Knowledge Management
Measurement
Dr. Birte Schmitz
October 2002
SIECC
Agenda
An approach to measure the success of a knowledge management initiative
Examples
What does that mean for SIECC?
Success of a KM initiative can only be measured with respect to prior objectives
Before starting a KM initiative the following two steps are necessary:
Align strategy to KM (What are the objectives?) => Target definition
Establish measurement baselines => Definition of Key Performance Indicators
Align the strategy to KM
“What must the business do to differentiate itself from competitors?…”
“How can Knowledge Management be used to support these objectives in ways that other capabilities within the organization cannot?”
Establishing measurement baselines
Measurable indicators are derived from business goals
A Balanced Scorecard is a possible means to represent and communicate these goals and derived indicators
Definition of strategic goals
Definition of KM objectives
Definition of KPI
ROI – calculation
Controlling
Go / No Go
KM objectives can be set on different levels
Tactical
strategic
User-related objectives
Organisation-related objectives
Effectiveness of the workplace
Operational effectiveness
Achievement of strategic objectives
Sharing of information and knowledge
Collaboration
Innovation
[Based on: Gartner Group]
Examples:
Increase of innovation rate
Attracting new clients
Shorter duration of projects
Avoidance of ``reinventing the wheel‘‘
Increase of productivity (eg. by shorter search times)
Better quality by use of Best Practices
KM objectives are to be quantified along the following dimensions
Customer satisfaction
Employee satisfaction
Decisions
Innovation
Cooperation
...
Quality
Information procurement
Product development
Reaction/Response
Learning
...
Time
Litigation
Bad decisions
Financial penalties
Safe-keeping
Obligations
...
Risk
Avoidance of multiple efforts
Productivity
Search
Communication
Travel
Storage
...
Cost
The next step is to determine KPI
Error rate
Number of complaints
...
Quality
Time to market
Duration of projects
Time to write a proposal
...
Time
Litigation expenses
Financial penalties
...
Risk
Productivity costs
Search costs
Communication costs
Travel expenses
Storage
...
Cost
KPI should be:
Simple
Immediate, direct
Concrete
comprehensible
Easy to measure
Low error rate
Two different business cases lead to a positive ROI:
Cost Cutting
Reduction of the time to write a new proposal
Reduction of search time
Reduction of travel expenses
...
Generation of new business
New business by intensified intra-company communication
Higher win rate of proposals (number of proposals written compared to the number of new signed contracts)
Difference between benefits of the project and ROI
The benefits of a KM project can be measured with respect to the dimensions money, time, quality and risk
The Return on KM-Investment only considers the financial dimension => conversion might be necessary. The KM-Investment is related to the financial benefits.
Examples
1) Knowledge Management for the sales department
Objectives: optimising the sales processes
Solution: Support of the process of writing a proposal by introducing a DMS that offers text modules, won proposals (Best Practices) und information about the customer
KPIs:
Time between the request to make a proposal and the actual delivery of the proposal
Ratio of delivered proposals compared to won proposals (Win Rate)
According to our experience it is possible to Divide the time to write a proposal by halve (cost cutting) and increase the win rate by 33% (new business).
2) Support of project collaboration
Objectives: reduction of the project duration, reduction of project costs
Solution: Introduction of a collaboration tool and methodology Shared use of documents, discussion forums, virtual team rooms, support of the project management
KPIs:
Average duration of a project
Average travel expenses per project member
They reached a reduction of the project duration of 25% (cost cutting)
In another case reported by Meta-Group they could save one business trip per employee per year. For 1000 Employees and an average cost of €1000 for a business trip, this means a cost cutting of 1 Mio Euro!
3) Intranet as a platform for knowledge exchange
Objectives: Support knowledge exchange between employees in order increase the profit
Solution: Introduction of a worldwide intranet and additional rewarding programs for knowledge sharing KPIs:
Time savings by reuse of information and documents, etc.
Higher turnover by new customer projects, that were generated by intensified knowledge sharing between different areas, countries, etc
Siemens says that they generated €146 millions of new business and saved € 2,5 millions with respect to costs within one year with their intranet „ShareNet“.
What does that mean for SIECC?
What are SIECC`s strategic goals?
“What must the SIECC do to differentiate itself from competitors?…”
“How can Knowledge Management be used to support these objectives in ways that other capabilities within the organization cannot?”
Which KPI express your KM-objectives?
Anmerkungen zur Nutzenkategorie Zeit:
Verringerte Bearbeitungszeit (automat. Workflows)
Lernzeit: . auch Einarbeitungszeit / Gewöhnungsdauer (integrierte Portale)
Anmerkungen zur Nutzenkategorie Zeit:
Verringerte Bearbeitungszeit (automat. Workflows)
Lernzeit: . auch Einarbeitungszeit / Gewöhnungsdauer (integrierte Portale)
