In September 2007, AMR Research conducted a detailed survey of 350 IT and business leaders across all industry sectors in the United States, United Kingdom and Germany to better understand spending plans, adoption, growth and business drivers for knowledge management (KM) platforms and applications. Here is a look back at the data through the lens of a possibly tighter economic environment.
The study showed that U.S. companies, the group for which we could extrapolate overall numbers, will spend an average of $1,224 per employee on KM software and services in 2008, a 16 percent increase over 2007. The total spending number across products, services and internal support amounted to $73 billion in 2007, which will grow to $85 billion in 2008.
Those numbers might seem astronomical, especially considering they only represent the U.S. market, but they include a wide range of associated categories, including content management, search, portals, collaboration and knowledge management applications. Moreover, the number considers not just licenses, but hardware, maintenance, services and internal headcount.
Still, more than 16 percent growth is remarkable. Separate AMR Research studies put only business intelligence and CRM—among the many software categories on which we conduct spending surveys—on par with KM in terms of growth.
So, why is knowledge management becoming such a high priority in the minds of IT and business professionals (roughly two-thirds of our respondents held IT roles; the other one-third held business roles)? The purpose of the study was not just to predict spending in various KM technology categories, but also to determine why. That is, what are the most important business issues that companies are looking to KM to help solve?
Thus, our study examines the top business priorities, what we call critical business initiatives (CBIs), for companies investing in KM. We determine CBIs in the course of our day-to-day inquiries and interactions with our clients. At the beginning of every call, we ask them about the business issues they’re trying to solve. We roll those answers into common themes and then validate the list against the broader, cross-industry and cross-geography audience in our spending study.
CBIs are not an attempt to pigeonhole KM investments into traditional departmental or industry silos, but to look at universal KM problems that require coordination across entire organizations. Figure 1 (Page 13, KMWorld, Vol 17, Issue #5) shows the CBIs regarded as most important by the companies in our survey, along with the perceived performance gap.
The CBI perspective gives our customers a clearer look at how to align technology investments with business goals. We also use CBIs to guide our landscape reports—the pieces in which we determine a vendor’s experience and expertise in addressing business issues through customer references and case studies.
Knowledge management framework
The scope of our survey covers the software elements of AMR Research’s Active Knowledge Framework (see Figure 2, Page 13, KMWorld, Vol 17, Issue #5), including four major categories:
- Portals and portal frameworks often act as platform and gathering points for KM initiatives. The portal framework serves as an integration environment, giving users secure, personalized access to structured and unstructured information sources, allowing them to aggregate, author, share and collaborate on knowledge. Portals also provide a single point of access, relieving users from decisions about where information is best stored, shared and retrieved.
- Content and document management systems ensure the quality and integrity of information. This includes ensuring that what goes into a knowledgebase is retrievable, that it’s worth the cost of managing it and that it’s disposed of when it becomes a liability. Subcategories include document management, records management, Web content management, DAM, imaging, XML component management and more.
- Navigation, search and retrieval (NSR) serve to aggregate and extract information from disparate structured, unstructured, internal and external sources. Not just a simple search box anymore, NSR platforms offer flexible and dynamic means of processing and navigating through more information, and are increasingly employed for their ability to integrate variously structured sources as well as offering business intelligence capabilities. NSR includes discovery, text analysis, indexing, categorization and related purposes, and has a complementary relationship to content management.
- Collaboration goes hand in hand with KM, giving people direct access to each other’s knowledge and promoting sharing. Collaborative environments also serve to generate and capture reusable content. They include real-time mechanisms, such as instant messaging and Web conferencing, and asynchronous mechanisms, such as document collaboration, team rooms, wikis and blogs.
Knowledge applications tend to employ content management, NSR and collaboration capabilities as services geared for more specific goals and purposes:
- E-learning and learning management systems educate people and certify their understanding of subjects, from company policies and procedures to regulatory processes.
- Expert location and knowledge networks, in lieu of published content, tend to identify who knows about a given topic. They have been used most effectively in R&D and services organizations, but are extending into general-purpose use with their introduction into portal and collaboration software.
- KM and collaboration suites intend to serve many or all of the above functions, often invoking the services for collaborative project management.
1. On average, midsize to large U.S. companies will spend $5.3 million in total and $1,224 per employee on KM software and services in 2008.
The budget growth for KM platforms, technologies and applications shows a significant increase as companies wrestle with a wide range of business issues requiring better handling of knowledge assets, including content and people. Sixty-six percent of companies expect budget increases in KM technologies, including content management, NSR, portal frameworks and collaboration tools and platforms. Only 5 percent expect to decrease spending in those areas. (See Figure 3, Page 13, KMWorld, Vol. 17, Issue #5)