What are the benefits of a knowledge management system?
Every organisation is looking for a competitive edge and most know that digital transformation is the present and the future. However, very few are aware of exactly what they are leaving on the table without a successful knowledge management system. For Fortune 500 companies, it is an estimated $31.5 billion of cost savings being missed by poor KMS practices.
It’s not that companies don’t know that a KMS will have a positive influence, it’s that they don’t quite grasp how far reaching the benefits are. Leveraging your knowledge frees up 19% of the workweek that employees lose trying to find and gather information. It cuts customer resolution times by as much as 50% and improves productivity close to 40%. These are integral business processes improved considerably by a functional KMS.
To give just one example, British Petroleum’s KM created $260 million of added value because it built an environment where employees could share information efficiently. With the digital era already rapidly disrupting industries, what could a knowledge management system mean for your company?
1. Increased productivity or reduced salary expenditure
“If Hewlett Packard knew what Hewlett Packard knows, we would be 3 times more productive” – Former HP CEO, Lew Platt.
Employees lose an average of 2.5 hours a day searching for information to help them do their jobs. That is not just new employees but company wide. That means for every 5 employees, 1 full salary is going on finding information you already know rather than being productive.
Knowledge management circumvents the searchability issue and gives your business a foundation to automate repetitive tasks. It leverages what you learn from every interaction between employees or with customers to create frictionless processes with automation and AI.
To explain just how crucial this is to businesses going forward, let’s take a look at the legal sector. Deloitte estimates that 100,000 legal jobs will be replaced by automated systems because there is so much repetition. That can be taken in 2 ways. 100,000 more employees that can be repurposed for greater productivity or a reduction of 100,000 salaries. What could you do with that opportunity?
2. Accelerated customer inquiry response times
Online shopping is here to stay and crafting the perfect self-service customer experience cannot be understated. According to a Salesforce survey, 78% of millennials will take their business elsewhere after just one poor customer service experience. A negative experience can be anything from a delayed response from your team, a frustrating chatbot, an unfriendly customer journey or more. All of which are easily solved by KMS.
KMS automates much of the buyer journey based on what the ideal experience is for a customer with improved self-service support. This leaves your customer care team with up to 50% more time to handle individual requests and errors. Customers get resolutions far quicker meaning call escalations are drastically reduced. The additional time afforded to your team gives you the opportunity to become a best practice help centre.
3. Reduced brain drain
10,000 baby boomers retire in the US every day. Exactly how much information and experience do you think gets retired with them? While you’re at it, how much information do you think is lost every time a tenured employee resigns?
Statistics say that it costs as much as 33% of an employee’s salary to replace them once you get done with recruitment, onboarding, upskilling and knowledge sharing. That may seem a conservative estimate but I would argue the opposite because the knowledge that walks out the door impacts more than that employee’s direct role. You are losing a huge amount of experience, how to manuals, problem solutions and training resources.
Inevitably, each facet the individual employee impacted will need to be replaced. Brain drain is a far greater cost to those without a knowledge management system and has even been crippling to many. A KMS system allows you to retain much of their practical nous and allows the team to defer to a knowledge bank when required. You may never quite replace the individual but you can store the information they have built up.
4. Enhanced onboarding procedures
When it comes to onboarding the replacement managers and employees are often sick of going through the process of repeatedly onboarding new team members when a better option exists.
Using a KMS, the required training material and instruction can be readily available and stored in standard operating procedures. KMS optimizes the time of the recruit and manager whilst removing the potential for oversights.
You see, each new employee that goes through your training has a different experience depending on the availability of team members to train them in. This is leading to omissions and differences in the preparedness of new recruits. KMS systemises the process.
The data routinely delivered by stretched management is captured and automatically reproduced for incoming recruits. Nothing gets lost and management time remains purely for questions and cultural integration. In times of major growth, a KMS driven onboarding process allows for smooth and agile scalability.
5. Cut information recreation costs
BAE Systems now employs over 85,000 people in 40 different countries to provide security and protection services. They are a model of intelligence but before their explosive growth, they struggled with profitability.
Richard West, a director at the time, was frustrated by low profit margins so he commissioned a study of the company’s internal operating procedures. He found a complete breakdown of communication and knowledge sharing meant engineers all over the country were solving the same wing construction issues reported by several different clients. Where some couldn’t solve it, they were bringing in industry experts. They were spending $5 million a year fixing a problem that had already been solved multiple times over.
Unfortunately, these instances of effort duplication are rife without a KMS. Plants, branches, departments, teams and right down to individual employees are left with a communication barrier that adds extra work and limits all tacit and explicit knowledge sharing.
6. Reducing mistake frequency and empower decision making
Knowledge management means that history doesn’t have to repeat itself when it comes to mistakes. So many organisations maintain an unfortunate structure where their teams don’t learn from each other. Sales might routinely hear the tales of woe from different customers about the inefficiency of the chatbot. However, this isn’t filtering through to your marketing or web development team.
The mistakes are allowed to continue when knowledge isn’t readily shared and accessible to all. KM systems help businesses to get faster at identifying and solving issues, and creating user manuals, how-to guides and seamless customer experiences. It leverages previously learned information to shorten learning curves and inform decisions.
We operate in a knowledge economy that is unrelenting and ruthless. As more companies follow Gartner’s advice of automating everything possible to save costs and augment learning, a bedrock of information is more and more essential. Without leveraging what you learn, many businesses will be left behind by the incessant appetite for growth of others.
Knowledge management stands as the key to unlocking the innumerable benefits to employee and knowledge optimization, artificial intelligence and automation.
Need to review your knowledge management system and workflows?