Technology in Society 27 (2005) 413435 www.elsevier.

com/locate/techsoc

A new strategy for harnessing knowledge management 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 will help 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 benet by adopting strategies that harness the potential of knowledge management technologies to transform their e-business activities. We dene 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)

* Corresponding author. Tel.: C1 513 529 4826; fax: C1 513 529 9689. E-mail address: yendc@muohio.edu (D.C. Yen).

0160-791X/$ - see front matter q 2005 Elsevier Ltd. All rights reserved. doi:10.1016/j.techsoc.2005.04.009

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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 meet business 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 efciency 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 eld 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 efciency, speeds deployment, increases sales and prots, 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 difculties 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 content management) and classication 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, rst by tracing the evolution of KM in e-commerce, and then identifying various strategies currently in use. We will demonstrate how companies can benet by adopting strategies that harness the potential of KM technologies to transform e-business activities. The paper begins with a denition of KM, then discusses the need for effective KM practices, followed by an analysis of the driving and impeding forces that help and hinder proper 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 nal 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 continuous availability, accessibility, and application of appropriate organizational knowledge within e-commerce systems. This include different types of knowledge such as business processes, business rules, customer proles, 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. Denitions 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, dealers/vendors, customers/users, strategic partners, regulators, and other agents related to or who support marketing, delivery, and distribution. These activities may be business-toconsumer (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 as public 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 efciency and effectiveness [8]. Several studies have proposed denitions of KM, and these are summarized in Table 1. Newman dened 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 illstructured information (such as insights, understanding and intuition of experts for solving specic 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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Table 1 Denitions of knowledge management Denition (Summary) KM is the collection of processes that govern the creation, dissemination, and utilization of knowledge. KM is managing the organizations knowledge through the process of creating, structuring, dissemination, and applying it to enhance organizational performance. KM allows business process automation and enhances communication and collaboration between internal and external constituents. Citation Newman, B. [9] Year 1992 Unique characteristics Turns information into a resource by exercising selectivity, imposing order, and adding structure in order to increase its value. Disseminates and applies knowledge to enhance organizational performance.

OLeary, D.E. [10]

1998

Suguraman, V. [8]

2000

Allows business process automation, enhances communication between internal and external partners.

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, rms can automate 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 signicantly. As more organizations have come to understand and appreciate the critical signicance 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

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a pioneer and has reaped the benets of being a rst mover. Today Internet time is measured in hours rather than the months or years that conventional companies have used when deciding to adopt, implement, and/or shift business strategy decisions [12]. The evolution from the Internet to intranets and then to extranets has happened very quickly in the past few years. According to Hazari, the 3 Cs of rst-generation e-commerceContent, Community, and Commercehave now evolved into the 7 Cs of second-generation e-commerce-Content (e.g. Yahoo), Community (e.g. Ivillage), Commerce (e.g. Amazon or eBay), Communication (e.g. Doubleclick), Connectivity (e.g. Cisco), Collaboration (e.g. Mercata), and Customization (e.g. Netperceptions) [12]. Each of these Cs reects an evolution of functionality that has its roots in enabling automated processes (such as order entry) to extending those processes to other functional steps and to business partners [12]. From an organizational initiative perspective, KM is usually embodied in the form of business systems that are driven by a number of technologies. For example, the convergence of knowledge management and business intelligence (BI) is underway in many organizations, and KM-enabling technologies are a vital part for the implementation and/or adoption of customer relationship management (CRM) systems. From an organizational perspective, initiatives like CRM, intellectual capital management (ICM), communities of interest or best practices management (BPM), and competitive intelligence all fall within the domain of KM [3]. Kalakota and Robinson [13] identify ve waves in which KM applications have evolved since the early 1990s (see Table 2). Of the ve, the last three are still ongoing: 1. 2. 3. 4. 5. Group memory systems; Corporate intranets and decision support portals; Extranets and inter-enterprise portals; E-commerce and click stream analysis; and Business intelligence.

In most organizations, KM programs start with the implementation and/or adoption of information technologies, which are closely associated with complementary enabling technologies such as federated search (presenting one set of results from a search of unique databases) and taxonomy (indexing and classication of relevant resources). One of the most signicant advances in KM-enabling technologies in recent years is the enterprise information portal (EIP), also called a corporate portal. Business-to-employee (B2E) EIPs are rapidly becoming an important core of todays organizational e-business infrastructure [3] and are much more than simply high-quality intranets. EIPs bring together the functions and features of business intelligence and KM into an emerging centralized desktop environment: the knowledge portal. In this millennium, the knowledge portal will likely play a key role in enabling virtual organizations and their employees by providing a personalized single access point to all relevant information, which in turn should enable faster and more accurate decision making. EIPs are also utilized to assist organizations in capturing and leveraging their intellectual assets by facilitating communities of interest, best practices, and expert systems within a single, intuitive, informative, and user-friendly web-based interface. The EIP is an evolving

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Table 2 Evolution of knowledge management applications Wave 1 Age Introduction Year Pre-1995 Important Activities Group Memory Systems Milestones Discussion boards or bulletin boards like Lotus Notes. Lessons Learned Company employees had instant access to data and reporting information that had previously taken days or weeks to obtain. Managers use decision support portals to conduct data mining, analyzing large quantities of data to discover relationships and patterns to support better decision-making. Extranets encourage trading partners to improve prots by managing inventories in the supply chain. Click-stream analysis provides electronic footprints that show where people go on the web; knowledge portals let users search, process and present data in corporate intranets using a web browser. Data analytics coupled with broadcast engine technology allows proactive, personalized information delivery to individuals, anytime, anywhere.

Growing

1995-2000

Corporate Intranets and Decision Support Portals

Data aggregation and analysis enabled by decision support portals built on corporate intranets.

Maturity

Late 1990 s to Present

Extranets and Interenterprise Portals

Suppliers and trading partners can access internal corporate information. User click-stream analysis, e-mail management, knowledge portals.

Current

Late 1990 s to Present

E-Commerce and Click Stream Analysis

Future

Business Intelligence

Content organization and collection, analysis and segmentation, real-time personalization, broadcast, retrieval and interaction.

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 justication There is an increased sense of urgency in institutionalizing comprehensive KM programs 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

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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 benets such as increasing the knowledge base and sharing expertise [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 efciently 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-efcient ordering process. All these constraints could be resolved by using KM technologies to achieve process 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 is perhaps 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 signicantly 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 in e-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 fulllment and convenient service delivery Increased process visibility 3. Organizational trends Outsourcing management; attening 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 employees 5. 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-ofce efciency, provide greater

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customer intimacy, become more exible 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. Efciency: 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 in databases so it is available to guide future decision making. Malhotra [4] identied 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 rst 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 longterm horizon in todays dynamic environment; instead, they must shift to a more exible 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, and the 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 nal 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 in a database does not ensure that people will necessarily identify or access this information. Most KM technologies concentrate on efcient 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 exibility 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 the following 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, SunNetscape 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 rewall [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 either concept 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 highperformance 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 the Internet [14]. Net. Genesis net. analysis component provides additional customer proling 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 realtime 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 trafc management capabilities that ensure high availability, performance, supervision, and control of e-business applications. And nally, TimesTens Front Tiere adds 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 benet from its well-regarded K2 technology platform, Verity released a new version of K2 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 specically 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 efciently. 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 as categorization 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 rms, including Delphi Group, META Group, and Ovum, have cited the strength and capabilities of Veritys K2 platform as the foundation of K2D. 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 web development 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% of Fortune 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; by analyzing 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 the knowledge 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-structured knowledge 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 elds, 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 or trends between and within knowledge categories [18]. Example technologies include WebIntelligence, SmartFinder, InfoSleuth, Intelligent Miner, IDIS, and Fulcrum Knowledge Network. Collaboration and workow 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 workow 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 notication 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 users often 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 relational database 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 are accessible 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 is augmented 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 the knowledge 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 specic 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 KM deployment. 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 signicant 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 in order 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 ercely 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 denition 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 synergistic combination of data and information-processing capacity of information technologies, and the creative and innovative capacity of human beings. [4] This denition 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 rst type relate more closely to a view of business strategy as a dynamic, driving force for corporate information strategy. Moreover, unlike most prevailing denitions, 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 these dimensions. 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 signicant 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 benecial to these e-business applications that have the following characteristics:

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A. A large data/solution domain that requires specic 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 with various database technologies. However, qualitative information cannot be done without more advanced decision support systems and expert systems capabilities. Specically, 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 dening a static set of procedures, such plans can be used to build e-business stakeholder consensus and dene 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 knowledge for 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 perform effective KM in an e-business environment, the following knowledge engineering issues should be carefully examined: (a) The characteristics of a domain expert for the specic 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. Conicts 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 rms programs and databases in the form of best practices. Such formalized information systems tend to be inexible 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 ows, 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 behaviors over 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 based on 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 rened queries that yield more precise results. Data mining tools can then be used to sift through massive amounts of data to nd hidden information. 5.8. Changes in senior management E-commerce initiatives should be focused on knowledge transfer and knowledge sharing 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 conceiving diverse 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 resistance KM is a complex process. To integrate KM and EC creates even more complexity, and it can be difcult 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 representation, and knowledge engineering), data warehousing, data mining, Internet/web tools, and applications. As a result, adequate training about KM and EC can help increase user acceptance 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 dene problems for themselves and generate their own possible solutions, but these knowledge workers would also evaluate, assess, revise, and improve their own solution-generating processes. By explicitly encouraging experimentation and re-thinking of assumptions, this strategy promotes reection-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 dening optimal programmed logic and then executing instructional cycles to achieve the highest efciencies. 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 (efcient processes) [4]. Emphasis should focus on continually renewing existing knowledge, creating new knowledge, 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-specied understanding of the business environment. However, a strategic focus constructs (and reconstructs) even the problem denition 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 capital seem 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 and quantication when obtaining knowledge, and rules conicts 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 rms to not only collect but also analyze data for use in building more protable e-business partner relationships, and to increase protability 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 specic needs. A one-to-one e-marketing strategy requires signicantly 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, rms 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 KM technologies 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 benets to the entire supply chain. The emergence of exchanges: Internet exchanges enabled by KM technologies promise vast benets, including dramatically reduced costs, greater access to buyers and sellers, improved market place liquidity, and a new array of efcient and exible 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 of responding 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, efciently 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 difcult to understand why KM information technology solutions are classied 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 benets. 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 KM and 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 interests include 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 of a 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 Certied Public Accountant. He has information systems consulting experience in several industries, including nancial 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.