Information Technology and Knowledge Management

Introduction
This paper claims that information technology is and will be quite helpful for knowledge
management; however knowledge science cannot be established only by information science.
This paper considers the deference between information and knowledge simply, but considers
deeply the power or ability to convert from one to another, which is the ability to understand
and learn things, or the ability to think and understand things instinctively or automatically.
This consideration suggests that what we should do research by the name of knowledge
science. This consideration also suggests the basic elements of knowledge science, which are
people, information, and system. These are hints to develop a new systems methodology for
knowledge creation.

Definition
Knowledge range from the practical to the conceptual to the philosophical, and from narrow
to broad in scope, which are summarized in, For instance, knowledge is organized information
applicable to problem solving ; knowledge is information that has been organized and
analyzed to make it understandable and applicable to problem solving or decision making ; or,
knowledge is reasoning about information and data to actively enable performance, problem-
solving, decision-making, learning, and teaching. These definitions require clear distinctions
between data, information, and knowledge. Several authors try to distinguish them Several
authors also define typologies of knowledge, for instance, Nonaka and Takeuchi suggest that
the conversion from tacit to explicit knowledge and vice versa is crucial in knowledge
creation. School of Knowledge Science was established in 1998 in Japan Advanced Institute
of Science and Technology, which is the first school, established in the world that claims
knowledge as a target of science. Since knowledge will certainly become a key concept in
every field in the 21st century, the school has enlisted researchers from different fields to
develop knowledge science that has a trans-disciplinary property in nature. One of the
important research topics in the school is to develop systems methodologies for trans-
disciplinary knowledge exchange utilizing information and communication technologies. We
will introduce a systems methodology under development, which may contribute to
knowledge science. This paper considers the deference between information and knowledge
simply, but considers deeply the power or ability to convert from one to another, which is the
ability to understand and learn things, or the ability to think and understand things
instinctively or automatically. This consideration suggests that what we should do research by
the name of knowledge science. This consideration also suggests the basic elements of
knowledge science, which are people, information, and system. These are hints to develop a
new systems methodology for knowledge creation. Knowledge Creation First, let us introduce
a popular idea among researchers of knowledge management in Japan:“Knowledge
management is not the activity only for resources called knowledge, but the activity to
consider how all resources are utilized. You have to make the new structure by repeating new
discovery and new creation rather than storing knowledge and considering the combination.
Creation can be performed only by people's capability instead of a system.” Apparently this
expresses the disappointment to the information technology.
However, if this is true, systems scientists cannot contribute to knowledge creation theory.
Now, let us consider the definition of knowledge creation, especially what creation means,
and roles of systems science and technology. There is a nuance of a completely new thing in
the word creation. However, it is unreasonable to think that knowledge is created in a situation
without prior information, direct, or indirect experience. Here, we define: “Creation is a new
combination of materials. Its thinking process is never based on a fantastic leap. It progresses
with a certain fixed procedure.” This definition gives us relief.
However, when this definition is accepted as it is, integration (or synthesizing) and creation
will have a quite near meaning. Therefore, we have to include the following meaning in this
definition. “New knowledge will be created at a certain stage of an integration or fusion
process of different knowledge.” But, how? There are mainly two approaches to knowledge
management. One relines on people, and the other relies on computer.

People vs. Computer One of the approaches is given in Nonaka and Takeuchi’s famous book:
“The Knowledge-Creating Company” published in 1995. Nonaka assumes that knowledge is
created through the interaction
Between tacit and explicit knowledge, and proposes four modes of knowledge conversion.
 Socialization is a process of sharing experiences and thereby creating tacit knowledge
such as
 Shared mental models and technical skills.
 Externalization is a process of articulating tacit knowledge into explicit concepts,
taking the
 Shapes of metaphors, analogies, concepts, hypotheses, or models.
 Combination is a process of systemizing concepts into a knowledge system. This mode
of
 Knowledge conversion involves combining different bodies of explicit knowledge.
 Internalization is a process of embodying explicit knowledge into tacit knowledge. It is
closely
 Related to learning by doing.
This theory is mainly devoted to management of knowledge that workers of an enterprise
have individually. On the other hand, researchers from information science have been trying
to establish their own knowledge science using the rapid developing information and
communication technology. There is a hierarchy of knowledge science from the viewpoint of
information scientists. At the bottom, there is the foundation of information engineering, and
at the second level, there are elements of knowledge science, and then these are objects of
knowledge science, finally, there are many applications. Information engineering has been
developed as a study of computer hardware and software, and its application, i.e., computer
science. Information originally accompanies all the sides of human activities. However, since
it is hard for us to feel information directly, unlike substance or energy, its conceptualization
was behind. Although the appearance of the computer contributed to its conceptualization
greatly, it limited the range of information as the object of technology to the computer and its
circumference. It is necessary to expand this range and to bring close to the system of
information over life science, social science, and cultural sciences. This approach is quite
natural.
However, many social scientists do not fully accept this approach. Information and
Knowledge Let us consider the definitions of information and knowledge, each of which has
the following two meanings: Information is:
(A) Knowledge transmitted by character, sign, and voice, etc.
(B) Data arranged to be useful for decision-making.

Knowledge is:
(C) Recognition memorized personally or socially.
(D) Judgment or a system of judgment that has objective validity. Apparently, there are no
clear distinctions between information and knowledge. However, they are different and each
of them is converted to the other. What is the energy to bring such transformation? Here, let
us call it intelligence. Intelligence is:
(E) Ability to understand and learn things.
(F) Ability to think and understand things instinctively or automatically. People convert data
and knowledge into information for some purpose. They create new knowledge based on data
and information. These conversion and creation require existing knowledge and some ability
called intelligence. We can see that the approach from management science aims at
developing the ability
(E), while the approach from information science is related to the ability
(F). Of course, both are important. However, their integration is difficult. We should
understand the limitation of our ability to objectify the real world, the limitation of our ability
to understand indirect observation, and the limitation of our ability to analyze things.
Objectively. The total system is inseparable, but we cannot perceive the inseparable whole.
Therefore, we usually cut off weak links and nonlinear features, and consider individual linear
subsystems that we can well imagine. Artificial intelligence inevitably inherits this weakness
of human beings. Social scientists are never satisfied with such pieces of knowledge. That is
why Nonaka theory requires direct experience in the knowledge management and creation
process. From this background, two approaches have been developed separately. One is
knowledge management by the persons concerned. The other is knowledge management by
information and communication technology. However, there is clearly a limit in the approach
to knowledge management from only one discipline. We think it is necessary to develop a
systems methodology that uses both approaches systematically.
Knowledge Science
As we have just mentioned, in the context of contemporary knowledge management, there are
mainly two approaches to develop intelligence of human beings: one is from management
science and the other is from information science. To integrate these approaches and establish
a new discipline is a quite natural idea, and then the School of Knowledge Science was
established in Japan Advanced Institute of Science and Technology in 1998. Since knowledge
will certainly become a key concept in every field in the 21st century, the school has enlisted
researchers from different fields to develop knowledge science that has a trans-disciplinary
property in nature. This is, however, not the first trial in our history, and most of them are not
necessarily successful. Something is necessary for the success, which may be the idea of
system. Systems science may have an important role for the success of establishing
knowledge science. However, there are also two
Different schools in the field of systems science: hard and soft schools, which roughly
correspond to the fields of information science and management science, respectively.
Something is necessary more.One of the difficulties, and also a challenge of knowledge
science, is to deal with different kinds of knowledge. The most reliable knowledge source is
the scientific investigation that produces public knowledge. This is objective, unique,
universal, and repeatable. One the other hand, knowledge obtained in social science includes
meanings given by people inevitably, which are wisdom-based knowledge, insight-based
knowledge, and experienced-based knowledge. These kinds of know ledge are subjective,
vague, ambiguous, and circumstantial. We would like to develop a systems methodology for
integration, management and creation of these different types of knowledge. This is a
challenge in knowledge science that creates justified true belief. Methodologies for
Knowledge Creation We are developing a systems methodology that uses approaches in social
and natural sciences complementarily. This systems methodology itself is a system consisting
of five subsystems. The first one is scientific approach that uses physical laws, data analysis,
etc. The second is information science, especially a large-scale computer simulation and the
networking technology. The third is a method in social science, which is related to forming
partnerships among social members. The fourth is knowledge science that integrates,
transform, and create knowledge. Finally, systems science is used to manage these different
approaches. The developing system can be called a knowledge-creating system. The system
integrates statistical data and individual persons' fragmentary knowledge, and then creates
new knowledge nobody had before. Such knowledge must be tacit, otherwise someone
including the system had it; this is a contradiction. Therefore, the system should have a
process to convert tacit knowledge into explicit knowledge. This means that the members of
the project or relevant people constitute a part of the system.
At the subsystem Intervention, we consider what kinds of knowledge are necessary to solve
thefaced problem, and request three subsystems to collect them. Here, knowledge is a
problem. At the subsystem Intelligence, we collect necessary data and information, analyze
them with a scientific attitude, and make a model for simulation or optimization. Here,
knowledge is a model. At the subsystem Imagination, we simulate complex phenomena based
on partial knowledge, using information technology. Here, knowledge is scenarios. At the
subsystem Involvement, we hear opinions of people by organizing a meeting or questionnaire
survey. Here, knowledge is opinions.
At the subsystem Integration, we evaluate reliability and justifiability of outputs from three
subsystems, and integrate them. Here, knowledge is solutions.
We evaluate the knowledge-creating system from the following viewpoint:
 Are the system, actors and contents well defined? Is its foresight power enough?
 Is the totality achieved?
 And, is it actually useful?

An example of complementary use of people and computer is as follows: Suppose now we

have a problem of how to activate ecological industry. At Intelligence, we will make a model
with computer based on ideas of people. At Imagination, we carry out computer simulation
with assumptions given by people. At Involvement, we develop a network with the help of
information technology initiated by people. Then, at Integration, we will build a strategic
scenario-based system by consulting the relevant people.
This methodology is a system because it has the following properties:
 Hierarchical structure.
 Emergent characteristics.
 Function of communication.
 Function of control.
For example, if we consider sustainable development, the role of subsystem Intelligent is
prediction based on scientific knowledge. To achieve this task, this subsystem asks the lower
system to develop a mathematical model, and then the subsystem Involvement of this lower
system will collect necessary data consulting the relevant people. Them, the next lower
system will start collecting numerical data, qualitative data, and scenario data. The subsystem
Imagination of this layer will ask to collect assumptions and ideas with their possibilities. In
such a way, this knowledge-creating system has a hierarchical structure with functions of
communication and control. Based on this knowledge with logical thinking and educated
intuition, we can produce a systemic knowledge. We can consider that creation of such
systemic knowledge or integrated knowledge is a kind of emergency.

The next question: how is the trans-disciplinary knowledge exchange achieved? The
subsystem Intelligence is mainly based on natural sciences, mathematics, and engineering.
The subsystem Imagination is mainly related to information science, economics, and statistics.
The subsystem Involvement is mainly based on management science, social science, and
cultural sciences. The other two subsystems Intervention and Integration are of course related
to systems science and knowledge science. Different disciplines are used to determine
boundary conditions or to check consistency of knowledge of subsystems. However, this is
not performed automatically. This is an interactive system.
 E-Commerce in Knowledge Management

An article recently appeared in another publication where the author stated that "Knowledge
management is nothing more than a new buzzword for document management." Is knowledge
management really just the latest "fad", dreamed up by consultants so they can bill more
hours?

One factor leading to the fad image is that a small number of vendors have taken the "search
and replace" approach to marketing their products as knowledge management products. This
is where they take existing brochures and replace words like document management,
information management, collaboration, imaging, workflow, text retrieval, etc and replace
them with knowledge management (KM). But can you blame vendors when the KM market is
predicted to grow from it's current $1.9 billion in 1998 to $6.7 billion in 2003 (Ovum Inc.
research report, 1998).

When explaining a term, referencing something familiar to each party often makes it easier for
the other to understand. So when knowledge management (KM) is discussed, it becomes easy
to fall back on a definition of document management or imaging since they are components of
knowledge management. But using document management as a synonym for KM is the same
as saying a monitor is a computer system. The monitor is an important part of the computer,
but there are other components required to operate efficiently (i.e. CPU, software, power, an
operator, application to use it for, etc.).

So what is knowledge management anyhow?

Knowledge management is a practice that involves the capturing and sharing of an

organization's information assets in addition to the experiences of their employees that can be
acted upon to achieve the strategic goals of the organization. It involves the sharing of tacit
(what's in our heads) and explicit (paper, computer data, transactions, microfilm, etc.)
information that leads to enhanced innovation and eliminates the reinventing of the wheel
with each project.

KM cannot be achieved through a single product, but must be developed through creating an
organizational culture that encourages sharing, adapting the proper practices and using
technology as an enabler for knowledge sharing.

So where does E-Commerce fit into the world of KM?

E-commerce is an important part of the knowledge organization puzzle. There is tremendous

amount of information that is contained within each business transaction. But this information
is much more that just who bought what and when. Questions such as why they bought are
sometimes more important than what they bought or the amount of the transaction. If an
organization can determine why each customer bought a particular item, it may be able to
determine future trends or new potential markets.
To find the answer to why someone bought an item is more than just understanding the
information that is housed within the physical transaction. Input from the sales person,
customer service representative and the service technician needs to be made available to those
that seek the information. Imagine if the product development and marketing departments had
all the knowledge of the front line people (sales, customer service, maintenance, and the
customers themselves) and was able to combine it with their own expertise in product
planning. How dramatic would that increase future sales?

As the graphic below indicates, there are numerous pieces of the knowledge organization. The
mission statement and strategic plan of the organization acts as the foundation that everything
else is built upon. The company culture and executive support are the pillars that hold the
organization in place and provide the framework for the tools (such as e-commerce) that
facilitate communication of the explicit documents (the content) of the company. The
employee knowledge (the tacit information) and their experiences rest on top of the building
and utilize technology to enable greater knowledge sharing.

The Knowledge Organization

Others have said knowledge management is nothing more than information management. But
information is only a subset of knowledge, just as data is a subset of information. Information
becomes knowledge when it is acted upon. A quote that can act as a lighthouse for navigation
through the knowledge management waters is as follows:

"To conceive of knowledge as a collection of information seems to rob the concept of all its
life… Knowledge resides in the user and not in the collection. It is how the user reacts to a
collection of information that matters." --Churchman (1971).

We have to remember what Churchman is saying when discussing knowledge management.

Technology is only a piece of the puzzle. Knowledge is not something we can display as a
tool or product. It is something we work towards, but will never reach a final destination since
it is impossible for an individual organization to know everything about every possible topic
and experience.

In Thomas Stewart's book, " Intellectual Capital", he tells of the story of Nike being a
knowledge company and not a manufacturer. At first, this may sound strange, since many
think of Nike as a manufacturer of footwear. But is Nike really a manufacturer? Stewart
points out that they are a research and marketing company since they don't own any factories.
They use the knowledge within their company to design great sneakers and they use their
tremendous marketing talent to sell products made by other companies to their specifications.
Other than their corporate offices and real estate, they don't own physical assets such as
factories to make the products they sell. The real value of their company is their knowledge
and expertise to design and market products, not manufacture them. Their physical assets are a
much smaller part of their total worth.

A Knowledge Map

Since it is impossible to store all the information within a company, particularly the tacit
information of the people, knowing where to find more information that can be turned into
knowledge is key. The reality is that knowledge is in the individual and not the explicit
property that can be captured. Many times knowing the location of where to find more
information is all someone needs.

How many times have you heard statements similar to the following: "Joe used to work for
the ABC Company, so maybe he knows about their pricing structure." A knowledge map
provides a "directory" of where to find the experts and information within a company.
Creating a knowledge map can be as simple or as complex as you want it to be. The available
resources and the value that a company places on knowledge management will be a
determining factor.
 KMS and TQM

TQM managerial focus considers human resources management as part of its core. Workers
are considered as a kind of customer whose needs and worries have to be considered in the
whole customer satisfaction view. This vision fits to Drucker (2002) Knowledge Workers and
its importance as key factor in organization success. So new KM focus have effective probed
human resources management model to look at. Mutual workers and company loyalty is
considered as crucial in KM focus, as in TQM managerial environment. Suitable
entrepreneurial culture has to be promoted in KM managerial choice. These requirements are
overcome in TQM companies. Workers provide their efforts, skills and knowledge relying on
company loyalty and appropriate reward systems (deserve wage, live long employment,
reward employees suggestion program,) in order to assure the necessary mutual loyalty. So it
can be said that referring to human resources management, TQM companies overcome most
new KM focus requirements. TQM companies whose strategies and programs had been based
on basis principles of TQM and not only in formal requirements can turn into knowledge
organizations, where knowledge workers are considered as important assets as in TQM
environment occurred.

New culture based on KM focus differs from traditional TQM one and have to consider new
worker exchange views. So, new concepts such as competitive cooperation have to be
considered and implemented. Even new contractual an legal company-workers commitment
based on technical parameters and objective general criteria such as throughput, productivity,
profit margin, … or particular one such as suggestion numbers, educational or skill e-learning
programs proposed, … per period of time, have to be considered. Ouchi (1982) Z theory could
be and useful guidelines to afford new human resources management.

In TQM continuous improvement principle, educational and training workers programs try to
ensure company or organization quality workers for excellent performance. In KM focus,
knowledge exchange model push workers into continuous learning process. One way or
another, both approach aim similar targets. In the end the organization has more skilled and
competent workers and workers have a higher professional competence. In this way, workers,
which want or have to leave organization managed under KM managerial focus, have some
competitive advantages to face complex labour market.
Knowledge Management And Information Technology

Castells (1996) thinks that what characterises the current technological revolution is not the
centrality of knowledge and information but the application of such knowledge and
information to knowledge generation and information processing/information devices, in a
cumulative feedback loop between innovation and the uses of innovation. For the first time in
history, the human mind is a direct productive force, not just a decisive element of a
production system.

In the e-Era, business speed appeared to be a crucial and key subject. So, now a day,
operational business time have to be reach and technological strategy have to be lead and
design to that, because it can become the necessary competitive advantage. New IT
technological resources provide tools to get the suitable business sped in new chances of
business opportunities, by cutting down the learning and mastering technologies processes,
innovative knowledge creation and added value process. Technology and knowledge have to
aid companies in their competitive advantages creation processes. So, many cognitive network
model or community networking model (Swan et al 1999) with different success degree had
been proposed. Virtual communities that have to be designed “ad hoc” in order to set up
formal or informal virtual networking group based on internal or mixed agents (workers,
customers, suppliers,) had been proposed and testing and probed.

Advanced IT KM system have never to be the aim of organization. Technology has to be

considered as tools, elements or facilities to suitable conceptual and flexible operational KM
system designs. IT should be the basis that allow such conceptual model design fitted to
organization workers abilities, skills and attitudes in each particular business hard and soft,
tacit an explicit resources and knowledge. Competitive advantages and innovative ability
aren’t in hard devices; they are in people abilities, skills and knowledge. So to our mind
innovation = competive advantages lies in explicit or tacit knowledge mastered by knowledge
organization workers. So, as in TQM environment, educational and training programs based
in IT opportunities will be a key factor in designing efficient and competitive organization
strategies and competitive advantages. Usually, medium and small size companies aren’t
aware of fundamental of training and educational programs in effectiveness and efficiency
improvement organization processes, and the principal role they had to play in its tacit or
explicit KM system. Bigger companies who are aware of these circumstances never pointed
out, by confidential strategic questions, that their self-training programs and e-learning
services were considered important in their operational KM systems.
Knowledge Management in TQM Companies Survey

This section assesses inquiry results from Appendix 1 and 2. Appendix 1 encloses the
statistical basis and survey evaluation. Appendix 2 encloses the design form of survey and
data collection of studied companies.

As we can see in question 1, up to 80 % of quality documentation of companies were

implemented in electronic support with wide and different operational access capabilities. In
question 2, up to 80 % stated that safety and confidential access system had been designed
even in those cases where quality systems were supported in traditional supports.

Only 34 % of companies declared (question 3) that some people spent most of their time in
KM activities. Companies that had implemented explicit KM systems was near to 27 %
(basically the greater companies). But only 23 % declared to know the structure and basis of
KM system design and implementation (question 4 and 5). It can be said that in explicit KM
system implemented, managers´ TQM systems had been deeply engaged in design and
implementation process. Up to 40 % companies declared that TQM system documentation
had been take into consideration in explicit or tacit KM system (question 6). Therefore, most
of them had discovered TQM system Documentation as interesting source of formalized
knowledge.

Most companies (70 %) paid attention to technology and innovation technology questions.
Nevertheless, after seeing question 3 and 4 answers, it looks as though only hard part of
technology were considered by many manager, and some questions related to tacit and skill
capabilities weren’t considered as part of technology. As far as we are concerned, accepting
and mastering a technology requires not only explicit knowledge but tacit and skill
knowledge, no matter buy or developed technology (question7).

As it can be seen in question 8 answers, whether or not companies had implemented KM

systems, everybody considered that IT should be a very important factor in KM system
design. Most sample companies pointed out to use the Internet through portal or web sites
(question 9). Usually, portal sites in bigger companies cases or small IT companies.

Most companies with portal sites had designed traditional education and training program via
web (question 10). So it can be said that companies sometimes identify knowledge and human
resource training. Obviously we think that this is a poor view of KM opportunities that
doesn’t consider fundamental tacit knowledge and skill in a whole view of suitable training
workers activities performance. In most cases (question 15) we think that managers don’t rely
on the Internet confidential and safety systems.
We think that formal aspects are usually much more important than conceptual and
methodological aspects in TQM system documentation. Question 11 and 12 revealed that
many basis and fundamental explicit or tacit knowledge in making decision processes were
neither in TQM system documentation nor in the Internet training workers utilities. We think
that this tacit and confidential knowledge and skills are spreading through not operational
traditional systems through informal interpersonal exchanges

4. Operational Model Proposal

The conceptual proposal considers formal TQM system and its operational and
implementation programs (TQM system documentation, quality circles, suggestions
programs, training programs, an so on) as a basis factor in the KM operational system design
success, based in Nonaka and Takeuchi (1995) Knowledge Spiral and others traditional and
common utilities, devices and facilities management tools. Implementation of operational
proposal model, have to be based in an IT architectural network frame, as we can see in
Figure 1. As survey shown, most useful network software programming technologies such as
Html, ASP, JSP, PHP, firewall ... in basic KM system design are broadly used in those
companies. Internet, extranet, and hardware network related technologies are usually well
known too in most of the inquiries companies. Consequently, suitable operational “ad hoc”
KMS can be implemented allowing effective and efficient KM operational system making
decision oriented with saving and cost reduction in educational and skill programs,
consumable saving an others resources, and so on.

Conceptual, confidential and safety model can be based in TQM confidential and accessibility
document distribution policies. Others traditional tacit and non-formalized knowledge and
information not considered in TQM system documentation have to be consider through
multimedia and simulation IT utilities and facilities. TQM system documentation will be the
core and interface between material support of explicit KM and tacit aspect of this knowledge
in a mixed model of Deming Circle and Nonaka and Takeuchi (1995) Knowledge Spiral view.
In both proposals lie the continuous improvement principle as basic for organization
management and its success (Figure 1). A synergic, cooperative and innovative continuous
improvement process can be designed in operational TQM policies and knowledge spiral
view. So, a specific relationship can be found in both focuses. TQM operational programs are
assumed to trigger a tacit and explicit knowledge interaction and interchange process in a
similar way of Takeuchi and Nonaka proposal.
 Figure 1: Detailed KM System Design In TQM Environment

So quality circles and interpersonal interaction and its exchange experiences and mental
model can be seen as support of tacit to tacit exchange model in a socialization process.
Continuous educational and training programs for suitable TQM praxis can be seen as an
explicit to tacit exchange and its internalisation process. Employee suggestion and continous
improvement programs can been seen as a sort of tacit to explicit exchange and its
externalization proccess. At last, tacit to tacit exchange and suitable combination proccess
could be considered through internal or external benchmarking programs in TQM continous
improvement programs in quality performance excellence policy.

Benchmarking

Benchmarking is the process of comparing one's business processes and performance metrics
to industry bests and/or best practices from other industries. Dimensions typically measured
are quality, time, and cost. Improvements from learning mean doing things better, faster, and
cheaper.

Benchmarking involves management identifying the best firms in their industry, or any other
industry where similar processes exist, and comparing the results and processes of those
studied (the "targets") to one's own results and processes to learn how well the targets perform
and, more importantly, how they do it.

The term benchmarking was first used by cobblers to measure people's feet for shoes. They
would place someone's foot on a "bench" and mark it out to make the pattern for the shoes.
Benchmarking is most used to measure performance using a specific indicator (cost per unit
of measure, productivity per unit of measure, cycle time of x per unit of measure or defects
per unit of measure) resulting in a metric of performance that is then compared to others.

Also referred to as "best practice benchmarking" or "process benchmarking", it is a process

used in management and particularly strategic management, in which organizations evaluate
various aspects of their processes in relation to best practice companies' processes, usually
within a peer group defined for the purposes of comparison. This then allows organizations to
develop plans on how to make improvements or adapt specific best practices, usually with the
aim of increasing some aspect of performance. Benchmarking may be a one-off event, but is
often treated as a continuous process in which organizations continually seek to improve their
practices.
Procedure

There is no single benchmarking process that has been universally adopted. The wide appeal
and acceptance of benchmarking has led to various benchmarking methodologies emerging.
The seminal book on benchmarking is Boxwell's Benchmarking for Competitive Advantage
published by McGraw-Hill in 1994. It has withstood the test of time and is still a relevant
read. The first book on benchmarking, written and published by Kaiser Associates, is a
practical guide and offers a 7-step approach. Robert Camp (who wrote one of the earliest
books on benchmarking in 1989) developed a 12-stage approach to benchmarking.

The 12 stage methodology consisted of 1. Select subject ahead 2. Define the process 3.
Identify potential partners 4. Identify data sources 5. Collect data and select partners 6.
Determine the gap 7. Establish process differences 8. Target future performance 9.
Communicate 10. Adjust goal 11. Implement 12. Review/recalibrate.

The following is an example of a typical benchmarking methodology:

1. Identify your problem areas - Because benchmarking can be applied to any business
process or function, a range of research techniques may be required. They include:
informal conversations with customers, employees, or suppliers; exploratory research
techniques such as focus groups; or in-depth marketing research, quantitative research,
surveys, questionnaires, re-engineering analysis, process mapping, quality control
variance reports, or financial ratio analysis. Before embarking on comparison with
other organizations it is essential that you know your own organization's function,
processes; base lining performance provides a point against which improvement effort
can be measured.
2. Identify other industries that have similar processes - For instance if one were
interested in improving hand offs in addiction treatment he/she would try to identify
other fields that also have hand off challenges. These could include air traffic control,
cell phone switching between towers, transfer of patients from surgery to recovery
rooms.
3. Identify organizations that are leaders in these areas - Look for the very best in any
industry and in any country. Consult customers, suppliers, financial analysts, trade
associations, and magazines to determine which companies are worthy of study.
4. Survey companies for measures and practices - Companies target specific business
processes using detailed surveys of measures and practices used to identify business
process alternatives and leading companies. Surveys are typically masked to protect
confidential data by neutral associations and consultants.
 5. Visit the "best practice" companies to identify leading edge practices - Companies
typically agree to mutually exchange information beneficial to all parties in a
benchmarking group and share the results within the group.
6. Implement new and improved business practices - Take the leading edge practices
and develop implementation plans which include identification of specific
opportunities, funding the project and selling the ideas to the organization for the
purpose of gaining demonstrated value from the process.

Cost of benchmarking

The three main types of costs in benchmarking are:

 Visit Costs - This includes hotel rooms, travel costs, meals, a token gift, and lost labor
time.
 Time Costs - Members of the benchmarking team will be investing time in
researching problems, finding exceptional companies to study, visits, and
implementation. This will take them away from their regular tasks for part of each day
so additional staff might be required.
 Benchmarking Database Costs - Organizations that institutionalize benchmarking
into their daily procedures find it is useful to create and maintain a database of best
practices and the companies associated with each best practice now.

The cost of benchmarking can substantially be reduced through utilizing the many internet
resources that have sprung up over the last few years. These aim to capture benchmarks and
best practices from organizations, business sectors and countries to make the benchmarking
process much quicker and cheaper.
Customer relationship management (CRM)

Is a broadly recognized, widely-implemented strategy for managing a company’s interactions

with customers, clients and sales prospects. It involves using technology to organize,
automate, and synchronize business processes—principally sales activities, but also those for
marketing, customer service, and technical support. The overall goals are to find, attract, and
win new clients, nurture and retain those the company already has, entice former clients back
into the fold, and reduce the costs of marketing and client service. Customer relationship
management is a name for a company-wide business strategy including all customer-interface
departments and even beyond.

Phases

The three phases in which CRM support the relationship between a business and its customers
are, to:

 Acquire: a CRM can help a business in acquiring new customers through contact
management, direct marketing, selling, and fulfillment.[3]
 Enhance: a web-enabled CRM combined with customer service tools offers customers
service from a team of sales and service specialists, which offers customers the
convenience of one-stop shopping.[3]
 Retain: CRM software and databases enable a business to identify and reward its loyal
customers and further develop its targeted marketing and relationship marketing
initiatives.[4]

Challenges

Tools and workflows can be complex, especially for large businesses. Previously these tools
were generally limited to contact management: monitoring and recording interactions and
communications. Software solutions then expanded to embrace deal tracking, territories,
opportunities, and at the sales pipeline it. Next came the advent of tools for other client-
interface business functions, as described below. These tools have been, and still are, offered
as on-premises software that companies purchase and run on their own IT infrastructure.

Often, implementations are fragmented-- isolated initiatives by individual departments to

address their own needs. Systems that start disunited usually stay that way: siloed thinking
and decision processes frequently lead to separate and incompatible systems, and
dysfunctional processes.

Types/variations

Sales force automation

Sales force automation (SFA) involves using software to streamline all phases of the sales
process, minimizing the time that sales representatives need to spend on each phase. This
allows sales representatives to pursue more clients in a shorter amount of time than would
otherwise be possible. At the heart of SFA is a Contact management system for tracking and
recording every stage in the sales process for each prospective client, from initial contact to
final disposition. Many SFA applications also include insights into opportunities, territories,
sales forecasts and workflow automation, quote generation, and product knowledge. Modules
for Web 2.0 e-commerce and pricing are new, emerging interests in SFA.[1]

Marketing

CRM systems for marketing help the enterprise identify and target potential clients and
generate leads for the sales team. A key marketing capability is tracking and measuring
multichannel campaigns, including email, search, social media, telephone and direct mail.
Metrics monitored include clicks, responses, leads, deals, and revenue. This has been
superseded by marketing automation and Prospect Relationship Management (PRM)
solutions which track customer behaviour and nurture them from first contact to sale, often
cutting out the active sales process altogether.

Customer Service and Support

Recognizing that service is an important factor in attracting and retaining customers,

organizations are increasingly turning to technology to help them improve their clients’
experience while aiming to increase efficiency and minimize costs.[5] Even so, a 2009 study
revealed that only 39% of corporate executives believe their employees have the right tools
and authority to solve client problems.“.[6] The core for these applications has been and still is
comprehensive call center solutions, including such features as intelligent call routing,
computer telephone integration (CTI), and escalation capabilities.
Analytics

Relevant analytics capabilities are often interwoven into applications for sales, marketing,
and service. These features can be complemented and augmented with links to separate,
purpose-built applications for analytics and business intelligence. Sales analytics let
companies monitor and understand client actions and preferences, through sales forecasting
and data quality.

Marketing applications generally come with predictive analytics to improve segmentation

and targeting, and features for measuring the effectiveness of online, offline, and search
marketing campaign. Web analytics have evolved significantly from their starting point of
merely tracking mouse clicks on Web sites. By evaluating “buy signals,” marketers can see
which prospects are most likely to transact and also identify those who are bogged down in a
sales process and need assistance. Marketing and finance personnel also use analytics to
assess the value of multi-faceted programs as a whole.

These types of analytics are increasing in popularity as companies demand greater visibility
into the performance of call centers and other service and support channels, [5] in order to
correct problems before they affect satisfaction levels. Support-focused applications typically
include dashboards similar to those for sales, plus capabilities to measure and analyze
response times, service quality, agent performance, and the frequency of various issues.

Integrated/Collaborative

Departments within enterprises — especially large enterprises — tend to function with little
collaboration. More recently, the development and adoption of these tools and services have
fostered greater fluidity and cooperation among sales, service, and marketing. This finds
expression in the concept of collaborative systems which uses technology to build bridges
between departments. For example, feedback from a technical support center can enlighten
marketers about specific services and product features clients are asking for. Reps, in their
turn, want to be able to pursue these opportunities without the burden of re-entering records
and contact data into a separate SFA system. Owing to these factors, many of the top-rated
and most popular products come as integrated suites.
Small Business

Basic client service can be accomplished by a contact manager system, an integrated solution
that lets organizations and individuals efficiently track and record interactions, including
emails, documents, jobs, faxes, scheduling, and more. These tools usually focus on accounts
rather than individual contacts. They also generally include opportunity insight for tracking
sales pipelines plus added functionality for marketing and service. As with larger enterprises,
small businesses are finding value in online solutions, especially for mobile and
telecommuting workers

Social Media

Social media sites like Twitter, LinkedIn and Facebook are amplifying the voice of people in
the marketplace and are having profound and far-reaching effects on the ways in which
people buy. Customers can now research companies online and then ask for
recommendations through social media channels, making their buying decision without
contacting the company.

Details on companies are now also shared online. People are using social media to share
opinions and experiences on companies, products and services. As social media is not as
widely moderated or censored as mainstream media, individuals can say anything they want
about a company or brand, whether pro or con.

Increasingly, companies are looking to gain access to these conversations and take part in the
dialogue. More than a few systems are now integrating to social networking sites. Social
media promoters cite a number of business advantages, such as using online communities as
a source of high-quality leads and a vehicle for crowd sourcing solutions to client-support
problems. Companies can also leverage client stated habits and preferences to personalize
and even “hyper-target” their sales and marketing communications.

Some analysts take the view that business-to-business marketers should proceed cautiously
when weaving social media into their business processes. These observers recommend
careful market research to determine if and where the phenomenon can provide measurable
benefits for client interactions, sales and support.. It is often found that people feel that
interaction is peer to peer between them and their contacts and resent the company
involvement, responding with negatives about that company.

Non-profit and Membership-based

Systems for non-profit and membership-based organizations help track constituents and their
involvement in the organization. Capabilities typically include tracking the following: fund-
raising, demographics, membership levels, membership directories, volunteering and
communications with individuals.
Many include tools for identifying potential donors based on previous donations and
participation. In light of the growth of social networking tools, there may be some overlap
between social/community driven tools and non-profit/membership tools.

Measuring Knowledge Management

So now that my company has decided to embark on a Knowledge Management (KM) path
the inevitable question is: How do you measure success of the KM program? From the
research I have done there seems to be no easy answers. The main issues are:

KM is a soft subject; it enables many different activities within a Professional Services

organization but is not directly responsible for these activities.Direct impact of KM on hard
metrics such as Profitability, Resource Utilization, Resource Productivity, Margin etc are
hard to attribute directly to KM, as any number of factors can influence these areas.
Collection of metrics can prove to be just as difficult as determining the appropriate metrics.
From the research I’ve done and conversations with my Board and other individuals I’ve
come up with a categorized system of metrics.

Indirect: These are metrics that KM has some degree of impact on but cannot be directly and
solely attributed to KM activities. Such metrics include, Year over Year or Quarter over
Quarter increase in:

 Profitability
 Margin
 Overall Revenue
 Other metrics that are measurable at a business unit level
 Revenue from partners

 Direct: These are metrics that KM has a direct impact on and can be recognized as
having contributed to. Capture of these metrics may require specialized tools or surveys.
Metrics can include:

 Employee satisfaction with finding information

 Enhanced Customer & Employee collaboration
 Enhanced Employee & Employee collaboration
 Reduced ramp up time for new employees/partners

 Program: These are metrics about the KM program itself, in my case the Professional
Services KM program.

 Increase in the number of Project Reviews

 Number of Knowledge assets grows
 Increase in the number Communities of Practice
 Number of hours spent by consultants on KM capture, update and use