Knowledge Management Vendors Go Vertical Page II

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Who's Buying

IDC's Dyer, who recently co-wrote a report on the move towards vertical solutions in the KM industry with analyst Brian McDonough, notes that another reason for the trend is the simple fact that some industries are prepared to spend more money on the technology than others. The research firm asked businesses in a wide range of sectors how much money they had allocated for KM initiatives in the Years 2000, 2001, and 2002, and came up with some pretty telling results.

Banking and financial services was consistently at or near the top of the list in each of the three years with firms saying they planned to spend an average of $1.07 million in 2000, $717,000 in 2001, and $1.44 million in 2002. Next in line were the Utilities/energy/chemicals sectors, at $800,000 in 2000, $918,417 in 2001, and $2.2 million in 2002. Discrete manufacturing, process manufacturing, and government more or less rounded out the top spending posts.

Interestingly, the retail/wholesale sector was the least likely to invest in KM solutions, with an average budget in 2002 of just $10,455, clearly indicating it is not a sector where KM vendors will be focusing a lot of their efforts.

Dyer says as the market got tougher some of the KM vendors, including the Big 4 consultants like PricewaterhouseCoopers, and Deloitte Consulting, decided to put a little more focus on tailoring KM offerings to the sectors which had money to spend. "It makes sense in the bad times, but it's also a pretty good strategy in the good times," he adds.

As part of its survey, IDC also asked industry participants to name the primary reasons they would adopt KM and the business uses for their KM deployments. Not surprisingly the reasons were mostly the same in each of the sectors, although there were some subtle differences that could be capitalized on.

The most common reason mentioned to adopt KM was to Retain Internal Expertise. Dyer says not long ago that usually meant companies wanted to capture expertise before an employee jumped ship and took their knowledge elsewhere. However, in more recent times that could mean capturing expertise before employees are handed their layoff slips. Depending on the type of industry, the next most common answer was Increase Customer Retention, or Improve Profits.

When looking at where most companies planned to deploy KM offerings in the coming year, the majority responded in customer support, while a few mentioned information systems. And when asked what was the most common challenge faced in implementing a KM solution, the most common answers were a lack of internal support for the systems, and a shortage of time on the part of employees to actively make use of the system.

Table 1 Who's Got the Money
Average amount companies in specific industries have spent on KM

Industry	2000		2001		2002
Business Services	$344,184		$415,658		$492,493
Communications	$244,657		$455,727		$413,681
Government	$108,444		$472,765		$523,529
Education	$87,111		$224,632		$386,444
Financial Services	$1,072,351		$717,168		$1,439,336
Discrete Manufacturing	$239,688		$436,313		$803,571
Other process manufacturing	$797,500		$729,583		$941,818
Healthcare /pharmaceuticals	$294,000		$253,333		$273,889
Insurance	$158,335		$236,113		$127,781
Retail/Wholesale	$4,159		$19,136		$10,455
Transportation	$75,000		$150,250		$140,200
Utilities/energy/chemicals	$800,040		$918,417		$2,200,100
Technology	$315,075		$390,871		$483,407
Others	$275,974		$373,533		$476,784

Source: IDC, 2001

Evolution

The move towards vertical KM offerings could also have another consequence for the industry: it could see the term KM being used less and less frequently.

"I think we're going to start seeing a move a way from the terminology, and in some cases it's already begun," adds Dyer. "You see a lot more emphasis on community development, or community building now. PricewaterhouseCoopers has what it's calling a new B2E solution (Business to Employee), but it's really KM at the heart . . . we're seeing some companies in e-Learning developing 'human performance' lines of offerings but they're all KM based . . . so we're probably going to see the terminology fade away in the next couple of years because it's just too ambiguous and confusing."

Table 2: Business Decisions
Click here to see a matrix of why the industries listed in Table 1 chose to go the KM route and how they used KM in there everyday business.

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