Knowledge management 2002-2003: the end of the beginning
By Eric Woods
Most people in the IT industry will be glad to say goodbye to 2002, even if they are wary of what lies ahead. Yet, there have been positive elements in the year, and we will eventually view this period as the real proving ground for the ideas and technologies behind knowledge management.
The knowledge management market, in fact, has fared better than many other areas. The KM and business intelligence sector of the enterprise software market is the only one to have shown any growth in 2002. Ovum estimated that the market as a whole would be worth more than $16 billion by the end of 2002. It will continue to be the fastest growing segment of the software market over the next five years, totaling more than $21 billion by 2006.
The reasons for our relative optimism for the market are not hard to see. Organizations continue to see knowledge and information management as key areas for investment. However, there has been some shift in priorities. Web content management has fallen in favor, while document management vendors have been well placed to exploit the focus on enterprise content management requirements.
Business intelligence technologies—data warehousing, OLAP and data mining—are back in fashion as companies look to make the most of their customer data to maintain revenues and margins. Small portal vendors are struggling as that nascent market starts to mature, and we see the big players gaining market dominance. And, of course, vendors whose business strategy was too closely associated with the hype of the dot.com boom are desperately trying to reposition and restructure for survival. But the general demand for the core knowledge management technologies has not lessened, and in the public sector, government in particular, vendors have been able to tap into new sources of funding.
But the most significant trend in 2002 has been the level of acquisition activity. Stronger players have taken advantage of market conditions to add to their offerings or grow their customer base, while weaker ones are looking to merger or acquisition as a way out of a difficult position. While acquisitions reflect the problems that small vendors face in a difficult market, the trend has many positive aspects. It should lead to the integration of innovative knowledge management technologies into broader platform offerings. That should make knowledge management more cost-effective for many organizations, particularly companies that cannot afford best-of-breed approaches.
Five trends to watch in 2003
While the onus in 2002 may have been on survival, the importance of innovation in the knowledge management market has not changed. Important developments are still taking place that will have a significant impact on the corporate architecture of knowledge-based companies. Further acquisitions and mergers will also characterize the market through 2003. But five other key trends have emerged in 2002 that we see dominating the knowledge management technology agenda in 2003.
Toward integrated knowledge management suites
The acquisition activity of recent months has not just been about buying up weaker players. Many of the acquisitions point toward a shift in the competitive landscape as vendors—particularly of content management solutions—strive to offer a complete product that can address all the requirements for knowledge management in both a business-to-employee and business-to-business setting. In recent months alone, we have seen Documentum buy eRoom and Vignette acquire Epicentric. Both targets were well-respected start-ups within proven products and real customers. Vendors such Documentum, Hummingbird, Open Text and divine are building a portfolio of tools that can address a wide range of information and knowledge management tasks.
In addition, we have seen IBM, Microsoft and Oracle fill gaps in their knowledge management offerings in 2002. In 2003 we expect to see them leverage those additions more effectively. With IBM now targeting content management and Oracle attacking the collaboration market, there is plenty of opportunity for a number of titanic clashes in the knowledge management market.
In the future, therefore, users will have an interesting choice between the content management-based approaches of the specialist vendors and the application server-centric strategies favored by the industry giants.
Collaboration: the time has come, again
The collaboration software market is going through a critical phase in its evolution. New business demands and new technologies are combining to transform the market. Over the next two years, we will see collaboration in the enterprise transformed as Internet and wireless technologies change the way we work together. Many of those changes have been underway for some time, but they are now reaching critical mass.
A range of new entrants and innovative solutions has risen to challenge the dominance of IBM Lotus as the default platform for enterprise collaboration. IBM itself has embarked on a significant organizational and technical transformation of its products to meet the challenges and opportunities offered. And while Microsoft casts a long shadow over the market, it faces some difficult decisions over its strategy for collaboration.
An additional factor in the development of the market will be the increasing need for collaboration capabilities to be embedded in most mainstream business applications. As a result, a wide range of software vendors must be able to offer a collaborative aspect to their product set. They will achieve that through development, acquisition or in many cases, partnering—adding further to the dynamism of this market.
The next two to three years will see a significant transformation of the collaboration software market. We will continue to witness the adoption of innovative point solutions, but there will be a growing need for a more manageable and coherent approach to handling collaboration across the enterprise. Existing platform vendors must adapt their offerings to support more flexible and better integrated collaboration services. Smaller vendors must expand their offerings, typically through acquisition or merger. All players will need to adapt quickly to changes in the overall technical environment and, in particular, the emergence of Web service-based architecture for application integration and the gradual development of the wireless enterprise.
Expertise location: a litmus test for KM
Expertise location could be one of the most important growth areas for the knowledge management market in coming years. If it proves to be attractive, expertise location will not only create a whole new market opportunity, it will also act as a lever for other intelligent software solutions within the enterprise. However, it also remains one of the most challenging areas of the knowledge management market and so far has been restricted to a few early adopters.
One reason for the slow take has been concern over user privacy, but that worry may be exaggerated. More importantly, the idea of sharing expertise through technology remains alien to most organizations. Expertise is a closely guarded asset and one that is only shared fully in trusted and usually face-to-face environments. It has been difficult, therefore, to build the critical mass of contributed knowledge needed to make most of those products effective.