Management Information Systems:

Managing the Digital Firm

Seventeenth Edition, Global Edition

Chapter 11
Managing Knowledge and Artificial
Intelligence

Ildikó Horváth PhD.

ildiko.horvath@uni-corvinus.hu
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https://www.youtube.com/watch?v=JvbHu_bVa_g&t=14s

https://support.google.com/assistant/answer/9071678?hl=
en&co=GENIE.Platform%3DAndroid

https://support.google.com/assistant/answer/9071678?hl=
en&co=GENIE.Platform%3DiOS&oco=0
New jobs and lost jobs, 2023-2027

https://www3.weforum.org/docs/WEF_Future_of_Jobs_2023.pdf
 Learning Objectives
 What is the role of knowledge management systems in business?

 What are the major types of knowledge work systems, and how do they provide value
for firms?

 What are artificial intelligence (AI) and machine learning? How do businesses use AI?

 What types of systems are used for enterprise-wide knowledge management, and how do
they provide value for businesses?

 The potential role of AI in supporting fundamental dimensions of KM: creation,

storage and retrieval, sharing, and application of knowledge.

 Practical ways to build the partnership between humans and AI in supporting

organizational KM activities.
 Takeaway message

Build a partnership between humans and AI to boost knowledge management

 Key terms and definitions
Knowledge Management Systems (KMS)
Knowledge Management Systems are integrated multifunctional systems that are
designed to manage and enhance the organizational processes of knowledge
creation, storage/retrieval, transfer, and application.
A key goal of these systems is to facilitate the transformation of individual
knowledge into accessible resources that benefit the entire organization.
They enable employees to have ready access to the organization's documented
base of facts, sources of information, and solutions.
 Major Types of Knowledge
Management Systems

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 Key terms and definitions -
Types of KMS
• Enterprise-wide knowledge management systems
– General-purpose firm-wide efforts to collect, store, distribute, and apply
digital content and knowledge

• Knowledge work systems (KWS)

– Specialized systems built for engineers, scientists, other knowledge
workers charged with discovering and creating new knowledge

• Intelligent techniques
– Diverse groups of techniques, such as data mining, expert systems,
machine learning, and AI used for various goals: discovering knowledge,
distilling knowledge, discovering optimal solutions
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 Requirements of Knowledge Work Systems
• Sufficient computing power for graphics, complex calculations
• Communications and document management
• Access to external databases
• User-friendly interfaces
• Optimized for tasks to be performed (design engineering,
financial analysis)
• Optimized information overview

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 The Knowledge Management Value Chain
• Knowledge management
– Set of business processes developed in an organization to create, store,
transfer, and apply knowledge

• Knowledge management value chain

– Each stage adds value to raw data and information as they are
transformed into usable knowledge
 Knowledge acquisition
 Knowledge storage
 Knowledge dissemination
 Knowledge application

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 The Knowledge Management Value Chain

• Knowledge acquisition
– Documenting tacit and explicit knowledge
 Storing documents, reports, presentations, best practices
 Unstructured documents (e.g., e-mails)
 Developing online expert networks
– Creating knowledge
– Tracking data from TPS and external sources

• Knowledge storage
– Databases
– Document management systems
– Role of management
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 The Knowledge Management Value Chain

• Knowledge dissemination
– E-mail, SMS, Messanger etc.
– Enhanced Digital Portals and Wikis: Interactive and user-friendly platforms that allow
for easy contribution, editing, and retrieval of information.
– Sophisticated Collaboration Tools: Utilizing advanced project management and
collaboration software that integrates with AI to streamline communication and work
processes.
– Social Media and Networking: Platforms for quicker, broader, and more interactive
sharing of knowledge.
– Webinars and Virtual Conferences: These allow for real-time knowledge sharing and
interaction without geographical constraints.
– Online Learning Platforms: E-learning systems that provide educational content to a
large audience and often include interactive features for better engagement.
– AI-driven Analytics: Using AI to sift through large volumes of data to identify and share
relevant knowledge with stakeholders.
 The main user demand is
to get the right information at the right time and in the right place.
https://www.techtarget.com/searchenterpriseai/feature/AI-for-knowledge-management-boosts-information-accessibility
 The Knowledge Management Value Chain

• Knowledge application
– New business practices
– New products and services
– New markets
– …

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 What is the Role of Knowledge
Management Systems in Business?
• Knowledge management systems are among the fastest-growing areas of software
investment
• Information economy: production and distribution of information and knowledge a
major source of wealth and prosperity
• A substantial part of a firm’s stock market value is related to intangible assets:
knowledge, brands, reputations, and unique business processes
• Well-executed knowledge-based projects can produce extraordinary ROI
ROI: Return On Investment is a performance measure used to evaluate the efficiency
or profitability of an investment or compare the efficiency of a number of different
investments. ROI tries to directly measure the amount of return on a particular
investment, relative to the investment’s cost.
– Main ROI factors: Transaction Cost, Taxes, Time, Inflations, Opportunity costs
 What Is Artificial Intelligence?

"The science and engineering of making intelligent machines, especially

intelligent computer programs. AI is related to the similar task of using
computers to understand human intelligence, but AI does not have to
confine itself to methods that are biologically observable."

Source: Stanford Encyclopedia of Philosophy, "Artificial Intelligence".

 Components of AI Definition
• Intelligence Simulation: AI involves the creation of algorithms and systems that can
simulate aspects of human intelligence. This includes the ability to learn from experience,
understand complex concepts, respond to changes in the environment
• Learning and Adaptation: A key feature of AI is the ability to learn from data and improve
over time.
• Automation of Cognitive Tasks: AI can automate tasks that typically require human
cognitive skills, such as analyzing large datasets, recognizing patterns in data,
understanding and generating human language, and making predictions or
recommendations.
• Interdisciplinary Nature: AI draws from fields like computer science, mathematics,
psychology, linguistics, philosophy, and neuroscience. This interdisciplinary approach helps
in developing systems that can mimic or replicate human thought processes and
responses.
• Variety of Techniques: AI encompasses a variety of techniques and disciplines, including
machine learning, neural networks, deep learning, natural language processing,
robotics, and computer vision.
 Reinforcement learning
Unsupervised learning
Supervised learning
 Relationship between Neural Networks, Deep
Learning, Generative AI, Machine Learning, and
Genetic Algorithms
• Machine Learning is a subset of AI
that focuses on the development of algorithms and statistical models that enable computers to
perform tasks without explicit instructions, relying on patterns and inference instead.
– It includes Neural Network.
They are algorithms designed to recognize patterns, inspired by the structure and
function of the human brain. Foundation for Deep Learning.
 Deep Learning is a specific kind of neural network architecture with multiple
layers (hence "deep") that allows for more complex and abstract pattern recognition.
Used in Various Applications: Including image and speech recognition, natural
language processing, etc.
– Generative AI refers to AI methods (often using deep learning techniques) that are
capable of generating new content. It's not a distinct class of algorithms but rather an
application or functionality.
• Genetic Algorithms are inspired by the process of natural selection. They are typically used
for optimization and search problems and are not necessarily a subset of ML but are rather
a parallel approach within AI.
NN: are ML: focuses on the
algorithms development of algorithms
designed to and statistical models
recognize
patterns.

Gen Alg: used for

optimization and
search problems
DL: Used GenAI: capable
image and speech of generating
recognition, new content
natural language
processing
 When should be using it?
Each of these methods has unique strengths and is chosen based on the specific requirements
and nature of the problem at hand.
• Machine Learning should be used when you have a large dataset and want to make
predictions or identify patterns. For example, it's used for recommendations on streaming
services based on user viewing history.
• Deep Learning is a subset of ML and is effective for tasks involving large amounts of
unstructured data. It's commonly used in image recognition, such as identifying cancerous
cells in medical images.
• Neural Networks, which are part of deep learning, mimic the human brain and are useful for
complex problems with numerous variables, like voice recognition systems in virtual
assistants.
• Generative AI, such as GPT, can generate content and is used for creating realistic text,
music, or art.
• Genetic Algorithms simulate natural selection and are used in optimization problems
where you have a large search space, such as designing aerodynamic car shapes.
 When should be using it?
Data Structure:
• Structured Data: Typically used with Machine Learning
for tabular data.
• Unstructured Data: Used with Deep Learning for data
like images, text, and audio.
 When should be using it?
Complexity and Depth:
• Simple Models: Basic Machine Learning models such as
linear regression or decision trees.
• Complex Models: Deep Learning with multi-layered
Neural Networks.
 When should be using it?
Problem Type:
• Classification and Regression: Machine Learning for
predicting labels or quantities.
• Feature Detection and Generation: Deep Learning and
Neural Networks for recognizing features or generating
new data.
• Optimization: Genetic Algorithms for finding optimal
solutions to complex problems with many parameters.
 When should be using it?
Application Area:
• For content creation, such as text, images, or music:
Generative AI.
• Predictive Analytics: Machine Learning for forecasting
future events based on historical data.
• Automation and Control: Neural Networks for tasks like
autonomous vehicles or robotic control.
 Major Types of AI
• Expert systems
• Machine learning
• Neural networks and deep learning networks
• Genetic algorithms
• Natural language processing
• Computer vision
• Robotics
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 Expert Systems
AI systems that emulate the decision-making ability of a human expert.

• Components:
– Knowledge Base: Contains domain-specific knowledge.
– Inference Engine: Applies rules to the knowledge base to arrive at conclusions.
– User Interface: Enables interaction between the user and the system.

• Functionality: Uses IF-THEN rules for reasoning and problem-solving.

• Applications: Diagnostics in healthcare, financial analysis, customer service chatbots, etc.

• Advantages: Provides consistent answers and can work with incomplete information.

• Limitations: Limited to the knowledge programmed into them; lacks learning ability.
 Figure 11.3 Rules in an Expert System

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 Machine Learning
Machine learning is a subset of artificial intelligence that enables systems to learn from data, identify
patterns, and make decisions with minimal human intervention. The main aspects of machine
learning include:
• Data Preparation: Gathering and cleaning data to train models.
• Learning Types: Supervised, unsupervised, and reinforcement learning.
• Algorithms: A variety of models like decision trees, neural networks, support vector machines,etc.
• Training: Feeding data to the algorithm to build the model.
• Evaluation: Assessing the model's performance with metrics like accuracy, precision, recall.
• Overfitting and Underfitting: Balancing model complexity to generalize well to new data.
• Feature Engineering: Selecting and transforming variables that effectively predict outcomes.
• Deployment: Integrating the model into production environments for practical use.
• Ethics and Bias: Ensuring models are fair and do not perpetuate biases.
• Continuous Learning: Updating models with new data over time.
 Neural Networks
Neural Networks are a foundational aspect of deep learning, inspired by the structure and function of
the human brain.
• Structure: Comprised of interconnected nodes or neurons arranged in layers: input, hidden, and
output.
• Weights and Biases: Each connection has a weight, and each neuron may have a bias,
determining the strength and direction of the influence between nodes.
• Activation Functions: Functions like ReLU or Sigmoid that determine whether a neuron should
be activated based on the weighted sum of its inputs.
• Learning: Adjusting weights and biases based on errors in predictions during the training phase,
often using backpropagation and gradient descent.
• Network Types: Various architectures like Convolutional Neural Networks (CNNs) for image
processing and Recurrent Neural Networks (RNNs) for sequential data.
• Applications: Extensively used in image and speech recognition, natural language processing,
and other complex pattern recognition tasks.
https://www.youtube.com/watch?v=aircAruvnKk&t=11s
Figure 11.4 How a Neural Network Works

A neural network uses rules it “learns” from patterns in data to construct a hidden layer of logic.
The hidden layer then processes inputs, classifying them based on the experience of the model.
In this example, the neural network has been trained to distinguish between valid and fraudulent credit card purchases.
In this example, given one or more specific combinations of age, income, purchase history, frequency of purchases, and
average purchase size, a neural network might determine that a new credit card purchase was likely to be fraudulent
 Deep Learning
Deep learning is an advanced subset of machine learning that involves neural networks
with multiple layers (deep networks) to model complex patterns in data. It excels at
identifying patterns in unstructured data such as images, sound, and text. The key aspects of
deep learning include:

• Layered Architecture: Multiple hidden layers between input and output for feature extraction
and transformation.

• Representation Learning: Automatic feature learning from raw data, reducing the need for
manual feature engineering.

• Backpropagation: A method for training the network by adjusting weights to minimize error.

• Large Datasets: Requires substantial amounts of data to perform well.

• High Computational Power: Benefits from GPUs for efficient training of large networks.

• Applications: Powers advanced AI applications like autonomous vehicles, facial recognition,

and language translation services.
 Figure 11.5 A Deep Learning Network
Deep learning networks consist of many layers of neural networks
working in a hierarchical fashion to detect patterns.

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 Generative AI
Generative AI refers to artificial intelligence algorithms designed to create new content, from text
to images to music, based on the patterns they've learned from existing data. It includes:
• Generative Models: Such as Generative Adversarial Networks (GANs) and Variational
Autoencoders (VAEs).
• Sample Generation: Producing new data instances that are similar to the training data.
• Training Process: Involving unique architectures like discriminator and generator in GANs to
refine outputs.
• Creative AI: Used for artwork, music, designing new products, and more.
• Data Augmentation: Generating additional training data for other machine learning models.
• Generative AI often uses a type of unsupervised learning, particularly with models like
Generative Adversarial Networks (GANs), where the system learns to generate new data that is
indistinguishable from real data. It can also use reinforcement learning, where the generative
model is rewarded for producing outputs that meet certain criteria. The learning type is typically
chosen based on the specific application and the nature of the data available.
• Challenges: Involves complex training procedures and requires careful consideration of
ethical implications.
 What has generative AI achieved?
- Memory
Able to do - Association
- Synthetization
- Search
- Understanding Context and Nuance
- Creativity and Innovation
- Emotional Intelligence
-
-
Ethical and Moral Reasoning
Adaptability and Generalization AI
- Autonomy
Unable Depends
- Perception
- Decision making
to do and
reasoning
 Association in Generative AI
Generative AI does have the capability for association, and it's actually a key
aspect of how it functions

• Pattern Recognition: At its core, Generative AI learns to recognize patterns in

data. This involves associating certain inputs with certain outputs or characteristics.
(For example, in image generation, it associates specific prompts with the kinds of
images typically linked to those prompts.)

• Contextual Understanding: Many Generative AI models, especially those dealing

with language or complex imagery, develop an understanding of context. They can
associate words, phrases, or elements in an image with broader concepts or
themes.

• Learning Relationships: Generative AI models can learn the relationships

between different elements in data. For instance, in music generation, the AI might
associate certain chord progressions or rhythms with specific musical genres.
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How Associations Contribute to AI Functionality
• Generating New Content: By understanding these associations, the AI can generate new
content that is contextually relevant. For example, when asked to generate an image of a
"sunset at the beach," the AI uses its learned associations of what a sunset and a beach
typically look like.

• Creative Combinations: Generative AI can combine different associations in novel ways.

This is evident in art or music generation, where the AI might blend styles or elements that
are not typically combined.

• Predictive Associations: In some applications, such as predictive text, Generative AI

uses the association to predict what might logically come next in a sequence.

Limitations and Considerations!

Dependence on Training Data, Lack of Deep Understanding, Ethical Implications

Synthesization in the context of Generative AI
~refers to the process of combining various elements, ideas, or data points to create
something new. This is a core function of Generative AI and is essential in many of its
applications.

• Combining Elements: Generative AI can synthesize new content by blending different

elements it has learned. For example, in image generation, it might combine features of
various objects to create a new, unique image that didn't exist before.

• Data Integration: In data-heavy fields like bioinformatics or market analysis, AI can

synthesize insights by integrating and analyzing data from multiple sources, leading to
new predictions.

• Creative Process: In artistic domains, synthesization involves generating new pieces

of art, music, or literature that are influenced by a wide range of styles and genres,
leading to novel creations.
 How Synthesization is Achieved
• Learning from Diverse Sources: The AI models are trained on a broad dataset,
enabling them to learn a wide array of styles, patterns, and information.
• Pattern Recognition and Replication: The AI recognizes patterns and can replicate
these in new combinations or forms. This is a key aspect of how AI generates art, music,
or textual content.
• Predictive Modeling: In some applications, AI synthesizes future scenarios or outcomes
based on historical data, which is particularly useful in fields like finance or
personalizational modeling.
Real-world examples: Art and Music, Product design,
https://www.youtube.com/watch?v=Emidxpkyk6o
Challenges and Considerations!
Ethical and Societal Impact: The potential of AI to synthesize highly realistic yet fabricated content (like
deepfakes) raises ethical concerns.
In summary, synthesization in Generative AI involves the creative and intelligent combination of learned
elements to create something new and often unique. This capability is central to many of the innovative and
exciting applications of Generative AI today.
 AI-Generated Images/Music
and "Creativity"
• Pattern Replication and Combination: Generative AI creates images by learning
patterns from a vast dataset of existing images. It then replicates or recombines
these patterns in new ways.

• Data-Driven Process: The AI’s process is data-driven; it doesn’t "imagine" or

"conceptualize" in the human sense. It doesn't have personal experiences,
emotions, or consciousness, which are often integral to human creativity.

• Parameters and Guidance: AI requires parameters or prompts from humans to

generate images.
 Creativity

pattern
recognition emotion
data
imagination
processing

mathematical
models and subjective
algorithms experience

AI creativity Human creativity

Capabilities of Gen AI in Knowledge Organization
• Data Synthesis: Generative AI can synthesize large datasets to create summaries,
reports, or even predictive models, making it easier to understand and use the data
effectively.

• Pattern Recognition: AI can identify patterns and trends within an organization's

data that might not be immediately obvious to human analysts. This can lead to new
insights and more informed decision-making.

• Automated Categorization: AI can categorize and tag knowledge resources

automatically, making it easier to search and retrieve information.

• Content Generation: Generative AI can create documents, presentations, or other

content types by synthesizing information from various internal resources, saving time
and ensuring consistency.

• Customized Learning Resources: In an educational context within the organization,

AI can generate customized learning materials based on the specific needs and
knowledge gaps of employees.
 Genetic Algorithms
Genetic Algorithms (GAs) are modeled on natural evolution.
• Concept: Based on principles of natural selection and genetics.
• Population and Chromosomes: Starts with a population of individuals represented as
chromosomes (solutions).
• Fitness Function: Each individual is evaluated using a fitness function to determine its
suitability as a solution.
• Selection: Individuals with higher fitness scores are more likely to be chosen for reproduction.
• Crossover and Mutation: Genetic operators used to create new individuals, promoting
diversity.
• Iteration: Repeated cycles of selection, crossover, and mutation lead to evolution of solutions.
• Termination: The algorithm stops after a set number of generations or when a satisfactory
solution is found.
• Applications: Used for optimization problems in various fields like engineering, economics,
and artificial intelligence (minimization of costs, efficient scheduling, optimal jet engine design).
 Figure 11.6 The Components of a Genetic
Algorithm

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Key takeaways from the field of Generative AI

• Generative AI tools are great for productivity - they can be

nifty shortcuts to dispose of law-value tasks and / or to
jumpstart creativity.
• Generative AI tools should always be used - and taught to
be used - with a critical mind, because they are prone to
mistakes and hallucinations.
https://www.youtube.com/watch?v=tSDFVOQtUD0
 Natural Language Processing
• Software that can process voice or text command using
natural human language
• Typically based on machine learning, including deep
learning
• Examples: Google search; spam filtering systems; text
mining sentiment analysis; customer call center
interactions

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 Computer Vision Systems
• Emulate human visual system to view and extract
information from real-world images
• Examples:
– Facebook’s DeepFace can identify friends in photos
across their system and the entire web
– Autonomous vehicles can recognize signs, road
markers, people, animals, and other vehicles with good
reliability

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 Robotics
• Design, construction, and operation of movable machines that
can substitute for humans, along with computer systems for
their control, sensory feedback, and information processing
• Generally programmed to perform specific and detailed actions
in limited domains, e.g. robots spray paint autos, and assemble
certain parts, welding, heavy assembly movement
• Used in dangerous situations like bomb disposal, delivering
medical supplies to coronavirus-contaminated locations
• Surgical robots are expanding their capabilities

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 Intelligent Agents
• Work without direct human intervention to carry out repetitive, predictable
tasks
– Deleting junk e-mail
– Finding cheapest airfare

• Use limited built-in or learned knowledge base

– Some are capable of self-adjustment, for example: Siri

• Chatbots

• Agent-based modeling applications:

– Model behavior of consumers, stock markets, and supply chains; used to
predict spread of epidemics

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 Figure 11.7 Intelligent Agents in P&G’s
Supply Chain Network

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https://www.gartner.com/en/articles/what-s-new-in-artificial-intelligence-from-the-2023-gartner-hype-cycle
Innovations that will be fueled by generative AI
• Artificial general intelligence (AGI) is the intelligence of a machine
that can accomplish any intellectual task that a human can perform.
• AI engineering is foundational for the enterprise delivery of AI
solutions at scale. The discipline creates coherent enterprise
development, delivery, and operational AI-based systems.
• Cloud AI services provide AI model-building tools, APIs for prebuilt
services, and associated middleware that enable the building/training,
deployment, and consumption of machine learning (ML) models
running on prebuilt infrastructure as cloud services.
Innovations that will be fueled by generative AI
• Composite AI refers to the combined application (or fusion) of
different AI techniques to improve the efficiency of learning to broaden
the level of knowledge representations. It solves a wider range of
business problems in a more effective manner.
• Computer vision is a set of technologies that involves capturing,
processing and analyzing real-world images and videos to extract
meaningful, contextual information from the physical world.
• Data-centric AI is an approach that focuses on enhancing and
enriching training data to drive better AI outcomes. Data-centric AI also
addresses data quality, privacy and scalability.
Innovations that will be fueled by generative AI
• Edge AI refers to the use of AI techniques embedded in non-IT products, IoT
endpoints, gateways and edge servers. It spans use cases for consumer, commercial
and industrial applications, such as autonomous vehicles, enhanced capabilities of
medical diagnostics and streaming video analytics.

• Intelligent applications utilize learned adaptation to respond autonomously to

people and machines.

• Model operationalization (ModelOps) is primarily focused on the end-to-end

governance and life cycle management of advanced analytics, AI and decision
models.

• Operational AI systems (OAISys) enable orchestration, automation and scaling of

production-ready and enterprise-grade AI, comprising ML, DNNs and Generative AI.
The Artificial Intelligence Knowledge Model
Real-World Applications https://oec.world/en
• Automated Report Generation: AI can generate regular reports on business
metrics, synthesizing data from various internal systems.
• Knowledge Bases and FAQs: AI can help in organizing and updating knowledge
bases, ensuring that the information is current and comprehensive.
• Training and Development: AI can assist in developing training materials tailored to
the specific learning patterns and needs of the workforce.

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Copyright © 2022, 2020, 2018 Pearson Education, Inc. All Rights Reserved
 Enterprise Content Management Systems
• Help capture, store, retrieve, distribute, preserve documents and
semistructured knowledge
• Bring in external sources
– News feeds, research
• Tools for communication and collaboration
– Blogs, wikis, and so on
• Key problem: developing taxonomy
• Digital asset management systems

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 Figure 11.8 An Enterprise Content
Management System

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 Locating and Sharing Expertise
• Provide online directory of corporate experts in well-defined
knowledge domains
• Search tools enable employees to find appropriate expert in a
company
• Social networking and social business tools for finding
knowledge outside the firm
– Saving
– Tagging
– Sharing web pages

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 Building Organizational and Management
Capital: Collaboration, Communities of Practice,
and Office Environments
• Developing new organizational roles and responsibilities for the acquisition of
knowledge

• Chief knowledge officer executives; dedicated staff / knowledge managers

• Communities of practice (COPs)

– Informal social networks of professionals and employees
– Activities include education, online newsletters, sharing knowledge
– Reduce learning curves of new employees

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Thank you for your attention!

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