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Advantage knowledge management - Views on News from Equitymaster
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  • Nov 29, 2000

    Advantage knowledge management

    Cogito, Ergo Sum (I think therefore I am). This dictum coined in 1637 by René Descartes as a first step in demonstrating the attainability of certain knowledge, holds true even centuries later especially, in today’s information economy. The most critical resource of an organisation today is knowledge. This gave rise to a concept known as knowledge management.

    The concept is still in its infancy and more importantly is very subjective. Infact, if we look at the very definition, almost everybody has one. But in simple english all activities that involve identifying knowledge, capturing it, using it for the organizational objectives and developing it further, all these come in the broad domain of knowledge management.

    The knowledge management domain
    Generating new knowledge
    Accessing valuable knowledge from outside sources
    Using accessible knowledge in decision making
    Embedding knowledge in processes, products, and/or services
    Representing knowledge in documents, databases, and software
    Facilitating knowledge growth through culture and incentives
    Transferring existing knowledge into other parts of the organization
    Measuring the value of knowledge assets and/or impact of knowledge management 

    With attrition rates as high as 30% in the Indian IT industry, knowledge management could be a key to future sustainability. IT companies are very knowledge intensive and a loss of an employee especially from a middle or senior cadre of the organisation has serious implications.

    A major concern that the IT industry faces is rising wage costs. Every year wage increases in India range from 15% to 30%. To sustain this companies have to increase billing rates. For improving billing rates companies have to take on more value added work. The point here is that the employee has become so critical that salaries now significantly impact the bottomlines. But far more pressing issue is the fact that quality of work suffers, if an employee leaves. With organisations becoming transnational, knowledge management becomes very critical for maintaining uniformity in quality and deliverability across geographically dispersed locations.

    Knowledge management as a product or service too promises huge markets for Indian IT companies. Since the field is still very subjective there is a huge component of consulting involved. This means higher billing rates. Estimates have shown that the global market for knowledge management systems will grow to over Rs 180 bn by the year 2003. But the problem with estimates is that since the concept is very different for each individual, the estimates by certain other quarters could go up to Rs 1800 bn for the same period. This is what makes the segment so lucrative.

    The products offerings under the domain of knowledge management is large they can be classified based on the functionality they satisfy.

    Products based on functionality
    Expertise management
    Search engines, filtering software, information categorization, and agents
    Intranets, extranets, web and portal development
    Collaboration, groupware, conferencing, e-mail, and messaging
    Customer service support
    Document / records management and image processing
    Data warehousing and data mining
    Workflow management
    Consultants and systems integrators for customized application development

    Infosys has implemented knowledge management and is practicing it very sincerely. It has an intangible asset-monitoring program through which it manages knowledge capital within the organisation. This could be a very interesting business model for the Indian software organisations. Firstly implement knowledge management internally, gain the expertise and sell it for a price. Apart from Infosys, a few other Indian companies like Satyam, Polaris, Aptech have taken their first step towards developing knowledge management.

    As it is Indians in the IT industry are creating a niche as systems integrators. With the knowledge management coming in they will have a lot more value add to offer. If initially the focus was internal with BPR (business process re-engineering) and ERP (enterprise resource planning systems), now it has shifted externally with CRM (customer relationship management) and is likely come back again internally with knowledge Management. The three-lettered acronym for the future is ERM (enterprise relationship management).



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