Knowledge Management Systems: Emerging Views And Practices From The Field

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KNOWLEDGE MANAGEMENT SYSTEMS:EMERGING VIEWS AND PRACTICESFROM THE FIELDbyM. ALAVI*andD. E. LEIDNER**97/97/TMUniversity of Mariland.Associate Professor of Information Systems at INSEAD, Boulevard de Constance, 77305 FontainebleauCedex, France.A working paper in the INSEAD Working Paper Series is intended as a means whereby a faculty researcher'sthoughts and findings may be communicated to interested readers. The paper should be considered preliminaryin nature and may require revision.Printed at INSEAD, Fontainebleau, France.

Knowledge Management Systems:Emerging Views and Practices from the FieldMaryam AlaviCollege of Business and ManagementUniversity of Maryland at College ParkCollege Park, Maryland 20742malavi@mbs.umd.edu301-405- 2226 (phone)301-405-0359 (fax)andDorothy LeidnerINSEADBoulevard de Constance77305 Fontainebleau cedex Francedorothy.leidner@insead.fr33-1-60-72-40-00 (phone)33-1-60-74-55-95 (fax)

Knowledge Management Systems:Emerging Views and Practices from the FieldAbstract: The knowledge-based theory of the firm suggests that knowlege is the organizationalasset that enables sustainable competitive advantage in hypercompetitive environments. Theemphasis on knowledge in today's organizations is based on the assumption that barriers to thetransfer and replication of knowledge endow it with strategic importance. Many organizations aredeveloping information systems designed specifically to facilitate the sharing and integration ofknowledge. Such systems are referred to as Knowledge Management System (KMS). BecauseKMS are just beginning to appear in organizations, there exists little research and field data toguide the development and implementation of such systems or to guide expectations of thepotential benefits of such systems. The current study provides an analysis of current practicesand outcomes of KMS and the nature of KMS as they are evolving in fifty organizations. Thefindings suggest that interest in KMS across a variety of industries is very high, the technologicalfoundations are varied, and the major concerns revolve around achieving the correct amount andtype of accurate knowledge and garnering support for contributing to the KMS. Implications forpractice and suggestions for future research are drawn from the study findings.Keywords: Knowledge Management, Knowledge Management Systems, OrganizationalLearning, Organizational Use of ISCategories: DD06, GA01, HAO93

" In post-capitalism, power comes from transmitting information to make it productive, not from hiding it."Peter DruckerThe New CapitalismL INTRODUCTIONInformation technologies designed to assist managerial and professional workers haveevolved over several decades from systems focusing on processing and disseminating vastamounts of information to managers organization wide (MIS), to systems focusing on providingtools for ad-hoc decision analysis to specific decision makers (DSS), to systems designed toprovide updated, often real-time, relevant information to senior and middle managers (EIS).These systems have each contributed to individual and organizational improvements in varyingdegrees and continue to be important components of organizations' information technologyinvestment. An emerging line of systems targets professional and managerial activities byfocusing on creating, gathering, organizing, and disseminating an organization's "knowledge" asopposed to "information" or "data." These systems are referred to as Knowledge ManagementSystems (KMS).The concept of coding and transmitting knowledge in organizations is not new--trainingand employee development programs, organizational policies, routines, procedures, reports, andmanuals have served this function for years. For example, the McDonald's restaurant's operatingmanual captures almost every aspect of the restaurant management including: cooking, nutrition,hygiene, marketing, food production, and accounting. By capturing, codifying, and disseminatingthis knowledge, the company reduces the level of required know-how for its managers whileimproving the effectiveness and efficiency of its operations (Peters, 1994). What is new andexciting in the knowledge management area is the potential of using modern informationtechnologies ( e.g., the Internet, intranets, browsers, data warehouses, filters and software agents)to systematize, facilitate, and expedite firm-wide knowledge management.The existing body of work on KMS consists primarily of general and conceptualprincipals of KMS (Davenport, 1997b) and case descriptions of such systems in a handful of4

bellwether organizations (Alavi, 1997; Baird, Henderson and Watts, 1997; Bartlett, 1996;Henderson and Sussman, 1997; Sensiper, 1997; Watts, Thomas and Henderson, 1997). BecauseKMS are just beginning to appear in organizations, there exists little research and insight to guidethe successful development and implementation of such systems, or to frame expectations of thebenefits and costs of such systems. Nor is it yet clear if KMS will experience widespreaddevelopment and implementation across a variety of industries, or if KMS are destined to behighly touted systems that quickly find themselves in desuetude as a passing fad. The currentexploratory field work aims to contribute an understanding of the perceptions of knowledgemanagement and knowledge management systems, both from the perspective of individuals inorganizations with KMS as well as organizations without KMS. More specifically, the studyidentifies the technologies being used to build KMS, knowledge domains being incorporated intoKMS, the champions of KMS initiatives, the desired benefits and expected costs of KMS, aswell as the major concerns regarding KMS.The organization of the paper is as follows: in the following section, knowledge andKMS will be defined. The third section will describe the methodology and the fourth willpresent the study findings. The fifth and final section will discuss the implications of thefindings.2. KNOWLEDGE, KNOWLEDGE MANAGEMENT, AND KMSTo define KMS, it is necessary to first define knowledge and knowledge management.Knowledge is a broad and abstract notion that has defined epistemological debates in westernphilosophy since the classical greek era . 1 Since this article has an applied (versus a theoretical orphilosophical) orientation, we have adapted the following working definition of knowledge, basedon the work of Nonaka (1994) and Huber (1991). Knowledge is a justified personal belief that1The epistomological debates have been expressed from a variety of perspectives and positions including therationalist perspective (advanced by philosophers such as Descartes in the seventeenth century), the empiricistsperspective (advanced by Locke and others in the eighteenth century), and the interactionist perspective (advanced byKant and others in the nineteenth century). For a discussion of the history of knowledge and epistemology, seePolanyi (1958, 1962).5

increases an individual's capacity to take effective action. Action in this context refers tophysical skills and competencies ( e.g., playing tennis, or carpentry), cognitive/intellectualactivity (e.g., problem solving), or both (e.g., surgery which involves both manual skills as well ascognitive elements in form of knowledge of human anatomy and medicine). The definitions ofknowledge as found in information systems literature further make a distinction amongknowledge, information and data. For example, Vance (1997) defines information as datainterpreted into a meangingful framework whereas knowledge is information that has beenauthenticated and thought to be true. Mag,litta (1996) suggests that data is raw numbers andfacts, information is processed data, and knowledge is "information made actionable".While each conceptualization makes inroads into understanding differences in the threeterms, they fall short of providing a means to readily determine when information has becomeknowledge. The problem appears to be the presumption of a hierarchy from data to informationto knowledge with each varying along some dimension, such as context, usefulness, orinterpretability. What we consider key to effectively distinguishing between information andknowledge is not found in the content, structure, accuracy, or utility of the supposed informationor knowledge. Rather, knowledge is information possessed in the mind of an individual: it ispersonalized or subjective information related to facts, procedures, concepts, interpretations,ideas, observations and judgments (which may or may not be unique, useful, accurate, orstructurable). We are basically positing that knowledge is not a radically different concept thaninformation, but rather that information becomes knowledge once it is processed in the mind ofan individual ("tacit" knowledge in the words of Polanyi (1962) and Nonaka (1994)) which thenbecomes information (or what Nonaka refers to as "explicit knowledge") once it is articulated orcommunicated to others in the form of text, computer output, spoken or written words or othermeans). The recipient can then cognitively process and internalize the information so that it isconverted back to tacit knowledge. This is consistent with Churchman's (1972)conceptualization of knowledge and his statement that " knowledge resides in the user and not inthe collection [of information]."6

Two major points emerge from this conceptualization: 1- Because knowledge ispersonalized, in order for one person's knowledge to be useful for another individual, it must becommunicated in such a manner as to be interpretable and accessible to the other individual. 2Hoards of information is of little value: only that information which is actively processed in themind of an individual through a process of reflection, enlightenment, and learning can be useful.Knowledge management then refers to a systemic and organizationally specified process foracquiring, organizing and communicating both tacit and explicit knowledge of employees so thatother employees may make use of it to be more effective and productive in their work.The major challenge of managing knowledge is less its creation and more its capture andintegration (Grant, 1996; Davenport, 1997a). Indeed, knowledge is of limited organizationalvalue if it is not shared. The ability to integrate and apply specialized knowledge oforganizational members is fundamental to a firm's ability to create and sustain competitiveadvantage (Grant, 1996). Traditionally, knowledge creation and transfer has occurred throughvarious means such as face-to-face interactions (planned or ad hoc), mentoring, job rotation, andstaff development. However, as markets and organizations become more global and move tovirtual forms, these traditional means may prove to be too slow and less effective and in need ofbeing supplemented by more efficient electronic means. On the other hand, as Brown and Duguid(1991) note, knowledge will not necessarily circulate freely firm-wide just because the technologyto support such circulation is available.Indeed, studies on such technologies as LotusNotes have not shown a change ininformation sharing and communication patterns; rather, organizational members who tended tocommunicate regularly and frequently without LotusNotes communicated regularly andfrequently with LotusNotes whereas members who communicated less regularly and lessfrequently before the implementation of Notes continued to communicate less regularly and lessfrequently (Vandenbosch and Ginzberg, 1997). Hence, in the absence of an explicit strategy tobetter create and integrate knowledge in the organization, computer systems which facilitatecommunication and information sharing have only a random effect at best. As a result,7

companies, particularly those which compete on the basis of services and expertise (e.g.,management consulting and professional services firms), are beginning to implement informationsystems designed specifically to facilitate the codification, collection, integration, anddisseminaiton of organizational knowledge (Alavi, 1997; Bartlett, 1996; Sensiper, 1997). Suchsystems are referred to as Knowledge Management Systems.The popular claims for the results of KMS are high and include the ability oforganizations to be flexible and respond more quickly to changing market conditions, and theability to be more innovative as well as improved decision making and productivity (Sata, 1997;Harris, 1996). To develop an understanding of the current practices and outcomes of knowledgemanagement and the form and nature of KMS that are evolving in organizations, we undertook adescriptive study of perceptions and practices of KMS in fifty organizations from a variety ofindustries. We hope that the findings of this study will lead to insights that will guide early KMSinitiatives in organizations and reduce failures and false starts. In addition, we anticipate that theresults can help guide further research endeavors in the emerging area of KMS.3. METHODOLOGYWe invited a non-random sample of 109 participants in an executive developmentprogram conducted at a northeast university in July of 1997 to participate in this study. Theparticipants in the program represented a cadre of vanguard organizations from twelve countriesthat in the authors' view would represent companies with significant IT investments and thuswould be likely candidates to have KMS under consideration/development or already inoperation.These participants were attending a two-week residential executive developmentprogram on the management of information technology. The participants were chief informationofficers (CIOs), information systems (IS) managers, and general and functional area executives.The participants were asked to respond to the study questionnaire on an individual basis duringthe first three days of their program. The questionnaire, displayed in Appendix A, contained 13questions consisting of short answers and multiple choice. The respondents estimated that it8

took them about 30 minutes to complete the questionnaire. A total of 50 usable responses werereceived for a response rate of 45.8 percent. The questionnaire tapped into the respondentsconcepts and perceptions of KMS, their perceptions of the current levels of KMS activities intheir firms, and their expectations of potential benefits and their concerns regarding thesesystems.4. STUDY FINDINGSFigures 1 thru 3 depict the sample of respondents by their location, their position, andtheir industry. Table 1 shows the current state of existence or development of KMS in theorganizations represented in the sample. As can be seen in the three figures, the respondentsrepresent a range of countries, organizational positions, and industries. Twelve different countriesare represented: Australia, Canada, England, Germany, Israel, Luxembourg, the Netherlands,Saudi Arabia, South Africa, Spain, Switzerland, and the United States. Respondents from theUSA represent the large majority of responses and as seen in Table 1 a greater percentage of theUS respondents report having an existing KMS in their organization than non-US respondents;however, a greater proportion of non-US respondents reported that their organizations werecurrently developing KMS.4%.r,64% 7/14 i'VV.:- 'i\ ---/.- ' ,Ir - a k‘.\,Ns';',, ,--. "'"'N.7\-.//AMA'AIL41/4//4;NIL2%AVIIIIII,AWLS. /NI, - if i 6. %.NAIIIIIIIIIL 40.1111111111 Mr.1 .IINNIER 1111111.6211.1111111111 NN:111011,1111111\11.1111111111 1111111111 1kr - ‘111111111h.IPTI.1111111111 vilimma, immoostmainamistimm.-! --4-4116:73E111 111111111111111111111L.r/1/1/111111111111P-11 111//ALE 11111111k 1U111111 11 11111 111111 1IINN SU JIM 1111111hre.111117 11 11111.ak AINT1111111111IIIIISU MUM ‘1111111111111.711111111.111111, WM BMIwitm111111111111111IIKAIMiff'x,m,*;IvlmorI I r.1% -NICW A 111/7Figure 1: Respondents by Location9

Managers ofFunctional Area21%SeniorManagers, nonIS21%Senior ISManager (CIO)Managers of IS1 7%9%Directors of IS32%Figure 2: Respondents by PositionManufacturing15% Consulting17%Energy17%24%Financial ServicesConsumer 2 / 2%ProductsChemicals15%Other Services2%RetailFigure 3: Respondents by Industry6% Government

Have an existing KMSCurrently developing a KMSConsidering developing a KMSDo not have a KMSHad not heard of KMSOverall27.27%16.36%10.91%16.36%29.09%US respondents Non-US 0%19.35%37.50%22.58%Table 1: Current Status of KMS existence and developmentAll respondents, regardless of whether they currently had or were developing a KMS in theirorganizations, responded to questions concerning their perceptions of knowledge management,the capabilities they believed necessary for effective knowledge management, and the keyconcerns they had about knowledge management. These are summarized in Tables 2 thru 4 anddiscussed below.4.1 The meaning of knowledge managementThe purpose of this question was to ascertain what managers consider the concept ofknowledge management to be about. Three perspectives emerged: an information-basedperspective, a technology-based perspective, and a culture-based perspective.In terms of the information-based perspective, managers reported thinking knowledgemanagement to be about characteristics of information, such as readily-accessible information,real-time information, and actionable information. Some spoke in terms of free text and conceptsbeing the information foundation of knowledge management. Also in terms of the informationperspective, several managers mentioned their view that knowledge management was aboutreducing the overload of information by "filtering the gems from the rocks". There was anapparent concern with the extraordinary amount of information that can now easily be gatheredand disseminated via information technologies. The managers expressed a desire to obtaincompetitive advantage from information itself (as opposed to associating competitive advantagewith any particular information technology). Lastly, some managers thought very specifically ofknowledge management as being a "corporate yellow pages" or a "people to people information

archive". In other words, they viewed knowledge management as a means of keeping track not somuch of knowledge itself, but of who held the knowledge and how to locate them.Knowledge was not distinguished from information or data, rather the words wereevidently used interchangeably. However, the managers were implicitly making a distinctionbetween the terms. For example, one manager stated "one person's knowledge" is "another'sdata". This is consistent with the view that knowledge resides in the individual and that there areno inherent "objective" attributes that distinguishes between the two constructs.In terms of the technology-based perspective, the managers associated knowledgemanagement with various other systems (including Data Warehousing, Enterprise Wide Systems,Executive Information Systems, Expert Systems, and the Intranet), as well as various tools (e.g.,Search Engines, Multi-media, and decision making tools). More generally, participants suggestedthat knowledge management was about information technology infrastructure and morespecifically, about the integration of cross-functional systems worldwide. There did not emerge aclear view of a new type of technology specifically dedicated to knowledge management. Indeed,this is consistent with the fact that knowledge management systems can be accomplished withsundry different technologies, the most effective of which would likely depend upon anorganization's size and existing technical infrastructure.Lastly, in terms of the culture-based perspective of knowledge management, managersassociated knowledge management with learning, primarily from an organizational perspective,communication, and intellectual property cultivation. Some suggested that theinformation/technology component of knowledge management was only 20% of the conceptwhereas the cultural and managerial aspects accounted for the bulk of the issue. However, theirresponses were nebulous in terms of specific cultural implications, perhaps indicating a rootconcern absent concrete ideas on how to address it.12

onable informationCategorizing of dataCorporate Yellow PagesFiltered informationFree text and conceptsPeople Information ArchiveReadily accessible informationData MiningData WarehousesExecutive Information SystemsExpert SystemsIntelligent AgentsIntranetMultimediaSearch EnginesSmart SystemsCollective LearningContinuous LearningIntellectual Property CultivationLearning OrganizationTable 2: Perspectives on the Meaning of Knowledge ManagementThe responses were examined based upon whether the responding individual was from anorganization with a KMS or not. However, there did not appear to be any major differences inthe perceptions of KMS for the two groups, with the exception that individuals fromorganizations without KMS tended to offer technology-based responses slightly more frequentlythan individuals from organizations with KMS.4.2 Knowledge Management Capabilities NeededWhen asked what capabilities related to knowledge management that their organizationswere in need of, the managers also tended to proffer three perspectives. In terms of information,they suggested the need for access to customer information, client information, competitorinformation, and product/market information. These are all external information which havehistorically not been provided by most computer systems. Several internal knowledge domainswere also desired, including activity-based costing, human resource information, and up-to-datefinancial status. The technology capabilities desired included wider bandwidth, a consistent suiteof e-mail and web-based products, search engines, intelligent agents, navigational tools, global ITinfrastructure, interoperability of existing data systems, and fast retrieval. Lastly, the managersreported a need for practical guidelines on how to build and implement knowledge managementsystems and how to facilitate organizational change to promote knowledge sharing.13

rnal:Client InformationCompetitive InformationCustomer InformationMarket InformationIntegrated databasesInteroperability of existingsystemsLarger bandwidthGlobal IT infrastructureIntelligent agentsConsistent suite of email andweb productsNavigational toolsFast retrievalTeamworkPractical guidelinesKnowledge SharingInternal:Activity-based CostingFinancial InformationHuman Resources InformatiorProduct/Services InformationTable 3: Needed Knowledge Management Capabilities4.3 Key Issues Concerning Knowledge ManagementWhen asked about the key concerns they had about knowledge management, the managersexpressed concern primarily over the cultural and managerial issues and informational issues. Interms of the cultural issue, the managers were concerned over the implications for changemanagement, the ability to convince people to volunteer their knowledge, and the ability toconvince business units to share their knowledge with other units (particularly when eachbusiness unit was responsible for showing a profit). The managerial concerns related to thebusiness value of knowledge management and the need for metrics upon which to demonstratethe value. There was concern about determining who would be responsible for managing theknowledge and of bringing together the many players involved in developing KMS, includingtechnical staff; corporate librarians, documentation staff, archivists, database administrators, andthe professionals with the knowledge. Concern was also expressed over how to effectivelyimplement KMS.Generally speaking, the managers expressed concern that knowledge management might beperceived by senior managers as just another "fad" and that the concept suffered fromimmaturity. Particularly those managers from organizations that had not yet implemented KMSexpressed a need to better understand the concept and to be convinced that knowledge14

management "worked" before pursuing KMS.The concerns related to information were primarily associated with a desire to avoidoverloading already taxed users with yet more information. The concern was as much about thenew information that would now be available as it was about eliminating "old/wrong data" orknowledge that was no longer valid. This supports Courtney et al's (1997) assertion that"omitting the unimportant may be as important as concentrating on the important" indetermining what knowledge to include in KMS. There was also a mention of concern aboutcustomer and client confidentiality now that much information about customers and clientswould be gathered and widely available in the organizations.Lastly, several managers expressed some concerns over technological issues. These issueswere related to technical infrastructure and the security of data on the Internet. More specifically,configuring an effective technical infrasructure and architectural requirements in the face of highlydynamic technology was reported.Information Building vast amounts of data into usable formAvoiding overloading users with unnecessary dataEliminating wrong/old dataEnsuring customer confidentialityKeeping the information currentManagement Change management implicationsGetting individuals to volunteer knowledgeGetting business units to share knowledgeDemonstrating business valueBringing together the many people from various unitsDetermining responsibility for managing the knowledgeTechnology Determining infrastructure requirementsKeeping up with new technologiesSecurity of data on InternetTable 4: Key Concerns Related to Knowledge Management15

4.4 Characteristics of KMSFor those respondents whose organizations had or were developing KMS, questions wereasked concerning the initiator, the team members on the KMS project, the budget, the types ofknowledge included, and the tools used. As is readily apparent in Figure 4, KMS are mostcommonly championed by senior general managers. This would be expected given thatknowledge management as a concept is not directly tied to technology; rather emergingtechnologies provide a means of enabling more effective knowledge management. In terms of theKMS development teams, virtually all respondents providing information on the teamsresponsible for developing their organization's KMS indicated that directors from the businessunits as well as IS managers and staff comprised the team. Less consistency emerged on theindividual responsible for the KMS. In some cases, respondents reported that the CIO wasresponsible for leading the KMS development team; in other cases, respondents indicated that abusiness unit director reporting to the CIO was responsible for the team.Senior IS Manager(CIO)15%Senior FunctionalManager25%Staff0%Senior General Manager60%Figure 4: Initiators of KMS with or developing KMS16

Figure 5 shows the estimated average budgets associated with KMS development. Thelowest reported budget for a KMS was 25,000. The highest reported figure was 50,000,000.The wide range of estimated budgets may be attributed to several factors including the size of theorganization, the current level of infrastructure, and the scope of the knowledge managementinitiative. In some firms, knowledge management is a firm-wide initiative involving upgrading thetechnical infrastructure, deploying workstations to professional staff desktops, developing andimplementing large intranets, and implementing large-scale communication and groupware tools.On the other hand, with the appropriate technology and information infrastructure in place, theaverage KMS development budget is substantially lower. For example, in a professional servicesfirm that had already installed LotusNotes, the cost of a knowledge management system for theproject engagement teams was limited to the cost of developing several Notes templates that theteam then used to populate with the customer and project related knowledge created and sharedthrough the engagement process. On the other hand, the estimated budget of KMS in anotherprofessional services firm was 50 million. This figure included the cost of content development,training, and overhaul of the technical infrastructure of the entire firm (hardware, software, andnetwork acquisition and development cost).17

100,00036% 1,000,00037% 500,000 1,000,00018% 100,000 500,0009%Figure 5: Estimated Average budgets of KMS in Organizations with KMSTable 5 shows the technologies being used in KMS development. The Intranet seems tobe the primary means of displaying and distributing knowledge in organizations with 90% of theorganizations using browser tools. The other two most common tools are electronic mail andsearch/retrieval tools.BrowserElectronic MailSearch/Retrieval ToolsInformation RepositoriesWWW ServerAgents/FiltersExternal Server able 5: Percent of KMS with Various Technologies/Tools(Note: multiple items could be specified when applicable)Table 6 shows the importance of various types of information that may be included inknowledge management systems. Respondents answered on a 7 point scale with 7 representing18

the highest score. Respondents in organizations without KMS were also asked to rate theimportance of the various domains of knowledge in their organizations even if they did not havetechnology designed to provide such knowledge. The most important knowledge domain forfirms with and without KMS is knowledge on customer service. The second and third domainsfor firms with KMS were business partners and internal operations. For firms without KMS, thesecond and third highest domains were marketing/sales and business partners. For both groups,knowledge on suppliers was indicated as the least important domain of knowledge to be includedin systems, perhaps reflecti

KNOWLEDGE, KNOWLEDGE MANAGEMENT, AND KMS To define KMS, it is necessary to first define knowledge and knowledge management. Knowledge is a broad and abstract notion that has defined epistemological debates in western philosophy since the classical greek era .1 Since this article has an applied (versus a theoretical or philosophical) orientation .

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