posted 23 Jan 2003 in Volume 6 Issue 5
Knowledge, technology and people
In the autumn of 2002, Xerox undertook a survey of firms in countries across Europe to gauge how knowledge and knowledge management are perceived, and how IT is affecting the way people work. David Jones and Richard Cross present the findings, which offer both reasons to be optimistic and cause for concern.
Questioning is not the mode of conversation among gentlemen…
Despite Dr Johnson’s disapproval, at Xerox we have established something of a tradition with an annual survey of various aspects of the world of work – and indeed, the world at work. In 2001, for example, the topics we examined included CRM and e-business. In the autumn of 2002, the subjects we turned to included the ways in which information technology affects people at work and the role that knowledge and knowledge management play in contemporary business.
Working with the market-research company, Mori, we interviewed over 1,000 directors of medium and large companies in the UK, France, Italy, Germany, Sweden and Switzerland. In order to gather a range of views, we set broad quotas on sectors (finance, manufacturing, pharmaceutical, utilities) and types of director (IT, finance, HR or purchasing). And for those of you with an eye for detail in what follows, the estimated statistical accuracy is +/- 3 per cent for the whole sample, at 95 per cent confidence limits.
The role of knowledge
I am always conscious of the fact that while the cognoscenti swap KM terminology with abandon – from taxonomies to tacit knowledge – the rest of the world may, understandably, not be on the same wavelength. So one of the first areas we examined was the extent to which knowledge is accepted as a business imperative.
The results are mixed. We started by exploring whether the concept of a knowledge worker – or even the term itself – is widely understood. The most common unprompted definition of knowledge workers is people who apply their brains or bring knowledge to the company (17 per cent). Sixteen per cent define them as a specialist or someone with appropriate skills. Less common definitions include someone who deals with company or management information (seven per cent), someone who has a clear understanding or knowledge of their company (five per cent) or simply someone who processes data (three per cent). So there seems to be no single definition that people accept. Indeed, 42 per cent of respondents are unable to characterise the term at all. French (56 per cent) and Italian directors (52 per cent) are least likely to be able to give a definition.
We then proposed one of our own, suggesting that a knowledge worker is someone who turns information or experience into action that produces value (whereas an information worker is someone who just manipulates information and passes it on). Given this definition, the majority of respondents consider senior management (67 per cent), professional specialists like accountants (67 per cent) and, especially, middle management (74 per cent) to be knowledge workers. However, fewer feel that sales people (44 per cent) or technical-maintenance staff (47 per cent) can be described as knowledge workers. Directors in Sweden and the UK are more likely than others to regard all these types of staff as knowledge workers.
On a personal note, I find these results somewhat disappointing. I am surprised that between a quarter and a third of directors do not consider management to be knowledge workers. In addition, it has become clear to me over the past few years that the knowledge component of work in those other areas we tested – sales and technical support – is high (and growing).
The importance of knowledge management and knowledge workers
Next, we tested whether knowledge per se is viewed as being important, and what steps are being taken to protect and promulgate it. Here, the results are more encouraging.
Eighty per cent of directors agree that building and sharing knowledge is important for their company, but less than half (48 per cent) seem to have a clearly defined policy to retain it.
Swiss and Italian companies are the most likely to have a knowledge-retention policy (both at 60 per cent) and UK companies the least likely (only 38 per cent).
Sixty-four per cent of directors also agree that retaining knowledgeable people is more important than cutting costs.
Only 19 per cent disagree. However, French directors are least likely to agree – only 42 per cent agree, while 39 per cent disagree. In all other countries the balance of opinion is more clearly towards retaining knowledgeable people, especially in Germany (70 per cent) and Italy (78 per cent). If carried through to implementation, this is definitely a positive finding. Eighty-seven per cent also agree that improving the way they manage knowledge would improve their organisation’s competitive advantage.
Over a quarter (27 per cent) of directors surveyed have lost a significant amount of knowledge or skills from their workforce over the past two years. However, more of this loss is due to deliberate downsizing (31 per cent) than to losing staff they want to keep (28 per cent). Deliberate downsizing is most common in the UK (52 per cent) and least likely in Italy and France (both 16 per cent).
IT systems and knowledge workers
Given that people in jobs with a high knowledge component are likely to be more costly than other members of the workforce, we wanted to find out if expenditure on IT systems is meeting knowledge workers’ needs.
Only 62 per cent of directors in this survey agree that their IT systems adequately meet the working needs of those they consider to be knowledge workers.
Fifteen per cent seem less certain of this, and 20 per cent feel that their IT systems are failing in this area. Perhaps surprisingly, the views of IT directors are broadly the same as those of their peers in this respect. Concern about IT systems is greatest in the UK, where 36 per cent believe that their IT systems fail to meet knowledge workers’ needs, and least in Switzerland, where only 11 per cent appear concerned.
We believe that these figures show there is still substantial work to be done in making IT systems more responsive to the needs of knowledge workers.
IT and the employee
Given the pervasive nature of IT, we then broadened the scope of our questioning, looking at technology’s impact on employees in general. In particular, we wanted to find out whether people think IT encourages or stifles creativity, and whether technology helps with stress and makes workers more productive.
Eighty-three per cent of European directors agree that IT increases productivity. Only eight per cent disagree. Agreement is strongest in financial services (19 per cent agree strongly) and pharmaceutical companies (21 per cent agree strongly). Directors in manufacturing companies also mainly agree (77 per cent) but are also most likely to disagree (14 per cent) compared with other sectors. Only about person one in five (21 per cent) agrees that IT has reduced creativity and innovation among employees, while 68 per cent disagree that IT is harmful in this respect.
So far, so good. But opinion is more divided about the impact of other aspects of IT on employees. About half (48 per cent) of directors agree that IT has made peoples’ jobs easier and removed complexity from the workplace, but a third maintain it has made things worse. Italian directors are the most favourably disposed towards IT in this area (61 per cent agree and only 23 per cent disagree) while the balance of opinion in the UK is much more critical (38 per cent agree but 47 per cent disagree). Nearly as many directors (39 per cent) agree that IT has increased employee stress as disagree (44 per cent).
Swedish directors are the most likely to agree with this (53 per cent) and Germans the least likely (28 per cent).
IT is also seen as diminishing direct interaction between employees. Fifty-one per cent say that IT has reduced personal, face-to-face contact between key workplace colleagues. Only 38 per cent disagree with this statement. Concern about this is strongest in the UK, where 77 per cent agree, and least in France, where only 45 per cent agree. These mixed views on the effects of IT on employees are reinforced by the finding that 83 per cent of directors agree that, when it comes to specifying an IT system, considering the impact of technology on employees is an important factor. Only eight per cent disagree with this idea. As someone who believes that IT systems often fail to fulfil their promises because human factors are overlooked, I find this very encouraging.
The objectives of IT
Investment in information technology is now the most significant item of expenditure for many organisations. But the vision that people used to have about the benefits that IT would deliver has not always been fully realised. We hoped to establish what tangible improvements senior management think they get from the money they spend, and what they see as their key priorities.
Sixty-one per cent of directors believe that one of the greatest advantages IT offers is that it creates opportunities for new business and increased revenues.
Only 22 per cent disagree with this view. Agreement is strongest among financial-services companies (67 per cent) and lowest in the utilities sector (53 per cent). On a country basis, opinion is strongest about this in Switzerland (65 per cent agree and 19 per cent disagree) and weakest in Germany (50 per cent agree but 28 per cent disagree).
Opinion is also fairly positive about IT and cost reduction. Fifty-seven per cent of respondents agree that one of the greatest advantages offered by IT is that it helps reduce costs, but 27 per cent disagree with this association. Italian directors are most likely to agree with this point of view (64 per cent agree and 14 per cent disagree) and the Swiss the least (51 per cent agree and 35 per cent disagree). Similarly, 54 per cent think that a major benefit of IT is that it allows staff to work more as a team, while 29 per cent disagree. French directors feel this most strongly (77 per cent agree while only 16 per cent disagree) and UK directors are the least convinced (39 per cent agree but 47 per cent disagree). Thirty-six per cent say that IT is their main way of gaining competitive advantage. Forty-seven per cent disagree with this view, with 17 per cent undecided. This spread of opinion is similar in all sectors surveyed and across different sized companies. French directors (55 per cent) are most likely to agree and UK directors the least likely (19 per cent agree while 72 per cent disagree).
This list of objectives – cutting costs, generating new business, getting competitive advantage and so on – is not exhaustive, but the ones we identify and explore here are certainly the most important. That said, in no case does any individual objective get a two-thirds agreement at a European level, indicating that there are mixed views about the goal of IT investment.
Expectations of IT
Given this varied set of objectives, we next sought to investigate whether IT investments deliver on expectations. It turns out that there is a broad spread of opinion about this. Eighty-one per cent of people interviewed say that IT investments live up to expectations at least half the time, compared with 12 per cent who are often disappointed, with investments living up to expectations less than 50 per cent of the time.
Swiss directors are the most positive: 65 per cent have had IT investments live up to expectations at least 75 per cent of the time. Swedish and UK directors, on the other hand, are the most likely to be disappointed, only 25 per cent and 32 per cent respectively having had their expectations met at least 75 per cent of the time. IT directors (55 per cent) and HR/purchasing directors (49 per cent) are more likely to be positive in this respect than finance directors, only 40 per cent of whom claim to be satisfied with their investments at least 75 per cent of the time. However, there is little difference across sectors or in companies of different size.
Reasons why IT investments fail to meet expectations
We first asked whether IT investments were so often disappointing because the design of IT systems fails to take into account the way people work. There are two distinct schools of thought here: 40 per cent agree that this is the case, but 47 per cent disagree. UK directors are most likely to agree strongly (11 per cent) and German directors to disagree strongly (11 per cent).
Opinion is more positive than negative when it comes to competitive advantage. Only 29 per cent say that most IT investments fail because they don’t increase competitive advantage, while 51 per cent disagree with this point of view. Italian directors are the least likely to agree (only 20 per cent), while those from smaller companies are the most likely to agree (35 per cent).
It turns out that many people are wary of suppliers that over-promote technology. On prompting, 66 per cent of businesses suggest the most likely reason for IT investments failing to meet expectations is because technology partners oversell the capabilities of the system. UK directors are most likely to feel this way (80 per cent) and Italians the least (46 per cent). Following on from this theme, 59 per cent of directors think failure is usually due to a lack of clear objectives, especially in France (75 per cent). This is less of a problem in Germany (42 per cent) but, perhaps unsurprisingly, IT directors are most likely to be concerned (68 per cent) about this. Almost as many respondents say failure is usually due to unrealistic expectations (56 per cent) and because there is often a lack of a real partnership between the IT supplier and the customer (54 per cent).
Other reasons suggested by directors for failure of IT investments include:
- The company not understanding its own requirements (12 per cent);
- A lack of planning (11 per cent);
- A lack of communication between provider and user (11 per cent);
- Poor cost controls (seven per cent);
- Insufficient training (seven per cent);
- Objectives changing during the project (six per cent);
- Implementation taking longer than anticipated (six per cent);
- Systems being inflexible and not user friendly (six per cent);
- A lack of research (four per cent);
- A lack of business understanding on the part of the developers (four per cent).
It therefore seems as though there are four dominant reasons given for the failure of IT systems: overselling, a lack of clear objectives, unrealistic expectations and failure to establish a true partnership between the IT supplier and the customer. Many other reasons were suggested by minorities of respondents, but it should be remembered that all this is in an environment where over 80 per cent of people believe that IT systems live up to expectations at least half the time.
As with the results of any survey, there is a risk of overwhelming the audience with a flood of figures. This year’s survey has been extremely broad, covering topics that range from knowledge workers to peoples’ expectations of information technology. From our point of view, some of the key conclusions are as follows:
- Messages about the importance of knowledge in business have obviously struck home. But maybe people don’t yet fully appreciate how much knowledge contributes to most jobs. Perhaps the knowledge economy is even more ubiquitous than many seem to think;
- Generally, IT systems are well received, but there are concerns over stress, dehumanisation and complexity. It would be interesting to know what the results would be if we asked the people who actually use the systems, rather than their managers;
- There is considerable scepticism about suppliers overselling technology and the resulting systems being saddled with unrealistic expectations. Overall, concerns were expressed in a number of ways about the hype that often surrounds technology.
David Jones was head of marketing for Xerox Global Services in Europe until the end of January 2003.
Richard Cross was managing partner at Xerox until the end of January 2003. Both Richard and David can be contacted at email@example.com