The Role of Information Technology in IBM - Case Study Example

The Role of Information Technology in IBM to Manage Employees and Knowledge Table of Contents The Role of Information Technology in IBM to Manage Employees and Knowledge 1 1. Introduction 1 2. IBM 2 3. Resource management 3 4. Use of Information Technology in IBM 5 4.1. Codification 6 4.1.1 IBM Enterprise Information Portal 6 4.2. Personalization 7 4.2.1 Intellectual Capital Management AssetWeb 8 4.2.2. Communities of Practice 8 4.2.3. On Demand Business 9 5. Conclusion 11 6. Reference 12 1. Introduction The term globalization “describes the increased mobility of goods, services, labor, technology and capital throughout the world” (Government of Canada, 2009). Globalization is refers to “economic globalization, integration of national economies into the international economy through trade, foreign direct investments, capital flows, migration and spread of technology” (Bhagwati, 2004). It describes ongoing processes where societies, regional and national economies and cultures have integrated with the development of communication and exchange systems. Communication technology like phones and web technologies like Internet, e-business and e-mail etc. have played an important role in pushing the process of globalization. The growth of Internet and the World Wide Web technologies have pushed the process of globalization at a very fast pace. They have opened new challenges and opportunities for multinational companies. It has allowed the multinational companies to respond to real-time demands of the customers placed in any part of the world within a short time. Information technology of the global organizations has to kept in pace with emerging markets and technologies and relies heavily on the integration of various computer systems, computing platforms and databases across the world. The goal of the information system department is simple: “To create globally integrated information infrastructures that electronically link their entire supply chains - their sales, production, and delivery processes - into one seamless flow of information across national borders and time zones, with both real-time and store-and-forward access to information from any location” (Stephen, 1999). Another vital goal for the information system department is to create and effectively manage the knowledge repository of the enterprise. A knowledge repository “is a computerized system that systematically captures, organizes and categorizes an organization’s knowledge” (Toolbox, 2009). They are the key delivery system for supporting business operations globally as the repository can be searched for data. It is generally used by the employees of the company. In this paper, we will discuss the strategies used by IBM to create knowledge repository for its employee. Employee and knowledge are the two most important resources of IBM organizational structure. To manage them requires a robust infrastructure that facilitates the retention of these resources. This article will bring out the ways in which both the resources are interlinked and the use of information technology for maintenance of these resources in IBM and how information technology is used to manage it. 2. IBM International Business Machines Corporation (IBM), also known as Big Blue started its operations in 1888 in Armonk, New York, USA, as a producer of punch card tabulating machine. In 1953, it introduced its first computer, the 701 and began its dominance in the mainframe and minicomputer market during the 60s and the 70s and personal computers during the 80s. It manufactures, develops and sells computer hardware, software and services. It offers services and skills in e-business, package integration and knowledge management to various industries including automotive, chemicals and petroleum, distribution, finance, insurance, and health care industries. Nicknamed as ‘Big Blue’ for its official corporate color, it has over 398,455 employees and had its operations in more than 170 countries. It is the largest and most profitable information technology (IT) organization in the world IBM grouped its various businesses into five units: Global Services, Hardware, Software, Global Financing, and Enterprise Investment. IBM Global Services’ mandate is to integrate services, hardware, software and research to help companies realize the full potential of information technology. It offers services in areas like application development, data storage, infrastructure management, networking and technical support. It also provides business consulting and outsourcing services. IBM is a leader in research and development. They have 8 Research Centers around the world where research on various field of information technology and semi-conductor is done. It has scientists, engineers, consultants that have earned Nobel Prizes, Turing Awards and National Medals of Technology and National Medals of Science. It also holds number of patents. Different development centers of IBM located across the world are involved in the development of middleware and hardware. IBM has also set up manufacturing plants and research labs in Europe and Asia Pacific including India, China and Japan to carry out research activities. IBM supports competency centers for various domains through research centers to test various models and methodologies for knowledge management processes. T.J. Watson Research Center for example is involved with the knowledge socialization project. The goal of the project is to identify how technology could be best applied to assist in resource management. 3. Resource management Resource management is the management of various resources in an organization. Resources consists of are inventory, human skills, production resources, information technology, machines and above all specialized knowledge. A project generally consists of management of various resources right from finance to people to knowledge. This article will focus on the two most important resource of the organization: the people who are the employee and the knowledge. The employees belong to various skill sets from engineers to accountants to clerks to managers who form the backbone of the organizations. These employees are managed by the human resource whose prime job is to ensure that the organization effectively utilizes the competencies (specially the specialized knowledge and experience) of employees. Knowledge is defined as “Knowledge is information that changes something or somebody -- either by becoming grounds for actions, or by making an individual (or an institution) capable of different or more effective action." -- Peter F. Drucker in The New Realities. There is almost a consensus among managers that knowledge is an important factor that determines the competitive position of the firm (Brown and Duguid 1991; Drucker 1993). This is emphasised by the shifting of focus from production economy to knowledge economy where organizational knowledge is considered to be an integral part of the organization that needs to be utilized to gain competitive advantage (Drucker 1993). Organizational knowledge is defined as “the capability that members of an organization have developed to draw distinctions in the process of carrying out their work, in particular concrete contexts, by enacting sets of generalizations (propositional statements) whose application depends on historically evolved collective understanding and experiences” (Tsoukas and Vladimirou 2001). This definition illustrates that organizational knowledge is a combination of two distinct but inseparable forms of knowledge: explicit, which can be formally articulated or encoded and tacit, that is developed from direct experience and action by individuals. Unlike tacit knowledge, explicit knowledge is captured using various forms of information technology tools. Tacit knowledge is highly pragmatic, situation specific, difficult to articulate and it is argued that its possession may be a source of competitive advantage. Tacit knowledge cannot be completely converted into explicit knowledge and vice versa as each component does work that the other cannot (Collins 1993; Cook and Brown 1999). Tacit knowledge is “...knowledge which is embodied in individual and organizational practices…cannot be readily articulated” (Spender and Grant 1996; (Sierhuis and Clancey 1997). Such knowledge is of critical strategic importance because, unlike explicit knowledge, it is both inimitable and appropriable (Spender 1996). Because of this, tacit knowledge is usually created and shared through socialization process (Nonaka 1994) and information technology is used to enable these exchange efficiently. 4. Use of Information Technology in IBM IBM has realized the importance of formulating strategies that revolve around people and knowledge. They use information technology from databases, grid computing, Internet technology, e-business etc to remain competitive in the market. However, the focus of the article will be restricted to the use of technology for managing knowledge. It has realized the importance of the different forms of knowledge residing in the employees and has invested in various KM initiatives to effectively store these knowledge forms (Sinha and Abou-Zeid, 2003). They use socialization process among the employees to capture the various forms of knowledge and take the help of various IT tools to help them in this process IBM feels that the employees need to upgrade and advance their skills and expertise continuously to compete in highly competitive environment. Top management feels that it is important to store and use various work related problems, ideas and solutions that is generated by various employees in different groups and working in different domain. Hence, they have sophisticated KM initiatives in helps in knowledge sharing and knowledge transfer among various employees. There are two ways in which knowledge is stored: Codification and Personalization. IBM uses a mixture of codification and personalization strategies to function efficiently and effectively. 4.1. Codification Codification is a strategy where the focus is around computers and where the knowledge is codified and is stored in databases. Knowledge extracted from the employee is codified and then stored in document forms. “Knowledge objects” are developed by pulling key pieces of knowledge out of documents and stored in repository for people to use. This approach is known as “people to documents” and it allowed many people to search for and retrieve codified knowledge without having to contact the person who originally developed it. Codification involves an extensive use of information technology to store and reuse different types of knowledge. The different types of knowledge can be accessed through the company’s own Intranet and Portals. Intranet is a local area network which is used to facilitate communications and knowledge sharing among the employees of an organization. It consists of collective knowledge like information on a particular topic, press article related to a particular domain, best practices and experiences. The employees log in to the internal website and can access e-mails and restricted information. Knowledge portals have interface features like menus to choose an area of interest and search engines to search for subject experts and specific topics. Another important feature is an editing system like Lotus Notes to enable the knowledge expert to do continuous editing and up gradation of the information in the form of articles. The complexity of the knowledge portals varies in all consulting companies (Sinha, 2009). Portals in an organization are paired with other technologies like content management, collaboration and business intelligence. These portals are used by individuals, communities, teams and networks to access information. It is considered to be a useful point to enhance personalization strategy. IBM has designed the Enterprise Information Portal where huge amount of information and data on various topics that is generated by the consultants around the world is stored. 4.1.1 IBM Enterprise Information Portal IBM launched Enterprise Information Portal version 7 in 1999, to access the different data sources and knowledge repository (Sinha, 2009). Data sources include structured data (e.g. databases, Lotus Notes), unstructured data (e.g. e-mails, files) and data from specific process or enterprise applications (ERP, CRM etc). Enterprise Information Portals (EIP) is a search engine that brought information from the Internet as well as in-house data (Sinha, 2009). The aim is to offer a single, uniform point through which all enterprise’s data sources can be accessed. It provides access to content and has the ability to manipulate these contents through rich set of component and services. Portals help to reduce the operational expenses that are generally incurred when accessing information. This portal personalized data queries, searched highly specific tasks and utilized results from both IBM and non-IBM data sources. After the successful implementation in its own domain, they marketed the Enterprise Portal to other organizations. It was either sold as a single product or was complemented with Lotus Discovery System. This portal was customized to enhance the features to meet client requirements. In 2004, IBM released Websphere Portal version 5.0, an updated version of Enterprise Information Portal. The administration capabilities, collaborative capabilities and configurability options are better in Websphere Portal version 5.0. The Websphere portal is offered as one of the knowledge management products under the umbrella of On Demand Business. In 2004, Websphere Portal 5.0 was rated leader in EIP by Eweek. It was also awarded the excellence awards winner in portals and knowledge management. In 2005, Websphere Portal was rated the most expensive product. 4.2. Personalization The focus of personalization strategy is around people and the knowledge is shared mainly through direct person-to-person contact. This results in formation of network, team, communities and relationships. The transfer of knowledge is done through brainstorming session’s and one-to-one conversations which help the consultant to get deeper insights on the various problems. IBM has invested heavily into building networks of people and various mode of computer mediated devices like e-mail, video conferencing tools and telephones and communication tools like Lotus Notes. IBM uses teams and communities of practice in their personalization strategy to transfer and share knowledge which is part of ICM AssetWeb (Sinha, 2009). 4.2.1 Intellectual Capital Management AssetWeb Intellectual capital consists of tacit knowledge like know-how, experiences, wisdom, ideas and explicit knowledge like objects, code, models, and technical architectures. The ICM AssetWeb provided the infrastructure for IBM's knowledge management solutions and initiatives. The ICM AssetWeb captured the intellectual capital of IBM. Several tools like version management, multi-database searching, “yellow pages”, and user preference configurators were built in ICM AssetWeb. IBM continued to upgrade ICM AssetWeb with respect to technology and content. In 1998, The ICM AssetWeb had won the Gold Medal of the Giga Excellence Award on Knowledge Management1. The objective of ICM AssetWeb was to capture information about customers from internal (meaning teams handling customer) as well as external sources. In ICM AssetWeb framework, intellectual capital was evaluated and stored in a structured form. The workflow and business processes were defined in this framework. The framework supported community of practice for collaboration and teamwork. 4.2.2. Communities of Practice In IBM, communities of practice are defined as groups of individuals who met on a regular basis to discuss different area of expertise and interests. Communities of practice basically dealt with people aspect of the organization. It is similar to team but the difference between them is that teams are formed by the management to discuss matters concerning an ongoing project while communities of practice are informal and are formed to discuss topic of interest. Communities of practice are one of the personalization initiatives in IBM to capture the skills and expertise of its employees throughout the world and stored them in a data repository. The presence of communities in IBM helps to reduce the time and expense spent on training the new as well as the old employees. Each community within IBM varied in issue, technology, process, participation and community development. It underwent different stages of formation. Communities at IBM are able to adapt to the changing business environment, while maintaining their unique identity. The communities are also able to support and establish alliances with other communities or knowledge networks in related competencies. ICM AssetWeb provided communication and collaboration tools to be used by the people of communities of practice (Gongla and Rituzzo, 2001). In 2000, there were over 60 unique communities of practice and about 76,000 professionals who accessed the ICM AssetWeb (Gongla and Rituzzo, 2001). About 20,000 employees were participating in community of practice. The level of participation and sustainability seemed to indicate a significant degree of success. In 2000, IBM Global Services announced the community based services. These services provided collaborative and communication tools to its clients. It also helped the clients to develop communities of practice. Community based services helped to provide support to those communities that are important to the organization. As the technology advanced, the collaborative and communication tool, an integral part of community of practice was developed and updated. This resulted in the design and development of their latest popular product On Demand Business. 4.2.3. On Demand Business On Demand Business offers advanced technologies and flexible solutions on rent basis, to organizations whose core business was not information technology development. It was defined as a “company whose business processes—integrated end-to-end across the company and with key partners, suppliers and customers— could respond with flexibility and speed to any customer demand, market opportunity or external threat”. One of the products of this solution On Demand Workplace is already implemented in IBM to support knowledge management initiatives in IBM. Other products, in On Demand Business include Lotus Process and Document management, and On Demand Workplace. On Demand Workplace is similar to Lotus Discovery and Enterprise Information Portal but is more advanced, sophisticated and user friendly. 4.2.3.1 On Demand Workplace In 2003, On Demand Workplace was installed in IBM where employees could share and transfer knowledge across the globe. This workplace helped employees to search for the profile of other IBM employees. It consisted of products and technologies that could connect people, business process, reveal and store information. One of the features of ‘On Demand workplace’ was the different types of portlets. They were role-based portlets which eliminated the need for people to go to multiple places for relevant information, manager resource portlets which provided a consolidated view of corporate, geography-specific and local manager resources and HR policy information, learning@IBM portlet which consisted a detailed profile of each employee with a detailed description of roles of each employee and their area of interests and Blue Pages Portlet which was a corporate directory that provided a comprehensive view of the skills and expertise of employees across IBM (Goyal, 2003) . IBM integrated all the contents of its different websites into On Demand Workplace. The statistics showed that 81 percent of IBM employees could access the On Demand workplace (Goyal, 2003). Employees would save 30 minutes per day of their time by quickly locating information relevant to them. Since 2003, On Demand Workplace helped IBM to save more than US$680 million (Goyal, 2003). On Demand Workplace enabled people to quickly identify, contact and engage those experts whose skills are required. It also recognized and rewarded collaborative and innovative behaviors, used change management behavior, and reshaped its compensation strategy to weigh business units and IBM performance equally. By 2005, On Demand Workplace had 15 products and came under the umbrella of On Demand Business. After the success of this workplace, it was rented out to its clients who needed a collaborative, communication and sharing tools. 5. Conclusion The article has focused on the role of information technology in IBM to manage two of the most important resources: employees and knowledge. Both these resources are interrelated and to manage them IBM had designed various framework over the years to manage these resources. They started with Enterprise Information Portal (EIP) in 1999 to capture explicit knowledge and with continuous technology advancement and requirement up graded this portal. Releasing the importance of socialization of the employees, they designed the ICM AssetWeb which supported the portals and communities of practice. With the advancement of technology and the interrelation of portals, communities of practice, teams, and various collaborative tools were integrated in On Demand Business and used as a solution. However, the most popular was On Demand Workplace which was a part of this solution. Overall, the journey of IBM from EIP to ICM AssetWeb and later to On Demand Business shows a thrust to use information technology to function as a global organization. 6. Reference Brown, J. and P. Duguid. 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