Knowledge is power, and many businesses are realizing that leveraging internal company knowledge is one way to gain an edge over the competition. As a result, the implementation of knowledge management (KM) systems is growing. According to Gartner, 50 percent of enterprises will have implemented formal management of intellectual capital with KM processes in key business units by 2003.

This article will define knowledge management and explain the benefits of such a system.

Creating a knowledge management system
Knowledge inherent to business processes, often called corporate knowledge, is any information essential to the daily functions of an organization. Corporate knowledge can be found in company databases, management documents, history files, and inside the minds of employees.

Often, pieces of corporate knowledge are dispersed throughout an organization in unconnected databases. Bringing these disparate sources together creates the KM system, which is designed to collect, organize, and process corporate knowledge into usable forms for all employees.

The term ‘knowledge management system’ has been used as a new IT buzz phrase, although businesses have been tracking knowledge for decades. Corporate knowledge can be tracked by records kept in company ledger books or databases in individual departments.

Richard Artes is co-founder of Lean Operations Management, a business process improvement company servicing manufacturing and distribution enterprises. Manufacturing companies have been using a form of KM related to their products.

“The closest many companies come to maintaining accurate and up-to-date corporate knowledge is through an engineering change order (ECO) system, a system that normally maintains information about products and manufacturing processes,” Artes said. He explained that an ECO system is a formal process used to validate and maintain accurate knowledge within an enterprise but is not a KM system.
Gartner predicts that, “through 2002, more than two-thirds of measurable benefits from KM initiatives will come from programs focused on sharing existing knowledge.”
The benefits of the system
The obvious benefit of a KM system is that everyone in an organization has access to corporate knowledge. But there are other benefits, including being able to use a KM system to turn intangible corporate knowledge into actual business assets. For example, a system can capture how a manufacturing organization solves a problem and package the solution process into a comprehensive document. Another organization can buy or license the document to solve similar problems, creating a revenue source for the first organization.

Gartner explains how corporate knowledge can also be turned into an asset for consultancies; a KM system can capture techniques, processes, and presentation templates, which can be reapplied to future consulting assignments.

Organizations providing outsourced project management can use a KM system as part of a sales presentation to prospective clients. The system can demonstrate what employees collectively know about a project and how they completed projects in the past.

“The benefits of a knowledge management system can be substantial and worthwhile when all the keys are in place and everything is up,” said Artes, who said that an efficient system can provide faster, more accurate communication of corporate policies and procedures to employees, faster problem solving within an organization, and give employees the information to make better decisions.

How to begin
Corporate knowledge must be sorted before it is entered into a KM system. According to Artes, there are three types of corporate knowledge:

  1. Explicit: Knowledge formally organized in company documents and procedure manuals
  2. Tacit: Knowledge that is unstructured, personal, or based on employee experience
  3. Strategic: Knowledge that is typically restricted and given limited access such as executive marketing strategies or patent regulations

“Knowledge management itself is a simple idea, but implementing a knowledge system can be difficult,” said Artes, who suggests that a system be segmented into six databases that are connected. “An organization can begin with one database and expand to others as resources and time permit”, he said. The chart below shows how knowledge management databases can be arranged.

Richard Artes suggests that knowledge management systems be driven by six databases.

The KM system connects each database, making collaboration between departments possible. For instance, if the knowledge within the sales department is documented and available in the KM system, the IT or another department can retrieve that knowledge to gain a better picture of which procedures drive sales.

Implementing a KM system can be a detailed process, involving an extensive amount of time and resources to set the system in motion. Creating support for the new system from the top down in an organization is the first step, according to Gartner analyst Rita Knox. “You have to get your executive management interested in knowledge management, “ Knox said. “You have to have popular belief in the value of knowledge management for it to be successful. We know that collaboration and innovation is the way to go.”

Setting priorities about what knowledge should be leveraged first is important. For example, if the business relies on marketing campaigns for revenue, then the information stored in the sales and advertising departments should be made available through the system first.

Additional reading
For more information on knowledge management, check out these TechRepublic articles:

TechRepublic Research Index: Knowledge Management“: If you’re looking for ways to implement a knowledge management system, you’ll want to learn about the valuable resources TechRepublic offers.

Overcoming the obstacles to knowledge management implementation“: Setting up a KM system can be difficult, especially if workers in your enterprise hold on to “power niches” that stifle innovation and impede the flow of information.
Let us know what successes and failures you have had with knowledge management implementations. Post a comment below or send us a letter.