Value from knowledge management is created in many ways. In some cases, companies are very focused on achieving a single, specific objective, like cycle time improvement or cost reduction. Other companies have more intangible goals, like making higher-quality decisions or moving their companies toward a more knowledge sharing culture.
Here are several examples of how organizations achieve business value from KM projects. Benefits are grouped into tangible and intangible categories.
Tangible Benefits
Tangible business benefits, which can be used in developing business cases for knowledge management, include:
– Increased revenues
– Increased profitability
– Increased growth and/or market share
– More new business opportunities, i.e., develop and launch more new product and service offerings
– Shortened business process cycle times
– Faster decision making
– Faster response to business issues
– Faster access to knowledge resources (24/7 knowledge availability)
– Enhanced customer service; increased customer satisfaction
– Improved allocation of resources
– Reduced redundancy
– Reduced mistakes and rework
– Increased productivity, efficiency, and effectiveness
– Reduced costs
– Improved processes, practices, and procedures from KM integration
Let us briefly touch on a few of them.
- Increased revenues. Revenue growth is one of the most important benefit considerations in business case development. When KM is used to speed up activities on the critical path for new product development and launch, companies can introduce more and better products with shorter cycle times, leading to increased revenues. Service companies can also increase revenues when knowledge management can be leveraged to provide faster and/or better delivery of their service offerings.
- Reduced costs. KM lowers costs by eliminating rework, cutting waste, reducing “reinventing the wheel”, and streamlining access to information and people.
- Shorter business process cycle times. KM reduces the cycle times of business processes by reducing or eliminating the time spent on low and non value added activities and speeding up decision making on key value-added tasks.
- Faster decision making. KM allows employees to make more expedient business decisions because they spend less time looking for and processing information.
- Increased customer satisfaction. KM increases customer satisfaction, creates positive impressions, and builds brand value because knowledge empowers a company to present a more consistent, unified, and knowledgeable “face to the customer.”
Intangible Benefits
Intangible benefits are much more difficult to quantify for a business case. However, when KM projects are done successfully, the value achieved in these intangible areas is usually equal to or greater than the value achieved from more tangible sources. Intangible benefits include:
– Better (higher quality) decision making
– Higher quality outputs
– Increased innovation
– Increased collaboration and teamwork
– Increased communication
– Codify implicit, fuzzy, and tacit knowledge into “hard” knowledge assets (e.g., lessons, practices)
– Re-use/re-purpose knowledge assets (e.g., templates, standards)
– Increased employee skills and competencies
– Increased value-added of jobs
– More fulfilling work; greater employee satisfaction
– Greater buy-in to decisions made
– Improved morale
Again, let us briefly touch on a few of them.
- Increased innovation. KM establishes an environment for faster innovation by enabling the creation, evolution, exchange and application of new ideas into marketable goods and services. Knowledge is essential in all aspects of innovation. Nurturing and managing the flow of knowledge may be the most distinctive capability needed for the future.
- Higher quality outputs. KM facilitates the creation of higher quality outputs, due to the reuse of templates, tools, project plans, etc.; leveraging best practices and lessons learned; and freeing up time so that the team can focus on higher value added activities.
- Increased collaboration. KM helps integrate talent dispersed across organizations, geographic boundaries, and time zones.
- Codify implicit, fuzzy, and tacit knowledge into “hard” knowledge assets (e.g., lessons, practices). Collecting, codifying, and securing knowledge reduces a company’s knowledge attrition and loss.
- More fulfilling work. KM improves the quality of life, work/life balance, security and flexibility, resulting in lower employee turnover. Given the labor shortages in certain professions, travel and on-site security concerns, virtual work flexibility has become one of the top recruitment and retention tools available today.
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