KM and ICT in organisations

KM and ICT in organisations with the ambition of implementing a KM-driven Operational Excellent strategy (Free Article 3).by dr. A.P. de Bree MBA, Go4estrategy Consulting & TheKnowledgeCircle
In many profit and non-profit organsiations, knowledge management projects and strategies are very much ICT-driven. In this short series of free articles we will describe and explain the main focus and objectives of the ICT-function and ICT-competencies in general, needed to support a viable KM-driven Operational Excellent strategy.
1. Knowledge in an Operational Excellence strategy.
Organisations pursuing Operational Excellence are consistent in seeking ways to minimise overhead costs, to eliminate steps in the production process, to reduce transaction costs and to optimise business processes across functional boundaries. The Operationally Excellent company will focus on exploiting data, information and knowledge systems to automate processes and to strip costs out of its operations.
2. The role of ICT in an Operational Excellence focused KM-strategy.
The role of ICT and IT departments and functions, supported by related individual and organisational competencies, is trying to optimise supply chains and process flexibility in order to reduce waste. And to connect as cheaply and easy as possible with customers in order to support cross selling of a limited number of (often) standard products and services. Technology is important in order to be able to see what business processes are running and what their status is. The ICT systems do not only steer the business processes but often also execute them completely. On the Customer Intimacy side, companies focusing on this discipline use ICT to sort sales leads to decide how much effort to devote to chasing them. Traditionally, this was done informally, by individual salespeople. More and more companies are now doing it semi-formally, using computers to apply a collection of ad hoc rules about customer preferences. Operational Excellent companies like American Express are trying to formalise the process yet further by using supercomputers, neural networks and advanced statistical processors to analyse data in great depth. ICT thus supports customer selection, customer identification and configuration management in order to make decisions on the level of customisation and sales co-ordination.
3. Examples of companies and industries.
Companies like Charles Schwab have been able to become market leader by focusing on Operational Excellence in a new way. Schwab has reduced costs substantially by connecting its systems of buying and selling securities directly to the Stock Exchange in the United States and the United Kingdom and it is even organising off-exchange trading. This eliminated non-adding value work and costs by not using paper or faxed input instructions or non-value-added intermediaries. It thus also ‘dematures’ [1] a mature Banking business being securities and payments processing business, for ages the exclusive battleground of the large global competitors like Merrill Lynch, Chase Manhattan and a number of European universal incumbents.
Another example is the system every employee and partner of Federal Express is using to co-ordinate the delivery of packages across the complete chain. In a slightly altered version, Federal Express now offers the same system to its customers on the Internet. This reduces the number of calls for information on the packages and related questions dramatically and in this way optimises the internal value chain substantially. The same applies to the Direct Connect system that can be used by retailers in the United States to access the systems of General Electric Appliances, again optimising the complete chain while reducing costs for everybody [2].
Other opportunities for adding value are for example implementation of workflow engines, the use of standard interoperable packages, introduction of dynamic scheduling and direct customer configuration [3]. And last but not least, all the available integrated information can also be used for management accounting, decision-making and cost and quality measurement systems. Key elements for measuring performance across chains cover not only key information indicators of value creation but also require the analytical and operational functionality in information systems to identify and execute changes in the chain process that increase value produced (in this context costs saved). The knowledge related to these main objectives is thus critical for the success of an Operational Excellence driven KM-strategy. Organisations in Health Services, Ministries and large production plants in for instance the Publishing Industry can benefit from these characteristics.
[1] Sviokla, J. J. (1998), “Is Digital Technology dematuring your Industry?”, Web site Diamond Technology Partners. See also chapter 5 on the underlying measurement tools and the economics of the different value disciplines. “Demature”: when technology enables new competitors to enter, force and facilitate the creation of new products and services and alter distribution. It therefore destabilises current competitive forces within a specific industry.
[2] Treacy, M, Wiersema, F. (1995), “The discipline of Market leaders: Choose your Customers, Narrow Your Focus, Dominate Your Market”, Addison-Wesley Publishing Company, U.K.
[3] CSC (1997), “An IT agenda for value chains should focus beyond process optimisation to process agility”, in: Foundation Report “Chains, Shops and Networks. The role of IS in New Models of value creation”, CSC 1997.
[4] Economically speaking, there is a problem in the virtual world. How it is possible to achieve economies-of-scale when there is no apparent relationship between what is processed and what is produced? No scarce resources are used up by processing virtual transactions. On the contrary, the Law of Increasing Returns shows that by processing more, more intangible assets are created in terms of knowledge and other intangible assets. If on the other hand prices and margins are accordingly going down continuously as has been the case in electronic payments and securities transactions in the wholesale world, than the ‘Law of Tim de Bree” applies: even if you have more and more of something, but customers do not want to pay for it, you still loose money. Digital transactions are commodities and are nothing more than a line on a computer screen.
........................................................................................................................... Dr. Tony de Bree MBA has worked as an interim manager and as a strategic advisor in a number of profit and non-profit organisations. Ranging from HRM-departments, Security Back-Offices of Investment Banks to European projects on mediating and monitoring electronic contracting and e-commerce in general. His presentations, books and articles have been well received during many conferences around the World, crossing boundaries of disciplines like knowledge management, (e)strategy, compliance, auditing, HRM, eLearning, e-business and e-commerce. He is currently part-time interim project manager e-business and e-commerce at ABN AMRO Trust and thus finds himself right in the eye of the legislative hurricanes of the post-11th-of-September off-shore financial services. He is responsible for design and implementation of innovative knowledge-driven solutions including eDMS and organisational change. He is also commercial partner in the network of Go4estrategy Consulting experts. Specialising in de-organising and targeting the bottom line with a positive, competency-based approach.
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