What is knowledge management

Knowledge Management.

Introduction:

Knowledge Management is one of the hottest topics today in both the industry world
and information research world. In our daily life, we deal with huge amount of data and
information. Data and information is not knowledge until we know how to dig the value
out of of it. This is the reason we need knowledge management. Unfortunately, there's
no universal definition of knowledge management, just as there's no agreement as to
what constitutes knowledge in the first place. We chose the following definition for
knowledge management for its simplicity and broad context.

Simple Definition:

Knowledge Management (KM) refers to a multi-disciplined approach to achieving
organizational objectives by making the best use of knowledge. KM focuses on
processes such as acquiring, creating and sharing knowledge and the cultural and
technical foundations that support them.

Knowledge management:

Know L Edge

Be aware of Learn A slight advantage
Be familiar over something.
with
Be
acquainted
To be informed to
with
gain knowledge to
be skillful.

P G Department of Management Studies and Research Center., PESITM, Shivamogga. Page 1


Knowledge Management may be viewed in terms of:

People – how do you increase the ability of an individual in the organization to
influence others with their knowledge?
Processes – Its approach varies from organization to organization. There is no
limit on the number of processes
Technology – It needs to be chosen only after all the requirements of a
knowledge management initiative have been established.
Or
Culture –The biggest enabler of successful knowledge-driven organizations is the
establishment of a knowledge-focused culture
Structure – the business processes and organizational structures that facilitate
knowledge sharing
Technology – a crucial enabler rather than the solution.

What Is Knowledge Management Related To?

Knowledge management draws from a wide range of disciplines and technologies:

 Cognitive science
 Expert systems, artificial intelligence and knowledge base management
systems (KBMS)
 Computer-supported collaborative work (groupware)
 Library and information science
 Technical writing
 Document management
 Decision support systems
 Semantic networks
 Relational and object databases
 Simulation
 Organizational science
 object-oriented information modeling



 electronic publishing technology, hypertext, and the World Wide Web;
help-desk technology
 full-text search and retrieval
 performance support systems

Although around 20 kinds of disciplines and study areas were listed above, there is no
way to include all of the related subjects to knowledge management.

The History of Knowledge Management

1. 70's,
A number of management theorists have contributed to the evolution of
knowledge management
 Peter Drucker: information and knowledge as organizational resources
 Peter Senge: "learning organization"
 Leonard-Barton: well-known case study of "Chaparral Steel ", a company
having knowledge management strategy

2. 80's,

 Knowledge (and its expression in professional competence) as a
competitive asset was apparent
 Managing knowledge that relied on work done in artificial intelligence and
expert systems
 Knowledge management-related articles began appearing in journals and
books

3. 90's until now,

 A number of management consulting firms had begun in-house knowledge
management programs
 Knowledge management was introduced in the popular press, the most
widely read work to date is Ikujiro Nonaka’s and Hirotaka Takeuchi’s The



Knowledge-Creating Company: How Japanese Companies Create the
Dynamics of Innovation (1995)
 The International Knowledge Management Network(IKMN) went online in
1994
 Knowledge management has become big business for such major
international consulting firms as Ernst & Young, Arthur Andersen, and
Booz-Allen & Hamilton

The Value of Knowledge Management

Some benefits of KM correlate directly to bottom-line savings, while others are more
difficult to quantify. In today's information-driven economy, companies uncover the most
opportunities — and ultimately derive the most value — from intellectual rather than
physical assets. To get the most value from a company's intellectual assets, KM
practitioners maintain that knowledge must be shared and serve as the foundation for
collaboration. Yet better collaboration is not an end in itself; without an overarching
business context, KM is meaningless at best and harmful at worst. Consequently, an
effective KM program should help a company do one or more of the following:

 Foster innovation by encouraging the free flow of ideas
 Improve decision making
 Improve customer service by streamlining response time
 Boost revenues by getting products and services to market faster
 Enhance employee retention rates by recognizing the value of employees'
knowledge and rewarding them for it
 Streamline operations and reduce costs by eliminating redundant or
unnecessary processes

These are the most prevalent examples. A creative approach to KM can result in
improved efficiency, higher productivity and increased revenues in practically any
business function.



Knowledge Management Today

According to a recent IDC report, knowledge management is in a state of high growth,
especially among the business and legal services industries. As the performance
metrics of early adopters are documenting the substantial benefits of knowledge
management, more organizations are recognizing the value of leveraging organizational
knowledge. As a result, knowledge management consulting services and technologies
are in high demand, and knowledge management software is rapidly evolving.

Knowledge Management Drivers

The main drivers behind knowledge management efforts are:

 Knowledge Attrition: Despite the economic slowdown, voluntary employee
turnover remains high. A recent survey by the global consulting firm Drake Beam
Morin revealed an average voluntary employee turnover rate of 20 percent with
81 percent of organizations citing employee turnover as a critical issue. An
estimated annual cost of employee turnover was a staggering $129 million per
organization. Much of this cost is due to knowledge attrition, which can be
effectively minimized using knowledge management techniques.
 Knowledge Merging: Since 1980, the annual value of mergers has rised 100 fold
reaching a cumulative $15 trillion in 1999. Over 32,000 deals were announced;
triple the number of 10 years earlier and more than 30 times as many as in 1981.
The recent frenzy of corporate mergers coupled with the increased need to
integrate global corporate communications requires the merging of disparate and
often conflicting knowledge models.
 Content Management: The explosion of digitally stored business-critical data is
widely documented. Forester Research estimates that online storage for Global
2,500 companies will grow from an average of 15,000 gigabytes per company in
1999 to 153,000 gigabytes by 2003, representing a compound annual growth
rate of 78%. As the volume of digital information expands, the need for its logical
organization is critical for purposes of information retrieval, sharing and reuse.



E-Learning: As the economy becomes more global and the use of PCs more
pervasive, there has been a dramatic increase in e-learning, also known as
computer based training. E-learning is closely linked to an overlapping with, but
not equal to knowledge management. E-learning can be an effective medium for
knowledge management deliverables.

KM Objectives

The graph below shows the results of a recent IDC study in which corporations cited
various objectives for knowledge management efforts:

Activities related to these objectives include: creating knowledge sharing networks
that facilitate a corporate knowledge culture, developing knowledge leaders,
optimizing intellectual capital by producing knowledge management solutions such
as codification strategies and knowledge bases, and estimating revenue and



efficiency gains resulting from knowledge management in terms of return on
investment.

Components of knowledge management:

organisation
component

Technolog
Componen Knowledge
t management

Technologies That Support Knowledge Management

The following diagram reflects the main technologies that currently support
knowledge management systems.

These technologies roughly correlate to four main stages of the KM life cycle:



1. Knowledge is acquired or captured using intranets, extranets, groupware, web
conferencing, and document management systems.
2. An organizational memory is formed by refining, organizing, and storing
knowledge using structured repositories such as data warehouses.
3. Knowledge is distributed through education, training programs, automated
knowledge based systems, expert networks.
4. Knowledge is applied or leveraged for further learning and innovation via mining
of the organizational memory and the application of expert systems such as
decision support systems.

All of these stages are enhanced by effective workflow and project management.

Present and Future State of KM

Currently, communities of practice such as the Knowledge Management Network
and the development of standards and best practices are in a mature stage of
development. KM curricula such as certification, corporate training and university
graduate certificate programs are on the rise. Techniques such as data mining and
text mining that use KM for competitive intelligence and innovation are in the early
stages of development. Finally, organizations are investing heavily in ad hoc KM
software that facilitates organizational knowledge. The chart below estimates the
state of their current and future KM activities.

The Future of Knowledge Management

In the next several years ad-hoc software will develop into comprehensive, knowledge
aware enterprise management systems. KM and E-learning will converge into
knowledge collaboration portals that will efficiently transfer knowledge in an
interdisciplinary and cross functional environment. Information systems will evolve into
artificial intelligence systems that use intelligent agents to customize and filter relevant
information. New methods and tools will be developed for KM driven E-intelligence and
innovation.



The Effect of Knowledge Management on Databases

Multiple corporate databases will merge into large, integrated, multidimensional
knowledge bases that are designed to support competitive intelligence and
organizational memory. These centralized knowledge repositories will optimize
information collection, organization, and retrieval. They will offer knowledge enriching
features that support the seamless interoperability and flow of information and
knowledge. These features may include: the incorporation of video and audio clips, links
to external authoritative sources, content qualifiers in the form of source or reference
metadata, and annotation capabilities to capture tacit knowledge. Content will be in the
form of small reusable learning objects and associated metadata that provides
contextual information to assist KM reasoning and delivery systems.
The Implications of Knowledge Management for...

 Database Users: From business class users to the general public, database
users will enjoy a new level of interaction with the KM system including just-in-
time knowledge that delivers precise relevant information on demand and in
context. More complex, smart systems will translate to optimal usability and less
time spent searching for relevant information. For example, data analysts will
enjoy simplified access and more powerful tools for data exploitation. The use of
knowledge bases can reduce customer service costs by providing customers
with easy access to 24/7 self service via smart systems that reduce the need to
contact customer service or technical support staff. Database users may even
create customized views of knowledge bases that support their needs.

 Database Developers: The design and development of knowledge based
systems will be considerably more complex than current database development
methods. Developers must consider the overall technical architecture of the
corporation to ensure seamless interoperability. The use of standardized
metadata and methods will also facilitate both intra-corporate and inter-corporate
interoperability. Making effective physical storage and platform choices will be



equally more complex. Both knowledge base developers and administrators
must understand the role of the knowledge base in the overall KM system.

 Database Administrators: Database Administrators will evolve into Knowledge
Managers. The knowledge base will store and maintain corporate memory and
Knowledge Managers will become the gatekeepers of corporate knowledge. The
lines between technical roles such as Web Developer, Data Analyst or Systems
Administrator will blur as these systems merge into and overlap with KM
systems. DBAs will need to have some knowledge about each of these
disciplines.

 General Public: Even if they are not interacting directly with a knowledge base,
the general public will benefit from the secondary effects of improved customer
service due to faster access to more accurate information by service providers.

Need for knowledge management:

Knowledge management underlines a growing structure of ideas, Techniques and
technologies. Fortune 500 companies loose close to 12 billion dollars annually due
poorly managed KM. With this background the need of KM become ever more
pressing. However, skepticism that surrounds knowledge management is not
surprising given the fact that is seem like just another craze, and one that can be,
extremely expensive to follow. But for multinational companies on the global stage
and the new entrants on the global stage, the demand of speed and distance make
easy available information inevitable, with company remaining local and domestic
both in old age economy traditional industrial sectors, the demand may be less
pressing for now.



Why organizations launch their KM programs?

Source: IDC 1999 Knowledge management survey.

Increase profit of Revenue 67%

Retain key and expertise 54%

Improve customer retention and 52%
satisfaction
Defend market share against new entrant 44%

Accelerate time to market with product 39%

Penetrate new market segments 39%

Reduce costs 38%

Develop new products and services 35%

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KNOWLEDGE MANAGEMNT HIERARCHY

WISDOM

KNOWLEDGE

INFORMANTION

DATA

Wisdom:

Wisdom is a condition of the human mind typified by deep understanding and deep insight. It is
often accompanied by widespread formal knowledge. Uneducated people can acquire wisdom,
and wise people can be found among the ordinary class of the people. Where ever it exists,
wisdom reveals itself as a perception of the relativity and relationships among things.

KNOWLEDGE:

Knowledge is processed information. Knowledge is fluid mix of framed experience, values,
contextual information, expert insight, and intuition.

INFORMANTION:

Information is collected of the data that make decision making easier. It is also facts and figures
based on reformatted or processed data. For example, a profit and loss statement provides
information. It is a collective fact put into a form that shows an organization’s state of heath
over a period of time.



DATA:

Data are unorganized and crude facts. They are stationary; they just sit there. For example, john
is 6 feet tall. This is Data; It does not necessarily lead one anywhere, however, the meaning one
bring to the evaluation of this data could be important. Such an assessment may indicate that
john’s height would make him an asset to the basket ball team. This becomes information.

NEED FOR KNOWLEDGE MANAGEMENT:

Knowledge management underlines a growing structure of ideas, techniques and technologies.
Fortune 500 companies loose close to 12 billion dollar annually due to poorly managed KM.
With this background the need of KM becomes even more pressing, however, skepticism the
surrounds knowledge management is not surprising giving the fact that it seems like just
another craze and one that can be, extremely expensive to follow. But for multinational
companies on the global stage and the new entrants on the global stage, the demand of speed
and distance make easily available information inevitable, while companies remaining local and
domestic both in the old age economy and traditional industrial sectors, they may be less
pressing for now.

The survival and success of business in the ever increasing competitive market place depends
significantly on the quality of knowledge, which those organizations apply to their business
processes. For example, the supply chain depends on knowledge of diverse area including raw
material, planning, manufacturing and distribution. Likewise product development requires
knowledge of customer requirements, new science, and new technology marketing.etc.

Case Study:

Dell Computer Corporation is a leading direct computer system company. In the United States,
Dell ranks number one and is a premier supplier, of PCs to business customer, government
agencies, educational institutions, and customers. Dell’s success has come from focusing on
direct sales, While other companies ignore this channel, Michael Dell formed the company in
1984 the Dollar 1000 of starting capital and venture capital forming what he refer to as the



“direct business”modle. In 1992, direct sale accounted for only 15 percent of PC sale, but by
1998 this sale method accounted for one –third of PC sales. Dell’s PCs are build to order, and
are enhanced by the knowledge the company gains from direct sale made in the past.

Dell has been able to succeed because it strives for quicker operation and lower overhead. Dell
keeps inventory cost low by turning inventory over every seven days on average and can turn-
sales into cash in 24 hours compare to Compaq’s

Average of 35 days. Dell is still improving its operations. The company has reduce the number
of parts in a PC from 204-to 47 and has been working on speeding up delivery of these parts,
moving selected distribution center from Malaysia to Mexico.

However, all of these achievements pale in comparison to Dell’s use of these internets. Dell
began selling PCs from the site www.dell.com in 1996 and recording daily sales over the
internet of dollar 50 million per day just 4 years later. The company set a goal in 1997 to have
50 percent of sale be over the internet, and reached that goal by the end of the first quarter of
2000. This is an increase from dollar 30 million per day over the past year.

However, Michael Dell does not see sale as the only value of the internet. Direct contact with
customers over the internet helps keep inventory cost down and gives the company a
competitive advantage. By having extensive knowledge of what the customer wants, money is
not wasted on un purchased inventory, crucial in the customer software industry where
inventory value decreases about 1 percent per week. These saving allow Dell to sell their
computers at 10 to 15 percent less than their rivals.

Dell’s direct sales method has translated to success in the computer industry on and off-line.

Question for Discussions:

1. how has Dell leverage knowledge and the new economic order to succeed?

2. What must the management of Dell do to continue its success?
3. How will their management of knowledge assets come into play?



Conclusion:

Organizations are realizing that intellectual capital or corporate knowledge is a valuable
asset that can be managed as effectively as physical assets in order to improve performance.
The focus of knowledge management is connecting people, processes and technology for the
purpose of leveraging corporate knowledge. The database professionals of today are the
Knowledge Managers of the future, and they will play an integral role in making these
connections possible.



Bibliography:

1. Knowledge management- Sudhir Warier.
2. Knowledge management- Elias M, Pearson Education.
3. http//:km/Introduction%20to%20Knowledge%20Management.htm.
4. http//:New%knowledgemanagement/20%/The%20Business%20Cycle%20Phases.htm.


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