To stay competitive, your organization tries to effectively exploit its resources. But chances are your company's intellectual assets are seriously under-utilized, which means costs are higher than necessary, productivity is lower and your competitive edge isn't as sharp as it should be.
    Read on to find out how collaboration, content, training and enterprise resource management technologies-along with appropriate knowledge management practices-can help you change all that and extract as much value as possible from your organization's intellectual capital.

Ever wonder why some companies enjoy especially high market caps? Look closer and you'll see that what makes these standouts intrinsically more valuable than others is their ability to derive more from their core competencies.
    How do they do this? By more effectively exploiting their most important-and most intangible-asset: intellectual capital-which is to say, knowledge.
    Trouble is, knowledge is tough to manage, and even tougher to quantify for CEOs who want to see clear, no-nonsense bottom-line metrics. Economic Analysts estimate that as much as 40 percent of the U.S. economy can now be attributed to the creation of intellectual property. Not surprisingly, this evolution is increasingly reflected in companies' market capitalization.
    Compare Microsoft's market cap of roughly $280 billion on revenues of $11-12 billion and a book value around $10 billion to General Motors, with more than $150 billion in revenues and a book value of almost $18 billion-but a market cap of less than $50 billion. What's going on here?
    Economists will tell you that the gap between book value and market cap measures not just a firm's future economic value but also the value of its intangible assets. The difference between Microsoft's market cap and GM's echoes Microsoft's ability to exploit its intellectual capital.

Knowledge Management (Sort of) Defined
What it means to you depends on who you are.

Often companies engage in knowledge management without calling it that. They seek solutions to business problems that lead them to address issues related to their core competencies, relying on technologies that aid in dealing with content and making collaboration easier.

Thus Cambridge Technology Partners defines knowledge management as "the ability to create and retain greater value from core business competencies."

    Here lurks the first metric of knowledge management: the more value your company can create and sustain from its core competencies, the greater your company's value to its shareholders.
    The more your company's products and services rely on intellectual components (as compared to raw materials), the more its bottom line depends on intellectual resources and processes that must be understood and managed.
    Of course, there's a darker flip side to this metric. The less a company understands and manages its intellectual resources and processes, the less value it will deliver and the less likely it is the organization will be able to maintain its competitiveness.
    "The single most valuable resource a company has is the information it stores," ob-serves Roland Hoelscher, CEO and president of Arcplan Inc., "and how this information-whether in terms of human capital or application technology-is used to give value to the customer."


Staying Competitive with Knowledge Management
"In the new economy, knowledge is the only real competitive advantage," says Luc Pinard, senior vice president, knowledge, in CGI's management and project performance practice.
    Ed Farrelly, vice president of business strategy at ABT Corp., agrees. "Competing in time at Internet speed requires zero-drag-there's no opportunity for re-work or re-learning."
    For now-familiar reasons, it becomes more imperative every day that organizations exploit their intellectual capital as effectively as possible. But that doesn't mean it's easy. Consider the pressures faced these days by just about all organizations:
    Shorter time to market. New products and/or services have to be conceived, developed and delivered in just months, or even weeks, which pinches the intellectual margin. "Reinventing the wheel," slows down development, wasting valuable time and risking an organization's competitive advantage.
    "Design rework is happening at an alarming rate of more than 65 percent in most companies," points out Philip George, vice president of worldwide marketing at Invention Machine Corp., "simply because people don't know that a problem has already been solved."
    A far-flung, mobile workforce. Finding out what your colleagues and business partners figured out about doubling widget output is tough; they sleep when you work, they're on the road when you're in the office-and then there's the language barrier.
    "Studies have shown that the virtual team doesn't have to be scattered halfway around the world," says Farrelly. "Once the team members are out of earshot-fifty feet away-many of the 'virtual' issues begin to surface."
    Knowledge worker turnover. When a pivotal person leaves, the pain is widely and quickly felt. More insidious is the quiet decaying of an organization's "institutional knowledge" as the lesser-recognized depart without sharing their understanding of how to get things done.
    "It's becoming increasingly difficult to acquire and retain employees, and a company's strongest asset is its people," says Chris Moore, chief technology officer at TrainingServer Inc. "Organizations that do not tap into their mind share and take advantage of the knowledge within will quickly fall behind."
    Global competition. There's so much more that an organization needs to know these days: competitors can spring up fast, they can come from anywhere and they may have access to insights and discoveries that can upend market hierarchies.
    More demanding customers and investors. For virtually every organization, the squeeze is on: customers want to pay less while investors want more value from their portfolios. That means all the resources to which an organization can lay claim-including its intellectual resources-must be managed for the best result.
    To sustain their competitiveness, organizations carefully craft processes to efficiently manufacture products and care for their customers, all in a effort to effectively exploit valuable resources. Yet Ernst &Young estimates that up to 80 percent of a company's intellectual resources-the knowledge residing within it-is not systematically applied to business processes.

A Rising Tide of KM Initiatives
Now more companies understand that they must develop strategies and processes expressly designed to best utilize intellectual re-sources in both day-to-day operations and long-term planning.

Chart 1

    Research from International Data Corp., for example, indicates that 50 percent of companies adopting data warehousing are planning or already implementing knowledge management. According to a survey by Cambridge Information Network (a division of Cambridge Technology Partners) of its 3,500 member CIOs, 85 percent think that knowledge management generates competitive advantage.
    These organizations realize that the better a company can manage its knowledge, the better it gets at:
  • Enabling employees to access, analyze and apply information regardless of where they are,
  • Developing and distributing products and services faster and more efficiently,
  • Identifying and enhancing best practices, and
  • Creating closer ties to customers.
        "The knowledge within a typical organization is an untapped resource," says Neal Moster, director of global knowledge with CGI's platform practice. "You can take advantage of it and thrive, or you can ignore it and fight to survive."

    Going With the Flow
    Basic to this effort is the understanding that intellectual capital behaves like light: it ex-hibits properties of both particles and waves. Pieces of data and information-content-can be treated as discrete objects or particles, but knowledge must be treated as a wave of energy.
        Knowledge is a resource that flows, and you get the most from it when you direct and manage that flow-when you treat knowledge as a process, a systematic series of actions taken to achieve a particular result.
        So, of course, the knowledge process is different in every organization, shaped by its core competencies and its business goals, which makes the generalized notion of "knowledge management" a little vague and squishy for people accustomed to visible, readily-quantified bottom-line metrics. Still, some things can be said about knowledge and the management of knowledge processes regardless of organizational context.
        There are several types of knowledge--explicit, tacit, cultural--and each plays a distinct role in every organization's knowledge processes, whether those processes are managed or not.
        Knowledge demands collaboration. Knowledge, like language, is always based on a shared agreement about what something means. Unshared knowledge loses meaning--and value.
        "Capturing explicit knowledge is much easier than capturing tacit knowledge," says CGI's Moster. "As a general rule, capturing explicit knowledge requires repositories. Capturing tacit knowledge requires collaboration."
        And when it comes to sharing tacit knowledge, says David Keller, vice president of marketing at Zoneworx Inc., "traditional training is most effective because of the higher degree of interaction between teacher and pupil and the experiential atmosphere that's found in one-on-one or group discussions, where stories, analogies and metaphors are commonly used to illicit insight."
        Information technology enables management of knowledge processes. The same technologies that have upped the knowledge ante and spawned incomprehensible amounts of content also offer the means to get that content under control and share knowledge more effectively across continents, time zones and language barriers.
        Collaboration, in particular, requires more than technology. A shift is necessary in those corporate cultures in which collaboration is an invisible process.
        "Improving collaboration requires time, process, motivation and a tool," Moster notes. "People must have the time to share-there are only 24 hours in a day. They need to make collaboration part of their everyday processes-to knowledge-enable the work they perform. They may need some kind of motivation. And, finally, they need someplace to collaborate, which is where many tools and products come in."


    How KM Solutions Fit
    Ours is a world where intellectual capital grows in value everyday. Thus, says ABT Corp.'s Farrelly, "All organizations are doing-deliberately or by accident-some form of knowledge management."

    Chart 2

        Early on, knowledge management focused on getting a grip on data (structured content) and information (often unstructured content). The result was an emphasis on data warehousing, which brought rationality to the maintenance and accessibility of structured data, and on document management, which initially involved getting enormous volumes of paper-based information digitized and therefore accessible via computer systems. On the heels of this effort came first-generation efforts at collaboration: messaging/e-mail systems and groupware.

    Helping Organizations Learn
    With acceptance of these basic knowledge management capabilities, people started to reflect about knowledge itself and how organizations acquire it and use it (and how they don't). Debates about knowledge are as old as our ability to talk, and will, no doubt, continue. Nevertheless, some consensus has emerged, revolving around an elegantly simple insight:
        Companies that are able to learn faster than their competitors enjoy a sustainable advantage. So knowledge management technologies are useful only to the extent that they help leverage an organization's ability to learn.

    A Growing Knowledge Management Infrastructure
    Hence most, if not all, of these organizations now have in place the technologies that serve as a basic knowledge management infrastructure. Its components-data warehousing and document management (content management) and messaging/e-mail and groupware (collaboration)-are pretty much ubiquitous, regardless of a company's core competencies and business goals.
        These days, more sophisticated knowledge management access software builds atop a KM software infrastructure. Those investing in these tools get a significant payoff:
  • The power to mine content that's important for decision-making out of vast amounts of structured production data.
        Zoneworx, for instance, uses machine-level interfaces to pick out the key performance indicators that manufacturing decision-makers need-without requiring the sacrifice of legacy systems.
        "Do all employees need information equally?" asks Keller. "The answer is probably no. There's probably a small percentage of knowledge workers whose output is critical to the future performance of the company, and a large percentage who would benefit from fewer, more direct communications on a more timely basis. The organization should focus its resources by implementing measurement systems for the latter and KM infrastructure for the former. Organizations trying to deploy systems that will work for both groups end up with programs that satisfy neither."
  • Better management of unstructured information by automating the ability to categorize it often involves both contextualization and personalization.
        "Managing and mining documents and other unstructured data-which can represent up to 80 percent of an organization's information-will have great bottom-line impact," says Gordon Briscoe, vice president, consulting at CGI.
        Invention Machine Corp.'s CoBrain extracts key concepts from unstructured content by using semantic processing to analyze sentence structure. CoBrain then creates corporate knowledge bases or Website content that can, when asked a question, provide actual answers rather than merely deliver lists of documents.
        If an employee queries a knowledge base automatically created by CoBrain, it returns a list of answers along with a brief excerpt, hyperlink and author. So, for example, if the question is How to reduce friction?, the answer list might include carbon coating, graphite, oil and graphite fibers. Should the employee wish to learn more about, say, graphite fibers as a solution, he or she can quickly review the cited document and contact the author for further investigation.
  • The means to deliver content proactively, usually through an information portal that integrates collaboration tools. For example, Unisys' Enterprise Knowledge Portal includes not only content management tools-such as search and retrieval, an ability to access electronic news and information, and a repository for documents, Websites and databases-but also collaboration and group productivity tools. These include profiling and alerting as well as capabilities that foster interactivity and brainstorming.
        And Intraspect's Knowledge Server enables an organization's staff, customers and partners to enjoy secure access to any type of information-budgets, project reports, market research, schedules-thanks to its centralized repository.
        For such effort and investment, an organization begins to achieve some facility at:     "Organizations that use KM tools to house their intellectual property will enjoy a definite competitive advantage," Briscoe says.

    Creating Communities
    Managing knowledge processes well also requires technologies that enable people to gravitate into communities of interest and expertise where their ability to share ideas and insights can spawn new knowledge and refine existing knowledge.
        "It's human nature to want to improve oneself," says Gary Layton, vice president of marketing at interBiz, "and these communities support that improvement. At interBiz, one of the most active areas of our intranet is the 'clubhouses' where employees share knowledge and experiences based on their function within the division."
        Says CGI's Moster: "Communities are where our members share their ideas, their tacit and explicit knowledge. They start out as very informal groups, where members share a common interest they wish to collaborate on. They may evolve into more formal groups, a community of practice, where now it's more than just a common interest, but a group where the members have created thoughtware around their interest.
        Next, they may evolve into a group with more of a commitment to sales of a service. Thus, the community has taken its shared interest and turned it into a CGI service. Communities may start out as a place where our members share, but can end up meeting specific business objectives and generating new business. That's the intent, to go beyond aspirations as simple as 'stimulate cooperation' to include 'generate new business' as well."

    E-Learning
    When these kinds of capabilities are combined with Internet-based training, or e-learning, an organization's learning vector can climb dramatically.
        Subject matter training for employees is critical if they're to understand the true context of what they're doing for their customers, believes Howard Marks, CEO of eMind.com, which offers Internet-based training and testing for professionals in accounting, insurance, securities, banking, information technology and personal development.
        "How," he asks, "can you know what's valuable, what to emphasize, what are the problems inherent to the industry, what are the technology gaps of your clients, its customers and partners?"
        Compared to traditional classroom training, Marks notes, "E-training is much more efficient and cost-effective; there's no need for classroom space, no travel expenses. Arthur Andersen has estimated that the training we provide is 75 percent less expensive than their previous traditional classroom training. And that doesn't even address the productive time lost to travel."
        There are other advantages to Internet-based training, too.
        "E-learning," says ABT Corp.'s Farrelly, "can be 24/7/365. It can be delivered by the 'best of the best'-why not learn risk management directly from Tom DeMarco instead of some local guy? It comes with a 'pause/replay' refresh button and it offers technologies like streaming video, downloads, conference calling and so on. You get the benefits of the interactive experience without leaving your assigned work location." People can also take it home with them, or on the road, doing it anytime, anywhere. And they can learn at their own pace.
        "This sort of 'just-in-time learning,' which chunks training into small online components (learning objects), allows learners to directly access topics as they need them to close skill gaps," adds TrainingServer's Moore. "Priorities for companies developing KM practices include defining small, reusable learning objects and tagging learning objects with meta-data to assist KM systems in locating and packaging the correct objects for delivery to learners when they need it."
        But for large organizations, keeping employees up to speed can be a daunting management task. Which is why, according to George Keegan of Unisys, "Knowledge management solutions and training and learning systems need to be tightly integrated. If you want to leverage your intellectual capital, you'll need to invest in an organized learning and training system."
        TrainingServer, Inc.'s Learning Management System does exactly this, helping companies integrate the management of their online training processes with a collection of functions: third-party content integration, course management, event scheduling, needs analysis, job development, e-mail and real-time integration to human resources data. An Internet-based component, TrainingServer@-Online, enables users to interact with TrainingServer's database with a Web browser.

    Web-based Enterprise Management
    As KM implementers integrate management of content, collaboration and communities, they can see that the benefits of maximizing intellectual capital-supporting innovation, replicating best practices in creating and delivering products and services, spreading expertise, and commercializing and productizing discoveries and insights-are best achieved with enterprise-oriented products, tools and services.
        "Companies need to take a comprehensive approach to centralizing and leveraging the information asset," says interBiz's Layton.
        "The knowledge management solutions we are considering will help us compete because they will help us win opportunities, deliver on our commitments and build new service offerings," explains CGI's Moster. "To win opportunities we generally need three items: subject matter experts, the ability to demonstrate we can do the job and reusable best-of-breed proposals. Consequently we are looking at a knowledge map, a comprehensive guide to subject matter experts within CGI, and document repositories of our expertise and proposals.
        "To deliver on our commitments we again may need subject matter experts, sample deliverables and best practices. These will be covered within our knowledge map and the document repositories.
        "And," Moster concludes, "to help us create new offerings we are looking at knowledge community solutions that will allow our members to collaborate on common areas of interest and evolve these interests into real business opportunities."
        Not surprisingly, these kinds of capabilities are broadly viable thanks to the Internet and the browsers we've all become accustomed to using. Their universality has created a set of de facto standards and widely embraced user interface practices on which KM products, tools and services can piggyback. And they've inspired an intensifying interest in Web-based enterprise management and reporting products able to pull in content from across the organization and encourage corporate-wide collaboration.
        "The transfer of explicit knowledge is escalating logarithmically with the advent of Internet technology," notes Zoneworx's Keller. Take the SAS Institute, long known for its data warehousing and decision support software and consulting services, which has started focusing on what it calls e-intelligence.
        "Our customers," says SAS President and CEO Jim Goodnight, "are achieving competitive advantage by basing business decisions on e-intelligence rather than intuition. We call it the power to know."
        Two SAS products, WebHound and e-Discovery, use data warehousing technology and methodology to integrate information from all enterprise sources-e-mail, campaign management systems and chat rooms. WebHound uses dynamic Web reporting through any browser, including wireless devices, to deliver information about how customers interact with an organization's Website. E-Discovery employs WebHound technology along with SAS data mining software to predict how customers will behave on a company's Website.
        It's easy to see how using e-Discovery enables an organization to boost its Website's effectiveness and profitability. SAS clients also combine e-Discovery and the SAS Solution for Customer Relationship Management to develop holistic customer profiles based on interactions across all channels.
        Systems integrator/consultant CGI has built knowledge management and collaborative technologies into the fabric of its E-Business practice, which also targets supply chain management, customer relationship management and business intelligence.

    The Knowledge-Aware Enterprise
    Some industry watchers believe such browser-driven access to content and the accompanying collaboration and community-building tools are only the beginning. Look next for products and services that put still greater emphasis on accessing unstructured data and managing content in ways that make it truly useful and relevant.
        "The huge volumes of information available from integrated information systems, the collaborative process and the Web will make filtering and artificial intelligence 'must-haves' in the KM future," believes Layton of interBiz.
        Already, these efforts are leading to products and services capable of unifying access to both structured and unstructured data, which will, in turn, underpin the automated push of business-critical information to those who must proactively respond to it. Hummingbird's Enterprise Information Portal, for instance, provides a single point of access to all of an organization's business-critical information, including structured and unstructured enterprise data.
        Arcplan's inSight and dyna-Sight offerings exploit the browser interface and Internet networking to enable users to restructure and integrate Web-based information with structured data housed in popular database environments.
        This sort of knowledge-aware enterprise management system could, for instance, generate a red flag on a vice president's screen every time a valued customer complained more than, say, three times during any quarter. It might also be configured to measure the results of various workflow designs and identify the ones that work best; it's reasonable to anticipate that workers themselves will be the ones who'll be most talented at defining the most effective workflows, and their knowledge can be captured and "institutionalized."

    Going, Going . . . Gone Vertical
    Precisely how an organization follows this broadly marked path will depend on its core competencies and business goals. These will determine the knowledge management solutions and technologies that your company lays atop its knowledge management infrastructure in order to stay competitive.
        Those who provide knowledge process management products, tools and services understand this and have started to field offerings aimed at particular industries, market sectors and core competencies.
        InterBiz, Computer Associates' e-business applications division, offers integrated suites of knowledge-enabling business applications for supply chain management, banking, and human resource and financial management.
        ABT Corp., meanwhile, focuses on project management. Its Web-enabled Results Management software includes a repository and an infrastructure for project-oriented communication, control and collaboration processes-including management of multiple projects and programs, time tracking, analyzing and reporting.
        Evolve Software specializes in helping those who sell, manage and deliver services. Its enterprise-scalable Servicesphere application integrates a Resource Manager to help deploy the right resources to the right projects at the right time; an Opportunity Manager that forecasts demand, resources and revenues; and a back-office Delivery Manager that consolidates time/expense tracking and project management activities and can itself be integrated to existing ERP or billing systems.
        Aspect Communications has targeted customer contact centers with an extensive suite of products built around the Aspect Enterprise Telephony Server and the Windows NT-based Aspect Enterprise Application Server, which runs the firm's call center software.
        In addition, Aspect offers eBusiness Architect, an intuitive graphical tool for developing e-commerce and e-CRM applications. The Aspect Customer DataMart analyzes and reports historical and real-time data from distributed, multimedia customer contact centers and other enterprise data sources.
        Aspect's Customer Relationship Portal integrates front-office, e-commerce and multimedia contact center applications to manage customer contact end-to-end, ensuring consistent communication with customers regardless of the initial means of contact.

    Chart 3

        Then there's Zoneworx, with a modular and scalable solution for manufacturing companies that merges commercial networking technology and plug-and-play installation with smart, auto-configuring machine-level interfaces to gather information that's critical for decision-making.

    Making Knowledge Management Pay Off
    "Organizations that overlook knowledge management risk the operational and financial inefficiencies that come with duplication of effort," observes Unisys' Keegan. "Knowledge management solutions, once adopted, ensure there's a process in place for accessing and sharing your organization's intellectual capital. The benefits are pretty obvious. You save money. You leverage talent, capability and capacity. You reduce your time-to-market."
        Keegan articulates five steps an organization must take to successfully implement a knowledge management solution:

    1. Identify the essential elements of your knowledge management toolkit. It should include:
  • Methodology
  • Products that need t
  • be implemented
  • Training, because your efforts will change the ways people work.

    2. Assess your organization's infrastructure. This means evaluating your:
  • Network (backbone, gaps, quality of service, bottlenecks)
  • Systems (operating systems, back office, data center, desktops)
  • Security (firewalls, network, certificates, keys, encryption)
  • Information (by type of content, by corporate function)

    3. Anticipate new roles and responsibilities. You may want a:
  • Knowledge officer t
  • determine strategy, policy and direction
  • Knowledge manager, t
  • oversee group and organization workflow
  • Knowledge administrator t
  • maintain your portals

    4. Select the right tools, technologies and partners. Considerations include:
  • Leveraging existing investments in your infrastructure
  • Scalability, s
  • your platforms can handle future growth
  • Usability, s
  • productivity levels are maintained
  • Support that's reliable

    5. Choose your strategy carefully. You'll want to:
  • Establish realistic, achievable goals
  • Start modestly with efforts in collaboration, content and workflow
  • Choose your early adopters carefully
  • Train them-and everyone else-well, using every technique available.

        "Those companies able to combine tacit and explicit knowledge," says Zoneworx's Keller, "can deliver solutions and products to the market quickly, raising the bar for their industry, whereas those who deploy late are constantly playing catch up and rarely see a strong ROI." Keegan notes that Unisys' own knowledge management effort began with what he calls "the basics"-collaboration, content management and workflow.
        "The most important ad-vice I give to organizations considering implementing knowledge management solutions is to start small-set achievable goals," he suggests. "Of course, part of your initial plan must include an ability to scale, because when other groups hear about the benefits, they'll want to tap into your knowledge portal. Knowledge management is an ongoing, evolutionary process. Once it's part of your business model, it will always be part of your business model."
        Keller concurs: "Companies that look at their knowledge base as they would any asset or resource are going to develop the culture and structure necessary to leverage it."

    This is the second in a series of four Strategic Directions Supplements produced by CIO Custom Publishing. Future supplements will examine trends and customer solutions in Wireless and Customer Relationship Management (CRM). For more information about the supplement program, contact Mary Gregory, director of custom publishing, at (508) 988-6765 or at mgregory@cio.com.



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