Synchronization of Information Technology and Knowledge
Management as a Key Factor in E-business
Joseph George, Ph.D., CSQP Head of IT and Business Computers St. Theresa Int College, Bangkok, Thailand.
Abstract
The Information Technology (IT) as a lever of competitive advantage; the IT effect characterized by consideration of information as a “utility just like water and air” and more recently, the “e” phenomenon turned as a new paradigm shift with the emergence of the internet. Now ‘e’ phenomenon has become a key factor in business.
In the current era the competitive advantage is based on information to one based on knowledge creation. The past era was characterized by relatively slow and predictable changes that could be deciphered and controlled by most formal information systems. The organizations that were slow to adapt their strategy to changing business environment will be hobbled by their past recipes of success.
The paper explains the need of transition from the old world of business to the new world of E-business in terms of fundamental transition or paradigm shifts. The better and accurate understanding of the strategic relevance of knowledge and knowledge management is expected to contribute more effectively to the E-business strategies that result in sustained performance.
Introduction
The information revolution is sweeping our economy world over and there is no way to escape its effects. The rules of doing business are changing because of dramatic reductions in the cost of obtaining, processing and transmitting information.
“Businesses, especially large ones will have little choice but to become electronically information based, as demographics demand the shift, the centre of gravity in employment is moving from manual and clerical workers to knowledge workers who resist the command and the control model that business took from military 100 years ago”. So Information Technology must be conceived broadly to encompass the information that business creates and use as well as a wide spectrum of increasingly convergent and linked technologies that process the information.
In this new world of business, success or failure for most enterprises depends on their ability to incessantly question and adapt their programmed logic of the way things are done. Such reality checks of the company’s ways of doing business are necessary to keep up with the sustained dynamic and radical changes in the business environment. The “old world” of determined and pre-defined recipes of success world still exists
2
side by side with the world of business enterprises. The new world of business puts less premium on playing by predefined rules and move on understanding and adapting, as the rules of the game-as well as the game itself keeps changing. Currently the “old world” of business is shifting to the E-world of business”.
The earliest emphasis of information systems log on defining the optimal programmed logic and then executing that logic to squeeze the highest effectiveness. However, increasing dynamics of the business environment mandate greater emphasis on ensuring doing the right thing than on denying the right thing with ongoing reassessment of key assumptions, the emphasis is more on the ongoing renewal of existing knowledge, the creation of new knowledge, its management and its application in business practices. The traditional information-processing model for the old world of business assumes a problem as given, and the solution is based on pre-specified understanding of the business environment.
The role of information technology has always been to help organizations solve critical business problems or deliver new services by collecting data, tuning data into information and tuning information into knowledge quickly enough to reflect the time value of knowledge precisely because changes in IT are becoming so rapid and unforgiving. The consequences of falling behind to irreversible, organizations will either master or re-master the technology or die.
The realization of potential offered by IT is catching up fast in the industry and all angles of our society. As industries grew, they realized the benefits of using e-business systems for different activities to obtain effectiveness in terms of speed, better management and competitive advantage and implemented software systems either custom built or bought off- the-shelf.
As a result of systematic increase in IT and information, there has been a noticeable improvement in productivity, quality and customer service. So Information Technology can become an effective driver, facilitator and coordinator of the business processes.
To survive and grow in the knowledge rich economy which is going to emerge, it is highly imperative that our corporate executive must explicitly define the role that they wish IT to play in their organizations competitive strategy.
Business
The history of Business has been as dynamic as the history of mankind itself. As we know today, manufacturing is pivotal upon entrepreneurship, logistics, production, machines, materials handling, marketing, sales and services and project management. The manufacturing technology includes computer numerically controlled (CNC) machines, advanced material handling system, computer system such as CAD/CAM, manufacturing resources planning software, reverse engineering software and other integrative software’s.
The extraneous factors like customers tastes and demands, societal attitudes, changed environments, information technology explosion, globalization, rise in the standard of living of the populaces and therefore, shift of priority to better quality of products, congested and unpredictable markets. Above all, heightened competition, almost covered the engineering sector to innovate or perish.
Effective survival can be achieved by implementing the information technology. IT is necessary for Engineering sector because we are moving towards a World of virtual enterprise (WOVE). Business is now being conducted over the powerful media of the web (e-business). As business sector grew, we have to realize the benefits of using IT
systems for different activities to obtain effectiveness in terms of speed, better management and competitive advantage and implemented software systems either custom built or brought off the shelf.
Corner Stone of Success and Growth
Figure. 1.
Need of Technology Transfer in e-business The technological changes are beyond the control of a single organization with an exemption to research organizations. As we have seen in the post liberalization era, only the fitness and the most efficient are likely to survive on the business horizons, technology plays a dominant role in effectively and efficiently converting organizational inputs into outputs.
One of the primary expectations is high return on technology investment. But the short life cycle of technology makes it absolute and the need for technology up gradation is felt time and again. Subsequently technology transfer or import becomes necessary. Today each organization is facing the extreme positions of
technological obsolescence and up gradation as this process repeats itself, cycles after cycles. As new technology changes moves from left to right, it makes the organization conscious of obsolescence and thus creating the need for up gradation.
The Technology Base Upgradation & Knowledge Resources
Situation Decades back when IT systems first
appeared, they were deployed to automate manufacturing processes and manage financial and secretarial activities more efficiently and easily. As maturity in the IT industry grew, decision support systems and executive support systems were deployed. ERP packages are higher level abstractions of such systems. Now the whole scenario is changed with business processes being oriented towards customers and real time decisions. ‘E’-Wave is helping this sweep. CRM and SCM are becoming the rule of the day. Growth in IT systems has been continual, but always it has not been possible to replace earlier systems completely. Hence the need to synthesize IT and business systems have increased i.e. the technology based up gradation is a must in this changing scenario.
Information technology has a crucial role in organizational change for effectiveness and efficiency. So business industry also has to prepare to absorb the technologies happens; it renders the available technology as conservative and makes the organizational technology obsolete. Naturally the organizations will be aspiring for modernization by technological upgradation. So technology import, technology transfer or indigenous development of technology can meet the need for renewal of technological obsolescence. Acquiring state of art technology makes the organizations into high-tech firms. Since time is critical in every activity, speed and fast changes can be
Actor Process
IT System (e-business)
4
achieved by making organizations move from low tech to high tech. The organizations that are able to identify and upgrade technology for potential competitive advantage will emerge as winners.
Knowledge Resources
In order to capture knowledge and lessons of experience and to translate them into actionable knowledge, the information technology is the best way. Knowledge is a resource and it can be extracted from the person possessing it, mode independent of that person and codified for future use.
Advances, in Information technology, especially IT, have made the task of knowledge management easier. Rise of networked computers and internet has made it possible to codify, store and share databases and reports easily and at least cost. The largest amount of information is an organization in the form of unstructured text. Knowledge has to be extracted from these texts, processed and made available for reuse. Human knowledge can now be transferred to Artificial Intelligence Systems through technology, which can make the complex task easier. But only with a long term perspective and by emphasizing on effective knowledge management one can combine success on the learning economy. How about you?
Knowledge Management
The present business scenario is characterized by intense competition, low growth rate, saturation in quality and services, standards, rapid changes and uncertainty. Success in this environment depends largely on “Humanware” which refers to the organization of work, management and skill of labour force. Emphasis on humanware results in better productivity gains and innovation which are the only means to success under present
economic conditions, resulting in what is called the learning economy where improvements in productivity, organization of work, training application of IT and innovation are under focus. All this is impossible without giving workers more discretion and responsibility. Improvement in the ability of workers, individually or collectively, to respond to a situation and to learn or invent new practices can result in performance gains. This knowledge has become the most important factor of business sector. Knowledge resides with the workers but it has to be managed so that it could be converted into differentiating factor and a competitive advantage. Companies gain reputation by the knowledge base that they have. Organizations which are better able to manage their intellectual assets have a higher success rate. Knowledge is not just collection of information, it resides in the users interpretations.
Importance of Knowledge Management The foundation of economy is shifting from natural resources to intellectual assets. For organizations in the long run, effective knowledge creation and management is essential. Knowledge management has to be as inbuilt feature of every department. Right information base in synchronization with the creative and innovative capacity of human resources of any organization can make a difference in the fortune of organizations. The effective knowledge management is not only useful for individual companies but also benefits the society as a whole.
Commercial Aspects: Schedule, Cost and Performance
Figure 2.
While the supplier is concerned about the schedule time, costs and defects, the customer looks for delivery, price and quality.
We are in business to make money We make money by satisfying needs We are able to satisfy needs by doing e-Every need/ Do pair is an interaction
The aim of customer focus is on improving need/do interactions. Reputation of the same action constitutes a process. The improvement of our business means improvement of our processes. Customers need products/service on time, with zero defects, at the lowest cost.
As process capability improves, the product quality increases. As quality increases, costs and cycle time go down.
By providing the right information technology at the right time will uncover what we do well and not so good. Once basic competencies and deficiencies are known, corrective action can be taken.
Corrective action leads to the reduction of defects, cycle time and cost. The reduction of defects, cycle time and cost leads to improved customer satisfaction.
As customer satisfaction improves, the likelihood of doing business increases. As business increases, we (as individuals) grow and prosper.
Supplier
Information as a Resource to leverage Overall Performance
Information is a valuable and costly asset that must be planned, protected, preserved and controlled as other valuable assets such as people, money, machines, facilities etc. Major shift of the power of technologies is to focus on the power of information content. As we reach the threshold of 21st century management information involves professional approach to deal with the global dynamic interactive environment with the new policy of liberalization and globalization, the professional in information based society is at the cutting edge. Information is considered as the nervous system for an organization.
Information technology is the technology portrayed as a major force for managerial and organizational changes. The extent to which information technology is absorbed in an organization is valuable through its work culture which leads to overall improvement in total performance and quality of life. It is essential to have management of change for betterment and effectiveness. There is bound to have resistance but growth cannot take place without change. For this we must understand information technology with the best practices of management.
The people, tasks, technology, culture and structure, systems, style of an organization; do affect efficiencies and effectiveness and how it organizes the delivery of information systems technology. Many variations do exists which reflect the
Schedule Custom Delivery Do Cost Price Need Defects Quality
6
attempts of organizations to tailor their organization to their business activities having new work. Procedures with improved layouts, investments in new equipments to get the full advantage of using information technology in everyday life.
The world of information technology necessitates the need for continuous search for new perspectives. As changes take place by continuous innovations in computers and information technologies in order to achieve excellence in the business world, if we do apply a few steps mentioned below, it will help our organizations to increase the overall performance.
• Attain flexible approach
• Adherence to fast paced innovation
• Building relevant structures, systems and skills
• Scientific attitude for achieving excellent results
• Creation of customer/employee responsiveness
• Learning to love changes
• Mutual respects and confidence
• Business ethics
Benefit of customized development to address all issues related to product, process and people.
A Model for Success:
Figure 3.
The Fundamental Logic
• Business survival is dependent upon how well we satisfy the customer
• Customer satisfaction is function of quality, price and delivery
• Quality, cost and prompt delivery are dependent upon process capability
• Process capability is dependent upon the knowledge of our people
• Knowledge can be successfully organized and transferred by using customized systems
• The type of knowledge people peruse depends on where they are being lead.
• The directions people are being led is established by management by providing required technology base.
• The flexibility of Information technology is a must for an engineering industry. The major issues related are:
Situation
Actors in Information Systems Development
Nature of application systems
Information systems models
Flexible information systems as an enabler for organizational change
Flexible information system as an enabler for organizational learning.
Major approaches to
incorporate flexibility in information system
The flexibility can be built into the information system with the following things into considerations.
• How users see his information requirements?
• How the user perceives users information requirements? Technology Knowledge & Maturity Processes People Organization
• How management information system planner/designer perceives users information requirements?
• How MIS planner designs the information systems?
At each stage when the gap is wide then success is doubtful. These gaps can be eliminated by in-house and customized development by considering the people, process and product of the organization. Then the success rate will become high. Best-Practice Technology
Where best practice is determined by the existing capacity of the individual to manage the technical change involved in moving from existing to new practices. Successful upgrading of the technical performance is much more likely to come through a consistent succession of incremental changes rather than through single, dramatic leaps in technical capacity.
The time has now arrived to put significantly increased emphasis on addressing the technological needs. Science and Technology performs a dual function in the process of human resource development. On one hand, it provides the knowledge and skills content of human resource development programs – Science and Technology covers a spectrum of subject disciplines from basic numeracy to quantum mechanics. On the other hand, it also acts as the medium whereby knowledge and skills are transferred. An example is the introduction of computer literacy which has positive spin-offs for a range of other knowledge domains.
Information Architecture
Information architecture is that part of the infrastructure that guides the creation and utilization of information resources. It should be designed to include the following principles:
• Freedom of access to information • Privacy of personal information • Respect for intellectual property rights • Security and integrity of information.
These regulatory principles enable the smooth and civilized functioning of the information society.
Conclusion
“E”-business creates conditions for economic and organizational development, and raises the prestige and presence of an organization in the modern world. The most important goal is to achieve results which in the near future will support the process of economic transformation, and in the long run will ensure economic growth and development of the organization. To reach this goal, it will be essential to link business with most effective ways of information gathering and dissemination.
During the past few years, the corporate world has seen the emergence of interest in knowledge management and adoption of the term by information technology vendors and the industry solution providers. However despite the popularity of the buzzword, most such implementations have been based on the outdated business model and related information-processing view. It may even be argued that in several cases it may be difficult to justify why specific information technology fall in the realm of “knowledge management” rather than in the scope of good old “information management “ or “data management”. This ambiguity has led some consultants to assert that knowledge management is a fad.
There is a need for developing a better and more accurate understanding of knowledge management as enabler of information strategy for the E-world of business. Departing from the information processing perspective that was relevant to the industrial world of business, a new perspective of knowledge management is a
8
must. It is based on the need for synergy between the capabilities of advanced information technology and human creativity and innovation to realize the agility demanded by emerging business environment. A clear idea of the strategic notion of knowledge and knowledge management is certainly required for the sustainability of business in the fast growing and competitive business environment. References
1. Amrit Tiwana, The Knowledge Management Tool kit, First Indian reprint 2000, Prentice Hall of India. 2. Drucker, P, (1999) “Management
Challenges for the 21st century”,
Harper Business, NewYork
3. Knowledge Management: An Emerging Discipline Rooted in a Long History, Karl M. Wiig Knowledge Research Institute.
4. Knowledge management in eBusiness and customer relationship manage-ment: South African case study findings M. du Plessisa,*, J.A. Boonb 5. Harris, K. (1999). “The Gartner Group
e-business glossary: Version 1.0”. Gartner Group report", October 8; [Online], Available: http://gartner4. gartnerweb.com:80/gg/purchase/0/00/8 34/75/doc/00083475.
6. Havens, C., & Knapp, E. (1999). “Easing into knowledge management. Strategy & Leadership”, 27(2), 4–10; [Online] available:http://web4.infotrac.london.g alegroup.com/itw/infomark/430/644/72 715798w3/purl=rc1GBIM0A54370966 &dyn=16!bmk10A54370966?swaep=u p itw.
7. Parlby, D., & Taylor, R. (2000). “The power of knowledge: A business guide to knowledge management”; [Online], cited 2000 - available:
http://www.kpmgconsulting.com/index .html.
8. The Information Technology Professional, Knowledge Management and Information Technology, Guest Editors: Christopher Lueg, Xavier Alamแn, The European Online Magazine for the IT Professional Vol. III, No. 1, February 2002
