05-02-2013

Management Information Systems

Chapter 11 Chapter 11 Managing Knowledge

LEARNING OBJECTIVES

• Assess the role of knowledge management and

knowledge management programs in business.

Managing • Describe the types of systems used for enterprise-

wide knowledge management and demonstrate how
Knowledge and they provide value for organizations.

Collaboration • Describe the major types of knowledge work systems

and assess how they provide value for firms.

• Evaluate the business benefits of using intelligent

techniques for knowledge management.

11.1 © 2010 by Prentice Hall 11.2 © 2010 by Prentice Hall

Management Information Systems Management Information Systems

Chapter 11 Managing Knowledge Chapter 11 Managing Knowledge

The Knowledge Management Landscape

P&G Moves from Paper to Pixels for Knowledge Management

• Sales of enterprise content management software for
• Problem: Document-intensive research and development knowledge management expected to grow 15 percent
dependent on paper records annually through 2012
• Solutions: Electronic document management system
• Information Economy
stores research information digitally
• eLab Notebook documentum management software • 55% U.S. labor force: knowledge and information workers
creates PDFs, enables digital signatures, embeds usage • 60% U.S. GDP from knowledge and information sectors
rights, enables digital searching of library
• Demonstrates IT’s role in reducing cost by making • Substantial part of a firm’s stock market value is related to
intangible assets: knowledge, brands, reputations, and
organizational knowledge more easily available
unique business processes
• Illustrates how an organization can become more
efficient and profitable through content management • Knowledge-based projects can produce extraordinary ROI

11.3 © 2010 by Prentice Hall 11.4 © 2010 by Prentice Hall

Management Information Systems Management Information Systems

Chapter 11 Managing Knowledge Chapter 11 Managing Knowledge

The Knowledge Management Landscape The Knowledge Management Landscape

U.S. Enterprise Knowledge Management

Software Revenues, 2005-2012 • Important dimensions of knowledge
• Knowledge is a firm asset
• Intangible
• Creation of knowledge from data, information, requires
organizational resources
• As it is shared, experiences network effects
• Knowledge has different forms
• May be explicit (documented) or tacit (residing in minds)
Figure 11-1 • Know-how, craft, skill
Enterprise knowledge
management software
includes sales of content
• How to follow procedure
management and portal
licenses, which have been
growing at a rate of 15
• Knowing why things happen (causality)
percent annually, making it
among the fastest-growing
software applications.

11.5 © 2010 by Prentice Hall 11.6 © 2010 by Prentice Hall

1
 05-02-2013

Management Information Systems Management Information Systems

Chapter 11 Managing Knowledge Chapter 11 Managing Knowledge

The Knowledge Management Landscape The Knowledge Management Landscape

• To transform information into knowledge, firm must expend

• Important dimensions of knowledge (cont.) additional resources to discover patterns, rules, and contexts where
knowledge works
• Knowledge has a location
• Wisdom: Collective and individual experience of applying
• Cognitive event
knowledge to solve problems
• Both social and individual
• Involves where, when, and how to apply knowledge
• “Sticky” (hard to move), situated (enmeshed in firm’s culture),
contextual (works only in certain situations) • Knowing how to do things effectively and efficiently in ways other
organizations cannot duplicate is primary source of profit and
• Knowledge is situational competitive advantage that cannot be purchased easily by
• Conditional: Knowing when to apply procedure competitors
• Contextual: Knowing circumstances to use certain tool • E.g., Having a unique build-to-order production system

11.7 © 2010 by Prentice Hall 11.8 © 2010 by Prentice Hall

Management Information Systems Management Information Systems

Chapter 11 Managing Knowledge Chapter 11 Managing Knowledge

The Knowledge Management Landscape The Knowledge Management Landscape

• Organizational learning • Knowledge management: Set of business processes

developed in an organization to create, store, transfer,
• Process in which organizations learn and apply knowledge
• Gain experience through collection of data, • Knowledge management value chain:
measurement, trial and error, and feedback • Each stage adds value to raw data and information
• Adjust behavior to reflect experience as they are transformed into usable knowledge
• Create new business processes • Knowledge acquisition
• Change patterns of management decision making • Knowledge storage
• Knowledge dissemination
• Knowledge application

11.9 © 2010 by Prentice Hall 11.10 © 2010 by Prentice Hall

Management Information Systems Management Information Systems

Chapter 11 Managing Knowledge Chapter 11 Managing Knowledge

The Knowledge Management Landscape The Knowledge Management Landscape

• Knowledge management value chain • Knowledge management value chain:

• Knowledge acquisition • Knowledge storage
• Documenting tacit and explicit knowledge • Databases
• Storing documents, reports, presentations, best practices • Document management systems
• Unstructured documents (e.g., e-mails) • Role of management:
• Developing online expert networks • Support development of planned knowledge storage
• Creating knowledge systems
• Tracking data from TPS and external sources • Encourage development of corporate-wide schemas
for indexing documents
• Reward employees for taking time to update and
store documents properly

11.11 © 2010 by Prentice Hall 11.12 © 2010 by Prentice Hall

2
 05-02-2013

Management Information Systems Management Information Systems

Chapter 11 Managing Knowledge Chapter 11 Managing Knowledge

The Knowledge Management Landscape The Knowledge Management Landscape

• Knowledge management value chain: • Knowledge management value chain:

• Knowledge dissemination • Knowledge application
• Portals • To provide return on investment, organizational
knowledge must become systematic part of
• Push e-mail reports
management decision making and become situated in
• Search engines decision-support systems
• Collaboration tools • New business practices
• A deluge of information? • New products and services
• Training programs, informal networks, and shared • New markets
management experience help managers focus
attention on important information

11.13 © 2010 by Prentice Hall 11.14 © 2010 by Prentice Hall

Management Information Systems Management Information Systems

Chapter 11 Managing Knowledge Chapter 11 Managing Knowledge

The Knowledge Management Landscape The Knowledge Management Landscape

The Knowledge Management Value Chain

• New organizational roles and responsibilities
• Chief knowledge officer executives
• Dedicated staff / knowledge managers
• Communities of practice (COPs)
• Informal social networks of professionals and employees
within and outside firm who have similar work-related
activities and interests
• Activities include education, online newsletters, sharing
experiences and techniques
Figure 11-2
Knowledge management • Facilitate reuse of knowledge, discussion
today involves both
information systems
activities and a host of • Reduce learning curves of new employees
enabling management and
organizational activities.

11.15 © 2010 by Prentice Hall 11.16 © 2010 by Prentice Hall

Management Information Systems Management Information Systems

Chapter 11 Managing Knowledge Chapter 11 Managing Knowledge

The Knowledge Management Landscape The Knowledge Management Landscape

• Three major types of knowledge management Major Types of Knowledge Management Systems
systems:
• 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 group of techniques such as data mining used for various
goals: discovering knowledge, distilling knowledge, discovering
optimal solutions There are three major categories of knowledge management systems, and each can be
broken down further into more specialized types of knowledge management systems.

Figure 11-3
11.17 © 2010 by Prentice Hall 11.18 © 2010 by Prentice Hall

3
 05-02-2013

Management Information Systems Management Information Systems

Chapter 11 Managing Knowledge Chapter 11 Managing Knowledge

Enterprise-Wide Knowledge Management Systems Enterprise-Wide Knowledge Management Systems

• Three major types of knowledge in enterprise • Enterprise-wide content management

• Structured documents systems
• Reports, presentations • Help capture, store, retrieve, distribute, preserve
• Formal rules
• Documents, reports, best practices
• Semistructured documents
• Semistructured knowledge (e-mails)
• E-mails, videos
• Unstructured, tacit knowledge • Bring in external sources
• 80% of an organization’s business content is • News feeds, research
semistructured or unstructured • Tools for communication and collaboration

11.19 © 2010 by Prentice Hall 11.20 © 2010 by Prentice Hall

Management Information Systems Management Information Systems

Chapter 11 Managing Knowledge Chapter 11 Managing Knowledge

Enterprise-Wide Knowledge Management Systems Enterprise-Wide Knowledge Management Systems

An Enterprise Content Management System

• Enterprise-wide content management
systems
• Key problem – Developing taxonomy
• Knowledge objects must be tagged with categories for
retrieval
• Digital asset management systems
• Specialized content management systems for classifying,
storing, managing unstructured digital data
• Photographs, graphics, video, audio
An enterprise content management system has capabilities for classifying, organizing, and
managing structured and semistructured knowledge and making it available throughout the
enterprise
Figure 11-4
11.21 © 2010 by Prentice Hall 11.22 © 2010 by Prentice Hall

Management Information Systems Management Information Systems

Chapter 11 Managing Knowledge Chapter 11 Managing Knowledge

Enterprise-Wide Knowledge Management Systems Enterprise-Wide Knowledge Management Systems

An Enterprise Knowledge Network System

• Knowledge network systems
• Provide online directory of corporate experts in well-defined
knowledge domains
• 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 knowledge database
• Best-practices Figure 11-5
A knowledge network maintains a

• Frequently asked questions (FAQ) repository database of firm experts, as well as

accepted solutions to known
problems, and then facilitates the
communication between employees
looking for knowledge and experts
who have that knowledge. Solutions
created in this communication are
then added to a database of
solutions in the form of FAQs, best
practices, or other documents.

11.23 © 2010 by Prentice Hall 11.24 © 2010 by Prentice Hall

4
 05-02-2013

Management Information Systems Management Information Systems

Chapter 11 Managing Knowledge Chapter 11 Managing Knowledge

Enterprise-Wide Knowledge Management Systems Enterprise-Wide Knowledge Management Systems

• Major knowledge management system vendors

include powerful portal and collaboration technologies • Learning management systems
• Portal technologies: Access to external information • Provide tools for management, delivery, tracking, and
• News feeds, research assessment of various types of employee learning and
training
• Access to internal knowledge resources
• Support multiple modes of learning
• Collaboration tools
• CD-ROM, Web-based classes, online forums, live instruction,
• E-mail etc.
• Discussion groups
• Automates selection and administration of courses
• Blogs
• Assembles and delivers learning content
• Wikis
• Measures learning effectiveness
• Social bookmarking

11.25 © 2010 by Prentice Hall 11.26 © 2010 by Prentice Hall

Management Information Systems Management Information Systems

Chapter 11 Managing Knowledge Chapter 11 Managing Knowledge

Enterprise-Wide Knowledge Management Systems Knowledge Work Systems

Managing with Web 2.0 • Knowledge work systems

• Read the Interactive Session: Management, and then • Systems for knowledge workers to help create new knowledge
and ensure that knowledge is properly integrated into business
discuss the following questions:
• Knowledge workers
• How do Web 2.0 tools help companies manage knowledge,
coordinate work, and enhance decision making? • Researchers, designers, architects, scientists, and engineers
who create knowledge and information for the organization
• What business problems do blogs, wikis, and other social • Three key roles:
networking tools help solve?
• Keeping organization current in knowledge
• Describe how a company such as Wal-Mart or Proctor & • Serving as internal consultants regarding their areas of expertise
Gamble would benefit from using Web 2.0 tools internally. • Acting as change agents, evaluating, initiating, and promoting
• What challenges do companies face in spreading the use of change projects
Web 2.0? What issues should managers be concerned with?

11.27 © 2010 by Prentice Hall 11.28 © 2010 by Prentice Hall

Management Information Systems Management Information Systems

Chapter 11 Managing Knowledge Chapter 11 Managing Knowledge

Knowledge Work Systems Knowledge Work Systems

Requirements of Knowledge Work Systems

• Requirements of knowledge work systems
• Substantial computing power for graphics, complex calculations
• Powerful graphics, and analytical tools
• Communications and document management capabilities
• Access to external databases
• User-friendly interfaces
• Optimized for tasks to be performed (design engineering,
financial analysis)

Knowledge work systems require strong links to external knowledge bases in addition to specialized hardware and software.

Figure 11-6
11.29 © 2010 by Prentice Hall 11.30 © 2010 by Prentice Hall

5
 05-02-2013

Management Information Systems Management Information Systems

Chapter 11 Managing Knowledge Chapter 11 Managing Knowledge

Knowledge Work Systems Intelligent Techniques

• Examples of knowledge work systems

• Intelligent techniques: Used to capture individual and
• CAD (computer-aided design): Automates creation and
revision of engineering or architectural designs, using computers
collective knowledge and to extend knowledge base
and sophisticated graphics software • To capture tacit knowledge: Expert systems, case-based
• Virtual reality systems: Software and special hardware to reasoning, fuzzy logic
simulate real-life environments • Knowledge discovery: Neural networks and data mining
• E.g. 3-D medical modeling for surgeons
• Generating solutions to complex problems: Genetic
• VRML: Specifications for interactive, 3D modeling over Internet
algorithms
• Investment workstations: Streamline investment process and
consolidate internal, external data for brokers, traders, portfolio • Automating tasks: Intelligent agents
managers • Artificial intelligence (AI) technology:
• Computer-based systems that emulate human behavior

11.31 © 2010 by Prentice Hall 11.32 © 2010 by Prentice Hall

Management Information Systems Management Information Systems

Chapter 11 Managing Knowledge Chapter 11 Managing Knowledge

Intelligent Techniques Intelligent Techniques

Rules in an Expert System

• Expert systems:
• Capture tacit knowledge in very specific and limited
domain of human expertise
• Capture knowledge of skilled employees as set of
rules in software system that can be used by others in
organization
Figure 11-7
• Typically perform limited tasks that may take a few An expert system
contains a number of
rules to be followed. The
minutes or hours, e.g.: rules are interconnected;
the number of outcomes
is known in advance and
• Diagnosing malfunctioning machine is limited; there are
multiple paths to the
same outcome; and the

• Determining whether to grant credit for loan system can consider

multiple rules at a single
time. The rules illustrated
are for simple credit-
granting expert systems.

11.33 © 2010 by Prentice Hall 11.34 © 2010 by Prentice Hall

Management Information Systems Management Information Systems

Chapter 11 Managing Knowledge Chapter 11 Managing Knowledge

Intelligent Techniques Intelligent Techniques

Inference Engines in Expert Systems

• How expert systems work
• Knowledge base: Set of hundreds or thousands of
rules
• Inference engine: Strategy used to search
knowledge base
• Forward chaining: Inference engine begins with information
entered by user and searches knowledge base to arrive at
conclusion
• Backward chaining: Begins with hypothesis and asks user
questions until hypothesis is confirmed or disproved
An inference engine works by searching through the rules and “firing” those rules that are triggered by facts gathered and entered by the user.
A collection of rules is similar to a series of nested IF statements in a traditional software system; however the magnitude of the statements
and degree of nesting are much greater in an expert system

Figure 11-8
11.35 © 2010 by Prentice Hall 11.36 © 2010 by Prentice Hall

6
 05-02-2013

Management Information Systems Management Information Systems

Chapter 11 Managing Knowledge Chapter 11 Managing Knowledge

Intelligent Techniques Intelligent Techniques

• Successful expert systems • Case-based reasoning (CBR)

• Countrywide Funding Corporation in Pasadena, California, uses • Descriptions of past experiences of human specialists,
expert system to improve decisions about granting loans represented as cases, stored in knowledge base
• Con-Way Transportation built expert system to automate and • System searches for stored cases with problem characteristics
optimize planning of overnight shipment routes for nationwide similar to new one, finds closest fit, and applies solutions of old
freight-trucking business case to new case
• Most expert systems deal with problems of classification • Successful and unsuccessful applications are grouped with case
• Have relatively few alternative outcomes • Stores organizational intelligence: Knowledge base is
• Possible outcomes are known in advance continuously expanded and refined by users
• CBR found in
• Many expert systems require large, lengthy, and expensive
development and maintenance efforts • Medical diagnostic systems
• Customer support
• Hiring or training more experts may be less expensive

11.37 © 2010 by Prentice Hall 11.38 © 2010 by Prentice Hall

Management Information Systems Management Information Systems

Chapter 11 Managing Knowledge Chapter 11 Managing Knowledge

Intelligent Techniques Intelligent Techniques

How Case-Based Reasoning Works

• Fuzzy logic systems
• Rule-based technology that represents imprecision used in
linguistic categories (e.g., “cold,” “cool”) that represent range of
values
• Describe a particular phenomenon or process linguistically and
then represent that description in a small number of flexible rules
• Provides solutions to problems requiring expertise that is difficult
to represent with IF-THEN rules
• Autofocus in cameras

Figure 11-9 • Detecting possible medical fraud

Case-based reasoning represents
knowledge as a database of past cases • Sendai’s subway system use of fuzzy logic controls to
and their solutions. The system uses a
six-step process to generate solutions to
new problems encountered by the user.
accelerate smoothly
11.39 © 2010 by Prentice Hall 11.40 © 2010 by Prentice Hall

Management Information Systems Management Information Systems

Chapter 11 Managing Knowledge Chapter 11 Managing Knowledge

Intelligent Techniques Intelligent Techniques

Fuzzy Logic for Temperature Control • Neural networks

• Find patterns and relationships in massive amounts of data that
are too complicated for human to analyze
• “Learn” patterns by searching for relationships, building models,
and correcting over and over again model’s own mistakes
• Humans “train” network by feeding it data inputs for which outputs
are known, to help neural network learn solution by example
• Used in medicine, science, and business for problems in pattern
classification, prediction, financial analysis, and control and
optimization
• Machine learning: Related AI technology allowing computers to
The membership functions for the input called temperature are in the logic of the thermostat to control the room temperature.
Membership functions help translate linguistic expressions such as warm into numbers that the computer can manipulate. learn by extracting information using computation and statistical
Figure 11-10 methods
11.41 © 2010 by Prentice Hall 11.42 © 2010 by Prentice Hall

7
 05-02-2013

Management Information Systems Management Information Systems

Chapter 11 Managing Knowledge Chapter 11 Managing Knowledge

Intelligent Techniques Intelligent Techniques

Reality Mining
How a Neural Network Works
• Read the Interactive Session: Technology, and then
discuss the following questions:
• Why might businesses be interested in location-based mobile
networking?
• What technological developments have set the stage for the
growth of Sense Networks and the success of their products?
• Do you feel that the privacy risks surrounding CitySense are
significant? Would you sign up to use Sense Network
services? Why or why not?
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.

Figure 11-11
11.43 © 2010 by Prentice Hall 11.44 © 2010 by Prentice Hall

Management Information Systems Management Information Systems

Chapter 11 Managing Knowledge Chapter 11 Managing Knowledge

Intelligent Techniques Intelligent Techniques

The Components of a Genetic Algorithm

• Genetic algorithms
• Useful for finding optimal solution for specific problem by
examining very large number of possible solutions for that
problem
• Conceptually based on process of evolution
• Search among solution variables by changing and
reorganizing component parts using processes such as
inheritance, mutation, and selection
• Used in optimization problems (minimization of costs, efficient
scheduling, optimal jet engine design) in which hundreds or
thousands of variables exist
• Able to evaluate many solution alternatives quickly This example illustrates an initial population of “chromosomes,” each representing a different solution. The genetic algorithm uses an iterative
process to refine the initial solutions so that the better ones, those with the higher fitness, are more likely to emerge as the best solution.

Figure 11-12
11.45 © 2010 by Prentice Hall 11.46 © 2010 by Prentice Hall

Management Information Systems Management Information Systems

Chapter 11 Managing Knowledge Chapter 11 Managing Knowledge

Intelligent Techniques Intelligent Techniques

• Hybrid AI systems • Intelligent agents

• Work in background to carry out specific, repetitive, and
• Genetic algorithms, fuzzy logic, neural networks, predictable tasks for user, process, or software application
and expert systems integrated into single • Use limited built-in or learned knowledge base to accomplish
application to take advantage of best features of tasks or make decisions on user’s behalf
each • Deleting junk e-mail
• E.g., Matsushita “neurofuzzy” washing machine • Finding cheapest airfare
that combines fuzzy logic with neural networks • Agent-based modeling applications:
• Systems of autonomous agents
• Model behavior of consumers, stock markets, and supply
chains; used to predict spread of epidemics

11.47 © 2010 by Prentice Hall 11.48 © 2010 by Prentice Hall

8
 05-02-2013

Management Information Systems

Chapter 11 Managing Knowledge

Intelligent Techniques

Intelligent Agents in P&G’s Supply Chain Network

All rights reserved. No part of this publication may be reproduced, stored in a

retrieval system, or transmitted, in any form or by any means, electronic,
mechanical, photocopying, recording, or otherwise, without the prior written
permission of the publisher. Printed in the United States of America.

Copyright © 2010 Pearson Education, Inc.

Figure 11-13 Publishing as Prentice Hall
Intelligent agents are helping Procter &
Gamble shorten the replenishment cycles
for products such as a box of Tide.

11.49 © 2010 by Prentice Hall 11.50 © 2010 by Prentice Hall