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April 5, 1999

Knowledge Management:
Get Smart

More companies are learning how to leverage their knowledge assets, starting with the basics

By Beth Davis with Brian Riggs

Related links:

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sidebar: Mastering The Human Factor

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ith its promise of letting companies better leverage everything they "know," knowledge management is now firmly established as a concept worth pursuing. Using groupware, databases, and other software tools, a growing number of businesses are trying to combine organizational data with the tacit information in employees' heads to create an enterprise repository of intellectual capital. It's an ambitious undertaking, and one that few companies have mastered.

In the pursuit of knowledge management, much of the work--and most of the payback--lies ahead. According to a new survey of 200 IT managers by InformationWeek Research, 94% of companies consider knowledge management strategic to their business or IT processes. But many of those companies apparently are in the early stages of their knowledge-management efforts. On average, companies capture only about 45% of their intellectual capital, according to the survey. Also, only 36% of companies have formal policies for sharing knowledge assets--and even fewer have formal policies for capturing such assets.

A variety of obstacles are preventing knowledge management from becoming ingrained in day-to-day business practices. Some of the biggest impediments involve people, not technology. Two-thirds of those surveyed say behavior modification on the part of employees is the biggest challenge moving forward (see sidebar story, "Mastering The Human Factor"). "Knowledge exists in people and in the interaction between people, work, and the problem to be solved," says Tom Brailsford, manager of knowledge leadership at Hallmark Cards Inc. in Kansas City, Mo. The challenge is to systematically capture information and share it across internal boundaries, he says.

Other barriers identified by the survey include getting buy-in from corporate management and the difficulty of classifying knowledge (see chart, below).

bar chart

Still, businesses are forging ahead. This year, 62% of organizations will spend more on knowledge management than they did last year.

Companies as diverse as Hallmark; Platinum Technology; Schneider Automation; Sears, Roebuck; and Shell Oil are pursuing knowledge-management strategies as a way of going beyond conventional business objectives such as increasing revenue and cutting costs. Their goals are to apply the collective intelligence of their employees--and the institutional memory of past experience--toward innovation and gaining a unique position in current and future markets.

"Knowledge is what we're all about," says Susan O'Neill, deputy chief knowledge officer at consulting firm PricewaterhouseCoopers. "All of our profitability and viability is about how good we are at leveraging the intellectual assets of our people and making that available to our clients."

The Infrastructure
Many technologies are being used to capture corporate knowledge. Because knowledge management has the potential to touch every employee and computer system within a business, companies are using a wide assortment of technologies to create their knowledge-management infrastructures. According to the InformationWeek Research survey, relational databases, text and document search engines, groupware, data warehouses, and data mining tools are the most popular components of a knowledge-management environment--in that order (see chart, below).

Sears, which is in the early stages of its knowledge-management initiative, is focusing its initial effort on data warehouses. The retail giant has more than 3 terabytes of customer data stored in 37 databases. That collective intelligence represents demographic data on 97 million households. An IT team at Sears is working with business staff to create an enterprise data model that, once in place, will let people in different divisions more easily share and reuse all of Sears' data. "One of our big issues is getting the data consolidated into a format that we can access in real time," says Marlene Gaidzik, a senior systems manager at Sears, in Hoffman Estates, Ill.

bar chart

Sears' data model will eventually lead to marketing and sales efforts that will involve employees not traditionally involved in those areas. "Let's say a customer requests service for a dishwasher," says Gaidzik. "The repairman shows up and sees that the customer has a 25-year-old refrigerator. If the repairman could get that information to the right people at Sears, the next time the customer was billed, the bill would include a discount coupon for a refrigerator."

Sears' knowledge-management efforts will eventually extend beyond its data warehouse environment to include reporting systems, data-analysis tools, customer-relationship management and enterprise resource planning applications, and an intranet. "We need to share knowledge so that we are not only getting information out to the business divisions, but so they are also bringing information back in," says Gaidzik.

Like Sears, other businesses are discovering that if they are to achieve some of the more ambitious goals of a full-fledged knowledge-management strategy, they have to start with the basic IT plumbing. Scient Corp, a 1-year-old consulting firm in San Francisco, has also built a unified data model that helps it maintain consistent data across different applications and eliminate silos of information.

Creating the data model "was the most important thing we did," says Doug Kalish, Scient's chief knowledge officer. Kalish and his team defined a set of common objects that represent employees, clients, and units of work, among other metrics. The model provides a framework for representing data that resides in Scient's knowledge-management system, which runs on an intranet, using Microsoft's Internet Information Server and Site Server.