Knowledge Management (KM) is among the hottest buzzwords today as corporates adapt to the New Economy. Some experts say that one way for this fast growing sector to grow even faster would be to adopt the ASP route. Punita Jasrotia reports

P Sadanandan says the pioneers in this space will start entering into business intelligence applications, data visualisation tools and learning management systems

While the economic downturn has resulted in a lot of cost cutting and delays in investments on new projects, one sector that was able to sustain itself was the Knowledge Management (KM) industry. Traditionally defined as a systematic approach to improve the way knowledge is created, secured, transformed and disseminated, the KM industry has undergone a transformation and has matured considerably from the hype surrounding it two years ago. The KM customer today is more informed and aware and is therefore demanding KM solutions that can not only be implemented in the short-term but that are also easy on the pocket.

There is also considerable focus being laid on ASP offerings (still at a nascent stage), which is termed as the next stage in the KM evolution. Expected to bring in a major chunk of the SME segment, KM through the ASP model will only help in further growth of the market.

There are a lot of technlogy- and KM tools-based players attempting to provide seamless access to both structured and unstructured information to enterprises. Players like IBM, Microsoft, Oracle, Computer Associates, Accenture, Ernst & Young, QAI India, Cognizant Technologies and Max Ateev are already offering KM solutions and more are in the pipeline. According to an IDC report, by 2004 the worldwide KM services and software market is estimated to be worth around $13.4 billion. Of this pie, the share of KM software is expected to be around $5.4 billion, growing at a CAGR of 22.2 percent. In the case of the access segment, the market is expected to grow to $3.4 billion in 2004, with a CAGR of 43.4 percent. Though there is no specific study conducted on the Indian KM industry, it is pegged to be worth around $10 million by next year, reason enough for action in the segment.

A Rajagopal says KM adoption is driven by enterprise needs to have 24/7 access to customers, employees, suppliers, partners and vendors

In terms of market maturity, the Indian market can easily be divided into two types of users. First are the companies who have already taken some initiatives in the KM space (with databases, Intranets or even a basic effort of creating awareness about the value of knowledge sharing among employees). These are companies who will go for complete enterprise solutions. The other group consists of users who have some idea about KM, but are still exploring how they can leverage it. They have heard about KM, have been discussing it, but are yet to put a value to what they derive from it immediately, and in the future. These are the companies who will go for ASP offerings. The purpose out here is not just to plug in technology, but also create the initial critical mass, experience RoI at every stage and then let it build over itself.

“The cost of technology is coming down, and this has led to a significant decrease in the pricing of KM solutions,” says Tarun Satiya, head of KM, Ernst & Young. While cost is a major issue for most corporates shifting to KM solutions, other factors also drive the KM market. According to A Rajagopal, senior consultant with QAI India, enterprises today need to have 24/7 access to their customers, employees, suppliers, partners and vendors to excel in their businesses. The need is for a well-planned system that not only helps in improving service and responsiveness to customers but also helps in decision making and problem solving. “Today’s winning enterprises are ones who not only provide a competitive solution, but are timely as well and reflect a sound value proposition. KM solutions should not only speed up the product development cycle, induce faster adaptability, reduce the duplication of efforts and loss of information, but also increase manpower productivity and satisfaction and also help in increasing shareholder value,” he explains.

Agrees R Ramkumar, chief knowledge officer, Cognizant Technologies, who feels that corporates globally are increasingly finding the burden of rework and relearning too much to bear. “It has become imperative for organisations to exploit their intellectual capital as effectively as possible. Adding to this is the pressure from global mergers and acquisitions, which has made it vital for every organisation to invest in KM initiatives,” he says.

R Ramkumar says pressure from global mergers and acquisitions has made it vital for every organisation to invest in KM

While there are a good number of tools and products available in the market that promise quick deployment turnarounds, most organisations seem to develop their own KM solutions by customising products such as SharePoint, Lotus Notes, .Net and Site Server. Besides this, Computer Associates (CA) and Quality Assurance of India (QAI) are the other players offering popular KM solutions.

According to Balaji Jagannathan, national manager, Information Management, CA, the company has consolidated all its information management solution products into three closely related groups. On the other hand there is QAI’s KM solution called Pentogen, which is an amalgamation of QAI’s ‘5Ps’ theory of purpose, people, process, portfolio of technology and pace of learning aspects. QAI also has a ready-to-deploy KM offering and proprietary rapid implementation methodology called MindCrossing Knowledge Xchange.

Raj Patil, CEO of Max Ateev says they want to help organisations implement KM solutions that give business benefits from day one. Agrees Pankaj Ukey, marketing manager of Microsoft India. The company offers what it calls a quick and easy-to-use KM solution, which can be productive from day one.

ASP: The potential driver
While end-to-end service providers have complete control in integrating their KM offerings at both the business excellence and the operational excellence drive of an organisation, tool-based KM players are trying to address the middle and lower layers of the organisation. The market is witnessing a shift towards ‘KM on tap solutions,’ which are expected to witness a faster growth rate compared to other KM solutions. This theory is well supported by IDC’s research, which pegs the global spending on Application Service Provider (ASP) services to explode. By 2004, ASP services will amount to $7.8 billion. With the ASP concept being endorsed by several influential players, including AT&T, IBM, Microsoft, and Sun, their commitment is resulting in applications, infrastructure and services, all needed to drive growth in the market.

The reason behind the growth in customer base in this space is the increasing awareness among customers about accessing new applications without initial spending on application licenses, servers, people and other resources. Not only is this stoking demand for faster and better-evolved solutions, what is emerging are offerings in both the collaborative and individual applications space.

According to S P S Grover, KM through the ASP model could be an answer for companies with budget constraints

According to an industry study, investments in enterprise applications were responsible for 66 percent of total ASP expenditure in 1999. Collaborative applications (comprising groupware, document management, and e-mail) and personal applications (including office suites and consumer-oriented applications) accounted for the balance of ASP spending, which came out to be one-third of the total. However, spending in these segments is only expected to grow, resulting in a combined market share of 50 percent by 2004. According to experts, because of their network-centric nature, collaborative applications are well suited for the ASP model.

Another step in this direction is through offerings like Internet-based solutions. While the industry is presently witnessing a demand greater for intranet-based applications, the need for extranet-based applications will definitely rise. Predicting the future, Ukey says that the next step in this category would be the integration of various intranet applications. Added to this would be the introduction of applications that will enable business partners to get into a company’s intranet and get relevant information.

Elaborating further, Rajagopal says that while a better knowledge of their customers is imperative and sharing of knowledge about their customers within the organisation is very critical, the need is to share information and knowledge with geographically dispersed installations/offices and enterprise KM with their suppliers and alliances. Similarly, there is also the need to share information about their business partners across various divisions/groups. According to Jagannathan, portals present the ability to add value through revenue generating core business functions with which they are integrated. “Business benefits are optimised where portals are aligned with business opportunity and goals,” he says. All this has only led to the market shifting its focus from just technology-oriented KM solution offerings to providing complete turnkey KM solutions involving strategic management, consulting, technology, tools and training.

Driving factors
Though time and money are the popular words associated with the ASP model, there are other factors like faster deployment, faster response time and RoI, coupled with low fixed costs, which is driving the market. According to Rajagopal, the economy depends on the knowledge era today for achieving business excellence. “Down the years successful enterprises would have their KM system up and running, integrated with all other business and support systems. Perhaps a KM system on-the-fly through anytime-any where access can be achieved as lots of corporations are thinking and talking about it seriously today. There would be lots of tools available, integrating different aspects of KM, viz. content management, document management, workflow, business performance management system and e-learning. The business imperatives such as improving faster response time to customers, need to leverage internal expertise, quality deliverables with better, cheaper and faster ways of addressing customers concerns would drive this momentum rapidly,” he says.

According to Pradeep Nair, the ASP model will only work when customers are looking to implement piecemeal solutions

Adding to that, P Sadanandan, director, R&D and chief technology officer of Intelesoft Technologies, says it is quite conceivable that initial forays by large organisations into this area will help in increasing awareness on the potential of KM technologies and shaking off the latent inertia in the industry. “If ASPs prove successful, they can provide a great boost to the KM movement in the country. By the same token, poorly managed KM services can set back the clock by a couple of years. Eventually organisations will see the inevitability of adopting KM solutions to maintain the competitive edge, and the technology will continue raising the bar on the power, sophistication, ease of implementation and ease-of-use of such solutions. Commoditisation of KM cannot be that far,” he says.

The major growth segments cited by the experts are manufacturing, finance, consulting firms, pharmaceutical companies, the IT-enabled sector and even the government sector. With solutions ranging from enterprise intranet portals, data warehousing solutions, document management systems, groupware and extranets, companies are also set to embark on this second phase of KM solutions.

Pradeep Nair, country manager-Lotus, Software Group, IBM India, feels that growth is going to happen only in certain cases. “We have many customers deploying full-fledged KM initiatives on their own. But where customers are looking to implement piecemeal solutions, like for instance instant messaging or e-learning as a knowledge management tool, the ASP model is attractive,” he says. According to him, it is usually dependent on what the scope of the KM solution is—if it involves elements of expertise location, skill mining, classification, collaborative portals, document management, real-time collaboration, virtual team-rooms, all put together in an integrated manner, an ASP model is not very attractive currently. However, when a customer needs only one or two of these capabilities, they have expressed keenness in an ASP-based offering.

But there are some who do not fully agree with the trend and term the ASP model as good enough for non-competitive and non-business-critical applications such as travel accounting or time sheet management. According to S P S Grover, GM, E-Business, Oracle India, for companies under budget constraints (typically in SME segment) this could be an answer. “More and more companies are expanding on this definition based on their industry needs. For companies that are restricting the definition ASP may be a solution but not so where the definition is evolving. At best, ASP may be just a way of managing a portion of the IT infrastructure required to manage structured data and the associated knowledge linked to it. But KM is about tapping knowledge hidden in all types of data created via all types of transactions—both structured and unstructured. It is unlikely this company will ever be able to move all the above IT infrastructure to an ASP environment,” he says.

Balaji Jagannathan says portals present the ability to add value through revenue generating core business functions with which they are integrated

Sadanandan on the other hand questions the market preparedness for such a solution, considering the lack of awareness and lack of readiness at the end user end. “Even much-harried CIO’s have not really risen to the occasion. Will the ASPs step in and paint the town red or will they be able to support/facilitate the highly demanding knowledge administration tasks of a mix of organisations? They can indeed offer technological solutions at shorter life cycles and competitive pricing. But for knowledge to be harnessed well and effectively end users will have to play a dominant and motivated role,” he says.

Though the experts agree that the market has achieved maturity in terms of understanding the knowledge curve of organisations and building the systems that facilitate knowledge harvesting, there is still a long way to go. Things like security issues, lack of understanding among organisations about the KM value chain or even the emergence of non-serious players have somewhat affected the growth of the industry.

Future course
According to Grover of Oracle, due to the existence of so many players, there would be a lot of confusion in the mind of the consumer. “The market will go through a stage where some companies will go in for early narrow definition solutions. However, they will soon realise that the solution should be a lot wider and will go back to vendors for additional solutions. Most of these niche vendors will not have the pieces and will be forced to look at partnerships that will be short-lived. All this will make the market veer towards unified single vendor solutions. Out of these, some of the smarter customers will see beyond the immediate horizon and go for a bigger integrated solution from day one. Niche vendors will push the narrow definition for their benefit while larger solution vendors will try to push for the unified KM view. However, given the sheer size of the market and the number of small-time players, it is inevitable that the small players will manage a lot of small deals initially before the market buys into the vision of the larger players.

Pankaj Ukey claims Microsoft’s KM solutions are designed to be productive from day one

The most popular KM solutions are going to be the ones dealing with workflow management, document management, content management, business performance measurement and management and the e-learning segments. “Pioneers will start entering into business intelligence applications, data visualisation tools and learning management systems. Enterprise knowledge portals, advanced CRM tools, interactive KM tools, knowledge maps, knowledge repositories, advanced e-learning environments, meta-search engines and knowledge maps are still beckoning from a distance,” says Sadanandan.

The market is expected to consolidate in the next two to three years and the survivors would be financially stable (with the ability to continually invest in technology and therefore able to communicate a clear roadmap for their offerings), and companies providing end-to-end solutions.