THE RELATIONSHIP BETWEEN KNOWLEDGE MANAGEMENT AND INFORMATION MANAGEMENT

Introduction

It is a truism that the collection, storage, manipulation and retrieval of information are much easier due to improved hardware and software that are now readily available. However, many of those information handling technologies are leading organisations into information overload.

At the same time, there is often great readiness to invest money in expensive IT. This is mainly because it is seen as keeping up with the times. However, much time and thought are not always given to consideration of planning aspects, such as:-

What information does the organisation need to achieve corporate objectives?

How do people need to use information to do their work properly?

How information should flow inside the organisation and between the organisation and the outside world?

What makes up the totality of the organisation's information resources?

If these issues are ignored, problems can develop within an organisation. As a result, many organisations do not fully or properly exploit their information resources.

It is another truism that management often sees information services as dispensable when they have to make savings. Although the value of information has been recognised, it is still not perceived as being as important as other resources. The onus is therefore on information professionals to ensure that information resources are seen as important and are controlled and managed in such a way to maximise their potential value.

Information Management

One can define information management in all sorts of ways.

One way is as: "the integrative management of a broad range of information/data/libraries, human, financial and technological resources, for the satisfaction of user needs, in pursuit of improved effectiveness, increased profits, and better services". Information managers have long realised that they need to be aware of the importance of supplying all types of information to the company. They strive to promote the place of information resources at the board level. Indeed, in some organisations "Information management" has found its way into the vocabulary of top management. However, whether they fully understand the concept is another matter.

For example, a recent Reuters survey found that whilst many middle and senior executives recognised that information is a key resource and that their companies were heavily dependant upon information, few of their employers had any coherent information policy or strategy in place.

The idea that information is a resource that should be handled like other resources, such as personnel, plant, financial assets, etc. can be traced back to the 1980s.

The idea is closely associated with the name of "Woody" Horton, who made his name writing articles and books - and promoting software - in the field of IRM.

Information Resources Management (IRM)

Information Resources Management (IRM) is a management activity concerned with information assets, or the content of information, and the people through which an organisation handles its information. Instead of looking at information as an overhead expense, IRM looks at it in the following ways:-

it something of fundamental value, like money, capital goods, labour and raw materials;

it is something with measurable characteristics, such as: methods of collection, uses, and a life-cycle pattern;

it is something that can be capitalised or expensed and cost accounting techniques can be used to control it;

It is an input, which can be transformed into useful output(s) that is (are) beneficial to achieving organisational goals and objectives.

John Diebold popularised IRM, with his pronouncement that, "the corporations that will excel in the 1980s will be those that manage information as a major resource". The IRM idea has enjoyed some increase in popularity since its inception. For example, Aslib has formed an IRM Network so that members interested in IRM can meet to develop the ideas further. IRM is a process that seeks to harness information for the benefit of the organisation as a whole by exploiting, developing and optimising information resources. Thus, IRM is the managerial link between the corporate information resources and the organisation's goals and objectives.

To achieve this link, every organisation should apply management disciplines, tools and techniques to the information resource just as they apply these disciplines, tools and techniques to other organisational resources. By doing this, the information resources of the organisation are managed along with the other organisational resources.

 

However, one of the difficulties is that the other resources, for example human, financial and physical, can be measured or counted, whereas information cannot, or only can with difficulty. Information is intangible and subjective, and its value depends on the use to which it will be put. So, accountants have great difficulty valuing the information assets of an organisation. One way of valuing information assets would be to calculate how much would it cost to re-create this information now, or how much did it cost to create the information in the first place. Recently, a complete British database was offered for sale. Produced by the Turing Institute, it comprised abstracts of items in the field of artificial intelligence and expert systems. It was priced at £500,000, this representing the cost that was incurred in building the database. Despite the fact that the price tag did not take into account goodwill, hardware, software, staff resources, etc., there were no takers at this price and the database folded. It looks as if this is not an acceptable way to value a database. Another interesting case study can be seen with the share prices of information intensive companies.

Despite all the hype you have seen regarding the share price of Netscape, Amazon.com and the like, in many cases the reverse applies. The share price is much lower than was hoped for, as city analysts feel uncomfortable with a company whose primary asset is the information it holds. Yet in contrast, acquisitions of database producers sometimes involve huge sums of money. There seems to be no rhyme or reason to the pricing of information assets.

To bring the point home, a nice recent story was the theft of confidential document E911, just six pages long, which was appropriated from AT&T and then widely copied. In the ensuing court case, AT&T were asked to value the document. They claimed its value was $79,449, this representing the cost to them of creating the document. However, it was pointed out that the same data plus even more detailed information was available in a BellCorp Technical Reference Document, available on sale for $13!

This demonstrates some of the problems in trying to value a piece of information, and similarly exposes the difficulty for a company suing someone for the theft of information.

Any resource should be evaluated in terms of cost and value. The assumption (or hope) is that the value of a resource equals or exceeds its cost. One major problem is that cost is generally measured quantitatively and objectively, while value is generally assessed subjectively. Value judgements are made on the basis that each information resource must have a role and be of significance to the organisation.

Information Resource Mapping

The idea of Information Resource Mapping was first developed by David Best of KPMG. The idea was subsequently popularised by Horton. It is the best known, and probably most widely used IRM technique. Information is intangible, inexhaustible and immeasurable. How can it be managed? The answer mapping gives is: information can be managed because it can be modelled. A manager who models an organisation's information resources as they would any other organisational resource, will be able to put the organisation's information resources into perspective by understanding the contexts within which they are used.

Information resource models can focus on the elements of an organisation's information resources and how they interlock. Alternatively, they may focus on the flow of information within an organisation. Either way, mapping provides an approach to dealing with organisational information resources and provides a 'map' of all the information resources that exist within a particular organisation. Horton recommends a "discovery process" based on the information resource entities (IREs) used by the organisation. IREs are "a configuration of people, things, energy, information and other inputs that have the capacity to create, acquire, provide process, store or disseminate information; the entities are the information holdings and information handling functions, that are, or should be, or could be, managed as organisational resources". Horton simplifies this by labelling such things as: Sources, Services and Systems.

I mention IR mapping because later in this talk I argue that KM cannot really be successful unless analogous techniques are used for mapping knowledge resources in an organisation.

 

 

Information management and information resource management techniques and tools have been around for about 20 years, and there is a small, but enthusiastic band or organisations who have adopted the ideas. One key factor in the adoption of such ideas is the concept that information must be shared between employees in an organisation. We all know the problem here. Individuals know that information is power, and will often do anything to stop colleagues obtaining information that really would benefit everyone.

Research commissioned by Reuters showed that one third of managers surveyed had had information that they needed withheld from them, and 59% thought the reason was internal political reasons. Incredibly, in 5% of the cases, information had been withheld by someone more junior than them. David Skyrme, in his recent report Creating the Knowledge Based Business reports the case of a trader in a bank trading room who saw that a colleague was making an unwise decision to buy a certain stock.

 

It was unwise because the trader had information that showed the company in question was s in trouble. But, because there were rumours that redundancies were in the offing, the trader declined to warn his colleague of the mistake he was making. He wanted the colleague to show big losses on his account when the time came for decisions on who was to be sacked. This was despite the fact that the ultimate loser was not the traders, but the bank itself. So a good information management policy must overcome this natural and understandable tendency to hog information for your own private gain.

So there’s information management and how it is applied. What’s the difference between all this and Knowledge Management?

What is KM?

Information is not, of course, a synonym for knowledge. Knowledge is all about knowing or understanding, whereas information is the materials that supplies or feeds into that knowledge. If you like, information has the potential to be worked upon, developed and applied.

So, clearly KM involves something rather more than simply the collection of formal information resources that an organisation may possess. A key criterion is that whilst information may be in formal or informal form to start with, it can always be converted into a formal form. Let me give you an example. You are walking in a city and suddenly you realise you are lost. You go up to a stranger and say ”Excuse me, can you tell me the way to the Railway Station?” and the stranger replies ”Take the first right and the second left, and you reach a main road. Turn right and you can’t miss it.” That information was passed to you in an informal way. But equally the stranger could have written those instructions down on a piece of paper and presented it to you as a piece of formal information.

Compare this situation with knowledge. Some knowledge, for sure, can be distilled into a formal statement, and can be transmitted as specifications, know how, recipes and so on. In KM jargon, this is known as explicit knowledge. But in addition, there is the tacit knowledge that is far harder to write down. This is knowledge based on experience and values, and is often intuitive.

One of the great problems with developing expert systems is to get the experts to articulate their tacit knowledge. When the stranger in his instructions says ”turn right and you can’t miss it”, in fact what he doesn’t tell you is ”it is a 20 minute walk, you have to cross the river and go up the hill”. That was tacit knowledge for him, but he failed to make it explicit to you. He somehow assumed you would know all this, but you don’t.

In my view, then, KM is information management plus. It is plus in two regards. Firstly, knowledge is more than information, and therefore the benefits of a knowledge management approach will be greater than an approach based solely on information management.

It is also plus because although, as I indicated, IM has enthusiastic supporters, they are relatively few in number. In contrast, KM has become a major management fad - arguably, the biggest one right now. It certainly seems to have swept past Business Process Reengineering and Total Quality Management.

Incidentally, an Alta Vista search on these terms a week ago produced the following hits:

BPR 18,401

TQA 47136

KM 33,233

So, information and knowledge are closely related, and IM is one stage along the road to KM. David Wilson’s excellent book Managing Knowledge provides a useful simple statement of how the two are linked:

ACTION

DECISION

KNOWLEDGE

INFORMATION

DATA

 

By selecting and analysing data, information is created. By combining different bits of information with prior knowledge, further knowledge is produced. From this, decisions can be taken and then actions implemented.

So what is involved in KM? According to Sylvia Webb in her excellent Aslib Know How Guide Knowledge Management: linchpin of change, implementing KM involves some or all of:

Recognising and building in house expertise

Formalising to varying degrees the harnessing of knowledge through the use of appropriate systems

Passing on knowledge

Developing it from an individual asset into a corporate one

Encouraging the growth of an open corporate culture in which knowledge is viewed as central to organisational development

Although Webb does not mention them, I would add a few more features:

Recognition that knowledge is an asset and attempting to value that asset on the balance sheets

Carrying out knowledge audits to identify what knowledge is maintained, and where, and to identify knowledge gaps, and knowledge duplication

Developing a KM strategy or policy, supported by top management but with its home in middle management

You will notice that one feature neither Sylvia Webb nor I mention is:

Installation and implementation of suitable hardware and software for the exploitation of knowledge

My reason for ignoring this is as follows: the technology is only a means to an end. If the corporate culture is not right, if top management does not buy into the concept, if the staff do not want to share their knowledge, no amount of technological wizardry will overcome the problem.

 

In my view, a key reason why Executive Information Systems were not very successful in the late 1980s and early 1990s was because they were technology led rather than people led. The same will apply to KM. Notwithstanding that, if the corporate culture IS in place and if top management is enthusiastic, then the technology can help enormously.

Summing up on KM

I hope I have now made clear the close affinity between the old established, but not much used ideas of IM and the new field of KM. Let me conclude with a few general thoughts:

I do not believe KM is going to be a short lived fad. Knowledge is fundamental to future success for all organisations. It may be that in the future the principles of KM become so second nature to organisations that it no longer gets a specific mention, though. This will be the ultimate compliment - obliteration through over use.

 

Secondly, I do not believe KM will really take off until the key issue of how one values information and knowledge on the balance sheet. Once standards are set and widely accepted, then everyone will become interested in KM because their bottom line will, literally, depend on it.

Thirdly, KM will not work without an information and knowledge audit. This will ensure that one does not buy in or duplicate expertise that already exists, they exploit the knowledge they possess, and makes it easier to identify gaps.

There is an emerging set of tools and practices for mapping knowledge, creating knowledge databases, for disseminating knowledge and for assisting the development of a knowledge based culture. But they are no more than that - just tools and practices. Alone, they do not create a knowledge based organisation.

Next, KM will not work unless the corporate culture is open and sharing. Ideas and learning should be rewarded. It will also not work unless top management enthusiastically adopts and endorses KM.

KM is not an instant panacea. It will take time, money and effort to achieve a KM based organisation; and be prepared to accept that mistakes will be made.

Next, a key to KM is exploiting tacit knowledge. This is the hardest type of knowledge to exploit, but it certainly requires good working environments and processes that encourage people to share knowledge. A database of expertise in the organisation is a small start in this process.

An explicit knowledge strategy and vision are necessary.

Mapping knowledge is not difficult and should be done once one has learned the tools and techniques of Information Resource Mapping.

What do you need to do?

You need to appoint a Chief Knowledge Officer. You need a clear knowledge strategy that everyone buys in to. You need to develop tools to ascribe financial value to your knowledge. You need to change the culture.

You need a good technical infrastructure and to use specific hardware and software to assist in the implementation of the strategy; and finally, you probably need to do knowledge mapping.