Knowledge, Knowledge Management & Knowledge Management System - Coursework Example

Module Name Course Title Name Professor Name Date The essay highlights the concepts of knowledge, knowledge management system and knowledge economy, a concept that has emerged with the use of technology or ICT for knowledge management. The challenges for the implementation of the knowledge management system faced by the small to medium enterprises (SME) such as resource constraints, absence of explicit policy for knowledge management and facilitating organizational change are discussed, along with the benefits of the usage of knowledge management system with respect to e-commerce by SME. These benefits lead to organizational transformation which paves towards the progress of the enterprises. Knowledge, Knowledge Management & Knowledge Management System Knowledge is considered as embedded in a person gained by experience or generated by logical thinking (Beesley & Cooper, 2008). According to (Bierly et al., 2000),  “knowledge can be termed as an understanding of information and the patterns linked to that information”. Thus knowledge is associated with the perception of information in a person’s mind. The perception can be a result of the practice a person employs to perform tasks. Knowledge management is regarded as an approach that is used by organization to utilize their intellectual assets. (Montequín et al, 2006) The knowledge management aims to manage the knowledge assets of an organization to aid decision making, improve organizational competitive and innovative ability (Zyngier et al., 2004). Knowledge management can be better understood by the knowledge cycle activities that are to recognize, obtain, assemble, syndicate, share, dispense, use, preserve, and eradicate (Jafari et. al, 2009). Knowledge management comprises various procedures to manage the processes of formation dissemination, and use of knowledge. Additionally, the term ‘knowledge management’ has been used around for an extremely long time. However, the basic purpose of knowledge management is to offer consultancy services and ways that facilitate businesses in repeatedly changing their company models as well as improving business competence and value. In addition, this process engages bringing jointly fundamentally enhanced business procedures, technology solutions and shared e-commerce to carry-out step for change developments in operational productivity and customer service. knowledge management offers suggestions to solve various serious issues of corporate adaptation, continued existence and capability against fundamental discontinuous environmental transformation. Fundamentally, it exemplifies an organizational procedure that looks for synergistic arrangement of data and information processing capability of information technologies, and the inspired and inventive capability of human beings. Whereas “a knowledge management system is an ICT system in the sense of an application system or an ICT platform that combines and integrate functions for the contextualized handling of both explicit and tacit knowledge throughout the organization or part of it……” (Borchardt, 2011). The knowledge management system utilizes Information Technology for the purpose of managing the knowledge. The knowledge management system compromise of two important elements, firstly the capability of the system to capture knowledge and secondly to the utilization of tools (Rasula et. al, 2012). Although many organizations and individuals think that knowledge management is a fad, or basically yet one more management program that is past its sell-by date. However, the knowledge working is an extremely user-friendly task which offers the new opportunity to business for improving their corporate working and market value. In addition, the current and future idea of a KM system is to facilitate organizational staff to keep them ready for the corporate documented base of business particulars, sources of information, and solutions. Moreover, sharing and distribution of information at organization become wider and can be able to lead us to more effectual automated business decision making engine design and it could as well lead to ideas for new or enhanced business services and equipment design. Both knowledge management and knowledge management system relies on knowledge. In fact the constructs knowledge, knowledge management & knowledge management system are interrelated such that knowledge management system makes use of knowledge management activity by codifying it. Whereas knowledge is used by knowledge management activity in order to capture, store and share. The hierarchy of the knowledge management is shown in Figure 1. Figure 1: Knowledge Management Layers (Jafari, 2009) The knowledge management implementation in an organization requires knowledge incorporation from “the domains of strategy, structure, processes, and technology” (Jafari, 2009). But the notion of knowledge itself cannot be described in simple terms. Two concepts are associated with the description of knowledge that are tacit or explicit. As the name implies explicit knowledge is which can be easily transferred, whereas tacit knowledge is difficult to convey to others (Beesley & Cooper, 2008) The explicit knowledge can be characterized in terms of documents, drawings, patents and software code etc. but the tacit knowledge on the other hand includes personal skills, mental model, intuition, tricks and heuristics etc (Holste & Fields, 2010). The explicit versus tacit knowledge can be categorized as tangible versus intangible assets of organization intellectual capital (Rus & Lindvall, 2002). The purpose of knowledge management is to escalate the individual level of knowledge to organizational level in such a manner that the knowledge is accessible (Rus & Lindvall, 2002). The transfer of individual knowledge to organizational level requires capturing and sharing knowledge. Provided with the access of such knowledge can bring about a positive change in an organization. Knowledge management can influence the effectiveness of the organization (Montequín et al, 2006) and (Borchardt, 2011). The knowledge is considered to be situated in mind. An assumption with knowledge is either it is an object or a process (Shin & Schmidt, 2001). The object notion of knowledge implies that data is saved in a hierarchical structure while process notion emphasizes on the analysis of knowing process or person’s cognitive ability of knowing (Shin & Schmidt, 2001). Consider an example of the autopilot system. The set of rules is implemented to automate the flight operation, i.e. the speed and altitude required for a particular trajectory. This is explicit knowledge codified into the autopilot system to assist the flight operation. On the other hand, how to operate a flight in adverse weather conditions requires personal skills and experience, which is tacit knowledge. The set of rules implemented in the autopilot system regards knowledge as objective. Consider another example of the Skandia Navigator developed by the Scandinavian company of finance and insurance to measure company performance and intangible assets. (Chen & Yuan, 2004) Five different elements are focused by Skandia Navigator, financial, customer, process, innovation and human. The focus on the non-financial aspect provides opportunity to capture the intangible knowledge (Chen & Yuan, 2004). The metrics for the five elements are highlighted in figure 2. Figure 2: Skandia Navigator (Edvinsson and Malone; 1997) The objective notion of knowledge implies that knowledge exists in terms of object independent of people, practice based notion on the other hand emphasize on the fact that knowledge is possessed by person and hence is personal (Hislop, 2009) The knowledge management system which are based on IT are strong candidate of objective notion of knowledge with the assumption that knowledge can be coded and stored in the database. The practice based notion focuses on the communication and interaction among people. (Hislop, 2009) An example in the domain of marketing and sale is presented in table 1. (Carlile, 2002) It highlights knowledge as an object as well as practice associated with that object. Objects Ends Across Practices Numbers: specification, Price/cost, requirements, volume, and delivery dates “The right numbers” must be transferred between interests Paper: contracts, Numbers, faxex, and spreadsheets “Close the deal” get and keep the business Technology: databases, computer analyses and faxes “Numbers set in stone” stand behind the numbers that work Table 1: Objects and Ends across practices in the domain of Sales Work (Carlile, 2002) The knowledge management system in the two examples; auto pilot system ad Skandia Navigator assumes knowledge as either objective, i.e. auto pilot system or practice based i.e. Skandia Navigator. The Skandia Navigator utilizes the practice based nature of knowledge by capturing intangible asset. Where as tangible or explicit facts are implemented within an auto pilot. Challenges for the Implementation of knowledge Management System in Small to Medium Enterprise (SME) SME is defined by the size. The size of an enterprise, however, can be judged by two factors the number of employees and the total revenue per annum. In this context an enterprise with less 10 to 49 employees and annual revenue of ten million Euro is categorized small enterprise. Whereas medium enterprise comprise of less than 250 employees and annual revenue under 50 million Euros (Borchardt, 2011) and (Halme & Korpela, 2014). The challenges for the implementation of knowledge management system in SME are firstly resource constraints, (Edvardsson & Durst, 2013) and (Pillania, 2008) secondly the absence of explicit policy for the knowledge management strategy (Edvardsson & Durst, 2013). The resources are restricted in SME compared to large enterprise, therefore the resources are required to be utilized in an optimized way (Edvardsson & Durst, 2013). It is very common that key decision making and business planning relies on one person in SME (Edvardsson & Durst, 2013) and (Valkokari & Helander, 2007). This results in limited time to deal with strategic issues. Provided with less social interaction and formal discussion within the SME tacit knowledge is not shared. Since no policy for knowledge management is in place, most of the knowledge remains with the key employee and is not documented or shared (Edvardsson & Durst, 2013). Knowledge management requires the identification and recording of tacit knowledge involved with the operational activities of work flow and heuristics (Baptista, 2006). This is, however a challenging task as it requires significant time and resources in order to compile taxonomy, categorization, ontology with relevant documents (Baptista, 2006). Furthermore, the implementation of knowledge management system needs availability of expert resources and the accessibility of SME knowledge associated with important strategic issues are mandatory. The limited number of employees and lesser documentation and limited knowledge sharing pose a challenge towards implementation of SME. As no explicit policy for knowledge management exists. Policy for the establishment of communication channels for knowledge sharing is needed as well as a knowledge management practice that would enforce the protection for the organizational knowledge is required, which practice is however not matured (Lee & Lan, 2011). Since explicit policy for knowledge management do not exist a generalized policy cannot be of any benefit either. The knowledge management is organization specific as it focuses on the needs of the particular organization. A generalized policy of knowledge management cannot be applied to every organization. For example the Skandia Navigator developed is specific to that particular Sandivinain company. Lastly the third challenge for SME to implement a knowledge management system is organizational change (Zheng e. al, 2010). For the introduction of a successful knowledge management system, organizational change is necessary. The change requires to be placed along with organizational culture, people and processes. This change aids the organization towards organizational process optimization (Rsula, 2012). Without the organizational change it is impossible to implement knowledge management system. The knowledge management depends on IT, so the major change required is to change the IT infrastructure of the organization. The issue within the SME is that organizational change can impact its limited financial resource. Any failure to carry out organizational change can prove to be a set back for SME. Thus we can summarize the challenges for implementation of knowledge management system within SME as; resource constraints, the absence of explicit policy for knowledge management and facilitating organizational change. Knowledge Economy & SME The focus on the intellectual capital has presented a notion of knowledge Economy (Park, 2001). Knowledge Economy is defined as " as production and services based on knowledge-intensive activities that contribute to an accelerated pace of technological and scientific advance as well as equally rapid obsolescence.” (Powell & Snellman, 2004) Knowledge economy is also defined in terms of three aspects; “high technology manufacturing, the information sector ICT and knowledge-intensive.” (Walby, 2011) Knowledge economy emphasizes on intellectual abilities for example, a patent is an intellectual artifact. The knowledge economy represents knowledge based product or service compared to manufactured products (Hislop, 2009). The knowledge centric products promote the creation and innovation of knowledge. The innovation is the main aspects of the knowledge based economy. (Park, 2001). The role of knowledge based economy with in SME introduces a need for innovation, research and development to promote the intellectual capital. This promotes innovation and competitiveness in SME (Park, 2001). Consider an example of automobile production, the engineering of a car is more focused on the development of a “smart machine” powered by technology rather than just an assembly of metallic components (Powell & Snellman, 2004). The SME therefore needs to stress on the innovative products or services in order to survive the competition. Consider another example of medium size bank with Sage X3 or Microsoft Dynamic software, both these softwares are used for the purpose of enterprise resource planning. The business planning and decision making depends on these knowledge intensive software. The services bank provides via the software ranges from online access of bank accounts to internal audit. Innovative services that relies on the knowledge centric software provided by the bank helps it to meet the competition. Thus the knowledge centric service employed by the software within the bank plays a vital role in its progress. The above discussion highlights the knowledge economy within the financial organization for example banks. Most SME employs information systems for the purpose of enterprise resource planning software to support their day to day operation. Knowledge Management System & SME The knowledge management system can play a vital role in the growth and development of SME. The use of web technologies by the SME is termed as e-commerce. E-commerce had acquired significant attention in the past decade in fact even more than a decade. For example, introducing the web access to the services offered by the SME can provide ease of access and customer satisfaction. Knowledge Management activities on web domain in the context of e-commerce are shown in figure 3 (Thuraisingham t. al, 2002). These activities involve developing web pages and e-commerce web site, exchange of emails and documents. Figure 3: Knowledge Management on Web, Image Source (Thuraisingham t. al, 2002) The web pages not only contain information about the enterprise but also offers different services of the enterprise. The most important service is the processing of transactions on these web pages due to the fact that it increase in the profit making ability of the enterprise . With the accessibility to web services of the companies, performing various tasks has been proved to be significantly easier. Consider an example a person going to bank to deposit or transfer amount on the other hand same task can be performed simply online. The managers of SME perceive e-commerce “as adding strategic value to the firm” (Grandon & Pearson, 2004). Those SME that tends to adopt e-commerce believes that the technology presents new opportunities in terms of new services. (McCole& Ramsey, 2005) Also SME with e-commerce is more focused on customers and the competitive market environment (McCole& Ramsey, 2005). Figure 4: Adoption Ladder for SME (Taylor & Murphy, 2004) The “adoption ladder” (Taylor & Murphy, 2004) is shown in figure 4, it outlines the steps of SME towards online business and benefits achieved for each step. It starts with the use of email which leads to efficiency in communication. Then comes the website, launched into the market for public. The important step is where online sale or purchase is initiated providing fundamental means of e-commerce for SME. The next step characterize the growth of SME e-commerce into e-business where a supply chain network is organized in order to deliver the customers with the services offered by SME. At the end of the impementation of these steps the organization transformation within the SME can be viewed, that is brought by the “adoption ladder” (Taylor & Murphy, 2004). SMEs are designating e-commerce as core means of their technology and business strategies and intends usage of web domain for the achievement of transformational change (Drew, 2003). Although employing e–commerce by SME presents many benefits as discussed above. There is a concern related to security regarding the use of web technology by SME. The cyberspace or the domain of the internet is always subject to serious threats of fraud (Ionescu et al, 2011) and unauthorized transactions are possible. Such issues pose a serious threat towards data integrity SME. In short the opportunities provided by the e-commerce for SME are significant and that is why SME tends to have it. It increases the firm strategic worth, provides more customer focus, ability to compete in the market. E – commerce tends to bring about an organizational transformation that results in the achievement of business benefits. The drawback, however, exists in terms of security. As a potential threat of cyber crime cannot be completely avoided. Conclusion With the rapid incorporation of technology in every field has given rise to a knowledge based activities such as knowledge management system. The focus of products is shifted to knowledge based products. In this context a knowledge economy has emerged. The knowledge economy is mainly technology intensive, with the utilization of ICT in the operational activities of organizations. Knowledge management comprises various procedures to manage the processes of formation dissemination, and use of knowledge. The adoption of knowledge management systems by SME is somewhat a bigger challenge compared to the larger enterprises. 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