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A new strategy for harnessing knowledgemanagement in e-commerce

Stephen A. Oppong, David C. Yen*, Jeffrey W. Merhout

Department of DSC&MIS, RTF School of Business, Miami University, Oxford, OH 45056, USA

Abstract

Knowledge management has become increasingly critical for the success of companies in this

emerging era of e-commerce. As business activities increasingly shift to the web, the challenge

facing corporate management is maintaining competitive advantage by building strong relations

with employees, customers, and upstream/downstream suppliers and partners. A good knowledge

management strategy can help achieve this goal. Unfortunately, many companies use knowledge

management technologies that do not suit todays new information era. Therefore, it is important to

understand how companies can successfully implement knowledge management programs that willhelp them to gain competitive advantage. Most experts agree that the biggest challenges of

knowledge management are not technological but human-based or behavioral challenges.

This paper addresses these problems by tracing the evolution of knowledge management in

e-commerce and identifying strategies that are currently in use. We will demonstrate how companies

can benefit by adopting strategies that harness the potential of knowledge management technologies

to transform their e-business activities. We define knowledge management; then provide an

overview of the driving and impeding forces that help and hinder proper deployment of knowledge

management strategies in e-commerce. Then we describe approaches and implementation

architectures currently in use by companies who are integrating knowledge management into their

e-commerce activities. Finally, we suggest a strategic approach that can overcome the limitations in

systems presently in use as well as implications for future knowledge management development.q 2005 Elsevier Ltd. All rights reserved.

Keywords: Business to business (B2B); Business to consumer (B2C); Business intelligence (BI); Customer

relationship management (CRM); Electronic commerce (E-commerce); Electronic data interchange (EDI);

Enterprise information portal (EIP); Enterprise resource planning (ERP); Knowledge management (KM); Supply

chain management (SCM)

Technology in Society 27 (2005) 413435

www.elsevier.com/locate/techsoc

0160-791X/$ - see front matter q 2005 Elsevier Ltd. All rights reserved.

doi:10.1016/j.techsoc.2005.04.009

* Corresponding author. Tel.: C1 513 529 4826; fax:C1 513 529 9689.

E-mail address: [email protected] (D.C. Yen).
http://www.elsevier.com/locate/techsochttp://www.elsevier.com/locate/techsoc

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1. Introduction

Corporate management today depends on the effective use of resources, elimination of

redundancy, and aggressive automation of manufacturing processes in order to meetbusiness goals. It is also clear that web-based electronic commerce (e-commerce)

has become a key force in todays business operations. Indeed, one of the major challenges

growing out of the popularity of e-commerce is competition in a just-in-time

inventory environment that strives to react to customers on-line demands and high

expectations. This challenge has forced business executives to recognize that they must

move in a timely manner to implement an effective e-business strategy that enhances

customer satisfaction while improving enterprise efficiency and effectiveness. One key is

effective utilization of timely information. But information is, by itself, rather meaningless

unless it can be collected, sorted/categorized, organized, and then made available as

knowledge.The effective use of knowledge is a key component in every successful organization

no matter what field or business function they may be in or what services the

organization provides. As Wallace and Caldwell note, With the growing popularity

of e-business, knowledge management is moving to the forefront of CEOs agendas

as a disciplined approach to enterprise transformation [1]. Effective knowledge

management (KM) enhances products, improves operational efficiency, speeds

deployment, increases sales and profits, and creates customer satisfaction. But using

knowledge correctly in an organization presupposes that management understands

that the mere availability of disconnected or dispersed bits of information is

not knowledge and that such bits can never adequately address these enterprise

imperatives [2].

The KM market is highly competitive, and it has developed considerable uncertainty

and risk because of the contradictory nature of its enabling technologies and the inherent

organizational and cultural difficulties embedded in its applications. According to a recent

Merrill Lynch report, the market for technologies that facilitate KM systems is expected to

appreciate at a 30% compounded annual growth rate, having skyrocketed from $97 million

in 1999 to over $500 million at the end of 2004 [3]. This clearly reinforces the fact that KM

is perhaps 95% focused on people, processes, and culture, rather than on technology, since

the majority of technology growth is in information management (i.e. business contentmanagement) and classification systems [3].

Since the biggest challenges of KM are not technological but human-based or

behavioral, it is important to conduct extensive research into how companies can

successfully implement knowledge management programs to realize competitive

advantage. This paper addresses this challenge, first by tracing the evolution of KM in

e-commerce, and then identifying various strategies currently in use. We will demonstrate

how companies can benefit by adopting strategies that harness the potential of KM

technologies to transform e-business activities.

The paper begins with a definition of KM, then discusses the need for effective KM

practices, followed by an analysis of the driving and impeding forces that help and hinderproper deployment of KM strategies in e-commerce activities. The second portion of the

paper describes current approaches and implementation architectures being used by

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companies to integrate KM into their e-commerce activities. In the final section, we offer a

strategic perspective of KM, building on work done by Malhotra [4], with a discussion of

the future of KM development.

2. An overview of knowledge management in e-commerce

In the new millennium, most companies are setting up or expanding e-commerce

systems, and are therefore, seeking new capabilities for managing web-based interactions

with their suppliers, partners, and customers. The primary use of such e-commerce

systems is to provide effective coordination between (a) purchasing operations and

suppliers; (b) logistics and transportation providers; (c) the sales organization and

wholesalers or retailers who sell their products; and (d) customer service and support. One

key ingredient for the success of these coordination requirements is the continuousavailability, accessibility, and application of appropriate organizational knowledge within

e-commerce systems. This include different types of knowledge such as business

processes, business rules, customer profiles, product information, problem solving

expertise, and expert insight.

Executives in leading organizations increasingly recognize that in order to maintain or

gain competitive advantage, organizational knowledge needs to be managed and

integrated into their corporate e-commerce systems [57].

2.1. Definitions

In general, e-commerce include activities such as electronic exchange, delivery, and/or

transaction of information, goods, services, and payments over telecommunications

networks, primarily the web. But e-commerce activities also include establishing and

maintaining on-line relationships between organizations and their suppliers, deal-

ers/vendors, customers/users, strategic partners, regulators, and other agents related to

or who support marketing, delivery, and distribution. These activities may be business-to-

consumer (B2C, such as direct book sales to the general public by Amazon.com),

business-to-business (B2B, such as corporate procurement or supply chain management

using a secure extranet, similar to Covisint.com), consumer-to-consumer (C2C, such aspublic auctions at eBay.com), or within a business (such as an employee intranet or an

enterprise resource planning system). These relationships enable organizations to

reengineer their internal and external functions, increasing both efficiency and

effectiveness [8].

Several studies have proposed definitions of KM, and these are summarized in Table 1.

Newman defined knowledge management as the collection of processes that govern the

creation, dissemination, and utilization of knowledge. According to Newman, KM treats

knowledge as a resource by exercising selectivity, imposing priority on information

resources, adding structure and categorizing the organization and formulation of ill-

structured information (such as insights, understanding and intuition of experts for solvingspecific problems) to increase its value, and proactively capturing information that might

be useful in the future [9]. According to OLeary [10], knowledge management is

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a business concept, which includes concerted, coordinated, and deliberate efforts to

manage the organizations knowledge through the process of creating, structuring,

disseminating, and applying it to enhance organizational performance.

An organizations e-commerce and KM strategies should complement each other.

Indeed, success in a competitive marketplace depends on the quality of knowledge that

organizations apply to their key business processes. Sugumaran adds:

By integrating knowledge management into their e-commerce activities, firms canautomate existing processes and dramatically reduce cycle times throughout the

supply chain. They can enhance communication, collaboration, and corporation

between knowledge teams (including virtual teams) using intranet technologies and

between the organization and members of its external constituent organizations

using extranet technologies. [8]

2.2. History and evolution

The knowledge-sharing concept has a rather long history in management practices;however, KM is a relatively new discipline in management and management science. It

was not until the mid-1990s that KM actually became a unique discipline, and interest has

since developed significantly. As more organizations have come to understand and

appreciate the critical significance of fostering an environment in which knowledge is

valued as the organizations most valuable asset, KM has evolved at an accelerated pace

[11].

The evolution of e-commerce technologies started around the same time, when

companies began to use the Internet as a medium for conducting business. Companies that

were experimenting with e-commerce by setting up so-called electronic storefronts to

display products and services were considering such issues as standardization, security,and privacy. Soon order entry was being managed on these e-commerce sites, and a new

era began in which customers could conduct business using the Internet. Amazon.com is

Table 1

Definitions of knowledge management

Definition (Summary) Citation Year Unique characteristics

KM is the collection of processes

that govern the creation, dissemina-

tion, and utilization of knowledge.

Newman,

B. [9]

1992 Turns information into a resource by

exercising selectivity, imposing

order, and adding structure in order

to increase its value.

KM is managing the organizations

knowledge through the process of

creating, structuring, dissemination,

and applying it to enhance

organizational performance.

OLeary,

D.E. [10]

1998 Disseminates and applies knowledge

to enhance organizational

performance.

KM allows business process

automation and enhances communi-

cation and collaboration betweeninternal and external constituents.

Sugura-

man, V.

[8]

2000 Allows business process automation,

enhances communication between

internal and external partners.


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technology platform that will likely soon incorporate streaming video and audio

components to include e-learning and e-training functionalities, and as a result, has the

potential to reduce overall organizational training costs [3].

2.3. Needs and justification

There is an increased sense of urgency in institutionalizing comprehensive KMprograms due to the fact that the Internet and the web are revolutionizing the way

companies do business. Organizations need to motivate and enable their knowledge

Table 2

Evolution of knowledge management applications

Wave Age Year Important Activities Milestones Lessons Learned

1 Introduction Pre-1995 Group Memory

Systems

Discussion boards or

bulletin boards like

Lotus Notes.

Company employees

had instant access to

data and reporting

information that had

previously taken days

or weeks to obtain.

2 Growing 1995-2000 Corporate Intranets

and Decision Support

Portals

Data aggregation and

analysis enabled by

decision support por-

tals built on corporate

intranets.

Managers use decision

support portals to con-

duct data mining, ana-

lyzing large quantities

of data to discover

relationships and pat-terns to support better

decision-making.

3 Maturity Late

1990 s to

Present

Extranets and Inter-

enterprise Portals

Suppliers and trading

partners can access

internal corporate

information.

Extranets encourage

trading partners to

improve profits by

managing inventories

in the supply chain.

4 Current Late

1990 s to

Present

E-Commerce and

Click Stream Analysis

User click-stream

analysis, e-mail man-

agement, knowledge

portals.

Click-stream analysis

provides electronic

footprints that show

where people go on the

web; knowledge portalslet users search, process

and present data in

corporate intranets

using a web browser.

5 Future Business Intelligence Content organization

and collection, anal-

ysis and segmenta-

tion, real-time

personalization,

broadcast, retrieval

and interaction.

Data analytics coupled

with broadcast engine

technology allows

proactive, personalized

information delivery to

individuals, anytime,

anywhere.


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workers to be more productive through knowledge sharing and re-use. A well-designed

KM infrastructure makes it easier for people to share and distribute information during the

problem-solving and decision-making stages, resulting in lower operating costs, improved

productivity, and indirect benefits such as increasing the knowledge base and sharingexpertise [14].

The digital revolution has changed the way companies collect, store, and process

data on consumer behavior, and the way marketers determine price and promote or

distribute products. The proliferation of information systems and technology

now enables companies to accumulate huge amounts of customer data and information.

Companies that possess or develop the ability to explore useful marketing

insights into customer characteristics and their purchasing patterns will be duly

rewarded. The changes that are re-shaping many businesses in the e-commerce era call

for a new paradigm to create, capture, locate, and share knowledge efficiently and

effectively [15].Business process constraints and technology inadequacies create a need for the proper

integration of KM strategies into e-commerce. Some business process constraints are: the

rise of customer self-service, the excessive cost of pre-sales support, the increasing cost of

order errors, changing sales channels, growing product complexity, and the rise of

deregulation leading to mergers and acquisitions. Technology inadequacies arise from the

selling-chain application continuum, problems with sales force automation, limited

process functionality, and limited sales effectiveness.

The complexity of the sales process is increasing as customers demand higher levels

of service, faster turnaround, and more customized products and services. Consumers

want exactly what they want, when they want it, and they want it packaged to meet

their individual needs. Product selection is just one aspect of the selling process that

has been affected by self-service ordering. Companies that fail to improve quality and

reduce the turnaround time associated with pre-sales technical support are likely to lose

sales and market share to more responsive competitors. Also, the sophistication and

complexity of customized products, services, and systems can result in more frequent

and costly order errors if manual order entry systems are employed. This can be further

exacerbated by the rapid proliferation of sales and distribution channels, increasingly

complex products, and the rise in customer demand for a time-efficient ordering

process. All these constraints could be resolved by using KM technologies to achieveprocess automation.

Along with deregulation, merger and acquisition strategies have created corporations

with diverse product lines. These lines are often sold by a consolidated sales force formed

from the companies that were involved in the merger but have had little experience selling

the entire range of products. By employing KM, companies can shorten employees

learning curves.

The limitations of existing applications in todays business environment, and the

emergence of innovations to improve the existing technologies, have also contributed to

increased corporate investments in automation solutions to keep pace with technologically

advanced competitors. But we argue that the technology behind knowledge systems isperhaps the easiest part of the effort. The real work lies in getting people to participate in

the design of the system, to use the system, and to contribute to its development. Hence,


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company managers need to understand the issues behind KM systems so they can develop

and implement optimal strategies that will maximize the return of their investments in

such technologies.

2.4. Driving and impeding forces

The forces driving KM result primarily from the evolution of the Internet-information

age into what might be called a knowledge-based economy. Easily accessed information

via the Internet has created chaos for many businesses in their routine operations and has

increased business complexity for many others. Easy access to information anytime,

anywhere, on any device has significantly reduced business response time [3], and

companies have an imperative to respond proactively.

Six major trends and the sub-factors that driving the deployment of KM strategies ine-commerce are [13]:

1. Customer-oriented trends

Faster service; for the customer, time is money

Self-service; empowered customers

More product choices; more personalization

Integrated solutions; not piecemeal products

2. E-service trends

Integrated sales and service; customization and integration

Seamless support; consistent and reliable customer service Flexible fulfillment and convenient service delivery

Increased process visibility

3. Organizational trends

Outsourcing management; flattening the organization

Contract manufacturing; become brand intensive

Virtual distribution; become customer-centric

Integrated solutions to the size and sophistication of the customer base

4. Employee megatrends

Hiring the best and the brightest workers

Keeping talented employees5. Enterprise technology trends

Integrated enterprise applications; connect the corporation

Multi-channel integration; look at the big picture

Middleware; support the integration mandate

6. General technology trends

Wireless web applications; mobile commerce

Handheld computing and information appliances

Infrastructure convergence; voice, data, and video

Application Service Providers (ASPs); software as rentable services

These forces drive the need for companies to integrate KM systems into their

e-commerce processes in order to improve back-office efficiency, provide greater


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customer intimacy, become more flexible to adapt to market changes, and enhance

knowledge-based decision making. This will increase the quality, reliability, and

timeliness of the decisions made. All the trends have four common threads:

1. Convenience: the forces that directly impact consumer self-service and ease of use;

2. Effectiveness: they directly impact the relationship between the organizations

customers and its environment;

3. Efficiency: the trends impact the internal structure and operating activities of the

enterprise; and

4. Integration: they push for one-stop shopping consolidation.

Previously, KM has been viewed in association with information processing. This has

led to rather elementary assumptions about storing the knowledge of individuals in the

form of routine, programmable logic, rules-of-thumb, and accomplished best practices indatabases so it is available to guide future decision making. Malhotra [4] identified three

problems with this information-processing approach that hinder effective KM practices in

e-commerce. The impeding forces are described as myths about KM as it applies to the

new wave of e-business.

The first problem is based on the assumption that KM technologies can deliver the right

information to the right people in a timely manner. Traditional information systems mirror

the concept that businesses will change incrementally in an inherently stable environment,

and that executives can foresee change by examining past data and taking advantage of the

lessons learned from prior experiences. However, the new business model is labeled as a

fundamental rather than incremental change. Businesses cannot plan/predict in a long-

term horizon in todays dynamic environment; instead, they must shift to a more flexible

model that anticipates uncertainty. Thus, it is nearly impossible to build systems that

predict who the right people and the right time are, much less to determine what constitutes

the right information [4].

The second impeding force is about the assumption that KM technologies can store

human intelligence and experiences. Technologies such as databases, groupware, and

other collaborative systems and applications codify bits and pixels of data, but they

cannot store the accompanying schemas, semantics, and syntaxes that people use to

make sense of the data. Moreover, todays information is very context-sensitive, andthe same collection of data can trigger differing responses from different people.

Furthermore, the same data when reviewed by the same person but at a different time

or in a different context could evoke different decision-making and problem-solving

responses. Thus, storing static representations of explicit knowledge-assuming the

person has both a willingness and ability to explicate it-is not equivalent to storing

human intelligence and experience [4].

The final obstacle is the notion that KM technologies can distribute human intelligence.

This assumes that companies can forecast the right information to distribute and can

ascertain which people need this information. Simply compiling a repository of data for

people to access does not solve the problem either. The fact that information is archived ina database does not ensure that people will necessarily identify or access this information.

Most KM technologies concentrate on efficient retrieval techniques; hence the focus is on


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creating consensus-oriented views of the data. Data archived in such technological

knowledge repositories are thus based on rational viewpoints, and are static and without

context in most cases. Accordingly such systems cannot renew existing knowledge nor

create new knowledge [4].

3. Knowledge management in e-commerce: current integration developments

This section describes the features of two popular enterprise information portals that are

currently used to integrate KM in e-commerce activities. The applications introduced here

are Sun Microsystemss Portal Essentials and Veritys K2 Developer.

3.1. Portal essentials

Sun Microsystems launched Portal Essentials, a comprehensive Internet infrastructure

solution set for launching e-business portals in February 2000 [14]. Portal Essentials

enables an enterprise to build a portal infrastructure that is specially tailored to the

companys unique needs, whether it be B2E portals to provide services to employees, B2B

portals to deliver products and services to partners and suppliers, B2C portals to sell

products and services to consumers or retailers, or media and entertainment portals to

deliver news and interactive content. This product allows an enterprise to extend its most

important relationships beyond the traditional channels and to strengthen these

relationships by delivering an anywhere, anytime experience through the use of its

e-business portal.

According to Sun [14], Portal Essentials delivers industry-leading technologies that

help to build, maintain, and improve online relationships. It includes tools to manage,

enhance, and personalize the online experience and, at the same time, create a robust and

secure e-business platform. As a result, the enterprise can offer a higher level of service

that will eventually lead to increased customer retention and expanded revenue-generation

opportunities. Since portal infrastructure requirements vary by enterprise, Portal

Essentials offers the flexibility of customer choice where a customer can select only

those solutions within the offering that meet the companys portal infrastructure needs.

Sun states that Portal Essentials incorporates best-of-breed solutions from thefollowing vendors: Sun Microsystems SPARCe architecture and Solarise Operating

Environment, which provide the scalability, manageability, availability, security, and

connectivity required for conducting e-business. iPlanete E-commerce Solutions, Sun-

Netscape Alliances application infrastructure products, enable fast prototyping of new

applications; rapid and reliable delivery of web site services; streamlined and effective

management of resources; enhanced security services; constant communication,

consistent and integrated collaboration with partners, suppliers, customers and employees;

and reliable authorized access behind the firewall [14].

Autonomys Knowledge Suite offers intelligent and powerful KM tools that are central

to the enterprise portal. It delivers the ability to provide information based on eitherconcept or context. enCommerce getAccesse is responsible for ensuring secure,

convenient and personalized access to e-business portals and Internet applications via


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single sign-on over the Web. Inktomis search engine is designed to provide the high-

performance search infrastructure that enables customers to locate information across a

wide range of sources. Lotusse Dominoe Server provides collaboration capabilities

allow both individuals and businesses to share resources and work together over theInternet [14].

Net. Genesis net. analysis component provides additional customer profiling

capabilities that enable the enterprise to market, sell, and support their products online

based on customer purchasing behavior. Net Perceptions for E-commerce 5.0 offers a real-

time personalized solution that allows the enterprise to conduct one-on-one focused

marketing with its customers across multiple touch points online. OpenMarkets Internet

Publishing System provides content management capabilities that enable the enterprise to

deliver the proper content tailored to its customers needs. Resonates Central Dispatche

provides traffic management capabilities that ensure high availability, performance,

supervision, and control of e-business applications. And finally, TimesTens Front Tiereadds real-time intelligence to e-commerce personalization to dynamic data caching on the

application server tier [14].

3.2. Veritys K2 developer

In a move to enable more people to benefit from its well-regarded K2 technology

platform, Verity released a new version ofK2 Developer(K2D) in April 2002. Verity is a

leading provider of infrastructure software that powers corporate portals, e-commerce

sites, and e-business applications. Their new version of K2 Developer is specifically

developed to be integrated into large business software applications [16]. K2D is the

companys major offering for the original equipment manufacturer (OEM) market, giving

enterprise software developers the ability to easily and seamlessly add any of Veritys

three tiers of KM infrastructure-search, content categorization, and social networks-into

their existing applications. Through features such as personalization, recommendation,

and expertise location, Veritys social networks technology can be used to leverage an

enterprises intellectual capital effectively and efficiently.

According to Simon Hayward, research director at Gartner Group:

Search has become a required feature for almost all software products. Search,

however, is not enough, and more advanced information access features such ascategorization and expertise location to compliment the conventional searching

capability are becoming key differentiators. Most application vendors will choose to

outsource a partner to obtain these capabilities rather than build their own. [1]

Gartner Group and other industry research firms, including Delphi Group, META

Group, and Ovum, have cited the strength and capabilities of Veritys K2 platform as the

foundation ofK2D.

Some of the leading software vendors that have already chosen K2D include Conjoin,

eMotion, FileNet, Haht Commerce, Kana, Macromedia, OTG Software, TIBCO Software,

and Virage [16]. According to Verity, K2D is fully compatible with standard webdevelopment languages, including Java, COM, and C/CCC. In addition, it offers full

support for inclusion within an enterprise software vendors.NET or J2EE applications,


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and includes comprehensive management APIs. These features thus help to ensure rapid

integration.

Verity products are used by approximately 80% ofFortune 50 companies and by more

than 1500 corporations in various markets. Customers include Adobe Systems, AT&T,Cap Gemini, Ernst & Young, Cisco, CNET, Compaq, Dow Jones, EDGAR Online,

FairMarket, Financial Times, Globe and Mail, Home Depot, Lotus, NewsEdge

Corporation, SAP, Siemens, Sybase, Time New Media and Timex. In 2001, Delphi

Group named Verity as the market leader in the portal infrastructure software market [14].

4. Components, processes, and architecture for implementing knowledge

management in e-commerce

In todays e-commerce marketplace, large amounts of data can be gathered easily; byanalyzing this data in a timely manner, organizations learn about their clients and generate

useful knowledge for planning and decision making. For example, in the B2C market,

when a customer visits a storefront, the actions of that customer can be tracked

electronically, and these data can be analyzed to understand customer learning, buying

processes, and eventually determine the demand for product lines. Similarly, in the B2B

market, organizations can scan the environment and monitor changes in the industry and

form strategic alliances or partnerships. Malhotras study [4] supports the aforementioned

discussion.

4.1. Processes and component technologies

E-commerce organizations use several processes and component technologies to

deploy KM capabilities. OLeary [10] developed a capabilities framework with examples

of currently available technologies that support each capability. The processes and

component technologies discussed in his study are discussed below, along with other

pertinent research.

Knowledge creation and capture are performed by both humans and software agents

and incorporated into tools. Knowledge creation is the formal process of acquiring theknowledge from the source and using a representation method for its capture. Example

technologies are: PC PACK (a package of integrated tools for requirements and

knowledge engineering), Wincite, Trellix, and Folio view.

Knowledge organization and storage techniques contribute to the effectiveness of

knowledge retrieval and distribution. The major techniques include categorization,

indexing, standardization, and navigation. The creation of a knowledge repository

involves the integration of knowledge across multiple information sources. Data

warehouses using multi-dimensional database structures are commonly used and let

users analyze large amounts of knowledge from many perspectives. Document

management also provides the same capabilities for unstructured and semi-structuredknowledge in documents [17]. Example technologies include Documentation, Grape

Vine, Intraspect, and Aeneid.


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Knowledge retrieval relies on advanced search features, such as natural language

searching, proximity searching, search by metadata fields, and concept searching. Data

mining software and agents are available to sift through large amounts of knowledge to

produce knowledge content relationships and also to identify particular patterns ortrends between and within knowledge categories [18]. Example technologies include

WebIntelligence, SmartFinder, InfoSleuth, Intelligent Miner, IDIS, and Fulcrum

Knowledge Network.

Collaboration and workflow technologies span a broad continuum, including ad hoc

information sharing through e-mail, and common access to documents and more

structured systems for document creation, approval, publication, and use. The key to

workflow management is the tracking of process-related information and the status of

each instance of the process as it moves through an organization. Example technologies

include Microsoft Outlook/Exchange, Lotus Notes, ChangePoint, eRoom, GroupWise,

NetMeeting, and Consillium.

Distribution technologies automate the transfer of knowledge to users using push,

publishing, or notification methods. Although e-mail has been traditionally used for this

purpose, emerging web-based technologies have better presentation, real-time updates

and the ability to push applications and content for electronic publishing. Example

technologies include InfoMagnet, DIDS, and Insight.

Assimilation technologies facilitate interpretation, summarization, visualization,

explanation, and interactive exploration of time-oriented information and the

multiple levels of meaningful concepts that can be abstracted from the information.

These technologies help reduce the information overload problem that usersoften encounter. An example technology for this category is KnowledgeX, which

has a suite of knowledge management software that can be utilized individually

or together for the assimilation of knowledge. The suite includes KnowledgeX

Analyst, KnowledgeX Context Miner, KnowledgeX Site Harvest, and KnowledgeX

Viewer.

Transformation technologies for KM include the embedded tagging capabilities of

XML. These technologies can provide the ability to treat a collection of semi-structured

documents (meaning non-tabular data representation) as though they were in a

relational database. This results in imposing the appearance of structure and allowing

the documents to be acted on by procedural logic in the same way data in a relationaldatabase can be. This will be possible through the development of XML schema and

query technologies, which are currently underway [19].

4.2. Architecture

While several approaches have been explored for supporting the knowledge activities

of an e-commerce enterprise, corporate portals are the most popular [20]. Portals provide a

single point of entry to the distributed sources of knowledge within an organization. They

also facilitate easy gathering of knowledge by providing a uniform interface, and areaccessible anytime, anywhere. Sugumarans study [8] illustrates a typical architecture

following the traditional three-tier client-server design consisting of HTML clients, a web


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server, and various knowledge repositories connected through the Internet and corporate

intranet.

In practice, there can be several variations of this architecture depending on the

particular needs of the e-commerce organization, but typically the server side isaugmented with intelligent agents to support the various activities of the stakeholders,

including knowledge creation, storage, and dissemination. The client is a basic web

browser that the stakeholders use to carry out different tasks. For example, employees can

use the portal to create and store related artifacts or to retrieve relevant domain knowledge

that could be used in problem solving. Customers can use the portal to scan the

environment and learn about various product offerings, as well as send and receive

information related to product requirements and shipments [8].

The knowledge server contains two high-level modules: (1) a knowledge acquisition

and storage module, and (2) a knowledge retrieval and deployment module. The

knowledge acquisition and storage module uses intelligent agents to facilitate theknowledge creation and acquisition process by seamlessly integrating it into the daily

routine. The agents that are part of this module are: (a) a acquisition interface agent, (b) a

product knowledge agent, (c) a process knowledge agent, (d) a domain knowledge agent,

and (e) a knowledge mapping and storage agent. This module acts as the interface to

knowledge repositories and enables stakeholders to search these repositories for

specific information related to the problem they are attempting to solve. The module is

also responsible for content delivery (knowledge that may be of interest to certain

groups) on a periodic basis. It is equipped with the following three intelligent agents: (a)

repository interface agent, (b) a search and retrieval agent, and (c) a knowledge

dissemination agent [8].

5. Knowledge management in e-commerce: a strategic perspective

The current integration developments, components, processes, and architectures of KM

technologies utilized by e-business companies, as described in the previous sections, may

give the impression that KM is seamlessly intertwined with technology. However,

Malhotra [4] observes that emphasis on technology applications can cause the real critical

success factors of KM to be ignored if managers do not follow a strategic approach to KMdeployment.

Until recently, technologies such as intranets and Lotus Notes were considered to be the

enablers of KM [4]. Today, however, more interest is focused on technologies related to

knowledge portals and emerging products and applications, such as Lotus Raven (Lotus

KM platform). Despite significant computing advancements and substantial investment by

companies in such technologies, many organizations are seeking answers to rather simple

questions, such as: How do we effectively capture, store, transfer, and disseminate

knowledge? and, How can we ensure that knowledge is available for sharing with fellow

knowledge workers? Thus, it becomes imperative for organizations to clearly understand

the distinct differences between knowledge and information from a strategic perspective inorder to effectively answer these types of questions. This strategic difference is not just a

matter of semantics; it also has critical implications for managing and surviving in


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the emerging economy where information overabundance is the norm. As most

communications media and Internet executives who are competing fiercely for clicks

from web surfers would appreciate, the scarce resource in e-business is not information but

rather human attention [4].Accordingly, it is reasonable to explicitly account for the human focus, innovation, and

creativity needed for renewing archived knowledge and for creating new knowledge and

innovative knowledge applications in new products and services that will build market

share [4]. In the context of enabling e-business strategy, the conceptualization of strategic

KM as proposed by Malhotra [4] can be further analyzed to support this argument.

A working definition of KM can be quoted here to provide additional strategic insight:

Knowledge management caters to the critical issues of organizational adaptation,

survival, and competence in the face of increasingly discontinuous environmental

change. Essentially, it embodies organizational processes that seek synergisticcombination of data and information-processing capacity of information technol-

ogies, and the creative and innovative capacity of human beings. [4]

This definition places the focus on answering questions, such as How can knowledge

management enable business strategy in the emerging world of e-business? and What

strategic outcomes should knowledge management seek to facilitate? rather than What

are the details of the technology that supports knowledge management? Questions of first

type relate more closely to a view of business strategy as a dynamic, driving force for

corporate information strategy. Moreover, unlike most prevailing definitions, Malhotras

conceptualization explicitly addresses the strategic distinction between knowledge and

information [4].

5.1. The relationship between knowledge management and e-business disciplines

Managers need to change how they view the interactions among business strategy,

senior management leadership, the design and utilization of information technology and

organizational knowledge processes, the unique economics of corporate knowledge assets,

and organizational design [4,8]. These are inter-related issues, with each having

implications on one or more of the other issues. The most effective KM program to

support e-business initiatives is one that takes a holistic but strategic view of thesedimensions.

5.2. Studying the current environment to apply knowledge management

It is extremely important to study the current operating environment to see if applying

KM will create strategic synergies for the company. For certain e-business applications,

KM can make a significant contribution. KM is particularly useful for performing tasks

such as knowledge mining, knowledge determination, application of common-sense

knowledge, and performing knowledge inference and symbolic reasoning. To this end,KM will be beneficial to these e-business applications that have the following

characteristics:


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A. A large data/solution domain that requires specific expertise to search, sort, group, and

categorize the relevant information to perform KM.

B. An e-business application that utilizes both quantitative and qualitative information.

Traditional e-business can handle the quantitative requirements rather easily withvarious database technologies. However, qualitative information cannot be done

without more advanced decision support systems and expert systems capabilities.

Specifically, there is a need for an inference engine and an associated rule base design

to handle KM tasks.

Thus a careful study of the current environment is key to ensuring that KM is an

appropriate addition to an e-business application before any implementation is attempted.

5.3. Determining an appropriate business strategy

The electronic facilitation of business has created a need to interpret the various

information outputs generated by computer applications, such as multiple viewpoints

about an unstable and unpredictable future. Instead of long-term forecasts, emphasis

should be on understanding these viewpoints by using techniques such as scenario

planning [4].

Within a KM model, where creativity and innovation drive KM more than

technology does, organizational planning activities are not eliminated. Instead of

defining a static set of procedures, such plans can be used to build e-business

stakeholder consensus and define constraints and limits. Accordingly, the organization

should have plans in place but not rely totally on such plans. Rather, the organization

should constantly challenge concepts of its business model and operating processes.

This change in strategy can then result in a faster cycle of knowledge creation and

application by enabling continuous and rapid detection of discrepancies between the

organizations e-business model and the dynamically changing business environment in

which it operates [4].

5.4. Knowledge representation schemes

As discussed in expert systems and knowledge based systems studies, evaluation and

selection of an appropriate knowledge representation scheme for KM is another important

success factor for implementing KM in an e-business application. Knowledge

representation schemes may include, but are not limited to, semantic nets, frames, formal

logic, and production rules. Each representation scheme has its own unique strengths and

associated weaknesses. Further, using the scheme in an e-business environment with

current popular web tools such as HTML, SGML, and XML is another interesting issue to

be explored before implementation. Whether self-developing an application or taking

advantage of commercially available interface packages to represent obtained knowledgefor performing KM, choosing the right scheme is a key step to ensuring success when

implementing KM in an e-business environment.


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5.5. Knowledge engineering issues

Knowledge engineering concepts and related techniques are important to conducting

systems analysis, which is essential for integrated KM and EC development. To performeffective KM in an e-business environment, the following knowledge engineering issues

should be carefully examined:

(a) The characteristics of a domain expert for the specific e-business application, and the

different levels of expertise that will be utilized later in the KM process.

(b) The advantages and related tradeoffs of using a single expert versus multiple experts.

Conflicts will need to be resolved if sources and information from multiple experts

differ.

(c) Are there any suitable knowledge acquisition techniques that can facilitate the

implementation of knowledge engineering, and then, knowledge management?

5.6. Shift in systems design and use of technology

As organizations business processes become more automated, practices originally

established by standard operating procedures and policies become embedded in the firms

programs and databases in the form of best practices. Such formalized information

systems tend to be inflexible since they are often developed based on the designers belief

that these practices are adequate for doing business. However, with increasingly rapid and

dynamic changes in the e-business environment, these static assumptions, embedded in

systems, become vulnerable to practices that do not mirror business world reality. The

increasing realization of such mismatches is behind the growing interest in designing

information systems that take in account the dynamic and diverse interpretations of

changing information requirements [4].

To achieve a better match, managers must shift from an emphasis on traditional

systems, such as transaction processing, integrated logistics, and work flows, to a new

emphasis on systems that facilitate communications, people networks, and on-the-job

learning and training. For example, developing virtual communities of consumers and

users should be one of the key priorities of vertical portals and specialized industry portals

[4] such as the ones described in Section 3 of this paper.

5.7. Other implementation technologies

Some additional technologies should be studied in order to maximize the advantages of

using KM in e-commerce. These technologies include:

(a) Data warehouse technology: A data warehouse is different from traditional database

techniques mainly because of the type of data processed. It deals with transactional

data and performs relative operations (i.e. add, delete, and/or modify) on these data.

The data warehouse, however, checks and/or analyzes data patterns and behaviorsover time. As a result, different types of knowledge can be found when different

technologies are utilized. Furthermore, the most effective way to use the content of


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the data warehouse for better KM is another critical issue for study before

implementation.

(b) Data mining techniques: The techniques of data mining have the potential to enhance

web search, and hence, KM in e-commerce. Web searches basically use a query basedon keywords and logical relationships to search for matching results. Typically, the

search results are large, and will grow larger as the amount of information on the web

increases. Most search engines have enhanced or advanced search options that allow

more refined queries that yield more precise results. Data mining tools can then be

used to sift through massive amounts of data to find hidden information.

5.8. Changes in senior management

E-commerce initiatives should be focused on knowledge transfer and knowledgesharing by directly connecting crucial business systems to key business partners and

stakeholders [21]. KM systems that have been designed to ensure compliance with

management mandates may also ensure adherence to procedural rules, but they tend not to

facilitate the detection and correction of operational errors [4]. Consequently, the role of

senior management needs to change from the traditional one of command and control to a

new role based on sense and respond [4]. Furthermore, if knowledge is truly about

values, commitment, and insights (rather than just information, which is simply processed

data), then a new focus should be placed on championing awareness and commitment to

the organizations vision rather than simply compliance to rules and best practices. Senior

managers need to view the organization as a community of people capable of conceivingdiverse meanings from information outputs generated by information technology systems,

and capable of applying this knowledge in non-routine ways, such as in new e-business

initiatives. Managers also need to ensure that the organizations information base is

accessible to all organization members in an effective and timely manner [4] because good

information is a key prerequisite to knowledge creation.

5.9. Organizational and managerial impacts

There are always a number of organizational and managerial impacts related to the

integration of KM and EC. Managerial impacts include issues such as approaches to

managing knowledge and distributing the organizations intelligence. Areas that deserve

attention include productivity, improved decision making, and impacts on organizational

structure. Some potential effects on employees include psychological factors, fear of

unemployment, and user resistance to change. There are also ethical and legal issues, such

as who owns the knowledge, possible liability for distributing knowledge, the basis and

domain of liability for controlling the knowledge, ethical use of knowledge, and the

privacy of the knowledge.

5.9.1. Reducing user resistanceKM is a complex process. To integrate KM and EC creates even more complexity, and

it can be difficult for users to learn all the related tools, techniques, and applications. Users


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may need to understand entire sets of functions and features about diverse components

such as knowledge management (including knowledge acquisition, knowledge represen-

tation, and knowledge engineering), data warehousing, data mining, Internet/web tools,

and applications. As a result, adequate training about KM and EC can help increase useracceptance of the new technologies, and thereby reduce user resistance.

5.9.2. Impacts on organization structure

Traditional KM models over-emphasize operations that are often institutionalized in

the form of best practices. The new model (adapted from Malhotra [4]) is expected to

break this paradigm. Traditional business logic was based on a high level of structure and

control, but the dynamics of the emerging e-business environment demand a different

organization design, one that assumes considerable freedom with few rules. Designers of

organizational KM systems can facilitate the proactive e-business organization. Not only

would the organizations members define problems for themselves and generate their ownpossible solutions, but these knowledge workers would also evaluate, assess, revise, and

improve their own solution-generating processes. By explicitly encouraging experimen-

tation and re-thinking of assumptions, this strategy promotes reflection-in-action and

creation of new knowledge. Instead of the traditional emphasis on best practices that have

been archived in databases, this strategic focus encourages continuous pursuit of better

practices that are closely aligned with the changing e-business environment [4].

5.10. Change in the organizational knowledge processes

Greater proactive involvement of knowledge-worker (i.e. employee) creativity and

innovation is needed in organizational processes to facilitate better decision making in

e-business initiatives. Effective KM in unstable business environments requires

imaginative suggestions rather than hard, documented, stereotypical answers. In the

past, the development of information systems has emphasized defining optimal

programmed logic and then executing instructional cycles to achieve the highest

efficiencies. However, todays increasingly dynamic business environment mandates that

greater emphasis be placed on ensuring that the right things are being done (effective

outcomes) rather than on doing the things correctly (efficient processes) [4].

Emphasis should focus on continually renewing existing knowledge, creating newknowledge, and effectively using that knowledge in e-business practices. This is certainly

superior to the old paradigms of archiving data and information in organizational

databases that tend to ignore the associated human interpretations of context and content.

The traditional information-processing model assumes a problem as given and the

intended solution as based on some pre-specified understanding of the business

environment. However, a strategic focus constructs (and reconstructs) even the problem

definition from knowledge available at a certain point in time [4].

5.11. Changes in the economics of organizational knowledge assets

Malhotra [4] explains Peter Druckers argument that in the emerging electronic

economy, knowledge is the primary resource for individuals and for the economy overall


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[22]. Land, labor, and capital-the economys traditional factors of production-are certainly

still factors, but they become secondary resources. These traditional factors of production

are limited, as every marginal increase in land, labor, and/or capital results in diminishing

returns on additional investment. In contrast, information assets and knowledge capitalseem to follow a different law of economic returns; that is, investment in every additional

unit of information or knowledge created and used can result in a higher return. This

phenomenon is often attributed to externalities of the network because the strength and

utility of the network increases with it growing membership [4].

5.12. Implementation issues

Integrating KM in an e-business environment will involve several uncertainties that

may arise from ambiguous knowledge representation and/or acquisition, incomplete

knowledge, false representation and utilization of knowledge, errors in measurement andquantification when obtaining knowledge, and rules conflicts among knowledge bases

used to resolve a problem.

In addition, virtual reality is gradually becoming a key issue when integrating KM and

EC. A number of types of knowledge exist in different forms and modes, such as image,

audio, and video formats. Using these different formats of knowledge has already caused

some problems in todays e-business operations. With the anticipated growing popularity

of virtual reality, integrating KM and EC will be even more challenging.

6. Future implications

The next generation of KM applications will use business intelligence and e-commerce

technology to open up enterprise information portals to hand-held devices. These

applications will allow firms to not only collect but also analyze data for use in building

more profitable e-business partner relationships, and to increase profitability through

revenue growth. We address future implications of KM in terms of: marketing forecasts,

and future trends and implications for users, professionals, and the industry.

6.1. Marketing forecasts

In the future marketing will be predominantly one-to-one. For this type of marketing to

succeed, companies must determine a customers value and then that customers specific

needs. A one-to-one e-marketing strategy requires significantly more information about

customer behavior and preferences than do other market strategies. Until recently,

companies did not capture detailed customer behavior information. New KM and BI

applications can address these needs.

6.2. Future trends

Trends that will impact KM in e-commerce are already transforming web-based supply

chain management processes. According to Ganeshan [23], they are:


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Customer and employee self-service: In order to increase customer loyalty and improve

customer service, firms are providing tools that enable customers to check product lists,

prices, and order and shipping information in real time. In addition, the integration of

enterprise applications enables employees to make better decisions. BI and KMtechnologies facilitate these processes.

Vendor managed inventory and automatic replenishment: Vendor managed inventory

technologies empower suppliers to manage selected inventories and replenish as

needed. This improves customer service and reduces inventory holding costs.

Collaborative planning, forecasting, and replenishment: Collaborative planning,

forecasting, and replenishment (CPFR) are able to transform B2B e-commerce.

CPFR allows business partners to share information over the Internet to leverage

benefits to the entire supply chain.

The emergence of exchanges: Internet exchanges enabled by KM technologies promise

vast benefits, including dramatically reduced costs, greater access to buyers and sellers,

improved market place liquidity, and a new array of efficient and flexible transaction

methods.

6.3. Future implications for users, professionals, and industry

Innovations in information delivery are creating new functionalities that did not exist

until recently, while traditional KM models focused on data analysis. Recent innovations

now couple data analysis with data delivery resulting in a structural migration from data

access applications to a new generation of proactive business intelligence tools capable ofresponding quickly and accurately to changing business needs. Knowing how to manage

and harness a companys knowledge assets can make or break an e-business initiative.

Decision makers should focus on using KM tools to better manage business partner

relationships, efficiently integrate internal processes and applications, and collaborate in

real time with constituencies.

7. Conclusion

The emergence of interest in KM has increased over the past decade. However, most

KM implementations have been based on outdated business models and related

information-processing views. In some instances, it is difficult to understand why KM

information technology solutions are classified in the realm of KM rather than simply as

information or data management. The misconceptions associated with how KM enables

e-business have led to misconceptions among some corporate executives about its

expected benefits.

A better and more accurate understanding of KM as an enabler of information strategy

for e-business is needed. Departing from the information-processing perspective of KM,

which was relevant in the past, a new perspective based on blending the capabilities of KMand BI technologies combined with facilitating human creativity has been offered. This

will produce the agility required in a dynamic e-business environment. Companies can


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harness the power of KM to dramatically improve and foster e-business performance by

adopting and adapting these strategic approaches.

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Stephen A. Oppong received an MBA with a concentration in management information systems (MIS) on

August 2003 from Miami University at Oxford, OH and is currently working as an information

consultant/systems analyst with Klynveld, Peat, Marwick and Goerderler (KPMG). His research interestsinclude customer relationship management, Internet, electronic commerce, and mobile commerce.

David C. Yen is Professor of Management Information Systems (MIS) and Chair of the Department of Decision

Sciences and Management Information Systems at Miami University. He received a PhD in MIS and Master of

Sciences in Computer Science from the University of Nebraska. Professor Yen is active in research, and has

published three books and many articles which have appeared in Communications of the ACM, Decision Support

Systems, Information & Management, International Journal of Information Management, Information Sciences,

Journal of Computer Information Systems, Interfaces, Telematics and Informatics, Computer Standards and

Interfaces, Information Society, Omega, International Journal of Organizational Computing and Electronic

Commerce, Communications of AIS, and Internet Research among others. He was also one of the co-recipients ofa number of grants including the Cleveland Foundation (19871988), GE Foundation (1989), and Microsoft

Foundation (19961997).

Jeffrey W. Merhout is Assistant Professor of MIS at Miami University. He holds a PhD and MBA from Virginia

Commonwealth University, and is a Certified Public Accountant. He has information systems consulting

experience in several industries, including financial services, manufacturing and retail. His current research

interests focus on: qualitative methodological issues, particularly in positivist case studies; pedagogical issues,

such as adult training, and writing-across-the-curriculum; electronic commerce; knowledge management; and IT

security and auditing. He has presented and published his research at AMCIS, ICIER, and IRMA meetings and in

the International Journal of Information and Communication Technology Education.


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