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KPMG releases KM report

According to a just-released survey from KPMG, large companies understand the value of a fully implemented knowledge management program, but the complete benefits of such a regime are being missed.

KPMG surveyed chief executives, finance directors, marketing directors and those with specific responsibility for KM at a total of 423 organizations--each with annual revenues over $270 million in Europe, the United States and elsewhere. The business sectors in which these companies engaged were broken down like this: financial services (22%); industrial products (20%); consumer markets (20%); chemicals, pharmaceuticals and energy (14%); government (2%); information, communication, entertainment (2%); services (13%); transport (5%) and others (2%).

Nearly 75% of those surveyed were looking to KM to serve an “extremely significant” or “significant” role in improving competitive advantage, marketing and customer focus. About 65% think that KM would benefit product innovation, revenue growth and profit. Employee development was cited by 57%. Nearly three-quarters (71%) believe KM leads to better decision making, and about 65% view it as achieving faster response to important business issues and better customer handling.

As would be expected, less than half of the companies with a KM program reported having to “reinvent the wheel,” compared with nearly two-thirds for those that didn’t. Information access was another key: 61% could profile buying habits of particular customers better; 72% could access an agreed upon methodology within half a day as opposed to 55% without; 78% were able to identify who last spoke with a customer; 64% could find out why their company won a new account.

On the other hand, KPMG discovered respondents with a KM program tend to see immediate, internal cost gains but don’t equate them with external, longer and more far-reaching benefits such as intellectual capital growth. While 28% believe KM would increase their share price, almost three times that many think it will reduce costs and increase profits.

Some 75% of the respondents either with or considering a KM system saw the decision driven by either senior management or from the board level. They also believe that KM must be a companywide initiative. However, KPMG discerns that the board and upper-level management view KM only in terms of return on investment rather than larger issues. Of the 36% of respondents who reported the benefits failed to meet expectations, the following reasons were most often cited (they were able to give more than one reason): lack of user uptake owning to insufficient communication (20%), failure to integrate KM into everyday working practices (19%), inadequate time to learn the system or the belief it was too complicated (18%), lack of training (15%), and belief there was too little personal benefit for the user (13%).

Generally, the pitfalls of a KM program--even for those who had implemented one--were seen to be: lack of time to share knowledge (62%), failure to use knowledge effectively (57%), and the difficulty of capturing tacit knowledge.

KPMG points to organizations’ failure to grasp the cultural implications of KM. While such a program should remove employee frustration, only a third of the companies actually had KM policies that spelled out the priority of knowledge elements. Even less than a third (31%) rewarded knowledge working. Only 18% had a knowledge map that indicated what information is available.

And, according the survey data, just 16% of the respondents of companies that either implemented (or considered implementation of) a KM regime actually measure “intellectual capital,” or the intangible value of knowledge, innovation and relationships. That figure explains why so few companies value KM as a means by which to increase stock value. Less than half of the respondents that had or were considering KM programs viewed it as a way to attract and retain staff, and only 30% actually achieved it.

KPMG concludes that companies view knowledge management as a purely technological solution. As such, they have employed the tools at their disposal: 93% use the Internet to access external knowledge; 78%, an intranet; 63%, data warehouse or mining; 61%, document management systems; 49%, decision support; 43%, groupware; and 38%, extranets.

Although companies do employ technology, they fail to take full advantage of it. The survey revealed that only 16% of the companies using relevant technology have a system specifically designed for KM. So, it appears that formal implementation of a KM system is a way off. KPMG concludes that the majority of companies are only at the first two stages (of five) in the KM journey. Only 10% are at stage 4, and just 1% at the highest level.

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