
Aligning strategy Still, any KM system within an organization needs to be
aligned with the enterprise’s business strategy. KM cannot be a stand
alone concept.
If it is not driven by business needs and strategies, then it will not
gain acceptance within the organization. Nor will it command the
respect it needs to garner ongoing commitment throughout the entire
spectrum of the organization.
STRATEGY: What knowledge
is needed to createvalue for customers
and competitive advantage?
PEOPLE & PROCESSES:
Who needs to createacquire, capture, anduse this information?
INFORMATION TECHNOLOGY: How does this
information need to be organized, stored and distributed?
1
23
The Knowledge Cube
This acceptance is important since organizations must continual-
ly bring new knowledge to their clients (demonstrating the value-add
of their services).
In addition, organizations must also possess the skills to apply
this knowledge to solve their clients’ business problems and thereby,
enhance their clients’ ability to compete.
Sharing corporate knowledge can be harder than it sounds.
Initially, there will be a multiplicity of questions within any organiza-
tion, each question worthy of examination.
These can include: "Why do we need KM? Who will use it and what
will they do with it? Which levels of our organization will need access to
the knowledge asset? What will they do with these capabilities? "
As any organization moves along on the KM journey, it must be
able to answer these questions, if only to be able to provide
the business case for the time and effort devoted to the possibility of
creating a KM system.
As stated, KM is a journey of discovery. It starts with making the
commitment to undertake what can be an exciting, yet challenging
journey toward creating new value in your organization.
Each step along with the way offers the chance for new
insights and learning. ■
issuethree28
partnerby David Gendron
Right time, right placeDavid Gendron is canadian knowledge management and messaging solution manager for Compaq Canada Inc.
Before data residing in various sources around the
world is of any value, it must be transformed
into information. And, from that information,
pertinent knowledge must be absorbed that allows users
to make more rapid and informed decisions. Benefits to
business manifest themselves through improved effi-
ciencies, streamlined processes and better customer
relationship building, all of which, individually or col-
lectively, translate into a competitive advantage.
Therefore the management of knowledge has assumed
mission-critical importance, particularly in enterprise-
level organizations now faced with global competition.
Business Drivers Essentially, the business drivers
for knowledge management are
consistent with corporate goals that
create a foundation for success. An
organization needs to manage the
knowledge assets of the corpora-
tion. It needs to promote the cre-
ation, sharing and leveraging of cor-
porate knowledge. And, it needs to
foster innovation through knowl-
edge sharing and collaboration
within and across various communities of knowledge.
Yet, in an era when information is almost limitless,
failing to manage this information and the knowledge
that flows from it, can literally starve an organization
into decline.
Key Challenges Essentially, there are four basic reasons why knowl-
edge management has taken on such importance.
The first is information overload. This is where
users are so inundated with information from the web,
e-mail and direct access to company databases, not to
mention the traditional sources of seminars, person-to-
person, reports, articles, memos, and voice-mail, that
it's a major challenge to sort and select what they need.
The second concern in managing knowledge has
been posed by staff turnover. With the baby-boom
reaching retirement age, companies are losing long-
time veterans with 30 to 40 years of company experience
and possibly five years or more of function experience that
previously provided context to company information.
In addition, as the remaining workers move from the
traditional office into their homes or cars to conduct busi-
ness, proximity is lost. They can longer lean over the cubi-
cle to ask a question or solicit advice. Both experience and
proximity are being lost to new work habits, attrition, and
career mobility, and are not immediately replaceable.
Next, decentralized decision-making and empower-
ment initiatives have shifted much of the decision making
from executive levels to the rank and file to enable
employees to directly and effectively deal with customer
and process issues. This creates a need for immediate
knowledge that, often, must cross functions and tran-
scend hierarchies. There is no longer any place for silo
mentalities and knowledge workers must know what
information is stored, where it is stored, and how to get it
through automated "smart" systems that link, sort and
suggest useful information.
Finally, timeliness has assumed critical importance
when it comes to decision making. As trade agreements
such as the General Agreement on Trade and Tariffs
(GATT), and the North American Free Trade Agreement
(NAFTA) have created global competition, acting quickly
and decisively in an informed manner can often
mean the difference between business success and failure
for organizations.
So the challenge of managing to get the right
information to the right people at the right time and
within the right context is of paramount importance.
And, understanding the components of knowledge
management is the first step to developing and deploy-
ing a successful system.
Three Components Knowledge management involves three interrelat-
ed and interdependent components: people, content
and technology.
Knowledge is the only
instrument of production
that is not subject to
diminishing returns.
- J.M. Clark
29issuethree
People, the producers and users of the knowledge, must have the
right tools, training and education to gather, store, access, understand
and assimilate timely, accurate and relevant knowledge required for any
given task.
Content deals with information available or process descriptions.
This content is most commonly found in:
• Messaging systems
• Collaboration and workflow initiatives
• Business intelligence
• Databases
• Intranet (corporate) information
• External Web sites
Technology is the means to store, search, sort and deliver rele-
vant information that will become knowledge in the hands of prop-
erly trained users. Since transferring and translating the information
via technology into knowledge has become a critical success factor for
most organizations, hardware and software technology must be reli-
able, robust and flexible.
Successfully integrating all three components into an efficient
knowledge management system requires technology solutions that fit
within, and complement your business needs.
Today and TomorrowThe technologies to engage today to create a knowledge man-
agement system can include:
• Portals
• Communities
• Workflow management
• Documentation management
• Integration of legacy data
In addition, be aware of developments in expertise networking
and location, such as those developed by Orbital Software, which pro-
vide a scalable, person-to-person infrastructure for Internet and cor-
porate portals that bring people and information together so users can
ask questions, find experts and share knowledge. Data visualization
applications, such as those provided by Cartia, can lend graphic effec-
tiveness, and knowledge communities can be created with the help of
applications such as Knowledge Track and Plumtree.
Trying to do all things at once in the field of knowledge manage-
ment is improbable, if not impossible.
Instead, look at your organization's big picture, the solutions
you can bring in, and the business benefits that will drive to your
bottom line.
In other words, find the information leverage points that will
provide the maximum benefit.
Next, focus on content and decide who needs what information,
when they will need it, and the specific and doable actions required to
fill this need. Tie it directly to the business objectives of the corporation.
Finally, know your network and who actually owns the content
as well as who consumes the content. Managing this content accord-
ing to your needs is key.
In theory, yesterday may be viewed as recognizing the need for
knowledge management, today as an era when portals and commu-
nities of interest are being developed to serve these needs, and
tomorrow as debuting leading edge tools such as smart personal
knowledge assistants.
Business Benefits While relatively recent, knowledge management systems are
already being implemented and organizations are enjoying a positive
return on their investment. How is this recognized?
Investment return comes in the form of measurable efficiency
improvements in sales, service and product development. It happens
when improved decision making takes place at lower levels (the front
ranks) where employees are able to address customer issues thanks to
knowing the customer's history and concerns.
It also manifests itself when improved morale happens because
employees are able to take charge and better manage their responsi-
bilities in line with stated corporate priorities and goals.
The major payoff, however, comes through an increase in cus-
tomer loyalty as a result of customers dealing with company repre-
sentatives who are knowledgeable about them, and better understand
their total concerns and needs.
When viewing the rapid recognition of knowledge management
as a key, strategic corporate goal among organizations around the
world, along with the on-going technological developments to
support knowledge management, it's obvious that it will play an ever-
increasing role in serving the information needs of both large and
small organizations. ■
[ ]The major payoff, however, comes through an increase in customer loyalty as a result of
customers dealing with company representatives who are knowledgeable about them, and
better understand their total concerns and needs.
issuethree30
nowledge management potentially integrates
information from a variety of sources into a
heterogeneous solution that maps to an organi-
zation’s mission statement. This includes such vital
areas as customer service, executive decision-making,
human resources, marketing, and operations. The
information, for the most part, exists in departments
and divisions within the organi-
zation, however, it is quite rea-
sonable to expect some linkages
to external data sources as well.
From a systems perspective, this
data comes from online transac-
tion oriented systems, summa-
rized data stores, document man-
agement systems, and back-end
systems. From a 40,000-foot view,
this approach appears almost
intuitive, and many organizations
start building the solution with-
out understanding the costs,
rewards, risks, and tradeoffs of the
process as a whole. Achieving the
full view is a complex and
challenging undertaking, and if
done incorrectly, can negate
the benefits offered by simpler
knowledge management solu-
tions. Achieving success in this
arena is a factor of expectations
management, technology, and
people relationships.
Defining a broad vision for
knowledge management is fine
for putting a stake in the ground,
but trying to achieve it in a meaningful timeframe can
be a different proposition. Many of the mega data ware-
housing projects of the 1990s are good case studies of
what can happen when a 40,000-foot solution is initi-
ated as a single big bang trying to reach into all parts of
an organization at the same time. A significant number
of these projects ended up producing little of value, and
certainly delivered under-whelming results when
assessed on a cost/benefit basis. The problem was trying
to do too much, in too short a timeframe, and without
enough resources. The broad vision may have been
achieved with more frequency, if it had been accompa-
nied by measurable and achievable objectives that
translated into a string of short-term goals.
Another relatively unique area of consideration in
knowledge management is in the area of ownership.
How this is handled will dramatically alter the end
results of the initiative. By definition, knowledge man-
agement requires information from different parts of an
organization, and occasionally from external sources as
well. The level of co-operation and access received from
each group providing the data, while they are main-
taining their operational activities, determines the
quality of the knowledge management solution. There
are three resourcing models to consider.
In the first model, a separate dedicated team is
established and led by a senior executive with a report-
ing relationship to upper management to give it credi-
bility. The organization of the team could be a mix of
technical knowledge management experts and others
who have good contacts in different parts of the orga-
nization. These contacts are vital for gathering and
mapping information that feeds the knowledge man-
agement solution. This model challenges the dedicated
team to win buy in from other groups that are pressed
by their own operational deadlines to divert meaning-
ful resources to the knowledge initiative’s deadlines.
In the second resourcing model, objectives are
established for different groups within the organiza-
tion. Each group produces a solution that has the capa-
bility of rolling up within the organization. This offers
the advantage of smaller and consequently more man-
ageable deliverables to be built by individual teams that
know their business. The weakness with this approach
is a lack of an overall enterprise view.
partnerby Sanjiv Purba
Mitigating the riskSanjiv Purba is practice director for Microsoft consulting services – e-solutions, Canada. He can be reached at [email protected].
You are your greatest invest-
ment. The more you store in
that mind of yours, the more
you enrich your experience,
the more people you meet,
the more books you read,
and the more places you
visit, the greater is that
investment in all that you
are. Everything that you add
to your peace of mind, and
to your outlook upon life, is
added capital that no one
but yourself can dissipate.
- George Matthew Adams
K
31issuethree
The third model combines elements of the other two. A virtual
team is established with representation from each group that is a
stakeholder or contributor to the overall solution. While the members
of the team are not dedicated to knowledge management, their
accountability to the operational side of the business will allow the
team to reach more directly into the different parts of the organiza-
tion. This model is worth considering in more detail.
Knowledge management systems should be carefully interwoven
with other systems (e.g. HR, CRM, ERP, and financial systems) in the
organization to provide a total solution. With slower technologies it
was necessary to basically draw a hard line between a transaction ori-
ented systems that needed fast turnaround, and data stores that fed
the predecessor to knowledge management systems as we describe
them today. These data stores or data warehouses were essentially a
copy of the production data, mapped to various formats. This fre-
quently resulted in problems with the data being reported, either its
timeliness or because emergency changes to production systems were
not propagated through the duplicate data stores. The data ware-
housing experience demonstrates that when there are multiple
groups of systems competing for resources, the transaction oriented
ones appear to win.
Technology continues to enable knowledge management solu-
tions. Such solutions can benefit from incorporating web-facing fea-
tures, access to external systems (e.g. in an ASP model, some of the
critical data may be on external computers), and integration with
email services. Knowledge management solutions can also be turned
into ASP services. This is a particularly interesting possibility that will
become more popular with growing bandwidth availability.
Another risk area to consider is executive reporting, which gen-
erally falls into the regular or ad hoc categories. Poor quality reports,
regardless of the effort required to produce them, are the worst way to
demonstrate a cost/benefit proposition to an executive team.
Similarly, ad hoc reports are only as effective as the requests going in
to produce them. The mitigation strategy to consider involves defin-
ing a core set of reports which demonstrate the value of the overall
knowledge management application and which are delivered at fre-
quent intervals to those paying for the solution.
Knowledge management is a strategic initiative that offers the
opportunity to integrate information and processes within and out-
side an organization to promote overall competitiveness. A sound
approach for getting started is to pursue some quick payback
projects, while supporting the overall knowledge management vision
for the organization. ■
28% Capturing employee expertise
28% Knowledge audits
45% Information mapping
67% Groupware
73% Knowledge-sharing events
78% Intranet
Use of SpecificKM Processes
Source: Ipsos Reid
[ ]Knowledge management is a strategic initiative that offers the opportunity to integrate the
information and processes within and outside an organization to promote overall competitiveness.
Current Non-Users of KM
Reasons for Non-Use of Knowledge Management practices
Source: Ipsos Reid
No
need
Not
fam
iliar
wit
h it
Hav
e ot
her
prio
riti
es
Cos
t/la
ck o
f re
sour
ces
Cor
pora
te c
ultu
re is
sues
No
tim
e
Inve
stm
ent
requ
ired
too
larg
e
Wor
kloa
d
Oth
er
DK
/N
S
14%
11%10%
9% 9%8% 8%
1%
16%
25%
issuethree32
fiveonfive
KM provides the tools to make it easierto share information and collaborate as teams. These tools help to capture,index, organize, search and deliver theright information at the right time to the right person.
First, you should have a solid under-standing of your current assets (whatexists and where it is located). Under-standing your environment, you can thenresearch the tools and technologies thatare available to facilitate the delivery of information. The end result is a planthat you can implement which will produce measurable results.
Some barriers are an inability for theorganization to create a proper knowl-edge map; poor participation from keyplayers to creating a knowledge marketwhich includes sellers, buyers and bro-kers; and, a poor infrastructure thatmakes it difficult to share information.
Technology is an enabler. In, and of itself,it can't help and can lead to more prob-lems. If there is structure around the useof the Internet, then it can assist in deliv-ering information just in time.
The financial services industry has been aleader. With their use of call centres anddatabase marketing efforts, they havetruly taken KM to new levels providingcustomers with information that is per-sonalized, customized and quickly.
1
The need for a solid knowledge
management strategy to build a
successful business is becoming an
accepted truth. Here are five views
on how to tap its huge potential.
Clara Angotti Vice president, sales & marketing Sage Information Consultants Inc.
B.J. BardDirector of consulting services,Sierra Systems
At the start of the information age, thefocus was on sharing and on pushinginformation out to others. Now that weare in a subsequent phase of the infor-mation age where there is plethora ofdata and information, there is a need togive people the tools to pull the informa-tion that they need.
Building on the concept of learning,implementing a knowledge managementstrategy would not only allow an organiza-tion to repeat the success of a past prod-uct or project but to build on it and possi-bly carve out or create something new.
Technology is really not a barrier, asknowledge management is more aboutintent and process, and less about tech-nology. As a result, the main barriers toimplementing a successful knowledgemanagement strategy are organizationalcommitment and individual (employee)buy-in.
The Internet, if well managed, is anenabler to knowledge management as it broadens networks or communitiesbeyond organizational in areas of com-mon or related professional responsibili-ties or activities. However, the Internet,when not managed well, can create chaosor noise.
Best practices in knowledge managementare not restricted to a given industry oreven size of organization. But organiza-tions that recognize how learning andbreakthrough thinking are fostered andhow this integrates with business systemsand business processes are usually more successful.
2
3
4
5
The need to share information is a huge issue in every organization. How does knowledge management help?
In what ways can a knowledge management strategy deliver value to a company?
What do you see as the main barriers to implementing a successful knowledgemanagement strategy?
Does the Internet help with the dissemination and sharing of knowledge or simply perpetuate the problem of information overload?
Which company or industry do you most admire for its approach to knowledge management and why?
33issuethree
KM-enabled sharing is more than justpassing information, it's adding value to it and making it relevant for the enterprise. Information becomes trueknowledge because it is relevant to past experience, actionable and keyed to a role or person.
With a good KM strategy and supportingtools in place, on the whole, clerk-styletasks are reduced and more responsive,thoughtful work is increased. Less lowvalue work, more high value results.
What's necessary is recognition of theneed and an effort to put a solution inplace. This can be as simple as having astandard practice for allocating docu-ments and e-mails into public folders oras powerful as implementing a completeenterprise KM solution.
The pace of information flow has out-paced a human being’s capacity toabsorb. This only underscores the needfor smart and straightforward Web-basedKM tools and solutions to provide peoplewith what is relevant to their jobs.
Microsoft Canada’s CanadaWeb, devel-oped by Navantis, is a great example ofhow an organization can commit to KMprinciples and technologies. The result isnew hires are trained quicker, existingknowledge workers are better informed,processes are terrifically streamlined andteams collaborate more strategically.
KM is a complicated affair more thanpeople think. The word does not solve theproblem. Real KM is the management ofintelligence. It requires a proper arrange-ment of access and input interfaces anda value-added sorting of data. We are notreally there yet.
KM can help a company enormously onlyif it is properly managed. The value is notonly that there is a chance of actuallydiscover new things but it also gives adeeper sense of cohesion and a new kindof mental freedom to the participants.
The first and worst is the tendency tohoard the info. We are on the cusp of thetrade-off between co-operation and com-petition. There is also the turf protectionsyndrome. It is also a good idea to devel-op the strategy bottom-up rather thantop-down. Attitude is key.
The next generation of tools beyondsearch-engines will be collaborative tools. We haven't even begun to makegood use of the hypertextual quality of the Internet. We are still using it as a glorified database.
I like Autonomy.com because it deals with information in a semi-automatedway, Thinkwire, Smart Money's Map of theMarket, Plumb design's Thinkmap or The Brain, and also, Napster.
Derrick de KerkhoveDirector, McLuhan ProgramUniversity of Toronto
Jason MartinCo-founder,Navantis Inc.
KM can enable the sharing of tacitknowledge through collaborative tech-nologies like e-mail, instant messaging,and electronic conferencing beyond phys-ical and geographical boundaries and tofar greater numbers of people.
One of the key methods to deliver value to a company is to leverage what is already there. What I mean is that theanswer or solution to a problem often lieswithin the organization. The challenge is knowing where to find it or who tospeak with.
Implementing the technology is usuallythe most straightforward aspect ofdeploying a KM system but if the processand culture is not there to support it, thesystem will not provide the return that isavailable. Calculating the value of knowl-edge or return on investment can also bea barrier in some organizations.
I have often heard the expression infor-mation overload but have never heardanyone complain of knowledge overload.We will be successful to the extent thatwe can extract knowledge from the infor-mation and provide that knowledge topeople in a digestible format.
I admire Nortel Networks because of the way they value intellectual propertyand leverage the intelligence within theorganization to remain competitive.
Peter RakoczyDirector, consultingMicrosoft Canada
by Yogi Schulz
issuethree34
column
T heorists describe knowledge management in terms
of building and retaining crucial organizational
expertise and understanding.
The CIO can address knowledge management by
ensuring that valuable knowledge of the past is available
to the business of today and by nurturing the formation
of new knowledge that is the foundation of future success.
An organization maintains
its competitive edge and controls
its costs by harnessing its accu-
mulated knowledge such as
research reports, engineering
documents and customer infor-
mation. Many organizations are
replete with such valuable, rele-
vant knowledge. Unfortunately,
they also experience difficulty
making this knowledge easily
available when researchers, exec-
utives or front line staff need to
see it or manipulate it.
For instance, in the oil and
gas industry millions of dollars
are spent each year on under-
ground reservoir characteriza-
tion studies. Shortly after com-
pletion, these studies gather
dust, migrate to an off-site stor-
age box or are lost. When a reservoir is reviewed a few
years later, the work begins from scratch because no one
can locate the previous study.
An organization strengthens its competitive edge by
creating the knowledge that will form the basis for appeal-
ing products and services in the future. Collaboration has
become essential to product development and problem
resolution. It’s become increasingly difficult for one per-
son or one discipline to comprehend all the dimensions
of an opportunity or problem. A multi-disciplinary
approach to collaboration based on technology delivers
innovation. Consider the examples of the wildly success-
ful PT Cruiser or the reintroduced VW beetle. These prod-
ucts are successes because of the collaboration of not just
engineers but also designers, marketers and sociologists.
The CIO can enable improvements in corporate per-
formance through knowledge management with some
surprisingly low-risk initiatives.
In many organizations, knowledge is stored in un-
indexed and/or unknown filing cabinets and in long-for-
gotten storage rooms. Improved document management
systems, with strong scanning, indexing and annotating
capabilities will help to make the knowledge of the past
easily accessible to the employees of today.
Knowledge of customer buying patterns, equipment
configurations, payment history, likes and whims are cru-
cial components of customer retention and superior cus-
tomer service. This knowledge usually disappears in direct
relation to employee turnover. The high interest in cus-
tomer relationship management systems reflects the
importance of managing this knowledge.
The CIO can also help the organization use this
knowledge through the introduction of higher capacity
storage facilities. And what receives less attention but is
arguably even more important is the use of hierarchical
storage management and strong cataloguing functionali-
ty. These technologies contain storage costs while ensur-
ing data can in fact be found when needed.
Some of the interest in knowledge management is dri-
ven by the pace and volume of knowledge generation
which accelerates as the number of researchers, engineers
and academicians continues to expand. In particular, the
biotechnology and pharmaceutical industries generate
huge volumes of new data associated with new knowledge.
One measure of the increase in data volumes can be
seen in the change of media used to transfer data. Just a
few years ago, documents were still being distributed on
floppy disks, then came CDs that store 500 times as much
data. The DVD constitutes another 10-fold increase and is
just beginning to take hold. ■
Gems in the Hype and FogYogi Schulz is president of Corvelle Consulting Inc., Calgary. [email protected]
Each new development
starts from something else.
It does not come out of a
blue sky. You make use of
that which has already
entered the mind ... That
is the real reason for
accumulating knowledge.
- Robert P. Crawford