Managing information may generate returns

The arrival of borderless markets and seamless integration of business processes spawned by the Internet has left many companies scratching their heads over where their competitive advantages now lies.

Unsurprisingly, the big players refuse to cede ground to the competition and trawl extensively to come up with The Next Big Thing to widen the gap between them and their competitors. The latest phenomenon in this regard, it appears, is knowledge management. Although it sounds like a bit of fundamental basic business sense, many of the world's largest, and more traditional companies have been exercising themselves greatly to get a grasp of it.

Knowledge management is quite simply defined by International Data Corporation (IDC) as:

"Making the right information available to the right people at the right time so they can act on it."

Knowledge has now been pegged as an intangible asset, which if monitored, stored and distributed in a strategic way can generate unique economic returns.

Sounds very straightforward, but a recent survey conducted by the Cambridge Information Network, part of Cambridge Technology Partners, found that there is a range of barriers to the adoption of knowledge management within established organisations.

One of the chief obstacles is financial justification for the introduction of structures to manage knowledge. How can the return be gauged? But perhaps more interestingly, there is a credibility factor surrounding the term knowledge management. But in this instance reservations appear to be ill-placed.

The Cambridge Information Network is comprised of 3,500 senior IT executives, and its latest report, entitled The Knowledge Paradox, has concluded that 85 per cent of chief information officers (CIOs) believe managing knowledge will create a competitive advantage.

But only 8 per cent of these companies have a knowledge initiative in place throughout the organisation, and only 7 per cent of chief executive officers view it as a high priority.

The main reason for this is because the knowledge-management concept is unclear. According to Mr Wim Bouman, IT controller of Dutch company, Friesland Coberco Dairy Foods: "As a management fashion, knowledge management will come to an end - all of these labels have their lifecycles. But as a concept it will stay."

As a result of this uncertainty knowledge management is very much in its infancy. Company executives understand they want a formula for creating new ideas and competitive advantage, but they are still experimenting with the tools to achieve this.

At the moment typical tools include e-mail, intranets, conferencing, data warehouses, document management, workflow charts and groupware. As the model matures, more companies will employ intuitive management software capable of case-based reasoning and collaborative filtering of information. Push technology, hyper-linked text, expert locators and virtual meeting points are all examples of what lies ahead.

Meanwhile, knowledge management within organisations appears to be emerging in small pockets at grass roots level, rather than as a strategic corporate initiative.

This is largely because it has been difficult convincing chief executive officers of the importance of knowledge management. One of the primary reasons has been a basic fear and mistrust of technology jargon at executive level. There is also a basic resentment out there of the term "knowledge management". Business executives have difficulty defining "knowledge", and 21 per cent of chief information officers surveyed by Cambridge said they believed knowledge management was a fad.

According to Mr Jan Rothman, management information services director for Chandon Estates, a division of Moet Hennessy Louis Vitton: "Introducing a concept like this, I would never call it `knowledge management' because it would just be another buzzword. We'll call it a useful tool, and that would be more pertinent to the users."

Among those companies which have moved to implement knowledge management on a companywide scale - including Lotus, Compaq and Xerox - there is resounding agreement that it is best introduced from the ground up, rather than from the top down.

According to Mr Mark Hazlewood, manager of IT for Bluewater Engineering: "The people down in the trenches have a better understanding of what it means to have the right data at the right time. If you try to sell the idea of management and wait for it to trickle down, it has a low probability of success."

One of the more interesting findings of the Cambridge Information Network survey was that Europe appears to be ahead of the US in implementing knowledge management. Across the board, there was agreement among European companies that knowledge management was a top priority. As a result many felt it was up to the board of directors or the chief executive officer to pioneer its implementation within organisations. US companies, however, were more likely to assign this role to the chief information officer.

Europeans were also found to be better adopters of knowledge-management tools, particularly in the areas of data warehousing and workflow management. Unsurprisingly though, US companies have the edge on Europe in adopting Internet enabled knowledge management technologies such as search engines and navigation tools.

Despite widespread confusion about knowledge management, 78 per cent of the companies surveyed said they had completed at least one knowledge-management project. The big challenge now is implementing it effectively at enterprise level. One of the key facilitators will be quantifying knowledge management and linking it to financial performance.

Of course there are fundamental barriers which need to be overcome, not least a reluctance to operate transparently, as cited by one information services manager of a $900 million (€848 million) French manufacturing company who wanted to remain anonymous: "Sharing information should be a priority, but it is not. In our market, they have made secrecy the first value in the corporate culture. There is a maxim that you should know only what you need to know. If you have such a culture, information sharing is a problem."