7/2/12 Lecture 5 Term 2

Business value of customer relationship management Increased customer satisfaction Reduced direct-marketing costs More effective marketing Lower costs for customer acquisition/retention Increased sales revenue Reduced churn rate Churn rate: Number of customers who stop using or purchasing products or services from a company. Indicator of growth or decline of firm’s customer base Customer Relationship Management Systems

Enterprise application challenges Highly expensive to purchase and implement enterprise applications – total cost may be 4 to 5 times the price of software Requires fundamental changes Technology changes Business processes changes Organizational changes Incurs switching costs, dependence on software vendors Requires data standardization, management, cleansing Enterprise Applications: New Opportunities and Challenges

Knowledge Management… 4

Knowledge Management 5

KM, it’s like riding a bicycle… 6

Knowledge management systems Support processes for acquiring, creating, storing, distributing, applying, integrating knowledge Collect internal knowledge and link to external knowledge Include enterprise-wide systems for: Managing documents, graphics and other digital knowledge objects Directories of employees with expertise Systems That Span the Enterprise

Definitions Knowledge Knowledge is a fluid mix of framed experience, values contextual information and expert insight that provides a framework for evaluating and incorporating new experiences and information (Davenport and Prusak, 1998)  Explicit Dimension  Tacit Dimension Knowledge Management An organisation’s ability to effectively acquire, create, retain, deploy and leverage knowledge 8

9 Data Information Knowledge Context Knowledge Hierarchy

The Knowledge Continuum 10

The Knowledge Evolution 11 Hard and soft data (Mintzberg, 1975) Managers get more information and knowledge from face to face meetings than they do from documentation/ repositories (Kefalas,1973; Keegan, 1974; Mintzberg, 1975; Eisenberg, 1984; Davenport, 1994; Davenport et al., 1998) “Knowing who to consult” (Keegan, 1974; Simon, 1977)

The Knowledge Evolution… 12 Strategic Scanning (El Sawy, 1985)  Accommodation Information  Assimilation Information Proposed Solution:  “Programs that allow users to record their creative ideas, provide editing, organizing, and outline facilities that later rearrange those thoughts into topics and give each topic a separate heading and sub-heading”.

Explicit and Tacit Knowledge 13 Explicit Knowledge  formal / codified  documents, best practices, databases, proposals Tacit Knowledge  informal / uncodified  experiential, within employee’s head,  hard to effectively capture and share

Knowledge Economy/Society 14 LANDCAPITALLABOUR ENTERPRISE KNOWLEDGE

The Knowledge Management Landscape Sales of enterprise content management software for knowledge management expected to grow 15 percent annually through 2012 Information Economy 55% U.S. labor force: knowledge and information workers 60% U.S. GDP from knowledge and information sectors Substantial part of a firm’s stock market value is related to intangible assets: knowledge, brands, reputations, and unique business processes Knowledge-based projects can produce extraordinary ROI

U.S. Enterprise Knowledge Management Software Revenues, Figure 11-1 Enterprise knowledge management software includes sales of content management and portal licenses, which have been growing at a rate of 15 percent annually, making it among the fastest-growing software applications. Management Information Systems Chapter 11 Managing Knowledge The Knowledge Management Landscape

KM, a fad? 17 Knowledge is not new People in organisations have always sought, used and valued knowledge Companies hire for minds rather than hands

What’s your Strategy for Managing Knowledge? (Hansen et al., 1999) 18 Codification Strategy  Computer centred  Captured and stored in database Personalisation Strategy  Associated with an individual  Shared person to person

People Broker 19 Locate “experts” to help solve business problems Link “knowledge holders” to “knowledge seekers” Transfer valuable “Tacit” Knowledge

Role of the Chief Knowledge/Learning Officer 20 Build organisational knowledge culture Create knowledge management infrastructure Make it all pay off

Learning Organisation 21 “the sum of individual knowledge used in the value creation process and the knowledge embedded in collective action”. (Von Krogh et al.,1996, pp.227) Organisations ability to :  Have a memory  React  Make decisions

Knowledge Management and IS 22 “‘Techknowledgy’ is clearly part of Knowledge Management” (Davenport and Prusak, 1998) KM is 80% about organization, and 20% about IT

Basic Features of a Knowledge Management System (KMS) 23 Storage Publishing Subscription Reuse Collaboration Communication

Searching and Filtering Knowledge 24 Knowledge should be  Intuitively accessible  Searchable to find relevant knowledge  Inform how things get done Alternatively you should be able to connect to experts

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KM Technology 26 Solution which complements strategy  Technology is an enabler Customized solutions which integrate with work processes  Non invasive  Build on Web and platforms Combination of tools and technology  Search / Categorization / Messaging / Collaboration

Examples of implemented KMS- Pharmaceutical 27 Business  Prosthetics manufacturer Technology  LINK (Leveraging Internal Knowledge) Web tool facilitates  Expert finder  Describes people who might be working on things that you might be working on  Ability to index sent items folder  Enables a user to build a personal work profile  “Brokers Discussions”

Continued… 28 Making it pay  Reduced length of time to uncover knowledge related to a clinical trial by finding existing experts in the area within the organisation

Manufacturing (1) 29 Business  Box design and manufacturer Technology  InnoBook: An interactive database of box design concepts, continually updated by over 300 designers Utilised by 250 sites across Europe Each design department has access to all designs and uses the system to search for base designs when an order is placed

Continued… 30 Designers motivated to contribute their box designs to the repository Initial reluctance to the utilisation of designs contributed to the system by other departments, question mark over the quality of the design not produced by the local team Making it pay  overcomes localisation of box design knowledge  avoiding ‘reinventing the wheel’

Manufacturing (2) 31 Business  Multinational data storage device manufacturer Technology  Primus a knowledge repository for customer solutions Implemented by Customer Service Team in two locations – European and US

Manufacturing (2) 32 Objective  to manage customer support knowledge issues by breaking down a problem or situation into its knowledge components  to classify knowledge about the problem received or add new knowledge about the problem

Continued… 33 Making it pay  build a knowledge base of solutions and solve customer’s problems in a more time efficient and effective manner  to provide an integrated approach to problem resolution and a solution for managing the knowledge across the CS group

Conclusions? 34 People are the key to successful knowledge management IS may be identified as one factor that can enable the capture, storage, creation and dissemination of organizational knowledge

But: 35 The focus on utilising organizational knowledge should be on a dialogue between two individuals or a community of practice and not knowledge objects stored in a database (Hansen et al., 1999)

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