Case Study

ECONOMICS OF KM SYSTEMS

ECONOMICS OF KM SYSTEMS

Early development consideration of KM systems by senior management need to take into account the overall costs of implementing and maintaining these systems.

These can be divided into costs related to implementing a KM system including overheads, and salary costs of employees with designated KM functions.

The implementation costs of KM systems include the following, (Maier 2001) à

1. Hardware – internet broadband connections and mobile technology such as mobile phones, laptops and Bluetooth wireless technology
   
2. Software – use off-the-shelf solutions with significant customisation
   
3. Training and education – continual communication about benefits of new system as well as structured training programme for all levels on use of KM system
   
4. Literature, conferences, consulting and proactive participation in KM activities – KM budget to spend on literature, funding KM research programmes, attending conferences and employing consultants.
   
5. Organization of KM events – announcing and communicating KM initiative and facilitating ‘communities of practice’
   
6. KM overload – to coordinate KM initative
   
7. KM systems administration – to protect system from hackers
   
8.  KM staff – salaries

CUSTOMER RELATIONSHIP MANAGEMENT SYSTEMS (CRMS)

CUSTOMER RELATIONSHIP MANAGEMENT SYSTEMS (CRMS)

CRMS are firmly rooted in front-office integration and revolve principally around marketing.

The motivation is to integrate technology and business processes to meet customer requirements at any given moment.

Customer relationship strategy is about cementing long-term, collaborative relationships with customers based on trust (Crosby 2002).

More about enhancing the customers’ lifetime value to the firm instead of short term revenue gains from the customer.

As a competition have increased, the market segmentation was started to focus towards customer-centric orientations instead of focusing on customer segmentation.

Customer-centric orientation was about a relationship with the customers and treating each customer individually and uniquely. It was one-to-one marketing.

Besides that, there are also some problems that may occur in CRM. However, to overcome some of these problems, a CRM development plan based on a project lifecycle is outlined below (Bose 2002):-

1. Planning

2. Research

3. Systems analysis

4. Design

5. Construction

6. Implementation

7. Maintenance and documentation

8. Adaptation

EXECUTIVE INFORMATION SYSTEM (EIS) & WORKFLOW MANAGEMENT SYSTEMS (WMS)

EXECUTIVE INFORMATION SYSTEM (EIS)

EIS was developed in the mid-1980s with a primary goal of enhancing the strategic planning and control processes of executives through the provision of quality, timely, accurate and accessible information (O’Brien 1991).

Provided a broad understanding of company information by summarizing large quantities of data and allowed the user to drill down to different levels of data to gain insight into the detail of information.

One dilemma facing the high-quality information requirements of EIS is the fact that data is often input using unskilled and untrained operatives, which may lead to gross errors and misleading analyses.

Careful consideration must be taken to avoid dangers of ‘garbage in, garbage out’ syndrome and potential risk of making the wrong decisions.

Research on the effective implementation of EIS has found number of factors that linked with continuous improvement that can increase the EIS -à

• Need for a committed executive sponsor to drive project and provide feedback on the product quality and expectation
  
• Need for a pro-active operating sponsor, to act as market researcher with the executives, confidence builder, product designer and operational line manager
  
• The bringing together of business knowledge and IT skills through framework
  
• Coordinating systems and processes lower in the organization with EIS to ensure alignment of effort
  
• Visually attractive graphics

WORKFLOW MANAGEMENT SYSTEMS (WMS)

• One of the ideal tools in business process re-engineering
  
• Part of enterprise resource planning (ERP) and consider as the back-office integration processes in organization.
  
•  An important function of WMS is the modelling of workflows. WMS can be seen as repositories of an organization’s procedures and process.
  
• They are predominantly suited to the efficient processing of a large number of ‘cases’ within a small number of predefined process.
  
• With a separate workflow defined each case more likely to occur in future developments of WMS
  
• Example cases; customer orders, insurance claims, university application and tax returns. However, each cases has a unique identity and a limited finite lifetime.
  
• Task in a WMS are logical units of work such as writing reports and assessing candidates, and can be manual, semi-automatic or automatic.
  
• The combination of a task and a case is termed a work item and the application of a task on a case is seen as an activity. Besides that, there are number of ways that a case can go through a process and this determines the nature and order of the tasks to be performed.
  
• This routing of a case may be   à

-          Sequential

-          Parallel

-          Selective

There are traditional and formal analysis of processes is use of ‘PETRI NETS’ – enables processes to be described graphically and is composed of places and transition.

This to ensure precise definitions of processes and prevent ambiguities.

Circle – places indicate states within a process

Rectangle – transition may denote different activities between states

*Places and transitions often linked together using arcs shown by the arrows

Besides that, to develop standards with the multitude of WMS, the Workflow Management Coalition (WFMC) was set up to define terminology and provide standards for exchange of data between different systems. The WFCM has produced a workflow reference model as a general description of architecture in WMS. 

In addition, there are different aspects of WMS:

1. Workflow enactment service

2. Process definition tools

3. Workflow client application

4. Invoked application

5. Administration and monitoring tool

There are 2 methods of developing WMS using business process re-engineering (BPR) or rapid application development (RAD).

1. BPR – aims to discover the most efficient and effective business processes without resource to existing processes. 

However, BPR lifestyle is initiated by senior management and contains 4 phases:

1. Diagnosis

2. Redesign

3. Reconstruction

4. Operations

2. RAD – uses more evolutionary method for developing WMS and has a strong emphasis on user participation. 

The RAD approach comprises 4 phases

1. Requirements planning phase

2. User design phase

3. Construction phase

4. Delivery phase

GROUP SUPPORT SYSTEM (GSS)

GROUP SUPPORT SYSTEM (GSS)

Teamwork is part of most organizations in one form or another. In response to global and competitive pressures, organizations are increasingly having their activities geographically dispersed and using internet technologies to communicate over long distances. Distance and time differences globally are less of barrier nowadays with a variety of technologies employed such as e-mail, video conferencing, mobile phones and co-authoring systems. Besides that, the important feature is the development of appropriate technologies to facilitate collaboration and cooperation in groups and teams.

There are 5 basic team processes supported by GSS;-

1. Communication

2. Knowledge sharing and learning

3. Cooperation

4. Coordination

5. Social Interaction/Social encounters

Experience has shown that the success of GSS relies on more than technology. There a are several noteworthy guidelines to improve the effectiveness of GSS (Andriessen 2003)  à

• If possible, start a group with face-to-face meetings\
• Learn about each other’s backgrounds through “yellow pages”
• Prepare and structure synchronous meeting well,
• Use video links where possible to develop trust and cohesion
•  Provide regular information on progress and milestones
• Pay attention to training and intercultural differences

Even though DSS provide a forum for knowledge sharing, learning and enhanced problem solving, they can also pose certain challenges for groups. For example;

• ‘free-riders’ relying on others to do all work
• Risk decisions
• Compromised solutions of low quality
•  Information overload

DECISION SUPPORT SYSTEM (DSS)

DECISION SUPPORT SYSTEM (DSS)

DSS combine data analysis and sophisticated models to support non-routine decision making. This is useful in helping the managers make decisions on ill-defined problems in rapidly changing environments. They provide the user with an interactive interface and bring together analyses and models to make sense of existing internal and external data.

There are several major capabilities of DSS (Turban and Aronson 2001);

• Provide support in semi-structured and unstructured situations
• Support several sequential and interdependent decisions
• Support intelligence, design, choice and implementation phases of decision making
• Support a variety of styles and processes
• Are adaptive and flexible over time
• Are user-friendly with strong graphical capabilities
• Improve accuracy, timeliness and quality of decision making
• Have substantial modelling capability to allow experimentation with different strategies under different scenarios.

There are multitude of DSS on offer in the marketplace. Besides that, there are also two distinction would be to separate them into MODEL-DRIVEN DSS & DATA DRIVEN DSS. 

Below is Model-Driven DSS provide a range of statistical, financial, forecasting and management science models that may be applied at strategic, tactical or operational levels.

The DSS may contain between a few and several hundred models encompassing:-

1. Strategic Models – tend to help high-level strategic planning processes within organization
2. Tactical Models - assist in allocating and controlling organizational resources such as capital budgeting and human resource planning
3. Operational Models – help to support day-to-day decision making, such as loans approval and quality control processes.
4. Analytical Models- cover methods of analysis such as statistical models or specific financial models.

Besides that, in contrast – Data Driven DSS : are more focused on examining patterns and relationships in large amounts of data. They used Knowledge evaluation tools such as online analytical processing (OLAP), to provide multidimensional analyses and data mining techniques looking at  à

1. Associations: are occurrences linked to a single event
2. Sequence: are events linked over time
3. Classification: recognizes pattern in certain groups such as loyal or fraudulent customers
4. Clustering techniques: can help to determine different groupings of certain customers where the classification don’t necessarily exist.
5. Forecasting techniques: can help to predict values for certain variables
6. Data mining techniques: vary considerably in the variety of approaches adopted, from fuzzy logic to neural networks. There are different industrial sectors illustrate typical analyses that data mining techniques may help to uncover:        - Banking industry

       - Retail and Marketing

       - Insurance

In order to purchase a DSS, an organization need to decide between custom-made solutions or off-the-shelf solutions.

1. Off-the-shelf solutions - are the lower costs, flexibility and application of many business problems in the same sectors
   
2.  Custom-made solutions – allow the organization to differentiate themselves from a competitors and use a more sophisticated approach based on different configuration. There are 7 classification;-

1. Text-oriented DSS – using technologies such as Web-Based documents, hyperlinks and intelligent agents

2. Database-oriented DSS – featuring strong report generation and query-searching capabilities

3. Spreadsheet-oriented DSS – such as Excel which uses statistical and financial models and techniques

4. Solver-oriented DSS – functions or procedures used for optimizing certain variables such as the optimal ordering quantities of certain resources based on historical data

5. Rule-oriented DSS – often expert systems linked to procedural and inferential (reasoning) rules such as evacuation of a tall building in case of fire in certain parts of it

6. Compound DSS – containing two or more aspects of the above five classification

7. Intelligent DSS – similar to rule-oriented DSS that can learn using agent technology and machine learning techniques

DOCUMENT MANAGEMENT SYSTEMS (DMS)

DOCUMENT MANAGEMENT SYSTEMS (DMS)

Organizations tend to publish a variety of documents for internal consumption or for external sources such as suppliers, customers, and shareholders.

The volume of these documents to increase substantially each year and an urgent need to manage them adequately for efficient storage and retrieval.

DMS have developed to address these problems and have typically employed the intranet as an electronic medium rather than conventional document printing and circulation methods.

The primary driving forces have been the cost savings compared with conventional publication and distribution methods, together with the dynamics nature of intranets.

Documents can be published and updated on the internet when needed and become available instantly to all interested users (Frazee 1996).

Types of documents; policy and procedure manuals, corporate phone directors, online help, HR guidelines, sales and marketing literature, customer data, price lists and press release.

The ‘value-adding facilities of DMS may include:-

• Control to ensure only one user modifies a document at a time
• Audit trail to monitor changes in a document over time
• Security processes to control user access to documents
• Organization of documents into related groups and folders
• Identification and retrieval of documents according to text they contain (free-text searching)
•  Recording information associated with the document as Meta data such as author. Creation date and title
• Ability to route the documents from one user to another in a controlled fashion based on the workflow
• Converting paper documents into electronic format by scanning
• Organizing documents into groups to enable them to be distributed to target audiences

The process of implementing a DMS can be divided into number of phases, as shown in this table below:-

Some of the typical remaining organizational challenges presented by DMS have included;

• Privacy
• Currency of information
• Performance
• Security 

Drivers of KM Systems : Quality Management Processes

The key driver of knowledge management systems in organisation is argued to centre around improving quality management processes linked to an organisation's ability to capture, share and apply new knowledge.

Deming & Juran

Deming's method of ensuring quality of every task was based on a form of learning cycle, the PDCA (Plan, Do, Check, Act) cycle that could be applied repetitively and continuously to every task ( Deming 1986). 

His beliefs can be summarised into the following stages that lead from one to another: 

• Improve quality

• Costs decrease because of less rework, fewer mistakes, fewer delays, snags, better use of machine time & materials

• Productivity improves

• Capture the market with better quality and lower price

•  Stay in business

• Provide jobs and more jobs

Dr Joseph Juran

He developed the concept of company - wide quality management (CWQM) as a way of disseminating quality throughout an organisation. 

• Planning - identify and ensure customer needs are easily understood by every person. Ensure that the process will produce something to meet customer needs. Produce a product for the customer.

• Control - Continuously monitor processes for variations. Management take responsibility for the majority (80 percent) of controlled variations in processes.

• Improvement - Take all necessary steps to improve system including attitude and cultural change.

Total Quality Management

TQM built on earlier concepts of quality control and quality assurance.

Quality Control was an extension of inspection to collect data and understand variations using statistical techniques.

Quality Assurance was about developing organisational structures, procedures, processes and resources to ensure that tasks were performed in a consistent manner.

The key elements of TQM are :

• A total process involving all units in the organisation and led from the top.
• Customer is king, with every strategy, action and process directed at satisfaction of customer needs.
• Information is gathered and analysed rationally using ICT
• All organisational processes that add to costs of poor quality are examined.
• Greater involvement of people as an untapped resource.
• The use of multi-discipline and multilevel teams to solve problems related to meeting customer needs.
• The promotion of creative thinking to develop innovative solutions.

Business Process Re - Engineering (BPR)

The pioneers of BPR (Davenport 1993, Hammer and Champy 1993) defined BPR as :

The fundamental re - thinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service and speed.

A typical BPR project has four stages (Huczynski and Buchanan 2001)

• Process mapping - drawing flowcharts of work activity sequences.
• Identifying 'moments of truth' - deciding which steps are critical, add value and introduce errors.
• Generating redesign proposals - streamlining processes and avoiding duplication and overlap
• Implementation - putting the redesign into effect.

Differences between TQM and BPR

Lean Production

The goal of lean production was to achieve increased productivity, reduced lead times and costs, and improved quality across the organisation.

The principles and technique in lean production have focused on manufacturing firms and contain the following features (Sanchez and Perez 2001)

• Elimination of zero - value activities - anything that doesn't add value to the product or service (Womack and Jones 1996)

• Search for continuous improvement in products and processes - involve production teams and management to develop creative solutions to the identification and adjustment of defective parts.

• Multi-functional teams - to facilitate task rotation and flexibility to accommodate changes in production levels. Increased training effort on quality control and remuneration to compensate for new flexibility in workforce.

• Just in Time (JIT) production and delivery - integration of automation equipment with production system to enable delivery of any part in the necessary quantity at the right time. This contributes to the reduction of inventories and lead times.

• Integration of suppliers - with key departments to enhance buyer - supplier relationships such as R&D for new component prototypes.

• Flexible information systems - to provide timely and useful strategic and operational information to all levels. Strategic information may contain organisation's production plans and sales forecasts whereas operational information may contain the factory's current productivity or quality performance.

Systems Thinking

A systems can be characterised as a series of elements connected by relationships or links surrounded by a clearly defined boundary to the external environment and with a role of transforming its inputs into desired outputs.

Each element and relationship has an attribute depending on how they are measured, such as size, intensity and strength.

The state of homeostasis is achieved when the system is able to control its internal environment and maintain a dynamic steady state with its changing external environment.

Boundary
The line that marks the inside and outside of a system and that sets off the system from its environment.

Environment
Everything external to a system that interacts with the system.

Introductions

• Many organisations have developed information systems to facilitate sharing and mobilisation of knowledge.

• Such systems that manage organisational knowledge process are referred to as Knowledge Management Systems (KMS).

• The organisational processes supported by KMS may include knowledge creation, storage/retrieval, transfer and application.

Alavi and Leidner (2001)

They argue that information technology plays a substantial role in 
knowledge sharing within organisations by 

increasing 'weak ties' between 

individuals and creating informal links.

Knowledge is transferred from individual 
to group to organisation 
through an interplay of tacit and 
explicit knowledge assisted by knowledge management systems (KMS).

For certain business applications, generic and standard software has been developed for mass - market appeal.

A major issue concerning off - the - shelf solutions is whether organisations want to follow practices and ontologies 

(a set of concepts and categories in a subject area or domain that shows their 

properties and the relations between them) 

embedded within the software.

In determining the appropriateness of KM solutions, one needs to be mindful of the five major concerns of 

senior executives related to 

IT investments in organisations 

( PriceWaterhouse 1995)

1. Integrating IT with corporate objectives
2. Transforming through IT
3. Infrastructure
4. Uncertainty
5. Cost Control