The Business Case and the Benefits

At the highest level, KM initiatives can deliver benefits in three main areas: productivity and efficiency improvements; the management of many forms of risk; and in enhancing the efficiency and effectiveness of training processes.

A breakdown of the benefits in each of these areas is presented in the following sections; metrics and possible benefits are suggested, but the exact quantification of any benefits specific to a client organisation would require further specific analysis by DKC and the client.

Productivity and Efficiency

KM initiatives enable a number of productivity improvements. The provision of FAQs; examples of good and poor practice, lessons learned, recommendations and access to corporate resources can deliver the following benefits:

  • Time savings. Time spent querying others who may be difficult to obtain or unavailable is reduced. Furthermore, answers to questions previously unavailable can be made available on-line via KM initiatives. The incidence of incorrect courses of action that may have been taken in the past can be reduced, directly improving productivity.
  • Efficiency savings. Time spent searching for appropriate reference material is reduced. A reduction in the amount of repeated mistakes can be achieved.
  • Standardisation and re-use of existing resources. Production of duplicates, triplicates, or worse of documents and reports that may already exist can be avoided by providing access to existing documents, which may act as templates, or even ready-made solutions.
  • Experience-led advice is always available. Direct access to examples of good and poor practice can be constantly available on-line, therefore acting to reduce the incidence of repeated mistakes.

Training

An obvious use of the experience and resources captured through any KM initiative is for training and e-learning purposes. The benefits of e-learning are well documented and include:

  • Time savings. 40-60% time saving in delivery compared to instructor-led programmes (review of 130 case studies – see Hall, B., “Return on Investment and Multimedia Training: A Research Study”. Multimedia Training Newsletter http://www.brandon-hall.com.)
  • Cost savings:
    • Reduced attrition costs through the provision of experience-rich training, resulting in new employees reaching full productivity faster. (Costs of attrition can range from 50% to 400% of annual salary depending on the position in question – see http://www.allegisgroupservices.com)
    • Reduced instructor(s) costs. Reduced travel, accommodation and subsistence costs associated with employee off-site course attendance.
  • Lost opportunity savings. Employees training and learning in-situ through accessing at-desk training are still available to respond to events as necessary; this may not be the case if they attend an off-site course or an in-house instructor-led course.
  • Consistency. The consistency of delivery is improved through reduced/eliminated use of instructors.
  • Accessibility. There is effectively no limitation on the number of trainees and no restrictions on the geographic location of trainees – training can be undertaken at any time and from any location.
  • Increased retention of information. It has been established that effective training and e-learning results in a 56% improvement in retention of learning points. See Stolovitch, H. & Jean, M., “Calculating the Return on Investment in Training: A Critical Analysis and Case Study”. Performance Improvement Vol. 37 No 8.

Risk Management

A significant element of any KM initiative should focus upon the identification of risks and how best to mitigate or eliminate them. The benefits of capturing, verifying and disseminating how best to mitigate risks using KM techniques include:

  • Corporate risk management. Risks associated with staff turnover and absenteeism (whether through illness, travel, etc) are mitigated if key individuals’ knowledge and experience is captured and made available to others via KM initiatives.
  • Functional risk management. Risks (and methods for their mitigation) associated with technical procedures, hazards, safety, etc. can be captured and widely disseminated using KM techniques.
  • Risk identification and ownership. The visibility, ownership and accountability associated with risks can be captured and widely disseminated using appropriate KM techniques.
  • Risk mitigation. The use of multimedia resources (e.g. photographs and videoclips) to illustrate risks, their impact and mitigation techniques are provided through KM portals.
  • Compliance. Access to regulations and legislation and an explanation of their impact on individual business processes can be provided via KM portals.
  • Planning. Predicting risk occurrence and planning preventative action is greatly enhanced – this minimises time spent “fire-fighting” through the repeated making of mistakes.
  • Feedback. Using feedback and communities of practice facilities, feedback on new or emerging risks and ways to mitigate and/or eliminate them can be encouraged. Once captured, the newly identified risks can be made available to the appropriate personnel via some form of KM portal.

Financial Benefits

As already stated, the quantification of any benefits specific to an organisation requires analysis of the individual client’s situation. However, considering the following general questions may be useful when attempting to quantify financial benefits, as effective KM initiatives may help to reduce some of these costs or realise a benefit associated with exploiting experience contained within the business.

  • How much do (or could) theoretically avoidable mistakes and errors cost the business in a particular function?
  • How much does variability in practice (e.g. across teams, departments or business groups) cost the business?
  • How much could freeing experts/teams from “fire-fighting” and allowing them to concentrate on their main role save the business?
  • How much could be saved by reducing/eliminating reliance on external consultants in certain areas?
  • How much time is wasted (and what does it cost) waiting for a decision from an experienced individual or in looking for information or resources that should be readily available?
  • How much is spent on training (external and internal) in a particular function? This cost should include both the cost of the training, the cost of trainees being unavailable to their department, the cost of trainees while they are reaching full productivity, the cost of experienced mentors/trainers not being available to their own functions due to training commitments, etc. ScottishPower have publicly stated that they spend over £250,000 on training for each graduate trainee over a two-year period in their business.
  • What opportunities are being missed (and how much is this costing the business) due to insufficient resources/experience being available?
  • Are there any commercial opportunities through providing (and charging for) access to the organisation’s experience in certain areas to third parties? This is obviously not an exhaustive list and there are many other questions that may yield costs that may be reduced and/or opportunities that may be exploited via effective KM initiatives. The reduction in costs/increase in opportunities is obviously a subjective issue and this must be addressed and agreed with stakeholders involved in any KM initiative.