LA SAGESSE UNIVERSITY MIS400 – Business 

Information Systems
Faculty of Business Administration and Finance

CHAPTER 11
MANAGING KNOWLEDGE

11.1 The Knowledge Management Landscape

Knowledge management and collaboration systems are among the fastest growing areas of software
investment. Knowledge is useful only when shared with others. Knowledge management has become an
important theme at many large business firms as managers realize that much of their firm’s value depends
on the firm’s ability to create and manage knowledge. Studies have found that a substantial part of a
firm’s stock market value is related to its intangible assets of which knowledge is one important
component, along with brands, reputation, and unique business processes. Well executed-knowledge-
based projects can produce extraordinary ROI.

Important Dimensions of Knowledge

There is an important distinction between data, information, knowledge, and wisdom. Data is a flow of
events or transactions captured by an organization’s system. To turn data into useful information, a firm
must expend resources to organize data into categories. To transform information into knowledge, a firm
must expend additional resources to discover patterns, rules, and contexts. Finally, Wisdom is the
collective and individual experience of applying knowledge to solve problems. Wisdom involves when,
where, and how to apply knowledge.

Knowledge is a cognitive, even a physiological, event that takes place inside people’s heads. It is also
stored in libraries and records, shared in lectures, and stored by firms in the form of business processes
and employee know-how. Knowledge residing in the minds of employees that has not been documented
is called tacit knowledge, whereas knowledge that has been documented is called explicit knowledge.

Every organization has four dimensions of knowledge:

- Knowledge is a firm asset: intangible asset. The transformation of data into useful information
and knowledge requires organizational resources.
- Knowledge has different forms: can be either explicit or tacit. Knowledge involves knowing
how to follow procedures.
- Knowledge has a location: cognitive event, social and individual, sticky: hard to move, situated
(enmeshed in firm’s culture) and contextual (works only in certain situations).
- Knowledge is situational: conditional (knowing when to apply procedure) and contextual
(knowing circumstances to use certain tool).

Organizational Learning and Knowledge Management

Organizational learning: Like humans, organizations create and gather knowledge using a variety of
organizational learning mechanisms. That is, organizations gain experience by:
- Collecting data,
- measuring planned activities,
- experimenting through trial and error,
- Gathering feedback from customers and the environment.
Organizations that learn adjust their behavior to reflect that learning by creating new business processes
and by changing patterns of management decision-making. This process of change is called
organizational learning.
MIS400 – Business Information Systems

Knowledge management: set of business processes developed in an organization to create, store,

transfer, and apply knowledge.

Organizational and management capital: set of business processes, culture, and behavior required to
obtain value from investments in information systems.

The Knowledge Management Value Chain

Each stage adds value to raw data and information as they are transformed into usable knowledge:

Knowledge Acquisition

Knowledge comes from a variety of sources. Early attempts of gathering knowledge from documents,
reports, and employee input. Now companies are using more sophisticated technologies to gather
information and knowledge from emails, transaction-processing systems, and outside sources such as
news reports and government statistical data.
- Documenting tacit and explicit knowledge
 Storing documents, reports, presentations, best practices.
 Unstructured documents (ex. e-mails)
 Developing online expert networks
- Creating knowledge
- Tracking data from TPS and external sources

Knowledge Storage

Once they are discovered, documents, patterns, and expert rules must be stored so they can be retrieved
and used by employees. Knowledge storage generally involves the creation of a database: Knowledge
management is a continual process, not an event. As you gather knowledge you must store it efficiently
and effectively. Document management systems are an easy way to digitize, index, and tag documents
so that employees can retrieve them without much difficulty. Expert systems also help corporations
preserve the knowledge that is acquired by incorporating that knowledge into organizational processes
and culture.
- Role of management: support and encourage development of planned knowledge storage
systems and reward employees for taking time to update and store documents properly.

Knowledge Dissemination

Once you’ve built the system, acquired and stored the knowledge, you need to make it easy and efficient
for employees to access. Portals, wikis, social networks, instant messaging, and email are some of the
tools you can use to disseminate information easily and cheaply. Everyone complains nowadays of
having too much information. Contemporary technology created a deluge of information and knowledge:
training programs, informal networks, and shared management experience help managers focus attention
on important information.

Knowledge Application

Knowledge that is not shared and applied does not add business value. To provide a ROI, organizational
knowledge must become a systematic part of management decision making and become situated in
decision-support systems. Management supports this process by creating new business practices, new
products and services, and new markets for the firm.

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Building Organizational and Management Capital: Collaboration, Communities of

Practice, and Office Environments

New organizational roles and responsibilities:

- Chief knowledge officer executives: His/her responsibilities involve designing new programs,
systems, and methods for capturing and managing knowledge. The hardest part of the CKO’s job
may be convincing the organization that it needs to capture, organize, and use its corporate
knowledge to remain competitive.
- Dedicated staff positions (knowledge managers)
- Communities of practice (COP) are informal social networks of professionals and employees
within and outside the firm who have similar work-related activities and interests. Activities
include education, conferences, online newsletters, and day-to-day sharing of experiences and
techniques to solve problems. Four areas where COP can make a difference are:
1- Reuse knowledge, 2- Facilitate gathering new information,
3- Reduce learning curves, 4- Act as a spawning ground for new knowledge

Types of Knowledge Management Systems

There are essentially three major types of knowledge management systems:

- Enterprise-wide knowledge management systems are general-purpose integrated firm-wide

efforts to collect, store, distribute, and apply digital content and knowledge. These systems
include capabilities for searching for information, storing both structured and unstructured data,
and locating employee expertise within the firm. They also include supporting technologies such
as portals, search engines, collaboration tools (e-mail, IM, wikis, blogs), and LMS (learning
management systems)

- Knowledge work systems (KWS) are specialized systems built for engineers, scientists, and
other knowledge workers charged with discovering and creating new knowledge for a company.
(Ex.: Computer-aided design- CAD, visualization, simulation, and virtual reality systems).

- Intelligent techniques are tools for discovering patterns and applying knowledge to discrete
decisions and knowledge domains. These techniques have different objectives:
 Discovering knowledge: data mining, neural networks.
 Distilling knowledge in the form of rules for a computer program: expert systems,
fuzzy logic.
 Discovering optimal solutions for problems: genetic algorithms.

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11.2 Enterprise-Wide Knowledge Management Systems

There are three major types of knowledge in every organization:

 Structured knowledge: Explicit knowledge stored in reports, letters, or presentations, formal rules.
 Semi-structured: Stored in emails, videos, digital pictures, or brochures.
 Unstructured: Tacit knowledge: Stored in the employees' heads.

Enterprise Content Management Systems

Enterprise content management systems:

- Have capabilities for classifying, organizing, and managing structured and semi-structured
knowledge and making it available throughout the firm.
- Capture, store, retrieve, distribute and preserve knowledge to help firms improve their business
processes and decisions.
- Bring in external sources.
- Tools for communication and collaboration.

Knowledge Network Systems

Also called expertise location and management system. It

addresses the problem that arises when the appropriate knowledge
is not in the form of a digital document but instead resides in the
memory of expert individuals in the firm. It provides an online
directory of corporate experts in well-defined knowledge domains
and use communication technologies to make it easy for
employees to find appropriate expert in a company. May
systematize solutions developed by experts and store them in a
knowledge database repository (best practices, frequently asked
questions – FAQ).

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MIS400 – Business Information Systems

Collaboration Tools and Learning Management Systems

The major enterprise content management systems include powerful portal and collaboration tools.
Enterprise knowledge portals can provide access to external sources of information, such as news feeds
and research, as well as to internal knowledge resources along with capabilities for e-mail, chat / instant
messaging, discussion groups and videoconferencing. Companies are using consumer web technologies
such as blogs, wikis and social bookmarking for internal use to encourage collaboration and information
exchange between individuals and teams.

Learning Management Systems

A learning management system (LMS) provides tools for the management, delivery, tracking, and
assessment of various types of employee learning and training. Contemporary LMS support multiple
modes of learning including CD-ROM, web-based classes, online forums, live instruction…The LMS
automates selection and administration of courses, assembles and delivers learning content, and measures
learning effectiveness.

11.3 Knowledge Work Systems (KWS)

The enterprise-wide knowledge systems we have just described provide a wide range of capabilities that
can be used by all the workers and groups in an organization. Firms also have specialized systems for
knowledge workers to help them create new knowledge and integrate that knowledge into business.

Knowledge Workers and Knowledge Work

Knowledge workers include researchers, designers, architects, scientists, engineers, and highly skilled
technical workers who create knowledge and information for the organization. Knowledge workers have
high levels of education and memberships in professional organizations and are asked to exercise
independent judgment. (For example, knowledge workers create new products or find ways of improving
existing ones). Knowledge workers have three key roles in helping an organization develop its knowledge
base:
 Bring external knowledge into the firm (keeping the firm current in knowledge: technology,
science, social thought, and arts).
 Serve as internal consultants regarding the areas of their knowledge, the changes taking place, and
opportunities.
 Act as change agents, evaluating, initiating, and promoting change projects.

Requirements of Knowledge Work Systems

Most knowledge workers rely on office systems (ex.: word processors, voice mail, e-mail…)
The first requirement of a KWS is that it provides knowledge workers with the following necessary tools:
 Substantial computing power for graphics, complex calculations
 Powerful analytical and Graphics tools
 Communication and document management tools
 Access to external databases
 User-friendly interface
 Optimized for tasks to be performed (design engineering, financial analysis)
Knowledge workstations often are designed and optimized for the specific tasks to be performed.

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Examples of Knowledge Work Systems

Major knowledge work applications: CAD systems, virtual reality systems and financial workstations.
- Computer-aided design (CAD) automates the creation and revision of engineering or
architectural designs.
- Virtual reality systems (3D visualization system) simulate real life environments, augmented
reality (AR) systems, and virtual reality modeling language (VRML). Provide architects,
engineers, and medical workers with precise, photorealistic simulations of objects.
- Investment workstations streamline investment process and consolidate internal, external data
for brokers, traders, portfolio managers. Are used in the financial sector to analyze trading
situations and facilitate portfolio management.

11.4 Intelligent Techniques

Artificial intelligence and database technology provide a number of intelligent techniques that
organizations can use to capture individual and collective knowledge and to extend their knowledge base.
- To capture tacit knowledge: expert systems, case-based reasoning, and fuzzy logic.
- For knowledge discovery: neural networks and data mining.
- For generating solutions to complex problems: genetic algorithms.
- Artificial intelligence (AI) technology: technology that consists of computer-based systems that
attempt to emulate human behavior.

Capturing Knowledge: Expert Systems

Expert systems are an intelligent technique for capturing tacit knowledge in a very specific and limited
domain of human expertise. They are used to assist humans in the decision-making process, but they
don't replace humans. These systems capture the knowledge of skilled employees in the form of a set of
rules in a software system that can be used by others in the organization. Typically perform tasks that may
take a few minutes or hours. Used for discrete, highly structured decision-making.

How Expert Systems Work

Expert systems rely on a knowledge base: set of hundreds or thousands of rules.

Inference engine: strategy used to search through the rule base in an expert system by forward chaining
or backward chaining to move through the rules and the frames.
- Forward chaining inference engine begins with information entered by user and searches
knowledge base to arrive at conclusion.
- Backward chaining inference engine begins with hypothesis and asks user question until
hypothesis is confirmed or disproved.

Examples of Successful Expert Systems

All expert systems deal with problems of classification. Expert systems are expensive and time-
consuming to maintain because their rules must be reprogrammed every time there is a change in the
environment, which in turn may change the applicable rules. The success of an expert system is measured
by the following criteria:
 Reduced errors
 Reduced cost, reduced training time
 Improved decisions
 Improved quality and services
 Happy users and happy customers
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Everything in an expert system is based on IF this, THEN that. Expert systems should not replace
managers. They can aid managers in the decision-making process, but managers have to make the final
call.

Organizational Intelligence: Case-Based Reasoning (CBR)

Descriptions of past experiences of human specialists, represented as cases, are stored in a database for
later retrieval when the user encounters a situation with similar characteristics. System searches for cases
with problem characteristics similar to new one, finds closest fit, and applies solutions of old case to new
case. CBR is found in medical diagnostic systems, and customer support. The Help files you find in most
desktop software applications are built on a case-based reasoning model.

Fuzzy Logic Systems

Fuzzy logic is a rule-based technology that can represent imprecision by creating rules that are
approximate or subjective values. A fuzzy logic system will combine various data into a range of
possibilities and then help solve problems that we couldn't solve before with computers.

Neural Networks

Hardware and software that attempts to emulate the processing patterns of the biological or human brain.
Find patterns and relationships in massive amounts of data too complicated for humans to analyze.

The Difference between Neural Networks and Expert Systems

 Expert systems emulate human decision making.
 Neural networks learn human thought processes and reasoning patterns.
 Expert systems use rules and frames in which to make their decisions.
 Neural networks adjust to inputs and outputs.
 Expert systems provide explanations for solutions.
 Neural networks cannot explain why they arrived at a particular solution.
 Expert systems require humans to update their database of information.
 Neural networks continue to expand their own base of information.

Genetic Algorithms

Develop solutions to particular problems using fitness, crossover, and mutation. Useful for finding
optimal solution for specific problem by examining very large number of possible solutions for that
problem. Used in optimization problems (minimization of costs, efficient scheduling …) in which
hundreds or thousands of variables exist. Able to evaluate many solution alternatives quickly.

Hybrid AI Systems

Genetic algorithms, fuzzy logic, neural networks, and expert systems can be integrated into a single
application to take advantage of the best features of these technologies.

Intelligent Agents

Software programs that work in the background without direct human intervention to carry out specific,
repetitive, and predictable tasks for an individual user, business process, or software applications.
To automate routine tasks to help firms search for and filter information for use in e-commerce and
supply chain management, a firm would most likely use intelligent agents.

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