Centre for Information

1
Centre for Information Knowledge Management

• INFORMATION SYSTEMS MANAGEMENT
• Jamie OBrien
• Centre for Information Knowledge Management
• University of Limerick
• Lecture 5
• E-mail jamie.a.obrien_at_ul.ie

2
What well 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 didnt 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 (RD)
• 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 cant manage what you cant 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
Irelands Knowledge Intensity

• Derived from RD intensity in the Business,
  Higher Education and Government Sectors
• Ratio of investment in knowledge to GDP was
  unchanged from 1997 to 2004
• RD linked directly with knowledge and growth
  (Romer 1986)
• Ireland remains below the average RD performance
  (14th of 17 in OECD survey ahead of Portugal and
  Hungary)

12
Irelands RD 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 firms 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, RD 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)
Tacit (1)
Explicit (2)
Implicit (3)
KEY ?
Red Human
Blue Structural
Green Relational
Learning
Invention
KNOWLEDGE INPUTS
Technical Staff(1) Patents(3) Expenditure
on RD(2) Technology Transfer(2)
Embodied Technology (3) Amortised Annual
RD(1) Disembodied Tech (2)
Stock Research Personnel(1) In
Surveys(2) Communities of
Practice(1) Outsourcing of RD(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
• RD- 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 RD-RD stock relative to production
  has been used to estimate rates of return to RD
  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 RD- 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

51
Compare Costs and Benefits

• Costs mostly in the initial stages
• Benefits end of systems life cycle
• Methods
• Discount Rate of Return
• Net Present Value
• Cost-Benefit Ratio
• Profitability Index
• Internal Rate of Return

52
Cost/Benefit pitfalls

• Tangible benefits can be quantified
• BUT
• Intangible benefits are not easily quantified
• Financial models assume that costs and benefits
  can be expressed in financial terms

53
Technical Criteria

• Rule-governed tasks
• Repetitive tasks
• Complex Tasks
• High degree of accuracy required
• Speed of Response
• Data used for many tasks

54
Technical Feasibility

• Will the system
• Deliver the performance required?
• Deliver the necessary level of security?
• Enable data integration?
• Ensure data quality?

55
Operational Organisational Feasibility

• Organisation accepts new systems?
• Will users be able to use the technology?
• Organisational structure (departments
  divisions) conducive to the system?
• Support the required decision-making?

56
Operational Feasibility

• The operational feasibility of the proposed
  change is centred on
• users to log calls to a central IS Service Desk
• users providing exact details to the IS Service
  Desk, such as confirming
• Asset Tag on PC
• Exact location
• Alternative contact numbers
• Engineers taking all instructions from the IS
  Service Desk
• Engineers refusing to handle calls that have not
  been logged with the IS Service Desk

57
Operational Feasibility

• Potential difficulties in the area of operational
  feasibility are
• Lack of cooperation from management
• This would result in their staff not adhering to
  new procedures
•  Lack of cooperation from service engineers
• This would result in calls being processed
  without being logged centrally

58

• Operational Assessment
• It is believed that the proposal to utilise a
  central ERP is operationally feasible because
• 1
• 2
• 3
• 4
• 5

59
Social Feasibility

• Implications on lifestyle
• Eircom removing telephone kiosks
• Implications on wider community
• Mobile Phone Masts

60

• Recommendation
• I would (would not) recommend that the proposed
  installation of a centralised IS Service Desk be
  progressed. The recommendation is based on the
  following main points
• Technically there are no issues to threaten the
  feasibility of the project
• Economically the project is feasible (based on
  two reviews)
• Organisationally the project is feasible
  (though it will need to be well-managed)

61

• Plans
• This report requires the approval of the board of
  Celtic Wholesome Foods Plc.
• If approved, the following are the most immediate
  steps to be taken
• Inform all senior managers of the decision to
  proceed with the project
• Inform the IS managers and IS teams in each of
  the business units
• Arrange meetings with IS teams to discuss how to
  progress the project
• Initiate the assessment of Helpdesk software
  solutions

62
Feasibility Report

• Title Page
• Terms of Reference
• Background
• Method of Study (fact finding)
• Present System
• Proposed System
• Recommendation
• Development Plan

63
Summary

• Initiation of a project
• Statement of Scope Objectives
• Data collection methods
• Feasibility Study
• Feasibility Report

64

• End of Lecture