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Management Information Systems

Chapter 11: Managing Knowledge

11.1 Copyright © 2016 Pearson Education, Inc.

Management Information Systems

Chapter 11: Managing Knowledge

Managing Knowledge

VIDEO CASES
Video Case 1: How IBM’s Watson Became a Jeopardy Champion
Video Case 2: Tour: Alfresco: Open Source Document Management System
Instructional Video 1: Analyzing Big Data: IBM Watson: Watson After Jeopardy
Instructional Video 2: Teamwork and Collaboration: John Chambers on Collaboration vs.
Command and Control in Web 2.0

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Management Information Systems

Chapter 11: Managing Knowledge

Learning Objectives

• Describe the role of knowledge management and

knowledge management programs in business.
• Describe the types of systems used for enterprise-
wide knowledge management and how they
provide value for businesses.
• Describe the major types of knowledge work
systems and how they provide value for firms.
• Describe the business benefits of using intelligent
techniques for knowledge management.

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Management Information Systems

Chapter 11: Managing Knowledge

The Knowledge Management Landscape

• Knowledge management systems among fastest

growing areas of software investment
• Information economy
– 37% U.S. labor force: knowledge and information workers
– 45% U.S. GDP from knowledge and information sectors

• 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
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Management Information Systems

Chapter 11: Managing Knowledge

The Role of Knowledge Management in Business

• 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)
• Know-how, craft, skill
• How to follow procedure
• Knowing why things happen (causality)
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Management Information Systems

Chapter 11: Managing Knowledge

The Knowledge Management Landscape

• Important dimensions of knowledge (cont.)

– Knowledge has a location.
• Cognitive event
• Both social and individual
• “Sticky” (hard to move), situated (enmeshed in firm’s
culture), contextual (works only in certain situations)
– Knowledge is situational.
• Conditional: Knowing when to apply procedure
• Contextual: Knowing circumstances to use certain tool
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Management Information Systems

Chapter 11: Managing Knowledge

The Knowledge Management Landscape

• To transform information into knowledge, firm must expend

additional resources to discover patterns, rules, and
contexts where knowledge works
• Wisdom:
– Collective and individual experience of applying knowledge to solve
problems
– Involves where, when, and how to apply knowledge
• Knowing how to do things effectively and efficiently in ways
others cannot duplicate is prime source of profit and
competitive advantage
– For example, Having a unique build-to-order production system

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Management Information Systems

Chapter 11: Managing Knowledge

The Role of Knowledge Management in Business

• Organizational learning
– Process in which organizations learn
• Gain experience through collection of
data, measurement, trial and error, and
feedback
• Adjust behavior to reflect experience
–Create new business processes
–Change patterns of management decision
making
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Management Information Systems

Chapter 11: Managing Knowledge

The Role of Knowledge Management in Business

• 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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Management Information Systems

Chapter 11: Managing Knowledge

The Knowledge Management Landscape

• Knowledge management value chain

1. 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

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Management Information Systems

Chapter 11: Managing Knowledge

The Knowledge Management Landscape

• Knowledge management value chain (cont.)

2. Knowledge storage
• Databases
• Document management systems
• Role of management:
– Support development of planned knowledge storage systems.
– Encourage development of corporate-wide schemas for
indexing documents.
– Reward employees for taking time to update and store
documents properly.

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Management Information Systems

Chapter 11: Managing Knowledge

The Knowledge Management Landscape

• Knowledge management value chain (cont.)

3. Knowledge dissemination
• Portals, wikis
• E-mail, instant messaging
• Search engines
• Collaboration tools
• A deluge of information?
– Training programs, informal networks, and shared
management experience help managers focus
attention on important information.
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Management Information Systems

Chapter 11: Managing Knowledge

The Knowledge Management Landscape

• Knowledge management value chain (cont.)

4. Knowledge application
• To provide return on investment,
organizational knowledge must become
systematic part of management decision
making and become situated in decision-
support systems.
– New business practices
– New products and services
– New markets
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Management Information Systems

Chapter 11: Managing Knowledge

The Role of Knowledge Management in Business

• 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
• Facilitate reuse of knowledge, discussion
• Reduce learning curves of new employees
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Management Information Systems

Chapter 11: Managing Knowledge

The Knowledge Management Value Chain

FIGURE 11-1 Knowledge management today involves both information systems activities and a host of enabling
management and organizational activities.

11.15 Copyright © 2016 Pearson Education, Inc.

Management Information Systems

Chapter 11: Managing Knowledge

MAJOR TYPES OF KNOWLEDGE MANAGEMENT SYSTEMS

FIGURE 11-2 There are three major categories of knowledge management systems, and each can be broken down further into
more specialized types of knowledge management systems.

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Management Information Systems

Chapter 11: Managing Knowledge

The Knowledge Management Landscape

• 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
• Facilitate reuse of knowledge, discussion
• Reduce learning curves of new employees
11.17 Copyright © 2016 Pearson Education, Inc.

Management Information Systems

Chapter 11: Managing Knowledge

The Knowledge Management Landscape

• Three major types of knowledge management

systems:
1. Enterprise-wide knowledge management systems
• General-purpose firm-wide efforts to collect, store, distribute, and
apply digital content and knowledge
2. Knowledge work systems (KWS)
• Specialized systems built for engineers, scientists, other
knowledge workers charged with discovering and creating new
knowledge
3. Intelligent techniques
• Diverse group of techniques such as data mining used for various
goals: discovering knowledge, distilling knowledge, discovering
optimal solutions

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Management Information Systems

Chapter 11: Managing Knowledge

MAJOR TYPES OF KNOWLEDGE MANAGEMENT SYSTEMS

FIGURE 11-2 There are three major categories of knowledge management systems, and each can be broken down further into
more specialized types of knowledge management systems.

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Management Information Systems

Chapter 11: Managing Knowledge

Enterprise-Wide Knowledge Management Systems

• Three major types of knowledge in enterprise:

1. Structured documents
• Reports, presentations
• Formal rules
2. Semistructured documents
• E-mails, videos
3. Unstructured, tacit knowledge

• 80 percent of an organization’s business content

is semistructured or unstructured.
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Management Information Systems

Chapter 11: Managing Knowledge

Enterprise-Wide Knowledge Management Systems

• Enterprise content management

systems
– Help capture, store, retrieve, distribute, preserve
• Documents, reports, best practices
• Semistructured knowledge (e-mails)
– Bring in external sources
• News feeds, research
– Tools for communication and collaboration
• Blogs, wikis, and so on
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Management Information Systems

Chapter 11: Managing Knowledge

Enterprise-Wide Knowledge Management Systems

• Enterprise content management

systems
– Help capture, store, retrieve, distribute, preserve
• Documents, reports, best practices
• Semistructured knowledge (e-mails)
– Bring in external sources
• News feeds, research
– Tools for communication and collaboration
• Blogs, wikis, and so on
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Management Information Systems

Chapter 11: Managing Knowledge

AN ENTERPRISE CONTENT MANAGEMENT SYSTEM

FIGURE 11-3 An enterprise content management system has

capabilities for classifying, organizing, and managing
structured and semistructured knowledge and making
it available throughout the enterprise.

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Management Information Systems

Chapter 11: Managing Knowledge

Enterprise-Wide Knowledge Management Systems

• Enterprise 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

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Management Information Systems

Chapter 11: Managing Knowledge

Enterprise-Wide Knowledge Management Systems

• Collaboration and social tools

– Social bookmarking
• Sharing and tagging bookmarks
– Folksonomies
• User-created taxonomies for tagging
– Examples:
• Delicious
• Slashdot
• Pinterest

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Management Information Systems

Chapter 11: Managing Knowledge

Enterprise-Wide Knowledge Management Systems

• Learning management systems (LMS)

– Provide tools for management, delivery, tracking, and
assessment of employee learning and training
– Support multiple modes of learning
• CD-ROM, Web-based classes, online forums, and so on
– Automates selection and administration of courses
– Assembles and delivers learning content
– Measures learning effectiveness
– Massively open online courses (MOOCs)
– Web course open to large numbers of participants
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Chapter 11: Managing Knowledge

Knowledge Work Systems

• Knowledge work systems

– Systems for knowledge workers to help create new
knowledge and integrate that knowledge into business
• Knowledge workers
– Researchers, designers, architects, scientists, engineers
who create knowledge for the organization
– Three key roles:
1. Keeping organization current in knowledge
2. Serving as internal consultants regarding their areas of
expertise
3. Acting as change agents, evaluating, initiating, and
promoting change projects
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Chapter 11: Managing Knowledge

Knowledge Work Systems

• Requirements of knowledge work systems

– Sufficient computing power for graphics,
complex calculations
– Powerful graphics and analytical tools
– Communications and document management
– Access to external databases
– User-friendly interfaces
– Optimized for tasks to be performed (design
engineering, financial analysis)
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Chapter 11: Managing Knowledge

REQUIREMENTS OF KNOWLEDGE WORK SYSTEMS

Knowledge work systems

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

FIGURE 11-4

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Management Information Systems

Chapter 11: Managing Knowledge

Knowledge Work Systems

• Examples of knowledge work systems

– CAD (computer-aided design):
• Creation of engineering or architectural designs
• 3D printing
– Virtual reality systems:
• Simulate real-life environments
• 3D medical modeling for surgeons
• Augmented reality (AR) systems
• VRML
– Investment workstations:
• Streamline investment process and consolidate internal, external
data for brokers, traders, portfolio managers

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Management Information Systems

Chapter 11: Managing Knowledge

Intelligent Techniques

• Intelligent techniques: Used to capture

individual and collective knowledge and to
extend knowledge base
– To capture tacit knowledge: Expert systems, case-based
reasoning, fuzzy logic
– Knowledge discovery: Neural networks and data mining
– Generating solutions to complex problems: Genetic
algorithms
– Automating tasks: Intelligent agents
• Artificial intelligence (AI) technology:
– Computer-based systems that emulate human behavior
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Chapter 11: Managing Knowledge

Intelligent Techniques

• 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
– Typically perform limited tasks that may take a few
minutes or hours, for example:
• Diagnosing malfunctioning machine
• Determining whether to grant credit for loan
– Used for discrete, highly structured decision making
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Chapter 11: Managing Knowledge

RULES IN AN EXPERT SYSTEM

An expert system contains a

number of rules to be followed.
The rules are interconnected;
the number of outcomes is
known in advance and is
limited; there are multiple
paths to the same outcome; and
the system can consider
multiple rules at a single time.
The rules illustrated are for
simple credit-granting expert
systems.

FIGURE 11-5

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Management Information Systems

Chapter 11: Managing Knowledge

Intelligent Techniques

• 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

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Chapter 11: Managing Knowledge

INFERENCE ENGINES IN EXPERT SYSTEMS

FIGURE 11-6 An inference engine works by searching through the rules and “firing” those rules that are triggered by facts
gathered and entered by the user. Basically, a collection of rules is similar to a series of nested IF statements in
a traditional software program; however, the magnitude of the statements and degree of nesting are much
greater in an expert system.

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Management Information Systems

Chapter 11: Managing Knowledge

Intelligent Techniques

• Case-based reasoning (CBR)

– Descriptions of past experiences of human specialists (cases),
stored in knowledge base
– System searches for cases with characteristics similar to new
one and applies solutions of old case to new case
– Successful and unsuccessful applications are grouped with
case
– Stores organizational intelligence: Knowledge base is
continuously expanded and refined by users
– CBR found in
• Medical diagnostic systems
• Customer support
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Chapter 11: Managing Knowledge

HOW CASE-BASED REASONING WORKS

Case-based reasoning
represents knowledge as a
database of past cases and their
solutions. The system uses a
six-step process to generate
solutions to new problems
encountered by the user.

FIGURE 11-7

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Management Information Systems

Chapter 11: Managing Knowledge

FUZZY LOGIC FOR TEMPERATURE CONTROL

FIGURE 11-8 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.

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Chapter 11: Managing Knowledge

Intelligent Techniques

• Machine learning
– How computer programs improve performance
without explicit programming
• Recognizing patterns
• Experience
• Prior learnings (database)
– Contemporary examples
• Google searches
• Recommender systems on Amazon, Netflix

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Chapter 11: Managing Knowledge

Intelligent Techniques

• Neural networks
– Find patterns and relationships in massive amounts
of data too complicated for humans to analyze
– “Learn” patterns by searching for relationships,
building models, and correcting over and over again
– 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
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Chapter 11: Managing Knowledge

HOW A NEURAL NETWORK WORKS

FIGURE 11-9 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

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Management Information Systems

Chapter 11: Managing Knowledge

Intelligent Techniques

• 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
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Chapter 11: Managing Knowledge

THE COMPONENTS OF A GENETIC ALGORITHM

FIGURE 11-11 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.

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Management Information Systems

Chapter 11: Managing Knowledge

Intelligent Techniques

• Intelligent agents
– Work without direct human intervention to carry out
specific, repetitive, and predictable tasks for user,
process, or application
– Deleting junk e-mail
• Finding cheapest airfare
– Use limited built-in or learned knowledge base
– Some are capable of self-adjustment, for example: Siri
– Agent-based modeling applications:
• Systems of autonomous agents
• Model behavior of consumers, stock markets, and
supply chains; used to predict spread of epidemics
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Chapter 11: Managing Knowledge

INTELLIGENT AGENTS IN P&G’S SUPPLY CHAIN NETWORK

Intelligent agents
are helping P&G
shorten the
replenishment
cycles for products
such as a box of
Tide.

FIGURE 11-12

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Management Information Systems

Chapter 11: Managing Knowledge

Intelligent Techniques

• Hybrid AI systems
– Genetic algorithms, fuzzy logic, neural
networks, and expert systems integrated
into single application to take advantage
of best features of each
– For example: Matsushita “neurofuzzy”
washing machine that combines fuzzy logic
with neural networks
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Chapter 11: Managing Knowledge

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