The Knowledge Management Payback
Knowledge management, an extremely broad term that was first heralded in the mid-'90s as the solution for companies looking to improve business processes, had its reputation tarnished as many companies that invested in knowledge-related technologies had little to show in return. Today, however, knowledge management (KM) seems to be in its renaissance as companies are now showing results.
Moreover, KM is no longer a pie-in-the-sky technology that mystifies business leaders who allocate the technology spending dollars. Implemented properly, knowledge management is more of a strategy supported by technology that can show a quantifiable, and sometimes substantial, return on investment.
In fact, the term knowledge management may even be old-school. "I am not crazy about the term knowledge management, I prefer knowledge strategy," says Hubert Saint Onge, senior vice president of strategic capabilities at Clarica (Waterloo, ON, $47 billion CD in assets). "Knowledge strategy is about giving people the ability to take effective and timely action with knowledge by putting it at the fingertips of people in the organization. Unfortunately, there tends to be a ton of information in the insurance industry, but there isn't much knowledge."
Insurers are turning the wealth of information they possess into knowledge in a few distinct ways, reports Bill Pieroni, general manager for Armonk, NY-based IBM's Global Insurance Industry. "Carriers are focusing on enabling existing knowledge for internal users, such as call center representatives and underwriters," he says.
"Another way carriers are working to share knowledge is by educating customers," Pieroni adds. At a minimum, insurers are putting information on the Internet describing different types of coverage, liability limits and some background on the rating process. "Historically, consumers would receive a notice in the mail about a rate increase with little explanation. Carriers are offering explanations of increases on the Internet so the insured isn't left in the dark. Policy education is very important for insurance customer service."
Regardless of whether the company takes an inwardly or outwardly focused knowledge strategy, the project cannot be an IT-driven initiative. "One critical aspect is that the business community has to be heavily involved from day one," says Mike Schroeck, partner, global data warehousing and iAnalytics, PwC Consulting (New York).
And the most successful initiatives seem to have higher-level input. "To be successful, sponsorship from line-of-business executives is very important," says Charlie Mihaliak, partner, insurance industry group, Accenture (New York).
CNA (Chicago) has been working on a knowledge strategy for about a year. The enterprise-wide project, supported from the top of the company on down, is a direct result of the company's reorganization that has the goal of presenting one view of the company to all customers, says Gordon Larson, knowledge officer, corporate development. "A year ago, we were 35 separate businesses," Larson says.
"It is very hard to bring all of company's products to the customer when the company is decentralized," Larson adds. "We had experts all over the company. We had to make it easy for employees to tap into the knowledge."
Larson says that since the top-level executives see the knowledge management project as such an integral part of linking the company's 15,000 employees, it is being well received throughout the company. CNA's knowledge strategy centers on AskMe Corp.'s (Bellevue, WA) AskMe Enterprise Version 6.5, a product designed for creating and managing employee knowledge networks in large organizations.
For instance, Larson says, representatives tend to offer the "products they know" to their clients. "The standard-line P&C field representatives have always served the customers' needs, but the customer may also have professional liability exposures," he says. "Before we did the reorganization and gave people knowledge about the other types of products, the standard-lines representative would not be inclined to offer more complex coverages."
However, CNA's success isn't just as simple as combining business units, organizing information and distributing it. In order for a knowledge strategy to be successful, a number of criteria have to be met. One of the first discussions IT and business leaders should have when developing a knowledge strategy is about what the technology is supposed to do.
"A knowledge project should focus on a specific business problem that can be quantified," in terms of what the problem costs the company, says Peter Novins, vice president, knowledge management, community and portals, Cap Gemini Ernst & Young (New York).
Provide Value
Udai Shekawat, chief executive officer of AskMe, concurs. "Knowledge management has to be installed to improve business and it has to be used by everyone," Shekawat says. "You can't take knowledge management and deploy it across the entire organization and say it will automatically improve revenues by six percent. Start with a specific business problem, solve it, show the ROI and then expand the initiative."
For instance, says Accenture's Mihaliak, "Aim knowledge management at a critical workforce that has a business need," such as claims processors. "Then, you can directly tie the KM expenditure to a reduction in claims paid." The same can be applied in call centers, where it is easy to measure number of calls answered, or in underwriting, where number of applications processed can be measured, Mihaliak adds.
IBM's Pieroni says externally focused initiatives can be measured also, but the ROI may not be as cut-and-dried. Customer retention, customer penetration and customer lifetime value are three things that can be measured. And if knowledge management is used to enhance a sales process, "straight-through processing of applications is an easy one to measure," Pieroni adds.
But, above all, the technology has to work. In order to get mass adoption throughout a company, the knowledge management project has to provide useful content over an easy-to-use delivery channel. "We selected a Web-based technology," says Bob Atkins, application architect for Livelink, Vision Service Plans (VSP, Rancho Cordova, CA, 36 million members). Livelink is a collaborative application that brings together knowledge in a company from Open Text (Waterloo, ON). "Everything was moving to the Web and Livelink was the only product that could integrate with our imaging system," which is used to get new information from paper documents into VSP's knowledge repository.
Livelink allows VSP's 2,000 employees to search by keyword for reports, information in VSP's database of qualified doctors, sections in the provider service manual—which is now distributed electronically to VSP's doctors—and other information.
Cap Gemini's Novins says that the trend to move knowledge management technology to Web-based delivery methods is common. "The rationale to integrate Cap Gemini Ernst & Young's knowledge management with the portal expertise is because the two are so closely linked," he says.
CNA is also using Web technology to give its 15,000 employees access to the company's knowledge architecture. With AskMe Enterprise, CNA users can search by keyword. AskMe automatically captures the interactions the users have and gradually builds up a database of problem-solving solutions. "When people are working on a problem, the interaction is captured, resulting in an expansion of the problem-solving database," says AskMe's Shekawat.
However, determining the channel is easier than developing useful content. "One cause of failed knowledge efforts is companies think that they have great information and they must get it to people, but it is not presented in context so people don't know how to use it," Cap Gemini's Novins says.
Greg MacSweeney is editorial director of InformationWeek Financial Services, whose brands include Wall Street & Technology, Bank Systems & Technology, Advanced Trading, and Insurance & Technology. View Full Bio
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