Research ResultsBy Terry Kirkpatrick | Posted 11-01-2001
Knowledge Management 2001
The challenge of knowledge management has always been the same: getting the right information to the right people at the right time in the right way. But as our August survey of 419 top IT executives shows, knowledge management systemsat least by that titlearen't yet a major focus for many companies. The good news is that for many of those installing KM systems, goals such as improving communications and enhancing customer and employee satisfaction were routinely met. The bad news: More ROI-focused goals, such as increasing profit margins and reducing costs, were rarely achieved.
Just a quarter of respondents have installed or are implementing a KM system, and about the same percentage say they're planning such an initiative. But more than half report no intention of installing a knowledge management capability. And those numbers don't change significantly among CIOs at larger companiesthose with more than $20 million in annual revenues.
Fully 70% of CIOs who have no plans for a KM system concede that they have never even considered one. Top reasons: Forty percent were unsure of the benefits, while 34% had no budget for a KM system.
Widely cited reasons for deciding against installing KM included cost (32%), the perception that KM doesn't match corporate strategy (30%), that no system could be found that met corporate needs (26%) and lack of resources (29%).
CIOs, who for years have assumed responsibility for helping their companies get smarter, are bemused to learn now that their efforts have a name, and a trendy one at that: knowledge management.
"The whole field is still a puzzle to me," says Robert P. Dallesandro, vice president of information services at Parsons Brinckerhoff Inc., a global engineering firm based in New York City. "I read this stuff about knowledge management, and it doesn't ring any bells for me. I can't connect it to my business. Maybe it's that the definition keeps changing."
Nevertheless, while he may not call it knowledge management, Dallesandro says his number-one challenge is giving employees and managers access to the information they need. "Whether it's through an intranet or some other system, they want to turn on the computer and find what they need fast," he says. "They know there's information they need some place in the company, and they'd like to be able to find it."
He's not alone. Of the 419 respondents to our survey, 25 percent have either implemented a KM system or are in the process of doing so, and another 23 percent are planning one. And their ranks would no doubt swell if others defined their own activities as knowledge management.
Kathy Harris, vice president and research area director at Gartner Research in Charlotte, N.C., agrees there has been confusion about KM. "Many don't call it knowledge management, but they recognize that they have these intellectual assets, and they're asking, 'What are we going to do with them? Why aren't we managing them better?' "
At Parsons Brinckerhoff, Dallesandro's challenge is to link the firm's 5,000 employees in the U.S. and about 5,000 in other countries so that they can collaborate on proposals and engineering designs. "In the last couple of years we've become a lot more global through a variety of acquisitions," Dallesandro says. "We don't even know where all the people are at any particular time. Someone you need may be in Singapore for three weeks, for example, and right now it's a struggle to get that type of information."
Collaboration, information access and expertise locationall part of Dallesandro's agendaare, along with e-learning, among the most common types of knowledge management initiatives, Gartner's Harris says.
Kelly Bissell, a senior manager in the IT strategy group at Arthur Andersen LLP, has looked at IT issues from several anglesas CIO of a national services company, as CTO at an Internet startup, and as an Andersen consultant. "KM is a term that's kind of vague," he says. "So people start taking that term and devising either components of what it is, or they create their own definition."
One reason it's difficult to define, he says, is that KM has a different look at different companies. "If you're talking about an energy company, KM might involve pricing trends. In a customer-focused, brand-based sales organization, it would be the customer. In health care, it would be completely different. In the consulting world, KM is understanding and sharing the information consultants have about an industry and the tools and techniques they have used."
Bissell was involved in setting up the architecture of Andersen's KM program, a distributed system on multiple databases. Via a Web-based tool, consultants can access everything they've previously done for a client. In addition, they can see the techniques, methodologies, work plans and product deliverables used by other consultants, which they can then customize.
Nearly 76 percent of our respondents with a KM system in place or in progress say the primary purpose is to share information relevant to operations. And 73 percent say the information generated by the system will be used to make strategic decisions.
That's the goal at Edgen Corp., a supplier of carbon and specialty pipe to the energy industry, based in Baton Rouge, La. Randy Harless, vice president and CIO, will install an Oracle applications suite over the next year that will capture financials, order entry, inventory, purchasing and other information. What his current pieces of software couldn't give him, he says, was a comprehensive view of the firm's seven wholly owned subsidiaries and 20 locations nationwide.
"The current system generates a lot of information, but it's difficult to use," he says. "For example, we'd like a salesman in one subsidiary to be able to see the inventory in another subsidiary." On top of that, he wants management to have the information it needs to make informed decisions on purchasing and inventories. "Today, they end up calling someone and saying, 'What does this number mean?' Typically, the other person says, 'I don't know; I'll have to research it and get back to you.' So now two or three people are involved for two or three days getting that one answer," says Harless. "That's something the software could do in two or three hours."
Speed, Harless says, is a competitive weapon. "Every month we close our books in five to seven days. When our new system is in place, that will shrink to three to five daysand every minute counts in this global market." Eventually, the system will link with key suppliers and customers.
Harless is suspicious of buzzwords and management fads. He likes to cite something that has been said about every new IT enthusiasm of recent years: "Knowledge management is like teenage sex," he says. "Everyone is talking about it all the time, everyone thinks everyone else is doing it, almost no one is really doing it although everyone is bragging about it, and those who are doing it aren't doing it very well."
When asked to wrestle with definitions of "data," "information" and "knowledge," he puts it this way: "Data is what our order entry clerks key in all day. Information is what our current systems do with that data. When we are able to take that information, and quickly act on it to our advantage, then we've got knowledge. The more knowledge I have than my competitor, the bigger my advantage."
These are common themes in the conversations we've had with CIOsunlocking information they know is buried in their organizations, getting it to sometimes far-flung employees so that they can work better together, and doing it fast. KM is at the core of their businesses, and it's strategic.
Indeed, says Gartner's Harris, you must start with the business need and the overall strategynot the technologyif KM is to succeed. "Managing intellectual assets is big and sprawling, so you have to start with a strong vision of how you want to operate, how you want people to work together. Then you pick a manageable set of your information to work with. Where people make mistakes is to believe that all knowledge is equally valuable. It's harder than it seems." Terry A. Kirkpatrick
The results are available in Adobe Acrobat PDF format. To download the free Adobe Acrobat Reader plug-in, click here.
Conclusion 01: Initiators
IT executives were by far the most frequent initiators of KM systems, and the IT department was the group most frequently cited as managing KM projects. But the least resistance to KM came when a senior executive, such as the CEO or CIO, was the project's initiator; business unit heads and CTOs didn't fare as well.
Slightly more than 60% of our respondents said their KM project was initiated by the CIO or CTO, while 25% cited the CEO. Business unit heads were cited by 7%, with CFOs and CKOs in last place, at 2%.
Acceptance levels among employees were noticeably higher when knowledge management initiatives were championed by the CIO or CEO. When one of these top executives is seen as the one initiating a KM project, at least three fourths of respondents cited employees as being somewhat or extremely positive.
Who's bringing the average down? Chief technology officers, who received somewhat positive or very positive ratings from only 52% of respondents. And although they're very unlikely to lead on project kickoffs, business-unit heads came in with somewhat or extremely positive ratings 64% of the time.
Conclusion 02: Components
There are no clear winners in the KM component popularity poll. Project management, intranet infrastructure and Internet infrastructure are the most regularly cited technologies to have already been implemented or are in the process of being installed, but each was only cited by slightly more than 60% of respondents. Collaboration tools and groupware, Web publishing, and portal technologies aren't far behind.
The least popular components were decision and predictive modeling, implemented or being implemented among less than one third of respondents, and metadata cataloging, at 36%.
One example of the potential fuzziness of the category is "collaboration tools and groupware," which was mentioned 54% of the time. While a widely used term, it can apply to technologies ranging from Lotus Notes to complex workgroup process products, allowing some companies to simply "grandfather" their existing e-mail infrastructure into the mix.
The most surrprising report was the comparative popularity of instant messaging, with 52% saying they already have instant messaging support in place or are installing it. This seems far greater than many might think, given how minimally IM is supported in most enterprises today. That's a strong message to other companies to begin evaluating IM as a valuable layer between e-mail and voice communications.
Conclusion 03: Acceptance
Simply because a KM system is installed doesn't ensure that it will be adopted. KM systems seem to gain reasonable levels of acceptance among employees, with only 12% reporting either somewhat or extremely negative responses. Yet respondents indicated that their post-implementation adoption rates were substantially lower than anticipated, with more than a quarter of respondents reporting zero adoption.
Adoption rates were nearly half what was expected. While 52% of those answering expected system usage to exceed 50%, that goal was achieved by only a quarter of respondents. And though few believed employees would completely ignore the system, that apparently occurred in 27% of the casesa pretty dismal result.
Two thirds of respondents reported some resistance on the part of end-users to their KM projects, and it was most likely to come from middle management down. Both middle management and general staff were cited by 22% of respondents as offering resistance, while just 12% pointed to senior executives, and 7% cited their board of directors.
To encourage use of a KM system, the most likely incentives (if they can be called that) include selling employees on the benefits of the system, cited by 66% of CIOs and "general reinforcement from management" (63%). Very few in our sample used financial compensation (14%) or job description changes (12%).
Conclusion 04: Results
The good news is that KM systems came reasonably close to meeting expectations for the most frequently stated business goals for KM projects. Unfortunately, those targets were relatively "soft": increasing communication, aiding decision- making, enhancing customer satisfaction and enhancing employee productivity. The bad news is that while they were less frequently cited, every goal with more clear-cut financial objectivesincluding increasing profit margins, increasing revenues and lowering operating costsdelivered less than expected.
The top four business objectivesincreasing communication, aiding decision-making, and enhancing customer satisfaction and employee productivitywere grouped tightly together from a statistical standpoint, cited by between 65% and 68% of CIOs with a system in place or being implemented. More ROI-related goals, such as increasing revenues and increasing profit margins, were lower priorities, at 52% and 50%, respectively. Meanwhile, reducing turnover was the least frequently mentioned goal, at 23%, closely followed by improving employee morale, at 25%.
ROI clearly takes a hit with KM, at least as implemented by those in our sample. While 57% of those responding expected lower operating costs, only 43% achieved them. Increased revenues were achieved by just 38% of respondents, and only 32% found they'd increased profit margins.
Conclusion 05: Time and Cost
KM systems seemed to come in relatively close to our respondents' original time projections, with a majority finishing their projects on or near schedule. However, the track record on staying within budget was more spotty, with less than half reporting they met budget expectations. Meanwhile, respondents cited "lack of necessary resources" and "scope creep" as the top reasons for falling behind schedule.
Nearly three quarters of our sample reported that their knowledge management projects came in within three months of the target date. But 14% said their projects were or had been at least seven months behind schedule, and of these, fully half said they were or had been more than a year past their target date.
Why did projects go past their projected schedules? Among 51% of CIOs, it was due to a lack of resources, while 41% cited "scope creep."
Only 48% said they'd brought their projects in at or below budget. But overruns weren't too breathtaking; only 12% said they'd spent 25% or more than they'd anticipated.
Knowledge management is contributing some clear benefits to the organization. People are communicating better, decision making is improved, and both customers and employees are getting some value. But it's a mixed bag: Real ROI benefits are elusive, and projects are often coming in over budget. Better definition of business goals, more emphasis on involving employees in system design and a stronger focus on ROI will help. And one word of advice: Get someone on the business sidepreferably the CEOto champion your knowledge management offering, so you're not seen as pushing knowledge management down the throats of corporate users.
How the survey was done: CIO Insight designed the knowledge management survey in partnership with Survey.com, a San Jose-based supplier of custom online research services. CIOs, chief technology officers and vice presidents of information technology and services from a number of sources, including third-party lists and other Ziff Davis Media publications, were invited to participate in the study by e-mail. The survey was then posted on a password-protected site, and 419 people responded between Aug. 28 and Sept. 16.