Knowledge, Technology and Return on Investment

Feature

posted 1 Oct 1997 in Volume 1 Issue 2

Knowledge, Technology and Return on Investment

Liz Fletcher, Director of Strategic Communications, Fulcrum Europe focuses on the implementation of an organisational knowledge system to optimise the management of both explicit and tacit knowledge within an organisation.

The current interest within enterprises for adopting knowledge management principles and practices is occurring for good reason. In an information-based economy it is knowledge that has become the most valued asset for the majority of organizations today, and is the key differentiate in pursuing competitive advantage. This knowledge, also expressed as "intellectual assets", is available from two sources: explicit knowledge that has been published in one form or another (e.g. in hardcopy or electronic format); and tacit knowledge that resides with workers themselves.

Enterprises are moving quickly to optimise the management of these assets by implementing Organizational knowledge systems. In concert with these developments has been the recognition that software tools are an important piece of the information technology infrastructure being developed to support knowledge management. Although no single technology provides a comprehensive solution, there has emerged a set of applications that, in conjunction with changes in Organizational culture, can specifically help meet the needs of both knowledge workers and information technology professionals.

Empowering users

In a recent study, The Delphi Consulting Group notes that:

' Over 130 years ago, Karl Marx revolutionised political and economic thought with the publication of his manifesto Das Kapital. In it, he called for a world economy in which the workers owned the factors of production. Today, his vision of a grand communist society lies in tatters. It is supremely ironic, then, that at the end of the twentieth century, the most competitive bastions of capitalism have surrendered ownership of their most valuable factor of production to the workers.

'This was not entirely intentional. It just so happens that knowledge has become the most important factor of production for the information economy, and knowledge resides in the minds of workers. This is a dramatic change in thinking for most economic models, and requires a fundamental reappraisal of the way that organizations manage this newly empowered resource.'¹

As we move towards the next millennium, it is inspiring to think how the job of knowledge workers will be transformed by advanced software systems. For now, intelligent information retrieval is focused on providing fast and seamless access to all enterprise repositories. The intelligence is delivered in the first phase with a logical view of entire collections. And in phase two, the view of the collection provides the foundation for intelligent analytical assistance for knowledge workers. Empowering knowledge workers with the ability to find, create and share information is a major element in capturing the tacit knowledge existent in an organisation. This has several obvious advantages in that it results in considerably higher job satisfaction and lower frustration levels for knowledge workers, given that their day-to-day tasks are quicker and easier to accomplish. In addition, from a strategic viewpoint, it can also result in higher productivity and improved efficiency, and consequently a better and faster return on investment for knowledge management systems utilised.

Core Knowledge System Functionality

While there are a number of definitions available that endeavour to define the functionality of knowledge systems, at a minimum applications should address three core requirements:

Support is provided for handling explicit knowledge.

Basic capabilities are provided for the capture and communication of tacit knowledge.

Providing a single point of entry to the enterprise knowledge base.

The primary challenge with explicit knowledge is to manage the ever-increasing volume available in order to ensure relevancy of the material. In supporting tacit knowledge, knowledge systems face a number of formidable challenges that have only begun to be addressed. Issues include how to easily translate worker knowledge into a form that can be easily communicated, and how to minimise user involvement and workload when interacting with systems, in order to maximise productivity. Current tacit knowledge offerings are still rudimentary at best. Regarding interaction with the knowledge base, the sheer number and diversity of information servers have made it crucial that users are given a single point of entry for maximum efficiency and effectiveness. For example, technology that is not able to provide the capability to broker a search or other information request across multiple servers and hosts, and to ensure any results are integrated, will not be acceptable as an enterprise solution.
Achieving seamless access to an organisation's entire collection of information is in marked contrast to previous information retrieval applications that focused on extracting relevant information from various repositories, but stopped short of delivering a connected view of the entire collection. Advanced retrieval technology has an expanded, and crucial, role to play in delivering comprehensive solutions.

Such a role is evidenced with innovations such as a "map" of corporate knowledge, giving users the ability to extract all relevant information from various physical repositories and view it as one logical collection.

The enterprise knowledge map provides a view into legacy repositories as well as newer sources of content. The result is the creation of a 'virtual document warehouse' that houses all of the information assets of an organisation. What makes this virtual warehouse special is its ability to handle several different data types (messaging, groupware, RDBMS, news feeds, etc.) easily and transparently. Another benefit is that organizations can preserve and - more importantly - optimise the significant investment they have made in their legacy repositories.

A classic example of an organisation totally dependent for its existence upon knowledge workers are the 'Big Six' consulting firms. Several years ago, the French office of one such firm decided to implement a document management system in order to centralise the firm's knowledge and facilitate this knowledge being shared between lawyers and other knowledge workers. The system was successfully implemented on a technical level, but little used by the lawyers due to its complexity and poor performance. Knowledge sharing was limited to conversations in the lift or over lunch! When subsequently researching alternative solutions, the firm's management defined, as key requirements, that the system must be acceptable to and useable by those for whom it was intended, and that the return on investment be clearly demonstrable within a timeframe of 30 months. The solution chosen by the company met the dual stringent requirements of acceptance by the 200 knowledge workers, as well as a rapid return on investment - which the firm calculated at 9 months compared to the 30 months specified in the system requirements. The firm has estimated that they have economised 60% of expenditure on research and filing-related tasks, translating into one hour a day per user. As these tasks had traditionally been performed by documentalists, the firm decided to suppress their 'old' job function but keep the staff - who, after all, have significant and vital corporate knowledge accumulated over several years - and upgrade their responsibilities within the organisation. Last but definitely not least, the level of service to the firm's clients, in terms of speed of response to questions and to requests for information, has dramatically improved, in turn improving the firm's competitive position in the market.

This firm's dual emphasis on knowledge workers' job satisfaction as well as on quantifiable strategic and financial benefits is exemplary. Today, the firm estimates that, over a three-year period, the cumulated cost savings on labour expenditure for 'non-productive' tasks, as well on as the space savings for filing cabinets, will surpass $1,600,000.

In the 'Big Six' case outlined above, the knowledge workers are primarily based at the same location. Organizations that need to link the collective knowledge of workers who may be working in any corner of the world and are highly mobile, can also see a rapidly-demonstrable return on investment. Parsons Brinckerhoff is one such example. They are the world's number one transportation engineering enterprise. Their 5,000 personnel provide multidisciplinary services centring on a primary market of infrastructure. The collective expertise and technical knowledge of its professional staff is the most valuable asset that the company has. To ensure that Parsons Brinckerhoff utilises this asset to its maximum potential, it has recently deployed a knowledge management software solution and has already been able to quantify a return on investment.

The applications include Parsons Brinckerhoff's Business Information System, which is devoted to managing business development activities, and Practice Area Networks (PANs), which provide a forum for the exchange of technical information amongst engineers in different disciplines and geographic regions.

Parsons Brinckerhoff is an example of an organisation moving away from simply collecting information relevant to its business processes in disparate 'information silos,' to bridging these silos and exchanging information with the use of knowledge management software.

For its Business Information System, Parsons Brinckerhoff uses its knowledge management software solution to connect an Oracle database and Microsoft Exchange public folders in a single application. Marketing staff use the application to pinpoint CVs and project experience for proposals, a crucial aspect of developing the company's consulting engineering business. Having a single view into disparate data sources has resulted in time savings of approximately $200,000 annually for Parsons Brinckerhoff.

The company is also using knowledge management software to facilitate information exchange with its PANs. With advanced information retrieval, engineers can pinpoint relevant project information within a large knowledge base. Since the PANs use Microsoft Exchange, engineers can also take advantage of its messaging infrastructure to discuss strategies and solutions to design problems, and then manage the information collected during these discussions with advanced information retrieval.

The above has been focused primarily on the return on investment in systems for organising, accessing and sharing information. Future considerations will take into account the ROI on the information itself - in terms of what can be done with it once it has been accessed.

The Next Frontier: Intelligent Analysis

The logical progression for organizations that have implemented intelligent access solutions will be to extend them to deliver additional value to knowledge workers. Whereas phase one focused on accessing the information as a means of optimising investment, phase two focuses on analysing the information in order to maximise return on that investment.

In the world of structured data, such as database information, business intelligence tools paved the way for powerful analysis. The ability to combine different databases into a single view and to uncover trends through data manipulation had a dramatic productivity impact on organizations. However, typically only 30% of an organisation's information assets are stored as structured data. The remaining 70% of the assets are held as documents and other types of unstructured data. The key to the optimal use of knowledge in an organisation is being able to unleash the wisdom contained in these unstructured repositories.

With a 'map' of corporate knowledge as described above, organizations are able to create a view of the collection and apply analysis using modelling and business intelligence techniques. A small number of companies are currently engaged in researching and developing exciting technologies to facilitate and automate analysis for knowledge workers, such as visualisation, collection summaries, automatic filing, classification, trending and differential analysis.

The objective is a corporate facility, or knowledge system, that incorporates unstructured text, structured data stores, groupware, search/retrieval/agent technology, repository services, and publishing services, while giving users the capacity to use, process, and transform information.² The end result should be a knowledge system capable of: providing a single access point to corporate repositories based on a secure, easy to administer, integrated network of information servers; combined with application functionality and features (e.g. searching, filtering, agents, user profiling, data mining, etc.) that supports information organisation, access, collaboration, dissemination and discovery.

While technology might be considered as 'only' an enabler of knowledge management rather than the whole story - given that corporate structures and their attitudes to change also play a key role - there are clear advantages in linking up existing repositories and functions within companies of any size. As we have seen, these advantages are manifold, and are visible at and by all levels inside the organisation, as well as by customers, partners and suppliers. They also make the knowledge enterprise a much nicer place to work.

Liz Fletcher is Director of Strategic Communications at Fulcrum Europe. She can be contacted at:

liz.fletcher@fulcrum.com

¹ The Delphi Report on Knowledge Management - In Perspective, Delphi Group Inc., September 1997

² META Delta 525, "The Knowledge ManageNet Food Chain", Advanced Information Management, MetaGroup Inc. (December 1996)