Role of Information Technology in

Successful Knowledge Management Initiatives

Atreyi Kankanhalli, Fransiska Tanudidjaja, Juliana Sutanto and Bernard C.Y. Tan
Department of Information Systems
National University of Singapore
3 Science Drive 2, Singapore 117543, Republic of Singapore

Forthcoming:
Communications of the ACM

Word Count (excluding cover page): 2,993 words

Please address all correspondence on this paper to Bernard C.Y. Tan (Dr.)
Phone and Fax: (65) 6874-6868; Email: btan@comp.nus.edu.sg

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 Role of Information Technology in
Successful Knowledge Management Initiatives

The growing importance of knowledge as a critical business resource has compelled

executives to examine the knowledge underlying their businesses, giving rise to
knowledge management (KM) initiatives. Given that advances in information technology
(IT) have made it easier to acquire, store, or disseminate knowledge than ever before,
many organizations are employing IT to facilitate sharing and integration of knowledge.
But considering the complexity of KM initiatives and the variety of IT solutions available
on the market, executives must often confront the challenging task of deciding what type
of IT solutions to deploy in support of their KM initiatives. This paper aims to shed light
on the IT-KM match by investigating the role of IT in successful KM initiatives.

There are two basic approaches to KM for which IT can provide support: codification and
personalization (Hansen et al. 1999). With the codification approach, more explicit and
structured knowledge is codified and stored in knowledge bases. The main role of IT here
is to help people share knowledge through common storage so as to achieve economic
reuse of knowledge. An example of such IT tools is electronic knowledge repositories.
With the personalization approach, more tacit and unstructured knowledge is shared
largely through direct personal communication. The main role of IT here is to help people
locate each other and communicate so as to achieve complex knowledge transfer.
Examples of such IT tools are knowledge expert directories and video-conferencing tools.
Both these KM approaches are fundamental to understanding the role of IT in KM.

Organizations Studied and Industry Classification

Among the 20 winners of Most Admired Knowledge Enterprises (MAKE) 2002 award
(http://www.knowledgebusiness.com/uploads/2002_Global_MAKE_Summary.pdf), 12
organizations (see Table 1) have been chosen for this study because information on their
KM initiatives is available and they represent a variety of industry contexts. The KM
initiative in each organization was analyzed to better understand the role of IT in these
initiatives. These organizations can be classified along two dimensions (product-based

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versus service-based and high versus low volatility context). This classification is
important because it defines the competitive bases of organizations, thereby dictating
appropriate KM approaches and the role of IT in KM.

Product-based and service-based industries have different competitive bases. Competition

in product-based industries includes the physical products themselves, the services that
accompany products, and the processes of marketing the products. However, competition
in service-based industries depends mainly on the services offered. Therefore, in product-
based industries, there are more diverse areas where knowledge can be utilized to gain
and sustain competitive advantage, compared to service-based industries. For example, as
a manufacturer of computing and imaging products, Hewlett Packard can leverage its
sales knowledge to support sales personnel or enhance product development. But a
service-based organization like Ernst and Young mainly leverages its service knowledge
to provide cost-effective services to its clients.

The volatility dimension reflects the rapidity of change in the business environment and
thus the extent to which knowledge can be economically reused. Business environment
refers to market conditions as well as the technological, regulatory, and socio-cultural
context. In a high volatility context, knowledge is time-sensitive. Currency of knowledge
is paramount. Stored knowledge needs to be refreshed continuously. For example, in
Microsoft, where software life cycle is short, an up-to-date expert directory is used to
rapidly provide software development teams with people who have the desired expertise
(Clayton and Foster 2000). Conversely, in a low volatility context, knowledge is less
time-sensitive and stored knowledge tends to be useful over a relatively longer time span
without updates. Table 1 classifies the 12 organizations under study using these two
dimensions.

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 Low volatility context High volatility context
Product- • British Petroleum • Hewlett Packard
based • Buckman Laboratories • Microsoft
• Shell • Siemens Infineon Technologies
• Xerox
Service- • Ernst and Young • McKinsey
based • KPMG • Skandia
• Siemens Business Services

Table 1. Industry Classification of the 12 Organizations

Product-Based Organizations in Low Volatility Context

British Petroleum, Buckman Laboratories, and Shell are examples of such organizations.
Buckman Laboratories produces chemicals for papermaking and water treatment. The
papermaking and water treatment industries use fairly standard chemicals manufactured
by well-established processes. Thus, it is difficult for Buckman Laboratories to compete
solely on the basis of products. British Petroleum and Shell manufacture petroleum and
petrochemicals obtained by oil exploration and refining. In the petroleum industry, these
products are subject to regulation of quality, quantity, and price. Such regulatory
pressures and the nature of commodity markets make it difficult for British Petroleum
and Shell to compete on basis of products. In short, product-based organizations in low
volatility context usually do not compete on the basis of products alone. Instead, these
organizations often compete on other bases (e.g., services that accompany products). For
instance, Buckman Laboratories changed its strategy from merely selling products to
solving chemical treatment problems for customers (Fulmer 1999). Similarly, British
Petroleum and Shell recognized oil exploration as a source of competitive advantage
because drilling for oil is an expensive undertaking.

Knowledge needed to sustain these diverse bases of competition is often tacit and fuzzy.
Thus, these organizations have mainly adopted the personalization approach to KM and
have deployed IT to support face-to-face communication and communities of practice
(COP), which are informal networks of people who share similar work roles and common
context. For example, Buckman Laboratories has spent $7,500 per employee each year,

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for its more than 1,200 employees, to facilitate a global e-communication network
(K’Netix) that links specialists to field staff (Fulmer 1999). K’Netix has several forums to
support COP devoted to various business areas (e.g., TechForum has about 20 sections
devoted to areas such as pulp and paper, and industrial water treatment). Likewise,
British Petroleum has invested $434,000 to develop Connect, a knowledge yellow pages
that helps employees to locate required expertise (Huang and Pan 2000). In addition,
global community knowledge is assembled across the organization to leverage expertise
on maintenance of oil drilling platforms and reservoir modeling. Shell has an Expertise
Directory that acts as a clearing-house and signpost for both knowledge seekers and
contributors. To facilitate communication among its subsidiaries, Shell developed Global
Networks, which comprised collaboration tools like LiveLink and Microsoft Exchange
(Arjan 2000). Although these organizations have invested heavily in IT to support the
personalization approach to KM, they also practice the codification approach to a lesser
extent. For example, Shell Global Networks has different degrees of codification for its
three forums (Earl 2001). The best practice forum has a greater degree of codified
knowledge whereas the discussion forum has minimal codified knowledge.

Product-Based Organizations in High Volatility Context

Hewlett Packard, Microsoft, Siemens Infineon Technologies, and Xerox are examples of
such organizations. These organizations produce high technology products (computing
hardware and software). They operate in rapidly changing environments where rate of
innovation and speed of new product development is crucial. To perform well, technical
knowledge must be transferred to product development teams in a timely manner.
Following launch of products, knowledge needed by sales teams should be disseminated
swiftly to gain competitive advantage.

Knowledge shared during the creation of high technology products is typically too tacit to
be codified. The effort needed to codify the knowledge and answer each possible query
may be substantial (Hansen et al. 1999). Hence, it is more effective to share knowledge
via the personalization approach. Towards this direction, Siemens Infineon Technologies
makes use of telephone, electronic mails, and video-conferencing tools for knowledge

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sharing (Davenport and Probst 2000). At Hewlett Packard, physical transfer of people
across geographical locations facilitates such knowledge exchange (Hansen et al. 1999).
The main role of IT is to provide yellow pages that map topics with experts. Examples of
such IT include Connex in Hewlett Packard and Knowledge Map in Siemens Infineon
Technologies. Employees in both organizations use such systems to locate colleagues
with relevant expertise on specific problems and then utilize more personal forms of
communication to gain knowledge from the experts.

In contrast, knowledge needed by sales teams (e.g., market characteristics, product

capabilities, and service tips) can be more readily codified and thereby cost effectively
disseminated to sales teams. Thus, the codification strategy to KM can be employed for
such functions. For example, Hewlett Packard uses its Electronic Sales Partners as a
knowledge base of technical product details, sales and marketing tactics, and customer
account history for its sales force (Teigland et al. 2000). Xerox deploys the Eureka
knowledge repository to provide its service engineers with access to technical tips for
servicing photocopier machines (Hickins 1999). In Microsoft, the Internal Technical
Education knowledge repository (comprising online learning, live class schedules, and
white papers) provides knowledge and training to its field sales force (Clayton and Foster
2000).

Service-Based Organizations in Low Volatility Context

Siemens Business Services and the financial services and tax consultancy units of Ernst
and Young and KPMG typify such organizations. They provide consultancy services that
are relatively stable over time. For example, as a main component of their businesses, the
above units of Ernst and Young and KPMG provide consultancy services on operational
issues (e.g., tax, audit, and financial matters) that are fairly well-defined. Siemens
Business Services provides technological solutions (e.g., SAP R/3 consultancy) which
have well-organized support knowledge. Competitive advantage of these organizations
lies in the cost-effectiveness of service provision. The wealth of knowledge cumulated by
these organizations and the ability to use this knowledge to serve their clients stand as a
key value proposition.

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Here, the codification approach to KM is often employed to facilitate economic reuse of
knowledge. Knowledge is codified, stored electronically, and made available to
employees via common technological platforms throughout the entire organization. For
instance, Ernst and Young has developed the Center for Business Knowledge as a central
repository holding its 40 areas of operational knowledge (Sarvary 1999). Similarly,
KWorld of KMPG and SAP R/3 Knowledge Library of Siemens Business Services
(Davenport and Probst 2000) are valuable knowledge resource repositories for their
employees. These organizations deliver their knowledge resources to employees through
common technological platforms such as Microsoft Office, Lotus Notes, and web
browsers.

Service-Based Organizations in High Volatility Context

McKinsey and Skandia typify such organizations. Their competitive advantage lies in the
ability to provide strategic services that are tailored to the unique requirements of clients,
in a timely fashion. Skandia, a financial services and insurance organization, leverages
knowledge about its clients and their needs to develop strategic financial services.
McKinsey, a strategic consultancy organization, utilizes its cumulative knowledge to
deliver highly customized solutions to solve unique client problems. Due to the highly
dynamic nature of their businesses, new and unstructured knowledge must be effectively
exchanged so that custom-made solutions can be tailored for their clients. Such tacit
knowledge can be effectively shared via face-to-face interactions.

The personalization approach to KM is usually used by these organizations. Compared to

organizations under the preceding three categories, these organizations rely less on IT for
knowledge sharing. Knowledge management initiatives focus more on people than on IT.
For example, knowledge sharing in McKinsey is done mainly through brainstorming
sessions and personal conversations. Physical transfer of people between offices is crucial
to knowledge sharing (Sarvary 1999). In Skandia, the exchange of knowledge among
international subsidiaries is conducted mainly through physical transfer of people.
International meetings among managers are held several times a year to exchange
experiences and promote new concepts (Mertins et al. 2001). Moreover, Skandia built a

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waterside villa (Future Center) where employees can exchange ideas and experiences,
thereby facilitating accidental learning and building networks (Earl 2001). These events
are designed to promote intensive knowledge exchange and for employees to learn where
to find experts on certain topics within the organization. Table 2 summarizes the KM
systems in the organizations discussed above.

Low volatility context High volatility context

Product- Expert Directories Expert Directories
based • Connect (British Petroleum) • Expert Directory (Microsoft)
• Expertise Directory (Shell) • Knowledge Map (Siemens
COP Infineon Technologies)
• K’Netix (Buckman • Connex (Hewlett Packard)
Laboratories) Direct Exchange
• Global Networks (Shell) • Phone and video conferencing
(Siemens Infineon Technologies)
• People-transfer (Hewlett Packard)
Repositories
• Electronic Sales Partners (Hewlett
Packard)
• Eureka (Xerox)
• Internal Technical Education
(Microsoft)
Service- Repositories Direct Exchange
based • Center for Business • Phone and video conferencing
Knowledge (Ernst and Young) (McKinsey)
• Kworld (KPMG) • People transfer (McKinsey and
• SAP R/3 (Siemens Business Skandia)
Services)
Table 2. Summary of KM Systems

Implications for Practice

Product-based organizations in low volatility context tend to compete on bases other then
the physical products themselves. Many such organizations adopt the personalization
approach to KM. A combination of expert directories with collaborative tools (e.g.,
discussion forums and video-conferencing) allows employees to connect and pool their
knowledge. Executives operating in such a context can identify and foster COP that have
direct impact on their organizational strategic objectives (e.g., the COP on Pulp and Paper

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in Buckman Laboratories). These communities can be supported with tools that allow
efficient posting of queries and solutions, and searching of discussion threads.
Participation in COP may also be made a part of employee performance appraisal. For
example, Buckman Laboratories promotes and rewards employees who are actively
contributing in discussion forums.

Product-based organizations in high volatility context tend to adopt both personalization

and codification approaches to KM. During product development (and for research and
development purposes in general), expert directories and collaborative tools can support
the personalization approach to KM. To support sales teams and technical field teams, a
common knowledge base with anytime, anywhere access will go a long way towards
facilitating the codification approach to KM. In many instances, organizations control the
quality of knowledge content being codified through a careful review process by domain
experts (as in Xerox). Given that rate of innovation and fast product dissemination are
keys to success, and that both factors hinge on intensive knowledge sharing, executives
may consider providing team rewards to foster collaborative norms, which encourage
knowledge sharing.

Service-based organizations in low volatility context often take the codification approach
to KM. Management can focus on the creation and maintenance of knowledge
repositories in core domains, with a careful review process by domain experts or
knowledge owners. To be most effective, these repositories must provide employees with
seamless access, and have powerful indexing and search capability. Beyond the technical
qualities of knowledge repositories, executives can also provide incentives to build an
organizational culture that encourages knowledge sharing. For example, employees in
Ernst and Young are rewarded for their contribution to knowledge repositories. In
addition, organizations can enforce policies to alleviate misuse of organizational
knowledge so as to further encourage knowledge contribution.

Service-based organizations in high volatility context often rely on the personalization

approach to KM. They require IT tools that support multiple media (e.g., audio, video,

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text, and graphics) for richer interaction. Since knowledge sharing is mainly conducted
through one-to-one interaction, executives should build a culture of mutual support. For
example, consultants in McKinsey are expected to return phone calls from colleagues
promptly. Organizations may consider mechanisms to reward employees for sharing
knowledge directly with colleagues. For example, the amount of consulting time that an
expert has provided to colleagues may form a part of performance appraisal. The
implications for practice are summarized in Table 3.

Low volatility context High volatility context

Product- • Identify and promote strategic
based communities of practice
• Provide expert directories and
collaborative tools
• Reward participation in strategic
communities of practice
Service- • Create and maintain high quality
based knowledge repositories
• Provide effective search
capabilities for repositories
• Reward quality contributions to
knowledge repositories
• Reward effective reuse of
knowledge from repositories
Table 3. Summary of Implications for Practice
• Provide expert directories and
collaborative tools for product
development teams
• Provide knowledge repositories for
product sales teams
• Review of contents in knowledge
repositories by experts
• Reward team sharing of knowledge
• Build a culture of mutual support
and interaction
• Provide communication support
for one-to-one interaction via
multiple media

Conclusion
This article offers some insights on the IT-KM match through a study of 12 organizations
with successful KM initiatives. Depending on whether organizations are product-based or
service-based, and whether they operate in a high or low volatility context, organizations
are found to have distinct patterns in their approaches to KM (see Figure 1). Future work
may go beyond the industry classification of this study to investigate KM strategies and
IT support at a finer level (e.g., task characteristics or processes supported). It is plausible
that organizations could use the personalization and codification approaches to KM, to
varying extents, depending on task characteristics or processes supported. Nevertheless,

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by highlighting the best practices of organizations with successful KM initiatives, this
article gives executives some clues about approaches to KM that may suit their situations
and appropriate roles of IT in support of these approaches.

high Service-based Product-based

organizations in low organizations in high
volatility context volatility context

Codification
Product-based
approach organizations in low
volatility context

Service-based
organizations in high
volatility context
low

low Personalization high

approach

Figure 1. KM Approaches across Industry Contexts

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