STRATEGIC APPLICATION OF INFORMATION

TECHNOLOGY
Unit I

KNOWLEDGE MANAGEMENT :
Dr. Seema Agarwal

Books for KMS

1. The Knowledge management Toolkit by Amrit
Tiwana
2. Knowledge Management Enabling Business
Growth by Nitin Nohria

What is KNOWLEDGE MANAGEMENT ?

Building a knowledge Creating Company:- In an
economy where the only certainty is uncertainty, the one
sure source of competitive advantage is knowledge

KM [Knowledge Management] involves

blending a companys internal and external
information and turning it into actionable
knowledge via a technology platform.

What is Knowledge Management?

Knowledge

management (KM) may be

defined simply as doing what is needed
to get the most out of knowledge
resources.

KM

focuses on organizing and making

available important knowledge,
wherever and whenever it is needed.

WHY is the Need ?

When markets shift
Competitors multiply
Products become obsolete almost over night
Shopper demands higher value for money
Access to key information for fast decisions
Successful companies are those that consistently
create new knowledge, disseminating it widely
throughout the organization & quickly embody it in
new technologies & products these activities define
the knowledge creating company, whose sole
business is continuous innovation.
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Forces Driving Knowledge Management

Increasing Domain Complexity

Accelerating Market Volatility

Intensified Speed of Responsiveness

Diminishing Individual Experience

0-5

Knowledge creating companies

Making personal knowledge available to others is the
central activity of the knowledge creating companies
it takes place continuously & at all levels of the
organization.
Knowledge management has Become one of the major
strategic uses of information technology.
Many companies are building knowledge management
systems (KMS) to manage organizational learning &
business know how.
The goal of such systems is to help knowledge workers
create, organise & make available important business
knowledge, wherever & whenever it is needed in an
organization.
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 This includes processes, procedures, patents, reference

works, formulas, best practices, forecast & problem
fixes.
Intranet / internet websites, data mining, knowledge data
bases, on-line discussion groups are some of the key
technologies that may be used by a KMS.
Knowledge management systems facilitate organizational
learning & knowledge creation.
They are designed to provide rapid feedback to
knowledge workers, encourage behaviour changes by
employees & significantly improve business performance.
KMS helps to integrate the knowledge into organizations
business process products & services.
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 Knowledge management can be viewed as three levels of techniques,

technologies & systems that promote the collection, organization,
access, sharing & use of work place & enterprise knowledge.

Enterprise
Intelligence

Information
creation,
sharing & mgmt.

Document Mgmt.

Leverage organization know how

Performance support
Building expert networks
Capturing & Distributing expert
stories
Communication & collaboration
New content creation
Access & Retrieval
Documents stored on-line

 Knowledge management systems use Information

Technology to help gather, organize, share business
knowledge within organization.
Corporate intranets have become the knowledge bases
for storage & dissemination.
Business Process are now ICT enabled , fully automated
and secure
Process design processes the situation with validated
rules and DSS and uses AI to decide and act.
Business operations are run using ERP,SCM & CRM.
Output of this data provide Business Data on operations
& performance.
DW & DM provide knowledge which can be used for
execution of various plans and strategy
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Knowledge management definition: (KM)

KM is a business activity with two primary aspects:1. Treating the knowledge component of business
activity as an explicit concern of business reflected in
strategy, policy & practice at all levels of the
organization.
2. Making & direct connection between an
organizations intellectual assets both explicit
(recorded) & tacit (personal know how) and
positive business results.
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 In practice, KM often encompasses identifying &

mapping intellectual assets within the organization,
making vast amounts of corporate information
accessible, sharing of best practices, & technology that
enables all of the above including information
communication technology (intra net.) & group ware
(collaborative work groups using it).
A significant element of business community also views
knowledge management as natural extension of
business process re-engineering.)
Knowledge is a fluid mix of framed experience, values,
information, expert insight & intuition that provides an
environment & framework for evaluating &
incorporating new experience & information.
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Drivers , Problems in Knowledge Management

Market valuation of a company largely depends on
intangible asset like its knowledge base.
Knowledge unlike any
physical asset, delivers
increasing returns.
Knowledge gives today's companies the edge to compete
successfully.
KM helps avoid unnecessary work duplication,
expensive reinvention & repeated mistakes.
KM can save your company from knowledge walkouts
60 out of 140 employees working in ING Baring and joined
Deutsche Morgan.
KM can compress delivery schedule & help you deliver
ahead of time.
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 Rapid

knowledge dissemination. Get existing

knowledge on time. Lessons learned but not shared. No
knowledge is learnt from failures.
Knowledge Hoarding . Collaboration is only for
namesake.
Compressed Product & Process Life cycle
KM

mutually reinforces corporate agility. The ability

of companies to react comes from their knowledge &
this agility reinforces their ability to apply such
knowledge.

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Basic principles of Knowledge

Management
1. Knowledge acquisition:- The process of development &
creation of insights, skills & relationship
Ex:- stock Broker can predict.
Data capture tools with filtering abilities, intelligent
databases, keyboard scanners, note capture tools and
electronic whiteboards
2. Knowledge Sharing:- Distributions & making available
what is already known.
Ex:- An expert system helps & technical call centre help
desk.
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3. Knowledge Utilization:- Learning is integrated into

the organization apply in new situations

- sharing & utilizations take place same time.
Whatever is available in company can be generalized and applied to
new situations
Sharing Emails, Intranets, Knowledge Portals, K DB
Collaboration Groupware , Enterprise wide software.

Data Base
Acquisition Sharing
Capture Tools
Utilization

Communication
Network

Collaborative
Tools
Basic Knowledge Management
Technology

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Data
Information
Knowledge.
Data
Information
Knowledge.
Data = collection of facts, measurements,
statistics
Information

and collated.

= organized data which is processed

Knowledge

= contextual, relevant, actionable

information built on experiences, doing things,
expert insight.
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Classic Data to Knowledge Hierarchy

Wisdom
Knowledge
Information
Data

Wisdom Intuition and deep Insight

From Facts to Wisdom

(Haeckel & Nolan, 1993)
one example of the hierarchy
Volume
Completeness
Objectivity

Less is

Value

More

Structure

Wisdom
Knowledge
Intelligence
Information
Facts

Subjectivity

 Basic elements of KM & typical technology tools that

can be used.
Concept of knowledge management
Knowledge terms & definitions
Information:- Relates to description, definition, or
perspective (What, Who, When, Where)
Knowledge:- Comprises strategy, Practice, Method, or
Approach (How)
Wisdom:- Embodies Principle, Insight, moral (Why).
Business Intelligence:- Is the process by which
businesses gather information specific to their use.
Logic:- Is the sequential decision making process in an
organizational context.
Technology:- Particularly the information technology,
aimed at information & knowledge.
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 Strategy:- Business strategy which incorporates,

information & knowledge.
Knowledge Management:- Is about connecting people
to people & people to information to create competitive
advantage.
Comparing information & knowledge
1) Processed Data
Actionable Information
2) Gives facts only

Allows Making
predictions

3) Clear, structured,
simple can be
expressed in written
form

Intuitive, hard to
communicate, difficult to
express in words
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4) Obtained by
condensing, correcting
calculating data

Lies in conversation,
intuition, peoples

5) Devoid of owner
dependency

Depends on the owner

6) Handled well by
information systems

Also needs informal

channels

7) Key Resource in
making sense of data

Key resource in intelligent

decision making /
forecasting / intuitive
judgment

8) Formalized in database
/ books / documents

Evolved with experience /

formed in & shared among
collective minds.

9) Can be packaged in
reusable form

often emerges in minds of

people thru their experience
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Example - taking Flight

Go from Jammu Delhi Bangalore
Information:
Flight Jammu Delhi - 1 hr (Indigo)
06:30 AM
08:00 AM
Delhi Bangalore 2:15 mins ( Jet)
08:30 AM
12:00 AM
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According to Michael Earl of London Business School

Parameter

Data

Information

Knowledge

Content

Events

Trends

Expertise

Form

Transactions

Patterns

Learning

Purpose

Representation Manipulation
and
Interpretation

Apply and
Share

Human

Observation

Judgment
Process

Experienced
Observation

Goal

Automation

Decision
Making

Excellence

Value

Business Data

Uncertainity
reduction

Better Insight
Better Vision
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 Classifying knowledge
Knowledge can be classified along four key dimensions:1 Type 2 Focus 3 Complexity
4 Perishability over time
Technological
Type
Focus
Knowledge
Complexity
Perishability
Dimensions

Business
Environmental
Operational
Strategic
Explicit
Tacit
Low
High
Classification

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Explicit Discrete data and information

Tacit Data and information in peoples heads

 Knowledge can be broadly classified into two

categories:1. Explicit:- Can be document or codified / E-mailed /
web page etc.
2. Tacit:- Personal, Context specific, stored in the head
of people.

Comparing Tacit & Explicit Knowledge

Characteristic Tacit

Explicit

1 Nature:-

Personal

Can be codified

2 Development
Process-

Difficult to
record

Can be systematically
recorded

3 Location:-

Stored in the
head of
people

Stored in documents /
databases
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Characteristic Tacit

Explicit

4 IT Support:-

Hard to
manage,
share or
support with
IT

Well supported by
existing IT

5 Medium
Needed:-

Needs &
Rich
Communicat
ion Medium

Can be transferred
thru conventional
electronic channel

Components of Knowledge
A KM system & KM strategy must support:Beliefs Starbucks believes in fun with work
Values Character of a firm
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Assumptions- set deeply ingrained but oblivious and unstated

assumptions

Ground Truth- What if analysis with spreadsheets

Judgment- allows knowledge to rise above to make decisions
Experience has Historical perspective
Intelligence- knowledge can be applied on when and
where needed

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SUMMARY
BUSINESS & KNOWLEDGE

KMS for the Enterprise :

The value of a firms products & services is
based not only on its physical resources but also
on intangible knowledge assets.
Some firms can perform better than others
because they have better knowledge about how
to create, produce & deliver products &
services
This firm knowledge is difficult to imitate &
unique & can be leveraged into long term
strategic benefit.
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 KMS collect all relevant knowledge & experience in the

firm & make it available wherever & whenever it is
needed to support business process & decisions.
The KMS also links the firm to external sources of
knowledge.
KMS support processes for discovering & codifying
knowledge, sharing knowledge distributing knowledge as
well as the processes for creating new knowledge &
integrating it into the business organization.

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KMS

applications help companies map sources of

knowledge, create corporate knowledge directories of
employees with special expertise, identify & share best
practices & codify knowledge of experts so that it can be
embedded in information systems & available to others.

KMS

also includes tools for knowledge discovery that

enable the organization to recognize patterns &
important relationships in large pools of data.

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Companies That MANAGED Knowledge Well

1. PWC

used Lotus Notes and formed central group to

identify ,capture and document Best Practices throughout
the company.
Collaborative work significantly improved.
Information Flows throughout the firm became frictionless
PWC measured ROI in terms of gain in revenue generated
though the use of such systems

Lotus Development Corporation originally developed

"Lotus Notes" in 1989.
IBM acquired the Lotus corporation in 1995
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What

is Lotus Notes -- the Manager version

Lotus Notes is an application suite that includes the following
components:
e-mail
calendaring and scheduling
address book
database
web server
programming
Unlike other application suites (like Microsoft Office) that split
these pieces of functionality into separate products (like
Outlook, Access, Front Page, etc.), Lotus Notes presents all of
these components using a single front-end.
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Texas Instrument TI
TI was low on its rank on customer satisfaction in 1992
because of companys failure to deliver
semiconductors on time.
TI world wide Wafer fabrication team adopted and
transferred best practices across several locations
effectively creating additional wafer fabrication
capacity that would have needed additional $500
million investment.
That is they created Knowledge Sharing .
Result
Saving of $500 Million.
Ranking from bottom to Top
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 KNOWLEDGE MANAGEMENT
THE BUSINESS ORGANIZATION

IN

Factors distinguish Knowledge friendly companies from

others:
1. Leveraged Core Competencies
Emergence of information & knowledge economy, core
competencies (two or three things that an organization
does best) are key organizational assets.
Producing unique products or services or producing at
lower cost than competitors is based on superior
knowledge.
Canon made investments in developing 8 such areas
resulting in 30 very successful products
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Knowledge assets:- Organizational knowledge

regarding how to efficiently & effectively perform
business processes & create new products & services
that enables the business to create value.
Knowledge assets are as important for competitive
advantage & survival like financial & physical assets.
These programs are headed by a chief knowledge officer
(CKO)
2.

Senior level
Sets strategic priorities
Defines area of knowledge based on organization mission and
goals
Creates infrastructure
Identifies knowledge champions
Manages content produced by groups
Adds to knowledge base
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Continuous Improvement of Value Added Chain

Creation of new standard operating procedures &business
processes that reflect organizations experience.
KM increases the ability of the organization to learn
from its environment & to incorporate knowledge into
its business processes.
KM refers to the set of processes developed in an
organization to create, gather, store, transfer & apply
knowledge.
Information technology plays an important role in KM
by supporting these processes for creating, identifying
& leveraging knowledge across the organization.
3.

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Example

Walmart continuously experiments in its stores throughout company.

JIT inventory
Walmat realised the value of information flows between suppliers and stores.
It used information to create knowledge, adding context and meaning to numbers generated by checkout
counters cash registers.
Captured data is automatically converted into well summarized information that is converted into
knowledge of safe stock level of each product.
The summary automatically informs and authorizes suppliers to replenish the stock.

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4.

Ability to revitalize fundamentally

Dropping old ways of doing things or challenging

fundamental ways in which the company does
business.

Example Motorola
The company simply dropped all product lines and enter
new lines when market seems to be making
foundational shift.
Result Motorola enviable success in cellular telephone
market.
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Organizational Process

ROLE
OF KNOWLEDGE
MANAGEMENT
SYSTEMS IN BUSINESS ORGANIZATION
1. Creating Knowledge KMS Provides knowledge
workers with graphics, analytical, document mgmt. tools
& also access to internal/external data to generate new
ideas.
2. Discovering & codifying knowledge Artificial
intelligence systems can elicit & incorporate expertise
from human experts or find patterns or relationship from
huge database.
3. Sharing knowledge Group collaboration systems
(Group ware), can help employees access & work
simultaneously on the same document from many
different locations & co-ordinate their activities.
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4. Distributing
knowledge:Office
systems
&
communication tools can distribute documents & other
forms of information among knowledge workers.

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Knowledge Management Road Map

1. Analysis of existing Infrastructure
2. Identify Knowledge Gaps

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Core

Knowledge
Eg to make modems circuit diagrams, electronic
parts, fabrication of SMD, OS divers for modems,
telephony standards.
Advanced Knowledge : to make a company
competitive viable.
User friendly sw interface, Extra Feature like
warning of incoming calls etc
Innovative Knowledge : allows company to lead
its entire industry or in words of Michael Zack
change the rule of game.
In 1980s lawsuit between Apple & microsoft.
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 Approach to competitive advantage

Competitive
Advantage
Align Knowledge
Strategy with
Business Strategy
Formulate
Knowledge Strategy
Identify
Knowledge Gap

Formulate
Business Strategy

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I- ALIGNING KNOWLEDGE MANAGEMENT WITH

BUSINESS STRATEGY
Knowledge Management A strategic perspective:- In the
emerging economy, a firms only advantage is its ability to
leverage & utilize its knowledge
Industry environment is influenced by unexpected, multiple
changes making competitive advantage not sustainable.
Initiatives like TQM, BPR, SCM, CRM etc resulted in firms
attaining some competitive advantage but are replicable &
not sustainable over longer period of time.
Hence organizations are now focusing on methods of
creating new knowledge & harnessing existing knowledge
to gain competitive advantage.
Sustainable competitive advantage thru knowledge mgmt.
- major focus for modern organizations
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 STRATEGY CONCEPT & FRAMEWORK Strategy

is a method / plan by a firm to balance its external (OT)
environment & the internal (SW) capabilities.
Porters notion of competitive advantage says resources
& capabilities of an organization can be a source of
competitive advantage if they process certain
characteristics of being rare, durable and difficult to
imitate.
If a firm have resources with these characteristics, they
can position themselves strategically on the basis of these
resources & capabilities.
Tangible resources mostly will not have these
characteristics & hence organizations focus should be on
intangible knowledge assets
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 Resources & capabilities are easily replicable.

Tacit knowledge gained thru years of experience are not
easily replicable.
Market is dynamic & going thru a string of realignment
hence any strategy based on market & product mix or
resources or capabilities may not provide a firm with
sustainable competitive advantage
Integration of knowledge or collective knowledge to be
stressed.

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 CREATIVITY, INNOVATION & KNOWLEDGE

STRATEGY
Creativity & Innovation play a very important role in
designing & driving the business strategy of any modern
organization.
Present industry scenario, an organization does not enjoy
sustainable competitive advantage merely by possessing
resources & capabilities.
These resources should be used & combined in new &
different ways or develop new capabilities to gain
sustainable competitive advantage .

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Experience &
Knowledge

New ways of
Combining
Existing Resources
Competitive
Advantage

Creativity &
Innovation

Develop New
Capabilities

Some of the innovations brought out by organizations are result

of application of new knowledge & others are result of working
with & recasting existing knowledge.
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CONCLUSION
In current dynamic industry scenario, organizations
cannot achieve sustainable competitive advantage, by
pursuing just a product market based strategy.
They need to appreciate the importance of the knowledge
existing in the organization & harness the knowledge
thru appropriate KM strategy & align this strategy with
the business strategy.

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Case Study Knowledge Management at Rolls Royce

Rolls

Royce was founded in 1906

Expensive Cars
Long Haul Aircraft Engine
As of 1999 Rolls Royce was serving 300 commercial Airlines.
Competitive Strategy Total Cost of ownership
Problem:
To maintain Engine was time sensitive.
20 Million pages of documentation covering variety of aspects of
aircraft engine parts.
Engine Manuals, diagrams, Time limit manuals, standard practices
Overhaul manuals, Maintenance manuals, Illustrated catalogue
parts etc

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Problem scope:
Rolls Royce decided to list critical issues that had
immediate payback for the firm.
Limited to:
Airlines
Airframe Manufacturer
Engine and engine parts manufacturer
Components manufactuer

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Scope of initial KM project was restricted to

Enabling different levels of reuse
Find, use , re-use and reintegrating related to
servicing of long haul engines.

This enabled them to place reasonable limits on

expectations from KM system
Scoping also helped target of KM investments in
terms of Business and strategic urgency.

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Knowledge management project goals:

Realistic and achievable goals
1. Customer oriented goals:
a)
b)
c)
d)
e)

Reducing equipment downtime for maintenance

Doing it right the first time
Improving maintenance quality
Improving maintenance scheduling
Reducing data handling as well as access and search cost

2. Internal

Goals for efficiency

a) Improve customer data access across multiple platforms

b) Deliver application that require little or no training
c) Reduce publishing cost, Maintain security and comply
with air traffic standards

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The

application developed looked like improved

version of intranet.
It had user specific table of content
Customizable interface
Ability to add annotations
Dynamic updates
Automatic notifications
Content authoring was done with SGML
(Standard Generalized Markup Language is for
defining generalized markup languages for
documents) and MS word interface.

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ROI
Paper cost saving of $3 million
Customer Productivity savings
of $1 million
5% improvement in
maintenance time
Unmeasured saving of Data
processing Cost.
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Knowledge Management System Cycle

Creates

knowledge through
new ways of doing things
Identifies and captures new
knowledge
Places knowledge into
context so it is usable
Stores knowledge in
repository
Reviews for accuracy and
relevance
Makes knowledge available
at all times to anyone

Disseminate

Components of Knowledge Management

Systems

Communication

Technologies

Access knowledge
Communicates with others

Collaboration

Perform groupwork
Synchronous or asynchronous
Same place/different place

Storage and retrieval

Capture, storing, retrieval, and management of both explicit and tacit

knowledge through collaborative systems

Components of Knowledge
Management Systems
Supporting technologies
Artificial intelligence

Expert systems, neural networks, fuzzy logic, intelligent agents

Intelligent agents

Systems that learn how users work and provide assistance

Knowledge discovery in databases

Process used to search for and extract information

Internal = data and document mining
External = model marts and model warehouses

XML

Extensible Markup Language

Enables standardized representations of data
Better collaboration and communication through portals

Knowledge Management System Integration

Database

Knowledge discovery in databases

CRM

Provide tacit knowledge to users

Supply

chain management systems

Can access combined tacit and explicit knowledge

Corporate

intranets and extranets

Knowledge flows more freely in both directions

Capture knowledge directly with little user involvement
Deliver knowledge when system thinks it is needed

Factors Leading to Success and Failure

of Systems
Success

Companies must assess need

System needs technical and organizational infrastructure to build
on
System must have economic value to organization
Senior management support
Organization needs multiple channels for knowledge transfer
Appropriate organizational culture

Failure

System does not meet organizations needs

Lack of commitment
No incentive to use system
Lack of integration