Global Enabled Supply Chain Series: Knowledge Management

It's a supply chain process without definition. Even though knowledge management has suffered under poor first-generation technology results and a hard-to-identify market, things are beginning to look up for this comeback-app.

[From iSource Business, August/September 2002] Have you ever tried to explain to someone how you organize your personal and business information? Do you get strange looks when you finish describing your hybrid filing system for both your home and office?

No clear and efficient system for record keeping has ever really emerged despite mankind's ongoing attempt to keep and store valuable and usable information. And yes, modern technology has allowed us to advance beyond ink and parchment and, for some of us, even beyond filing cabinets and rolodexes, but sophisticated databases still require that information be stored away in precisely-defined fields and then used in a way that can be transformed into knowledge and intelligence.

Once stored, how do you find the data again? Most companies host a mammoth amount of unstructured databases of valuable information. This information can be dug out of employees' hard drives, Web servers and company intranets: Word documents, PowerPoint slides, spreadsheets, e-mail and much more. Analysts claim that as much as 80 percent of a company's most valuable data is stored on these various files.

Enter information sharing and analysis or, its more appropriate moniker, knowledge management (KM). In order to mine these various documents and files, companies are realizing that technology should help them share information across systems and provide analysis capabilities.

According to IDC, an IT research organization, knowledge management continues to gain momentum. They expect worldwide KM services spending will increase at a compound annual growth rate of 41 percent, from $2.3 billion in 2000 to $12.7 billion in 2005. This growth comes as organizations turn their focus away from technology issues toward issues involving people and processes.

In version 4.0 of The Global Enabled Supply Chain (see the insert in this issue) Knowledge Management appears in one of the Decision Support Circles after information sharing and analysis. In the iSource Supply Chain model the Decision Support Circles always surround the Functional Links of the map.

KM is Back

The major consulting firms touted knowledge management in the late 1990s. The marketing hype at the time - as is typically the case - preached that the software would be the end-all panacea for enterprise information management. However, the problem was that even with the first-generation KM enterprise software employees still had the labor-intensive and expensive task of carefully organizing and annotating information before it could be managed.

So, knowledge management fell out of favor.

And for some analysts, the most important realization to gain is that if software can gather and share information as well as provide tools for valid analysis, then the system actually supports a type of knowledge management. But this makes the market difficult to identify.

"Under any traditional, healthy application, KM capabilities will be wrapped into it, although they might be named differently, like 'business process management' or 'best practice templates,'" says Navi Radjou, senior analyst on Forrester Research's Business Apps Team. "That's why IT research firms are not as comfortable creating a matrix of the KM software market like we do the other software markets."

Of course, it didn't help that KM lost its shine in the market. But it's making a comeback that is built mainly on the strength of better solutions and organizations that have a clearer picture of their information sharing and analysis needs. The biggest improvement has been in the search engine technology of the enterprise KM software players. Today's search engines, more notably for their work on the Web, have become much more effective at finding bits of data where they may lay.

Market leaders, according to the analysts, include Autonomy, Verity, OpenText, IBM Lotus, Hummingbird, Hyperwave and SAP.

Guy Creese, research director, Internet analytics for the Aberdeen Group, suggests that many applications are fairly feature rich, however, integration is a problem. "KM suppliers are struggling to meld systems with current processes."

A Process, Not A Software Package

When French Caldwell, research analyst for IT research firm Gartner, defines KM as "the business process for managing your intellectual assets," he's serious about clarifying that business professionals must see the efficiency of the business process of KM before they attempt to apply the technology.

"You can't shrink-wrap KM and put it into a box," says Caldwell. "The idea that you can go out and buy technology to fix your information and analysis problems does not pass muster with any rational mind. KM has no specific KM suppliers. Different technologies in KM will help an organization manage those intellectual assets, but first get the right processes in place."

Gartner defines five different KM lenses:
1. The information management and access lens.
2. Knowledge workplace, which looks at collaboration.
3. e-Commerce, which looks at inter-enterprise KM.
4. Intellectual capital management, which looks at how an organization accounts for its knowledge, value and audits its intellectual assets.
5. Process knowledge lens, for the actual capturing of knowledge.

Says Caldwell: "In each of those lenses, you'll find several different practices around KM. If you total them all up you'll have 35 different practices trying to leverage those intellectual assets."

He also explains that the two lenses on which most companies concentrate are the information management and access lens and the workplace lens. "The key suppliers are offering a suite for 80 percent of the functionality in these two lenses."

If you're into defining KM, Aberdeen's Creese suggests you avoid it at all costs.

"First I'd run screaming from the term," says Creese. "In the market, knowledge management has been very e-morphised. It was certainly implemented for good reasons, but there was too much touchy-feely on this subject in the late 1990s."

What initially made KM play in the market when pushed by the consultants is that no company wants to say, "No, I don't want to know what my business is doing." In the end, says Creese, companies realized that at its core, knowledge management "takes tacit knowledge and makes it more explicit."

The Appeal Today

The appeal of KM or expert systems today is highlighted in three main areas, according to Forrester Research. First, the right systems should capture workers' tacit knowledge before they retire. According to Jim Walker, research analyst for Forrester in a recent report, "Companies in traditional industries like energy and chemicals are facing a looming brain drain as the average age of employees - like refinery plant operators - moves into the upper forties." So, to combat the loss of practical know-how to impending retirements "reasoning knowledge" needs to be programmed into artificial intelligence systems.

Another benefit of robust knowledge management systems is the ability organizations have to promote and manage change management. KM technology can even use expert simulation programs to help users "test-drive" new process changes and simulate their impact on the overall organization - before actually implementing them.

Finally, Forrester suggests that today's knowledge management projects must provide platforms for actionable knowledge management. Here, participants should be able to go "beyond full text and apply 'if-then' reasoning rules to multiple data sources - archived, performance, sensor and user input - so the right information is immediately available to control mission-critical systems in real time."

Creese, with Aberdeen, boils the appeal of KM down to the core process of thinking. "Organizations want their knowledge to come at them from a strategic point of view. Thinking is changing in corporations. They want to quickly assess what's important and what's not in their own competitive environment."

Gartner's Caldwell adds that knowledge management is a process that supports other core processes of the business. "Therefore, the benefits of KM will come automatically if an organization sees it as a support to its core efforts. Success in this area all depends on the key metrics associated with key business processes. You don't look at KM metrics; you look at business process metrics."

The Status of the Market

Several of the analysts interviewed for this article describe the current knowledge management market as "stagnant."

"It's simply flat," says Caldwell. "This market was $3.5 billion in 2001 and it will maybe end up at $2.2 billion at the end of this year. But Gartner sees a 3 to 8 percent growth rate out to 2006." He does point out that overall collaborative KM and e-mail and calendaring is drawing the market down, causing reports to show negative growth even though other areas of KM might have actually doubled their revenues this year.

Aberdeen's Creese confirms this, saying, "Different parts of the KM software market are flatter than others." He adds the Microsoft and PlumTree have been more successful, despite the market.

And though it's not a real strong market for software suppliers trying to support KM, the smart enterprise suites with robust offerings are becoming the economic driver. Says Caldwell: "Users are asking the suppliers to help them integrate tacit and explicit knowledge. They don't want to find and integrate independent tools by themselves."

An Exciting Future

If you switch to the future when discussing knowledge management, you begin to truly imagine a world of great possibilities. Some analysts studying this area describe the next level as intelligent-agent technology.

Forrester's Radjou, describes intelligent-agent technology as "tiny, configurable software components that can help continually realign divergent goals and processes of trading partners, bringing it all together." Or, in layman's terms, distributed software components that can help companies and their business partners to figure it all out.

These tiny intelligent agents can interpret data in real time, continually search for valuable data in various systems and block out useless information. Agent technology isn't a brand-new thing - it has been researched and tested in academic and military circles for the past two decades. The new twist, according to Radjou, is that agent technology this time around, instead of replacing human beings, is projected to help human beings make better decisions. Such technology won't eliminate the human contribution; it will just make us smarter at work.

So how does all of this relate to the core issue of knowledge management? Says Radjou: "Agents can literally shadow your decisions. If you're a supply chain manager trying to work out the new inventory management strategy you can have agent tools that warn you that a similar inventory policy has been tried out in the past and didn't perform well. These agents can also help capture the mental maps and the assumptions of business analysts when they develop new business processes. That way, when a company wants to re-engineer a particular business process in the future, it can quickly revisit the rationale underlying the process design."

Radjou says the major enterprise resource planning and supply chain management players, like SAP, will have large roles in this intelligent agent market. Plus, certain solutions in various areas of the supply chain - like auction-based sourcing apps - already use some various forms of intelligent agent applications.

You might not want to toss out your current filing and organization system for your personal business stuff, but get ready for a whole new world in the knowledge management and intelligence areas.

Companies in this article