Knowledge management a strategic imperative

Knowledge-management tools are now the most important strategic technologies for large companies, according to a new report and survey of European executives by the Economist Intelligence Unit (EIU), sponsored by Tata Consultancy Services.

In the survey, 67 per cent of companies cite knowledge-management/business intelligence technologies as important to achieving their strategic goals over the next three years. This compares with 63 per cent that accord the same level of importance to new customer- relationship-management (CRM) solutions, and 35 per cent that see mobile/wireless technology as vital.

The findings are based on a June 2005 online survey of 122 senior executives in western Europe, 68 of whom were based in the UK. Participants were selected from large organisations with over $1bn in annual sales revenue, and from a cross-section of industries, with a particular emphasis on financial services, healthcare and pharmaceuticals, telecommunications and professional-services companies.

Researchers at the EIU found that, in many of these organisations, information overload was impeding effective decision making. “Over half (55 per cent) of executives say that IT’s failure to prioritise information is the main barrier to effective decision making. Consolidating information and providing consistent performance indicators are regarded as the most important step firms can take to improve the speed and quality of decision making,” says the report’s author, Terry Ernest-Jones.

In particular, good customer information remains elusive at many firms. “Knowledge about customers, their preferences and behaviour is the overwhelming focus for improving the quality of information in large organisations over the next three years,” says Ernest-Jones.

When asked where IT needs to improve most to help managers make better decisions, the top two priorities are to make it easier to analyse and drill down into information (40%) and to improve the quality of data (31 per cent). Only 12 per cent of executives see ensuring access to information anywhere as a priority for improvement.

But most respondents acknowledge that corporate culture is as important as IT for ensuring effective knowledge management. Half of executives said that internal barriers between departments hamper information sharing and that ignorance of what knowledge exists, or of where to find it, is another major barrier, according to 41 per cent of respondents. “In some cases, a simple solution such as keeping a regularly updated record of who knows what can be more effective than throwing IT at the problem,” says Ernest-Jones.

A free copy of the report, ‘Managing knowledge for competitive advantage’, can be downloaded at: www.eiu.com/site_ i nfo.asp?info_name=eiu_TCS_know_how.