Lecture 5 Term 2

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Lecture 5 Term 2

• Business value of customer relationship management

• Increased customer satisfaction• Reduced direct-marketing costs• More effective marketing• Lower costs for customer acquisition/retention• Increased sales revenue• Reduced churn rate

• Churn rate:

• Number of customers who stop using or purchasing products or services from a company.

• Indicator of growth or decline of firm’s customer base

Customer Relationship Management Systems

• Enterprise application challenges

• Highly expensive to purchase and implement enterprise applications – total cost may be 4 to 5 times the price of software

• Requires fundamental changes

• Technology changes

• Business processes changes• Organizational changes

• Incurs switching costs, dependence on software vendors

• Requires data standardization, management, cleansing

Enterprise Applications: New Opportunities and Challenges

Knowledge Management…4

Knowledge Management5

KM, it’s like riding a bicycle…6

• Knowledge management systems• Support processes for acquiring, creating, storing,

distributing, applying, integrating knowledge• Collect internal knowledge and link to external knowledge• Include enterprise-wide systems for:

• Managing documents, graphics and other digital knowledge objects

• Directories of employees with expertise

Systems That Span the Enterprise

DefinitionsKnowledge Knowledge is a fluid mix of framed

experience, values contextual information and expert insight that provides a framework for evaluating and incorporating new experiences and information (Davenport and Prusak, 1998)

Explicit Dimension Tacit Dimension

Knowledge Management An organisation’s ability to effectively acquire, create, retain, deploy and leverage knowledge

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Data

Information

Knowledge

Con

text

Knowledge Hierarchy

The Knowledge Continuum10

The Knowledge Evolution11

Hard and soft data (Mintzberg, 1975)

Managers get more information and knowledge from face to face meetings than they do from documentation/ repositories (Kefalas,1973; Keegan, 1974; Mintzberg, 1975; Eisenberg, 1984; Davenport, 1994; Davenport et al., 1998)

“Knowing who to consult” (Keegan, 1974; Simon, 1977)

The Knowledge Evolution…12

Strategic Scanning (El Sawy, 1985) Accommodation Information Assimilation Information

Proposed Solution: “Programs that allow users to record their creative

ideas, provide editing, organizing, and outline facilities that later rearrange those thoughts into topics and give each topic a separate heading and sub-heading”.

Explicit and Tacit Knowledge13

Explicit Knowledge formal / codified documents, best practices, databases, proposals

Tacit Knowledge informal / uncodified experiential, within employee’s head, hard to effectively capture and share

Knowledge Economy/Society14

LAND CAPITAL LABOUR

ENTERPRISE KNOWLEDGE

The Knowledge Management Landscape

• Sales of enterprise content management software for knowledge management expected to grow 15 percent annually through 2012

• Information Economy

• 55% U.S. labor force: knowledge and information workers

• 60% U.S. GDP from knowledge and information sectors

• Substantial part of a firm’s stock market value is related to intangible assets: knowledge, brands, reputations, and unique business processes

• Knowledge-based projects can produce extraordinary ROI

U.S. Enterprise Knowledge Management Software Revenues, 2005-2012

Figure 11-1Enterprise knowledge management software includes sales of content management and portal licenses, which have been growing at a rate of 15 percent annually, making it among the fastest-growing software applications.

Management Information SystemsChapter 11 Managing Knowledge

The Knowledge Management Landscape

KM, a fad?17

Knowledge is not new

People in organisations have always sought, used and valued knowledge

Companies hire for minds rather than hands

What’s your Strategy for Managing Knowledge? (Hansen et al., 1999)

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Codification Strategy Computer centred Captured and stored in database

Personalisation Strategy Associated with an individual Shared person to person

People Broker19

Locate “experts” to help solve business problems

Link “knowledge holders” to “knowledge seekers”

Transfer valuable “Tacit” Knowledge

Role of the Chief Knowledge/Learning Officer20

Build organisational knowledge culture

Create knowledge management infrastructure

Make it all pay off

Learning Organisation 21

“the sum of individual knowledge used in the value creation process and the knowledge embedded in collective action”. (Von Krogh et al.,1996, pp.227)

Organisations ability to : Have a memory React Make decisions

Knowledge Management and IS22

“‘Techknowledgy’ is clearly part of Knowledge Management” (Davenport and Prusak, 1998)

KM is 80% about organization, and 20% about IT

Basic Features of a Knowledge Management System (KMS)

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Storage PublishingSubscriptionReuseCollaborationCommunication

Searching and Filtering Knowledge 24

Knowledge should be Intuitively accessible Searchable to find relevant knowledge Inform how things get done

Alternatively you should be able to connect to experts

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KM Technology26

Solution which complements strategy Technology is an enabler

Customized solutions which integrate with work processes Non invasive Build on Web and Email platforms

Combination of tools and technology Search / Categorization / Messaging /

Collaboration

Examples of implemented KMS- Pharmaceutical

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Business Prosthetics manufacturer

Technology LINK (Leveraging Internal Knowledge)

Web tool facilitates Expert finder

Describes people who might be working on things that you might be working on

Ability to index sent items folder Enables a user to build a personal work profile

“Brokers Discussions”

Continued…28

Making it pay Reduced length of time to uncover knowledge related

to a clinical trial by finding existing experts in the area within the organisation

Manufacturing (1)29

Business Box design and manufacturer

Technology InnoBook: An interactive database of box design concepts,

continually updated by over 300 designers

Utilised by 250 sites across Europe

Each design department has access to all designs and uses the system to search for base designs when an order is placed

Continued…30

Designers motivated to contribute their box designs to the repository

Initial reluctance to the utilisation of designs contributed to the system by other departments, question mark over the quality of the design not produced by the local team

Making it pay overcomes localisation of box design knowledge avoiding ‘reinventing the wheel’

Manufacturing (2)31

Business Multinational data storage device manufacturer

Technology Primus a knowledge repository for customer solutions

Implemented by Customer Service Team in two locations – European and US

Manufacturing (2)32

Objective to manage customer support knowledge issues by

breaking down a problem or situation into its knowledge components

to classify knowledge about the problem received or add new knowledge about the problem

Continued…33

Making it paybuild a knowledge base of solutions and

solve customer’s problems in a more time efficient and effective manner

to provide an integrated approach to problem resolution and a solution for managing the knowledge across the CS group

Conclusions?34

People are the key to successful knowledge management

IS may be identified as one factor that can enable the capture, storage, creation and dissemination of organizational knowledge

But:35

The focus on utilising organizational knowledge should be on a dialogue between two individuals or a community of practice and not knowledge objects stored in a database (Hansen et al., 1999)

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