Centre for Information & Knowledge Management

1. Centre for Information & Knowledge Management INFORMATION SYSTEMS MANAGEMENT Jamie O’Brien Centre for Information & Knowledge Management University of Limerick Lecture 5 E-mail: jamie.a.obrien@ul.ie

2. What we’ll cover today • Knowledge Management • The Project

3. Trends and Implications

4. Ireland • As of Feb 1st 2009, 325000 people on the live register • 12% unemployment!!! • Predicted by end of 2010, 450,000 on live register, probably will be higher • Net emigration for the first time since 1995 • No safety valve of immigration this time!

5. Introduction • Term knowledge-based economy? • Knowledge has always been central to economic development.....we just didn’t get behind it • Only recently been recognised as important • Knowledge-intensive service sectors, such as education, communications and information, are growing faster

6. Introduction • Intangible investments in research and development (R&D) • It is skilled labour that is in highest demand in the OECD countries. • Average unemployment rate for people with lower-secondary education is 10.5 per cent, falling to 3.8 per cent for those with university education

7. Introduction • Knowledge....knowledge knowledge?? What is it? • Lots of definitions and opinions on this • Types: Know-what (information), know-why (specialised), know-how (skills- surgeon) and know-who (who knows what) • Simply: Knowledge lets us code the meaning of information. Information is meaningless unless given perspective.

8. What is Knowledge Dave Snowden IBM, Gurteen Conference 2003

9. “You can’t manage what you can’t measure”

10. Knowledge & Economics • Traditional production functions focus on labour, land, capital, materials and energy (Neoclassical Economists) • Knowledge and technology are external influences on production (Robert Solow) • Investment in knowledge lead to long term growth (Paul Romer)

11. Ireland’s Knowledge Intensity • Derived from R&D intensity in the Business, Higher Education and Government Sectors • Ratio of investment in knowledge to GDP was unchanged from 1997 to 2004 • R&D linked directly with knowledge and growth (Romer 1986) • Ireland remains below the average R&D performance (14thof 17 in OECD survey ahead of Portugal and Hungary)

12. % GNP 2000 IRELAND % GNP 2006 IRELAND E.U. 2006 OECD 2006 Gross Expenditure on R&D 1.32% 1.56% 1.77% 2.26% Business Sector R&D 0.94% 1.05% 1.12% 1.54% In Line with E.U. Higher Education Expenditure on R&D 0.27% 0.40% In Line with OECD Government Sector performed R&D 0.11% 0.11% 0.24% .27% Total Researchers 4.8 per thousand 5.9 per thousand - 6.9 per thousand Ireland’s R&D Performance: An E.U and OECD Comparison

13. How can Knowledge be brought into the equation? • Irish economy based on construction, housing, manufacturing sector.......etc • Had all this money (our old friend, Celtic tiger) ......but forgot about knowledge... • Now we are in a little trouble.... • What about knowledge? We have a knowlegde problem!

14. So what can be done? • Well you cant manage a problem unless you can measure a problem • few ways of looking at knowledge! • Endogenous growth theory looks at the link between knowledge and long term growth • Intellectual capital theory measures intangibles • KM theory looks at audit models • OECD takes a conceptual framework approach

15. Endogenous Growth Models • Learning-by-doing models (Arrow 1962: Lucas 1988: Stokey 1988) • Invention based models (Romer 1986: Aghion & Howitt 1992: Jones 1995) • Hybrid models (Young 1993)

16. Brief look • Learning-by-doing: technical change (knowledge) be viewed as endogenous (internal) to the economic system and secondly for attempting to offer an account of what constitutes technical change (the active attempt to problem solve) • Invention based models: technical change (knowledge) is seen as the product of profit maximising agents at micro level, while at macro level, knowledge is channelled into growth through increased firm efficiency and knowledge spillovers

17. Measuring Intangibles (IC) • Capital is “knowledge imposed on the material world” (Boulding 1966: 5) • To the Physiocrats of pre-Revolutionary France, it was the surplus generated by agriculture • Decreasing amount of economic activity now involves the manipulation of physical assets • Intangible assets such as knowledge have instead become the dominant value driver at firm level (Low 2002: Bounfour & Edvisson 2005: Chartrand 2005)

18. Intellectual Capital (IC) For the purpose of the framework IC has been broken down into: • Human: has been defined as the individual stock of knowledge accumulated by a firm’s employees • Structural: refers to the procedures, systems, routines and rules that comprise the core of the firm • Relational: encompasses knowledge that is embedded in all of the external relationships that a firm develops with its stakeholders; competitors, customers, suppliers

19. Knowledge Assessment Framework (KAF) • Derived from OECD standard indicators for knowledge, endogenous growth models, KM auditing models and Intellectual Capital • OECD- Factors and constructs • KM- Tacit/Explicit/Implicit knowledge and structure • EGT- Learning-by-doing/Invention • IC- Human/Structural/Relational • For use at organisational level

20. Location • Ireland; why? Research has a sense of urgency given economic climate, R&D and knowledge deficits, access. • High-Technology sector as defined by the OECD; why? High knowledge sector with large amounts of knowledge workers. • Definition: comprised of computers, electronic-communications, medical device and pharmaceutical industries.

21. Knowledge Assessment Framework (KAF) KEY  Tacit (1) Explicit (2) Implicit (3) Red = Human Blue =Structural Green= Relational Learning Invention KNOWLEDGE INPUTS Technical Staff(1)Patents(3)Expenditure on R&D(2)Technology Transfer(2)Embodied Technology (3)Amortised Annual R&D(1)Disembodied Tech (2)Stock Research Personnel(1)In Surveys(2) Communities of Practice(1)Outsourcing of R&D(3) Training Programmes(2)Education(3)Experience(1)New Market Products(2) Publications(2) Patents Granted(3) KNOWLEDGE STOCKS & FLOWS KNOWLEDGE INTENSITY INDEX (K.I.I) KNOWLEDGE NETWORKS KNOWLEDGE LEARNING KNOWLEDGE OUTPUTS CONSTRUCTS FACTORS

22. Knowledge Intensity Index (K.I.I.) • Factors: One that actively contributes to an accomplishment, result, or process (FactorConstructK.I.I.) • Constructs: To form by assembling or combining parts (ConstructK.I.I) • Knowledge Intensity Index (K.I.I): K.I.I. shows the knowledge intensity of an organisation

23. Constructs • Knowledge Inputs • Knowledge Stocks/Flows • Knowledge Networks • Knowledge Learning • Knowledge Outputs

24. Knowledge Inputs • Technical Staff- information on employees such as the level of education and number of technical staff, can be collected • R&D- any creative work undertaken on a systematic basis in order to increase the stock of knowledge • Technology Transfer- payments for production-ready technologies or know how • Patents- the representation of ideas themselves, patents are the closest to direct indicators of knowledge formation

25. Knowledge Stocks/Flows • Embodied Technology- Embodied technology is the introduction of context into production processes of machinery, equipment and components that incorporate new technology • Disembodied Technology- is the transmission of knowledge, technical expertise or technology in the form of patents, licenses or know-how within an existing domain • Amortised R&D-R&D stock relative to production has been used to estimate rates of return to R&D investment • Research Personnel- measurement of personnel employed

26. Knowledge Network • Communities of Practice- Informal networks tend to be based on personal contacts or communities of practice • Innovation Surveys- surveys capture information about the factors affecting the propensity of firms to innovate • Outsourcing of R&D- new types of collaborations with research organisation & activities in research and development, production, procuring, distribution, recruiting and ancillary services

27. Knowledge Learning • Training- assessed by questions on human resources and training • Experience- Each worker requires skills obtained through education (which usually gives rise to formal qualifications in the shape of degrees or diplomas, whose equivalence may be recognised internationally) or through training or on-the-job experience • Education- labour force with particular educational attainments

28. Knowledge Outputs • New market products- the Oslo Manual distinguishes three relevant concepts: new to the firm, new to the market and new to the world • Publications- by academic publication (a common codified pool of knowledge) • Patents Granted- legal property right to an invention, which is granted by national patent offices

29. What we covered today • Knowledge Management • The Project

30. Introduction of Project • This report is intended for the board of Celtic Wholesome Foods Plc. The purpose of the report is to: • Assess the feasibility of a proposal to implement a centralised I.S. Service Desk • Explore the possible options • Recommend a course of action

31. Scope of Document • This document provides an outline of the investigation and feasibility study that was conducted in February/March 2010 by __________________ into the use of a centralised IS Service Desk in Celtic Wholesome Foods Plc.

32. The Statement of Scope and Objectives is a copy of the statement that was created at the initiation of the project. • Interviews were conducted principally in the _______ division. This was due to the fact that the author is currently based in this division. However, other divisions were taken into consideration in all other aspects of the study

33. Statement of Scope & Objectives • At the inception of this project this statement has been created in order to outline • the exact nature of the business opportunity that has lead to the project • the intended benefits of the proposed new information system

34. Assignment Scope • Company details • Project Initiated… • This project was initiated at the request of the Finance Director of the group due to a number of issues that came to her attention: • Business units are paying vastly different rates for maintenance on their systems • Purchasing decisions are not based on clear historical data

35. Problem/Opportunity • Currently, all problems with information systems are resolved using local arrangements. Consequently, there are inefficiencies across the group. • Potential for cost savings from central purchase is not being utilised. • Call response times vary greatly across the group.

36. Problem/Opportunity • For example: In production all calls are responded to in 2 hours • In Finance, calls are often unanswered for 8 hours • There is no management information – which could be used for • Highlighting problems with current systems • Making purchasing decisions more informed in future • The response to calls is variable: Some service calls are being answered promptly • Other calls are taking days to resolve • There are no means of prioritising calls

37. Business Benefits • There are many anticipated benefits from the use of a centralised service desk. These include: • Faster response times – i.e. engineers respond to requests faster • Reduction in time lost due to system issues • More specialisation among engineers – i.e. each engineer focuses on one area • e.g. one engineer concentrates on email • another engineer concentrates on database applications

38. This means that engineers are being utilised to do the work that they are skilled in • Management information is produced regarding the support calls for various systems

39. System Capabilities • An IS Service Desk should be capable of the following: • Handle all IS Service Calls • Maintain a history of all calls • Maintain a record of all software that is rolled out to computers • Maintain an exact record of the configuration of each information system in the group

40. Company Information • Company size, geographical locations • Personnel (by type) • The breakdown of personnel in the division is as follows:  • Marketing Director, • Sales Manager • Marketing Manager • Organisation chart • A copy of the organisation chart for the project Department is shown in Appendix ?? Page ??.

41. Feasibility Report This report provides an outline of the current system and available options before examining one option in detail.

42. Current System • Currently, the system operates as follows: • Each business unit has a team of people who handle all matters relating to IS • There are no formalised methods of logging requests to the IS people • Sections located nearest to the local IS department get the highest level of service • Because they can walk into the office to get personal service • Offices that are distant from the IS department do not get good service

43. Available Options • Different vendors/suppliers are used in each of the business units resulting in • A variety of support contracts • Loss of potential savings from pooled purchase • Management information is not available because • Each IS team has its own method of logging requests • Some use an access database, others use an Excel spreadsheet

44. Some teams do not keep records of service requests • Information is not pooled across the divisions • Each IS department has its own budget • Local arrangements are employed in prioritising calls • Some of the managers have close links with the IS department • This provides them with the means of escalating calls • It also enables the IS people to get to understand the business

45. Currently each business unit has its own IS team who are acting independently. There are a number of options available to the group with regard to how to work in the future. The following is an outline of the main options available: • Continue with the current option of each unit operating independently • Utilise a centralised IS Service Desk but allow local IS service functions

46. Utilise a centralised IS Service Desk and centralise all IS functions • Outsource the IS Service Desk and centralise all IS functions • Outsource the IS Service Desk and outsource all IS functions • Options Evaluated • Ads/Disadvs

47. Feasibility Study Baaf 3 Project

48. Components • Economic • Technical • Operational & Organisational • Social

49. Economic Costs • Systems Analysis & Design • Purchase of Hardware • Software Costs • Training Costs • Installation Costs • Changeover & Data Conversion • Redundancy Costs • Operating Costs

50. Economic Benefits • Savings in Labour • Benefits of Faster Processing • Better Decision Making • Better Customer Service • Error Reduction