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Dear reader,

Knowledge has always been the basis of all human activity. The
importance of knowledge for companies and public-sector organisations
as a key resource, however, has only been widely understood since the
1990s. Today theres no need to argue the importance of managing
information and knowledge: we need tools for managing and developing
our information and knowledge resources.
Information and knowledge management (IKM) as a scientific
field is still young, and not all of the key concepts are well established.
Knowledge, and the phenomena related to it, are complex and abstract. In
order to manage these phenomena, we need concepts and terms in order
to communicate with others about them. It is important for the people
who work with information and knowledge to know the basic concepts
and terminology. One key goal of this book is to increase our
understanding of the basic concepts of information and knowledge
management, and how these concepts are interconnected.
This book is intended to be used as a textbook for higher
education. It is also aimed at knowledge workers and managers who
practise IKM. Information, knowledge, and management are powerful
concepts, and they are even more so when combined. This is why IKM
should be defined broadly.
This book was written in this spirit by a group of teachers and
researchers in the field of IKM. It is the result of many lively discussions,
and should serve as a brief introduction to the world of information and
knowledge. We hope that it will awaken curiosity in the reader to delve
deeper into this fascinating field.

Mika Hannula
Tampere, Finland, 7 April 2013
Foreword to the English edition

Dear reader,

This English translation of the book Information and Knowledge

Management is intended to be used as a textbook in the course Basics of
Information and Knowledge Management. We welcome anyone who is
interested in the field of IKM to read the book and to use it as a gateway to
the fields many concepts and terms. After each chapter, we list several
readings that we suggest looking into for further enlightenment.
IKM is still in its youth as a scientific discipline, and is advancing
rapidly as a result. This book was written to introduce the basic concepts
and terms that are thought to be relatively stable and well-established.
The reader should be aware, however, that the latest developments will
be found in the various scientific journals dedicated to the subject.

Ilona Ilvonen
Helge Jalonen

Tampere, Finland, August 2015

Management models and practises develop along with the changes in
society and societys needs. Many of our contemporary management
models, theories, and tools are rooted in the industrial era, when the
industrial mass production of goods began and large companies emerged.
The growth of these companies created the need for systematic
management practises in order to ensure that industrial production was
both efficient and profitable.
Today, two thirds of jobs in Finland, for example, are in the
service sector. The majority of industrial jobs are expert positions in such
fields as product development and marketing. We call these experts
knowledge workers, since the major asset they provide to companies is
their knowledge, rather than physical labour. Actual industrial production
has in many industries been moved to countries with lower labour costs.
In todays post-industrial information and service society, information,
knowledge, and other intangible assets have become increasingly
important. The competitive position of companies depends on the use of
information and knowledge. How well this information and knowledge
can be utilised in creating products and services that are valued by the
customer is a question that all companies seek an answer to.
Information and knowledge management (IKM) is a relatively
new management discipline that is based on the idea that information and
knowledge play a major role in the success of organisations. The term
tietojohtaminen (the equivalent of IKM in Finnish) emerged in Finland in
the 1990s to describe this concept. The rapid development of information
and communication technologies (ICT) has played a central role in the
development of IKM as a discipline. ICT development has created new
opportunities for storage, analytics, and the communication of data and
information. At the same time, the development of technology has created
new challenges, such as the flood of information experienced by
knowledge workers.
Not all of the concepts related to the IKM discipline are well
established. Scientistsnot to mention practitionersuse different and
occasionally even controversial concepts. In addition, because most IKM-

related phenomena are intangible, in order to understand them we need
simple and understandable concepts. If we cannot name the phenomena
that we deal with, we certainly cannot hope to understand them, let alone
manage them. One of the goals of this book is to organise the range of
concepts found in IKM and to provide practitioners, in particular, with the
concepts and tools to grasp the fundamentals of the field.
But what is it that IKM brings to the vast field of management
studies? First of all, IKM provides concepts and models that help to
describe and understand the different forms and roles that information
and knowledge have in organisations. Second, IKM offers management
models that allow them to control information. Third, IKM provides us
with a technical understanding of information systems, which in turn
allows us to bring the management models to the practical level. Figure 1
illustrates this setting.

Figure 1: IKM viewpoints

In Figure 1, the starting point for IKM is the set of management challenges
demanded by our modern information and service society. Tackling these
challenges requires a good understanding of IKM. One thread found in
IKM is the means of understanding knowledge-based value creation, i.e.
understanding how information and knowledge can be used to create
value in different business processes and environments. Another thread
examines management practises: when we understand how a company
creates value for different stakeholders, we can identify important
information and knowledge resources, and managing and developing
these resources becomes possible. The third thread of IKM examines
management tools. By analysing these tools, we are able to focus attention
on how different tools can help us grasp intangible information processes,
and how new ICT tools can support management.
There are two main approaches within IKM: managerial and
technical. The managerial approach examines information and knowledge
as success factors, and strives to develop tools to perform managerial
actions that are connected to information and knowledge. The technical
approach to IKM, on the other hand, emphasises the role of information
systems in managing information. These two aspects are closely
connected to each other; the division between them is partly artificial.
Identifying different emphases, however, helps us to recognise different
types of challenges and solutions within IKM.
IKM is generally visible in organisations in two ways. On the one
hand, it is part of the professional knowledge and conceptual toolbox of
each knowledge worker. Each individual and teamregardless of the
industryhas to know how to implement knowledge-sharing practises
and the tools that support them. On the other hand, some positions are
devoted specifically to IKM: for example, business intelligence analysts
and information managers, who are responsible for the acquisition and
maintenance of information systems.
IKM is a fairly established discipline in Finlands universities. For
example, in the technical universities of Tampere and Lappeenranta, IKM
has been taught as a major discipline since the early 2000s. A relatively
large number of master-level graduates working in the corporate world

have either majored or minored in the study of IKM. In addition, dozens
of doctoral dissertations and hundreds of masters theses have been
published in the field of IKM in Finland alone. Internationally, IKM is an
establishedalthough still quite dispersed discipline of study. Different
fields of IKM, such as intellectual capital management, the development
and management of information systems, and knowledge management,
all have well-established academic conferences and journals.
IKM practitioners work in a variety of professional positions. A
typical example of a technically oriented IKM professional is someone
who works in the development and management of information systems.
A managerially oriented practitioner can, for example, work with
management practises that handle business intelligence or knowledge
work. Many of those who have studied IKM, however, do not have a
specially appointed IKM role. Instead, they have general managerial,
expert, and developmental roles, in both the private and public sectors.
Just as industrial engineering management has been developed to meet
the special needs of industrial businesses, IKM has become the
management paradigm of knowledge-intensive organisations. IKM thus is
concerned with managing knowledge-intensive organisations as well as
knowledge workers; the goal of IKM is to promote the performance of
these organisations.
Modern society bases its success mainly on information and
knowledge. Typical examples of important resources include individual
knowledge and competences, organisational information systems,
networks and organisational processes, and management practises.
Information resources are difficult to manage because of their intangible
and dynamic nature. Individuals and organisations are constantly
searching for new ways of gaining and utilising information and
knowledge; the supporting role of ICT in this search is significant. The
efficient management of information resources has become a central
factor in developing organisational performance.
In the beginning, IKM focussed more on producing and sharing
information. At that time, the position of IKM could be compared to other
traditional functions such as accounting, marketing, or human resource
management (HRM). The goal of IKM was to collect information into
databases and to produce reports from that information. One task was to
make information in the databases available to the organisations
personnel. Today the focus has shifted from producing information to
utilising it. Information and knowledge have become important resources
in our modern information society, alongside more traditional resources
such as labour, raw materials, and assets. A companys competitive edge
is increasingly created with the use of information.

Figure 2: IKM and general management fields

Figure 2 (above) shows IKM as a management paradigm that crosses over

traditional function boundaries. IKM is also illustrated as an activity that
combines the management and technology angles. This idea has played a

key role in the development of IKM as a discipline. The multi-
dimensionality of IKM also poses new challenges and needs for
competence and knowledge, however; in addition to understanding
business and management, people need to understand ICT tools and their
role in organisations.
A central challenge in IKM is to understand information-based
value-creation. We need to understand how to create value from
information; value is created when information and knowledge are
utilised in both operative activities and in long-term development. A core
message of this book thus is that IKM should be approached from the
utilising knowledge point of view. Collecting and storing information
should not be the goal per se. The goal of IKM activity is to support
business strategy and business goals; it needs to define whatand,
especially, whyinformation needs to be collected and stored.
On the basis of the knowledge-based value creation logic, it is
possible to develop approaches to improve the management of
information resources, value creation, and related management processes
and tools. IKM is a comprehensive activity that supports the value
creation process of organisations. We need information and knowledge to
understand different situations, make decisions, and to create new
knowledge. These processes are not limited to the traditional fields of
marketing, accounting, or strategic management; nor can they be made
solely the responsibility of production, sales, or management (Figure 3).

Figure 3: IKM crosses over traditional functional boundaries

Figure 3 is a simplified illustration of how IKM has become part of the
work of every employee of an organisation. In this case, almost every role
constantly collects and utilises information. From the perspective of the
organisation as a whole, the mission of IKM is to build a big picture view
of the information and knowledge the organisation possesses, and to
harness these for the benefit of the business. The figure could be
complemented with customers and other external elements from the
environment, since the information that comes from outside the
organisation is highly significant in the development of an organisations
IKM thus does not serve only as a management function. Due to
societys change towards an information and service society, IKM has
evolved into a value-creating core process for an increasing number of
organisations across a variety of industries. IKM has become a mode of
operation that crosses organisational boundaries and is the responsibility
of every employee.
In this book we take a wide perspective about the information
resources of an organisation. We do not limit our perspective to the
opportunities offered by ICT tools or to softer, human-related
viewpoints. Instead, we aim to comprehensively examine the different
information and knowledgerelated issues that might have an impact on
the management of an organisation. We need to recognise both the role of
technology and the role of human actions in order to effectively utilise
information in reaching these goals.
When managing the operations of an organisation, it is important
that the management practises, general modes of operation, and
technological solutions form a unified structure that reasonably supports
the individuals who work in the organisation. Technology creates new
opportunities, but it is important to realise that technology alone seldom
solves information management problems. In addition to technology,
organisations require the commitment and competence of their
employees. It is also important that the management practises and modes
of operation do not hinder fluent workflows.
IKM is needed at different levels of society. Individuals, teams,
organisations, and networks strive to benefit from information resources:

both their own and of others. Innovative teams combine different kinds of
knowledge and competences, and organisations outsource activities and
concentrate on their core functions. Networks create value by offering
different combinations of products and services. Better management of
information resources can increase both efficiency and customer value.
By increasing efficiency, organisations aim to lower costs; by adding
customer value, organisations aim to increase the benefit experienced by
the customer.
It is important to note that value need not be monetary. For
example, increased free time or general wellbeing can be considered to be
forms of value. What is essential from the companys point of view is that
the customers are willing to pay for the value they receive; after all,
profitability is a requirement for the existence of a company in the long
run. In addition, an increase in customer value does not always lead to
improved profitability. All companies try to improve their offerings, and
their customers may not be willing to pay more for the increased value
experience if the companys competitors produce the same experience.
This means that increased profitability requires that a company can
produce a better offering, and more efficiently, than its competitors. In
order to be successful in the ever-changing market, companies choose
differing strategies. One company may concentrate on creating
exceptional value for the customer; another could base its success on
exceptional efficiency, which means that the value that customers
experience does not need to be so high. In order to make these kinds of
strategic choices possible, the company must have information and an
understanding of its own business and that of the business environment.
The challenges of IKMand at the same time the opportunities it
offersare manifested on both the operative and strategic levels. On the
operative level, overlapping work can be avoided, so that the proverbial
wheel does not have to be re-
invented. When IKM is successful,
existing information can be utilised
Too much or too
over and over again, and remarkable
little information
benefits in efficiency can be reached.
can both be
From the perspective of individual
workers, this reduces workload and
enables them to focus on more
important tasks. On the strategic level, IKM practises help a company to
recognise essential information and knowledge resources and to utilise
them in its operations. IKM also offers tools to measure and valuate these
intangible resources.
Different methods of working intelligently have become more
common, especially among knowledge workers. Efficient knowledge work
requires facilities and tools that are different from those we are
traditionally accustomed to. For example, mobile work, open office
spaces, different kinds of innovative spaces, and video calls create new
opportunities for knowledge sharing and utilisation. At the organisational
level, IKM solutions are familiar to many workers. The efficient use of
existing information is generally considered to be a good way to improve
performance. The creation of new knowledge, on the other hand, is at the
heart of innovation activities. Combining various competences, teamwork,
social interactions, and knowledge-sharing activities produce new
interpretations of existing information and allow for an understanding of
the business environment and the constant development of activities.
These are core processes of information and knowledge management.
Over the past few years, IKM practises have also been applied in the
development and management of networks, regions, and economies. At
these same levels, recognising core knowledge resources and promoting
collaboration are examples of ways to improve performance and
competitive position.
Many people are familiar with IKM challenges: there often seems
to be either too little or too much information. Over the past few years,
the flood of information has become a major productivity challenge for
knowledge workers. People also mention the challenge of constant
interruption: we are required to be reachable all the time via various
technical tools. As a result, knowledge workers do not have time to focus
on what is essential. There never seems to be enough time to filter whats
essential out of the flood of e-mails, and the constantly updated
professional literature and electronic sources create a distressing feeling
of falling behind. Despite the rapidly flowing information and numerous
technical possibilities, it would seem that information still doesnt flow
well between knowledge workers or management and employees.

The challenges of IKM are not limited to within each organisation.
Sometimes organisations dont know the needs of their customers well
enough, or they dont receive enough information about the changes in
the business environment to support decision-making. Out of the endless
list of electronic resources that are available to everyone, it is difficult to
weed out those that are essential. Information systems that do not work
(or, equally problematically, cannot be integrated) also pose problems.
One emerging problem is the aging workforce: losing important
knowledge and experience due to retirement will be a major problem for
many organisations in the near future. (Of course, this is also due to
employee turnover for reasons other than retirement.) People who
change jobs also pose an information security challenge to the
organisations they leave behind. While information security has
traditionally been understood to consist of the securing of data and
information in information systems, it should cover peoples knowledge,
Despite these problems and challenges, there is huge potential in
information and knowledge. The success of many companies is based on
the knowledge and competences of their employees. In-depth knowledge
creates sustained competitive advantage if it can be utilised efficiently.
IKM offers many practises that can improve operations and ensure the
performance of an organisation. This book aims to describe how
information and knowledge can be used in value creation, both for the
organisation itself and for its customers. We also discuss the ways in
which IKM can help develop processes. The fundamental idea of the book
is that the value from IKM will be realised only when information is used.
This view brings the users of information and knowledge into the


Business management research and social science research are both

based on two opposing research philosophies: positivism and social
constructivism. The fundamental difference between these two
philosophies can be approached with the help of the concepts of ontology
and epistemology. Ontology (what is) is a field of philosophy that
examines the fundamentals and structures of reality, i.e. the assumptions
that we make about the nature of reality. Epistemology (what can be
known), on the other hand, examines the concept and origin of
knowledge, types of knowledge, the possibilities of acquiring new
knowledge, and the reliability and certainty of knowledge.
These two research philosophies are opposed in their approach to
reality (ontology) and in how we can observe reality (epistemology). The
fundamental idea of positivism is an assumption of objective truth that is
not dependent upon human interpretation. According to positivism, there
is no other knowledge than that which is grounded in observed facts.
Social constructivism has a different view on reality. In this view, reality is
not objective and free of interpretation; rather, reality is constructed in
social interactions when people create interpretations and meanings. The
differences are visible in their approaches: while positivist scientists aim
to explain phenomena, social constructivists aim to understand them.
These different research traditions have an impact on the worldview of
people with different educational backgrounds. The positivistic
worldview dominates in science and technology, while the social sciences
and economics are more deeply grounded in social constructivism.


Information is a broad concept. It can be broken down into different

levels and types to distinguish different kinds of dimensions. One
common way to break the concept down is to use three different concepts
to signify levels of information. These concepts are data, information, and

knowledge (Table 1). In addition to these three, the academic literature
identifies higher levels such as intelligence, insight, wisdom, and truth.

Table 1: The three levels of information

Later on, this book will describe the refinement of information. This
phrase refers to those processes and activities that move from one
information level to the next. For example, data is used to create
information by structuring it, and information is further used to create
knowledge through analysis and interpretation.
In addition to the levels of information, another common way to
break down the concept of information is to distinguish between explicit
and tacit knowledge.

Tacit knowledge accumulates to individuals through experiences,

and it is partly subconscious. Tacit knowledge can be described as
intuition or know-how. It is difficult to express in words, which
makes transferring it to other people challenging.

Explicit knowledge is information that is expressed in written

form, and it thus can be saved and transferred easily. Different
languages and mathematical formulas are examples of tools that
are used for expressing explicit knowledge.

These levels and types of information (i.e. knowledge) are
complementary viewpoints within the concepts of information and
knowledge. Data and information are clearly forms of explicit knowledge,
because it is possible to express them in a language (spoken language,
computer code, mathematics, etc.). While knowledge and intelligence are
mostly tacit, and they accumulate over time, not all knowledge is tacit. For
example, we can easily express the date of our birth in numbers, which is
explicit knowledge. Physical skills and competence can also be considered
tacit knowledge. Tacit and explicit knowledge form a continuum, where
some knowledge is more tacit than others. It is thus possible to express
knowledge in an explicit form, and in that way transfer it between people.
Knowledge management practises aim to do just that.
Although the levels of information and the formation of
intelligence are core IKM concepts, these concepts are not used in a
unified manner. The term information, for example, may be used to refer
to data, or to wisdom or truth. The English language lacks an umbrella
concept that would cover all forms of information and knowledge, which
makes the use of concepts confusing at best and misleading at worst.
(Finnish, on the other hand, has the concept of tieto.) This is important to
bear in mind when reading the literature on IKM: a word is one thing;
how it is defined in each context is another.
Central to all of these concepts and levels of information is
accumulation and refinement. Where data is figuratively dumbonly
objective factsknowledge is analytic interpretation of the information.
And this information is constructed of individual data elements, which
means that the quality and correctness of our knowledge and intelligence
depends on the quality and correctness of our data.


The quality of data and information found in organisations is quite often

poor. The data can have flawed, missing, or controversial values, or it can
be in an unusable format. For example, different ways of saving dates can
cause problems with interpretation: what date does the number sequence
100712 signify? Different cultures have different preferences for the
order of days, months, and years in a date. If data is to be useful, someone

needs to maintain and clean it up, and define instructions and policies
about how the data should be stored. Since organisations have massive
amounts of data, and more is produced every day, cleaning it up takes a
great deal of effort. This is why organisations usually do not even try to
clean up all their data; instead, they concentrate on the quality of its most
essential, so-called master data. The heaps of transaction datathe data
produced by information systems about an organisations daily
operationsget less attention. This strategy is called master data
management. This strategy is common even though analysing transaction
data can provide new insights into the operations of an organisation.
In order to reduce the workload of correcting errors in their data
and information, many organisations strive to create practises and
routines for guaranteeing the quality and correctness of the data. For
example, instructions on the proper format for an address can state if a
zip code is required, where
addresses are saved and stored,
and what is done if there are
Information quality is the discrepancies in the data. The
responsibility of anyone rules and practises are important
who works with data and (as is following them), so that the
information organisation has correct and
good-quality information to base
its decisions on.
Data is stored in databases. Individual databases are usually connected
into a data warehouse that collects the relevant data from the source
databases and transforms it into a format that is unified and easy to use.
Many analysis and reporting systems utilise a data warehouse in their
functionalities. For example, the correctness and usefulness of business
intelligence analyses and reports is dependent upon how (and in what
format) the transaction data is stored in the original system, how the
system is integrated into the data warehouse, how the data is converted
into the format required by the data warehouse, and how the warehouse
is integrated into the analysis system. The process of designing and
controlling this chain is called data and information management.


Data, information, and knowledge are all resources for an organisation, in

addition to its material resources (facilities, inventory, etc.). Protecting
physical resources against theft or accidents is assumed to be the default
for modern organisations. Protecting information and knowledge is not so
simple: as immaterial resources they can exist in multiple places at the
same time, and thus their value is difficult to define.
Information security is an area of IKM that aims to protect and
secure the information and knowledge of an organisation so that it will
not end up in the wrong hands, and that problems with information
systems will not disrupt an organisations operations. Information
security is often thought of as a technical issue that belongs to the
information management function of the organisation. In addition to the
technical issues, however, there are many managerial elements within
information security that should be understood by all personnel. Valuable
information resources always come with the risk of getting lost or ending
up in the wrong hands. An organisations management should understand
not only the significance of information and knowledge to the business,
but also the risks that are connected with them.
Just like information quality management, information security
management is a process that aims to recognise valuable information,
assess risk connected to it, and select measures to prepare for risks. The
continuous evaluation of threats and the development of protective
measures are part of the process. In many organisations, this process is
managed with an information security policy.
The characteristics of information from the point of view of
information security are integrity, availability, and confidentiality.
Information security aims to maintain these characteristics in all
situations. Integrity can usually be maintained with technical solutions,
such as creating and copying back-ups and installing virus-protection
systems. On the other hand, the integrity of knowledge should also be
maintained, so that employees knowledge is up to date and correct.
Knowledge management and competence management initiatives partly
aim to do this.

Availability as a characteristic refers to the state of information
being available to those who need it without delay. Availability can be
secured with technical means: for example, with multiple network
connections and redundant equipment. (Redundant is used here in the
desirable, technical sense of fail-safe rather than the undesirable, non-
technical sense of repetitive and unnecessary.) Guaranteeing the
availability of knowledge is a bit more challenging, since knowledge is
bound to an organisations personnel. One way to maintain availability is
thus to retain the personnel who work for the organisation; this is why
many HR activities are also information security activities. The daily
availability of knowledge should also be looked after, for example by
encouraging employees to share knowledge openly within the
organisation. An organisational culture that supports knowledge sharing
and knowledge creation is also important from the information security
point of view.
Confidentiality is the
information characteristic that is
An organisations most often mentioned in
management should connection to information security.
understand not only the Maintaining confidentiality means
significance of information that the information is not
and knowledge to the revealed to anyone who is not
business, but the risks that authorised to receive it. For
are connected with them. example in healthcare
organisations, maintaining the
confidentiality of patient records is
essential. In other kinds of companies, the business secrets of the
company should be kept away from the eyes of competitors.
Confidentiality can also be partly controlled with technical measures, by
means of access controls and specified user rights and roles. Ensuring the
confidentiality of knowledge depends on how well the organisations
employees follow its policies, which is where the attitude and example of
management and the awareness of employees come in. Information
security is tightly connected to the organisational culture, and changing
work culture is well known to be a challenging task.

Further Reading

Easterby-Smith, M., Thorpe, R. & Lowe, A. 2002. Management research. An

Introduction. 2nd ed. SAGE publications, London.
Loshin, D. 2001. Enterprise Knowledge Management: The data Quality Approach.
Morgan Kaufman, Burlington, MA.
Loshin, D. 2008. Master Data Management. Morgan Kaufman, Burlington, MA.
Nonaka, I. & Takeuchi, H. 1995. The knowledge creating company: How Japanese
companies create the dynamics of Innovation. Oxford University Press, New York.
Peltier, T.R., Peltier, J. & Blackley, J. 2005. Information Security Fundamentals.
Auerbach publications, Boca Raton, Florida.
Polanyi, M. 1974. Personal Knowledge: Towards a post-critical philosophy.
University of Chicago Press, Chicago.
Thierauf, R. 2001. Effective Business Intelligence Systems. Quorum Books,
Westport, CT.
Whitman, M.E. & Mattord, H.J. 2003. Principles of Information Security. Course
Technology, Canada.


The theoretical background of information and knowledge management

resides in the resource-based view developed in the late 1950s, according
to which an organisations competitiveness is defined based on the
resources it has and that it can exploit. In order to create sustained
competitive advantage, the organisational resources should be valuable,
rare, difficult to imitate, and difficult to replace.
Following in the footsteps of the resource-based view, the
knowledge-based view (starting in the early 1990s tried to explain how
organisational information and knowledge resources help to create
sustained competitive advantage. According to this view, knowledge
resides in people, and it is the task of management to co-ordinate the
processes that integrate knowledge into products and services.
These two theories aim to understand the value-creation logic of
organisations on a fundamental and theoretical level. Business
management applications of knowledge management, meanwhile, aim to
improve organisations performance by focussing on the processes of
knowledge creation, organisation, and use. Information and knowledge
management is thus concerned with the processes and activities that
support knowledge-based value creation, i.e. the utilisation of knowledge
Various process models have been created to support information
and knowledge management. They differ according to the purpose and
viewpoint that they are made for. While some models emphasise
information management, others concentrate more on the process of
refining information and knowledge. Figure 4 (below) presents one way
to describe the information management process.

Figure 4: The information management process (adapted from Choo 2002)

The information management process begins with identifying the

organisations information needs and finishes by using information and
changes in the organisations activities. The phrase information needs
refers to gaps between the information that is available now and the
information that is needed to carry out a task or to make a decision. This
first phase of the process is central to the next phases, because
information is acquired on the basis of the identified information needs.
In practise, identifying information needs is no easy task. It is not
easy even for experts in their own field to identify what they need to
know. There are multiple reasons for this. Information needs, the
operational environment, and the organisation itself change over time in a
way that is difficult to predict. What information needs will emerge in
future is thus impossible to know with any certainty. On the other hand,
the difficulty of defining the information needs of a knowledge worker is
connected to the characteristics of knowledge work itself: knowledge
work (or expert work) is defined as work that finds solutions to
previously unknown problems. Because the problems that need to be
solved are unknown, it is impossible to accurately define what
information will be needed to solve them.

Information acquisition is performed either as a one-time
operation for a specific information need, or as a continuous process: for
example, daily follow-ups of news services. While most of an
organisations information needs can be satisfied with these continuous
follow-up processes, the acquisition of specific needs is still important.
The faster the changes in the organisations environment, the more the
organisation has a need for specifically tailored information acquisition.
The idea of the information management process model is to
create a kind of organisational memory, where the acquired information
is organised and stored in such a way that it will complement information
that was acquired earlier. This enables the effective use of the previous
information. After acquisition, the information is organised into a format
that is useful for the users. We can refer to this as the formation of
information products and services. The different products and services
serve different kinds of information needs.
It is important to note that the phases of the process in Figure 4
overlap, and that they dont necessarily follow each other in the same
order each time. In practise, the process is more complicated than weve
described here: it also involves people and their actions; various
information systems and equipment; and different operational
environments, which undergo constant change, surrounding it all. If we
hope to understand these complicated knowledge processes, we need
conceptual tools and practical process models and tools to help us. IKM
helps with value creation by offering all of these models and tools.
Put simply, knowledge-based value creation is concerned with
improving organisational performance. All of an organisations activities
should support value creation for the customer, and should help the
organisation to achieve its goals. The ultimate goal of a company is
profitable business; but in the public sector the goal is not so clear. It may
be profit, community wellbeing, or some other goal for the common good.
IKM also creates value for the internal customers of an organisation. With
the effective use of information and knowledge, we can support decision-
making and reduce work that does not lead to value creation.
The different kinds of frameworks and models in IKM help to
understand how organisations process information, create value out of it,
and build their competitive capabilities. Whereas the more traditional
management disciplines mainly hold that knowledge is one important
resource among many, IKM focusses on the special role of information
and knowledge and offers tools to grasp and utilise them. IKM theories
are also useful for entities that are larger than individual organisations:
networks and ecosystems. The information flows between organisations
is currently a hot topic in both the public and private sectors.
IKM is constructed of various sub-processes that create, collect,
share, refine, and distribute information. All of these processes have
practises that vary according to industry, organisation size, and strategy.
Some organisations put more emphasis on people and their tacit
knowledge; others choose a strategy that concentrates on explicit
knowledge and information systems. Naturally, a strict choice between
these two is not often made; instead the emphasis is somewhere in the
middle. Authors offer numerous solutions in the literature for managing
IKM on the operative and strategic levels. The value of IKM is varied:
while the importance of knowledge has increased, IKM has grown into a
function that crosses traditional functional boundaries. At the same time,
the perspective of value creation has widened. Information and
knowledge are not simply a resource, and managing them cannot be
defined solely as the responsibility of one organisational unit. All
employees create value from knowledge when they utilise things that
they have learned, information that is stored in databases, or knowledge
from the network of experts that they belong to.
It is important for the IKM processes to link seamlessly to the
business processes; otherwise the information and knowledge will not
support the core purpose of the organisation, and the value potential will
be lost. For example, a consultancy company will need good support for
communication and knowledge sharing, where as a manufacturing
company will benefit from up to date inventory and product configuration
information. It is also important to acknowledge that successful IKM
requires an environment and practises that support the systematic
sharing, use, and creation of information and knowledge. IKM is an entity
that is built around the process phases of creating, collecting, organising,
refining, distributing, and maintaining information. Surrounding this
process are the enabling factors: organisation, executive decisions, ICT,
and, above all, organisational culture (see Figure 5, below).

Figure 5: The IKM process and its driving factors
The organisation should be able to create a culture of managing with
information, which means that all activities are transparent and open.
Information creates value when available information and knowledge are
used, and decisions are based on an accurate understanding of a situation.
This understanding is constructed from information that is gathered from
both inside and outside the organisation. Situational awareness requires
knowledge and competence in addition to the information provided by
information systems, such as enterprise resource planning system (ERP).
Explicit measurement information is also connected to situational
awareness; it can support decision-making and can improve awareness of
the prevalent market situation or functional efficiency. When constructed
well, a collection of performance measurements can be used to instruct
and encourage personnel about activities that are required of them.



IKM as a field is in a way a paradox: it is presented as a key way to

approach managing knowledge-intensive organisations, while at the same
time information and its management are so naturally bound to the

everyday functions of an organisation that many people are not even
aware of its practises.
When we examine a typical contemporary knowledge-intensive
organisationfor example, the organisation the authors of this book
work forinformation and knowledge management as an explicit
function does not stand out from everyday activities. Of course, most
organisations have an information management function that takes care
of the tools that people work with. In addition to these tools, information
is stored in information systems, and knowledge and competence
development needs are looked after. The most visible core processes of
the organisation, however, are 1) operative functions (in the case of the
organisation the authors work for, this is education and research, i.e.
knowledge-based value creation) and 2) the development of operations
and personnel. These two processes involve a lot of information and
knowledge management elements, although they are not always explicitly
Information gets shared, processed, and formed into products
during the course of the core processes of an organisation. Organisations
also look after developing the knowledge of their personnel and
recruiting new talent. Other examples of everyday management activities
that are linked to information and knowledge include different analytic
and measurement practises that organisations use. For example, experts
knowledge regularly gets evaluated, and the results of their work are
tracked by setting measurable goals. Measurement information is also
produced about, for example, the functionality of an organisations work
community, and its processes, financial issues, customer relationships,
and reputation. Collecting this information is not important just for the
sake of measuring: the goal needs to be managing and developing
processes on the basis of the collected and analysed information.
As we have just demonstrated, IKM is not a distinct function in
leadership, but rather is a natural part of leadership and management
methods. It cannot be operated on someones behalf; instead it must be a
concern of every part of the organisation. Everyone must work with IKM
processes in their daily activities. Information and knowledge
management could actually be seen as a knowledge-intensive

organisations managerial paradigm. In practise, IKM represents ordinary
leadership that takes its field into account in knowledge-intensive work,
which in turn is performed by autonomous and creative experts.
Information and knowledge management is a fixed part of a
knowledge-intensive organisations leadership practises. This can be
demonstrated by reviewing in detail the practises and principles of
knowledge work and management. In order to enable experts to work in a
creative and efficient manner, they should be given the freedom to plan
their own means of action instead of closely
controlling their work. The freedom to plan and
execute their own methods, schedules, and
places requires clear goals, however: without IKM is an integral
them, the work might be too detached from the part of
big picture. In order to keep the individual knowledge-
motivated, the work must also feel meaningful. intensive
The working community must also have organisations
common and shared goals to make it possible daily operations
and efficient for its members to cooperate.
In knowledge-intensive work, individual performance is the
source of organisational success. Motivated, excited, and (when facing
challenges) resilient individuals are an important resource. This state is
achieved by engagement in ones work. In this state, an employee feels his
or her work is challenging and provides experiences of success and
delight. Work engagement has a positive effect on both employee
performance and wellbeing, both at work and beyond.
Work engagement can be affected by building a supportive
working environment, creating an open and stimulating atmosphere,
taking care of setting clear goals, and by giving employees a chance to
learn new things and to develop their own work. While management and
organisational environments and development activities have been found
to have the effect of increasing work engagement, it actually has more to
do with a broader, more holistic work community engaging in
developmental activity. By their actions and behaviour, all of the
individuals in a company can affect the creation of a positive work

Individuals who are highly engaged in their work have been found
to affect the work community with their positive attitude and solution-
based behaviour. For example, they develop and share successful working
methods and encourage their fellow employees when they succeed and
achieve their goals. Internal personal resources, like optimism, seem to
have at least as big of an effect on work engagement as external
resources, such as a pleasant office environment. The emergence of high
work engagement and good team spirit in the workplace both requires
and fosters an open and trusting organisational culture.
We have described above a few general principles that promote
the performance of individual experts and knowledge-intensive
organisations. This was meant to demonstrate how an organisations
approaches to core processeswhich create value from informationare
essential parts of information and knowledge management. Hence, IKM is
not a distinct area of knowledge management, but actually is part of daily
work and management. When leading a knowledge-intensive
organisation, it is essential to create a framework for productive
knowledge-based value creation, and to remove any possible barriers that
might prevent it. In conclusion, daily IKM is common-sense behaviour
that is used to develop an organisations performance. This common
sense requires the assimilation of basic ideas of IKM, however, such as the
significance of information and knowledge as the source of successful
work and the importance of sharing knowledge and the autonomy of
individual experts. The theories presented in this book are important to
understand these phenomena.

Further Reading
Barney, J. 1991. Firm resources and sustained competitive advantage, Journal of
Management, vol. 17(1), pp. 99120.
Choo, C. 2002. The Knowing Organization as Learning Organization, Education +
Training, vol. 43(4), pp. 197205.
Grant, R.M. 1996. Toward a knowledge-Based Theory of the Firm, Strategic
Management Journal, vol. 17, special Issue: Knowledge and the Firm (Winter,
1996), pp. 109122.

The practises of information and knowledge management can be viewed
by different approaches. All of these approaches take practical challenges
as a starting point, and they aim to create applicable models and tools for
business management. Especially in Finland, it is customary to separate
managing information from managing with information:
Managing information refers to processes and management of
organisational learning and renewal, and the creation of new
information and knowledge; it also refers to the management of
knowledge resources and flows;

Managing with information refers to the practises and principles

that aim to refine an organisations information resources, and to use
these in an organisations managerial actions and decision-making

Another strategy for viewing information and knowledge management is

to separate it into managerial and technical approaches. Managerial
approaches focus on IKM practises that affect human relations and social
processes, while technical approaches focus on applying information
technology within knowledge management. The field of expertise of the
technical approach includes information management activities and the
information management function itself. Information management is an
important function that produces services for other organisational
A third strategy for viewing IKM is to see IKM as an umbrella
concept that ties together many topics in the international IKM discourse
(see Figure 6). In the Finnish discourse, IKM often includes organisational
learning, knowledge management, intellectual capital and its
management, and business intelligence. The themes of IKM are also linked
to many more traditional fields of research, such as information systems
science and management science. In this book, IKM is understood as a
whole that views an organisations actions and phenomena in

management and development from the point of view of information- and
knowledge-based resources, processes, and technologies.

Figure 6: IKM approaches and fields, and the relevant academic journals

Figure 6 shows the different approaches that form the toolbox of business
management in the IKM field. Each of these approaches offers a different
point of view on how information and knowledge can generate value, and
how this process can be supported. The technical aspect of IKM is
considered in Chapter 6.
We begin by examining this toolbox from the approach of
intellectual capital (IC), which offers a strategic view of an organisations
knowledge resources. At its centre is the identification of important
knowledge resources and how these resources support the achievement
of the organisations goals. We then look at business intelligence, which
aims to ensure that the organisations decision-making activities are
supported with enough relevant information and knowledge. The
information is gathered both inside and outside of the organisation, as

well as throughout its business environment. After business intelligence
we examine knowledge management, which is focussed on knowledge
and information sharing and transferring, the application of existing
knowledge, and the creation of new knowledge and information. In the
same chapter we consider organisational learning, as this is closely tied in
with the creation of new knowledge and information. The organisational
learningfocussed approach attempts to offer tools for learning from
errors, and the constant development of functions.
The fields presented above are also known in the international
literature. Figure 6 shows an example of each fields particular scientific
publication forum; the approaches are applied by many different
companies, which offer different knowledge or information products such
as decision support systems, market analyses or process consulting. They
aim to develop their customer organisations different functions with
these products and approaches.
Along with the presentation of fields within IKM, this book
attempts to draw attention to the whole, where information generates
value. As we said earlier, value generation means exploiting information.
This could mean a better understanding of the business environment, the
support of decision making, or the creation of new knowledge. Different
practical situations need different solutions; from this point of view, IKMs
toolbox offers many different approaches. Sometimes, however, one
should stop to think of the big picture and ensure that the organisations
knowledge processes form a seamless whole. Other things to think of
could be to ensure that there is no duplicate work when gathering
information, or that the processes of knowledge management actually
support the organisations overall business goals. For example, putting a
lot of effort into gathering information into databases, but then not using
it to support decisions doesnt help the organisation.



Intellectual capital consists of an organisations non-physical and

intangibleyet valuableassets. While the concept itself is rather new,
the ideas behind it have always been important. For example, motivated
and knowledgeable experts are an essential foundation for value creation.
Along with these experts, there have to be supporting systems and
processes that support the transferal and creation of knowledge among
experts, as well as protecting the vital expertise of the business. Product
brands, and the companys reputation as an employer and societal actor,
are also important things to keep in mind. These concepts are examples of
intellectual resources, which together form the organisations intellectual
capital. Discussions about intellectual capital began in the 1980s and
1990s; observers at the time noticed that many companiesespecially
knowledge-intensive onessignificantly increased in market value
compared to their accounting value. This change signalled that a
significant part of a companys market value was something other than
simply physical and economic resources. This non-physical and non-
economic capital was named intellectual capital.
The iceberg in Figure 7 demonstrates the role of intellectual
capital in the formation of a companys value. The tangible financial and
physical resources, such as production machines and facilities, represent
only the visible tip of the iceberg. The more substantial part of the value
remains invisible and under the surface. In practise, this invisibility
means that intellectual capital is not usually shown in any meaningful
way in a companys balance sheet.

Figure 7: The iceberg metaphor of the relation between intellectual capital and
traditional resources

The significance of intellectual capital is especially high in knowledge-

intensive companies. For example, in international IT service companies
such as Facebook and Google, only a small portion of their billions of
dollars in value is tied to physical assets. A well-known brand and an
active user base are the factors that investors seem to value. As another
example, a small consultancy company can work with no physical assets
at all, since facilities and tools can easily be rented. Instead, reputation,
expertise, and customer relations can be the key to success for the
company; acquiring these assets, on the other hand, might be significantly
more problematic. The concept of intellectual capital helps in outlining
and structuring a companys valuablebut invisiblesources of value.
The discourse about intellectual capital started with the
examination of a companys value formation. Quite quickly, however, a
notion was formed: if intellectual capital was valuable, should it not be
considered by management? The discourse then moved from intellectual
capital value measurement towards its management. Examining
intellectual capital from the management point of view can be
demonstrated with a tree metaphor, as pictured in Figure 8 (below).
With the tree metaphor, the company can be seen as a developing
and growing organism whose job it is to grow fruithigh-quality
products and services and financial success. These are the goals of every
company, but how is the value itself created? Intellectual capital can be
seen as the trees roots: the source of value generation. The responsibility
of management is to take care of these roots: managers must maintain the
quality and amount of intellectual capital in the company. Simply
acquiring new intellectual capital is not enough; they must be put to
productive use as well. In other words, the roots should bring nutrients to
the fruits.

Figure 8: The tree metaphor for intellectual capital

The focal concepts of intellectual capital (see below) offer different tools
to support company management in handling these tasks. As intellectual
capital consists of invisible and hard-to-define phenomena, however,
managing them is not an easy endeavour.


In Figure 9 (below), the concept of intellectual capital is divided into three

focal concepts or fields. Human capital considers individual employees
and their experiences and expertise; it may be easily lost to a competing
company, for example. Human capital arrives at work every morning and
leaves for home every evening, and will eventually retire. Structural
capital, on the other hand, is more permanent, as it is tied to a companys

structures and functions. Structural capital comprises soft elements such
as organisational culture, and hard elements such as patents. The third
field is relationship capital, which is related to a companys stakeholder
relations. Customer relations, and the reputation of the company, are
typical examples of this field.

Figure 9: The three fields of intellectual capital (Kujansivu et al. 2008)

The separation of intellectual capital into three fields is somewhat

artificial: the concepts are closely tied to each other and are not truly
separate. The separation is done mainly to demonstrate that different
intangible assets have different kinds of attributes and limitations. For
example, human capital is important for an organisations renewal. On the
other hand, its application is limited by how much one individual can
achieve during a given workday. The components of structural capital,
such as the information stored in information systems, are not dependent
on individuals, but can be exploited by many people at the same time.
The intangible assets listed in Figure 9 are typical examples of the
components of intellectual capital; the list is not comprehensive. In
addition, we should stress that the listed concepts are not necessarily
important in all organisations. The significance of intangible assets
depends on the companys strategy and goals. For example, one could ask
what kind of intangible assets the company has and what it should have in
order to achieve a certain business goal.
Intellectual capital is dynamic by nature. New expertise is created
all the time, key people leave, new people are hired, and new customer
relations are formed. The reputation of a company is also dynamic, and
can increase or decrease for any number of reasons. Intellectual capital
mostly refers to internal resources whose value is tied to external factors.
This is why the value of intangible assets can change very quickly: for
example, Nokias employees expertise in Symbian OS was greatly valued
in 2005, but a few years later it had become a burden that was no longer
needed. Similarly, some intangible assets might become valuable very
quickly: for example, in case of changes in legislation or dominant
technologies. At the moment we see a rapid increase in the demand for
social media know-how; in a few years the next technological innovations
will create the need for new kinds of knowledge and competences: i.e.
intellectual capital.
As with many fields of IKM, the
field of intellectual capital is quite young Intellectual capital
and the related concepts have yet to be is dynamic by
solidified. There are many overlapping nature
words for the same concepts, such as
intellectual capital, intangible assets, and
knowledge assets. They usually mean the
very same phenomena. Social capital is also closely related to this theme.
While the concept of social capital has its roots in social sciences, and
intellectual capital is rooted in the business environment, they do overlap
in some points.


Research on intellectual capital started from the business environment.

Companies were the centre of interest, and intellectual capital was
studied as a source of value and success. Intellectual capital is a concept of

strategic management, and it can be naturally applied, for example, to a
CEOs or an executive teams actions. At the operational level, intellectual
capital might seem theoretical, which is why the talk is often about the
individual fields of intellectual capitalsuch as patents and expertiseas
these are already familiar concepts to employees.
Examining intellectual capital has also become common in the
public sector. The concepts can be well applied to non-profit
organisations, as their attention is often drawn to non-economic factors
since they tend to pursue these rather than strict economic success.
Intellectual capital has been studied from the regional and
political economics points of view in recent years. As with successful
companies, the success of geographical areas often depends significantly
on intellectual capital. For example, the viability of a city area is highly
affected by the expertise and breadth of expertise of the people living and
working there, the reputation of the city as a system of neighbourhoods,
and the functionality of its governmental processes.
Figure 10 (below) demonstrates the role of intellectual capital in
economics. The base of the approach can be national goals: for example,
human wellbeing and wealth, or taking care of the environment. From
these bases can be identified key areas of intellectual capital. Different
nations highlight different goals, and they differ in their states of
development, which will lead to different needs in terms of intellectual
capital. For example, literacy and education are known to be important to
the development of a nation. Because a developed country like Finland
does not significantly profit from allocating more money to education, its
attention should instead be drawn to the diverse and effective utilisation
of the expertise it is already actively investing in. Investing in different
intellectual resources can develop nationwide intellectual capital, which
helps economic wealth and the pursuit of national goals.

Figure 10: Intellectual capital at the societal level (Kpyl et al. 2012; Salonius &
Lnnqvist 2012).


Managing intellectual capital may be considered to be a practical

management application, which is related to earlier resource- and
knowledge-based theories. The concept of intellectual capital (Figure 9)
concretises the relevant information-related resources that the success of
the company is based on. This is how it is possible to move from abstract
theories to practical management.
Even simply defining the central concepts can help managers to
see their organisation in a new way. Finer processing of the concepts
reveals what this phenomenon means. The concept helps to identify
different types of resources and their attributes. Looking at the

organisation from the intellectual capital point of view can help
managers identify which intangible resources are the most important for
their own organisation. This is an important aspect in development
The concept of intellectual capital management refers to the
functions and models that are used by a company in order to affect the
development of its intellectual resources. It can be defined as actions that
assess the state of intellectual capital (i.e. get a picture of the size of the
iceberg), affect the development of intellectual capital (i.e. strengthen the
roots of the tree with the right resources), and transform it into outcomes
desired by the company (i.e. ensure that the yield grows).
Managing intellectual capital can be split into two closely related
levels. On the strategic level, the goal is to examine the state of intangible
resources in relation to the business objectives, and to guide the
development of those resources. On this level, the management
extensively examines the intellectual capital big picture and creates
guidelines for its development. Actual development action, however, is
made at the operative level. For example, the HR department can recruit
and train personnel, and the marketing department can develop customer
relations and increase brand awareness.
Scholars have created models specifically for managing
intellectual capital (for more information see Lnnqvist et al. 2005 and
their applications, and Kujansivu et al. 2008). Intellectual capital can, of
course, be managed without models, alongside the usual management
actions. The development of individual intangible resources, like
expertise, is actually nothing new. Research and organisational actions
have both been conducted for a long time. The actual profit in managing
intellectual capital is in its holistic view, as this can be used to assess the
value of the companys intangible assets.

Further Reading
Kujansivu, P., Lnnqvist, A., Jskelinen, A. & Sillanp, V. 2007. Liiketoiminnan
aineettomat menestystekijtmittaa, kehit ja johda. Talentum Media Oy,
Kpyl, J., Kujansivu, p. & Lnnqvist, A. 2012. National intellectual capital
performance: a strategic approach, Journal of Intellectual capital, vol. 13, No. 3,
pp. 343362.
Lev, B. 2001. Intangibles. Management, Measurement, and reporting. Brookings
Institution Press, Washington.
Lnnqvist, A., Kujansivu, P. & Antola, J. 2005. Aineettoman poman johtaminen.
JTO-palvelut Oy, Oitmki.
Salonius, H. & Lnnqvist, A. 2012. Exploring the policy relevance of National
Intellectual Capital Information, Journal of Intellectual Capital, vol. 13, No. 3, pp.
Stewart, T.A. 1997. Intellectual Capital, The New Wealth of Organizations.
Doubleday, New York.
Sveiby, K.-E. 1997. The New Organizational Wealth: Managing and Measuring
Knowledge-Based Assets. Berrett-Koehler Publishers Inc., San Francisco.


Organisations decision-makers, such as the management, take snapshots

of the big picture based on the information and knowledge they have and
how they interpret things with their own experience. Relevant and timely
information can help these organisations to identify and analyse
alternative solutions in decision-making situations. With information,
different possibilities can be compared, bad ones can be left out, and the
best ones can be chosen in light of the current situation. Decisions that are
based on information guide a companys actions to better choices and can
help it to best its competitors.
Information is not automatically valuable, nor does it create
competitive advantage. Information might even be harmful to the
organisation if quantity is valued over quality during information
gathering. In a worst case scenario, information overload might even
paralyse the whole organisation if the amount of information exceeds the
organisations processing capabilities. The amount of information that is
available has been increased by the progress of technology, faster
telecommunications, and globalisation. More diverse information is also
available, which has been affected, for example, by the rise of social
media. Because of this enormous amount of available information, it is
important to be able to control and structure it. Information that can be
used to generate value has relevant content, is in the hands of the right
person (and in a timely manner), and is in a usable form. In order to
generate value from information, it must be interpreted correctly and it
must affect decision-making. Along with the massive amount of
information, its interpretation is complicated by its fragmentation:
decision-makers require information from many external and internal
Information that is relevant to the company can be classified into
information that affects the organisation itself and information that
affects the organisations environment. Internal information consists of
the information that an organisation produces itself with its own actions,
such as production figures, process descriptions, strategic guidelines, and
how employees view the organisation. External information, meanwhile,
is information that is related to an organisations environment: consumer
trends, competitor actions, and the general economic situation of the
world. Sometimes the line between internal and external information can
be blurry, which is particularly noticeable when organisations network
and outsource their functions. We must take into account that while the
topic of the information might be external, its source could be internal.
Planning and launching an organisations actions requires the
management and application of internal information, which forms the big
picture of an organisations strengths and weaknesses and how these can
be developed to respond to external possibilities and threats. At least as
important to an organisations competitiveness is how it exploits external
In order to succeed in the long run,
an organisation must pay attention
to (and if possible predict changes
Information that in) the external business
generates value is environment, understand the
relevant, timely, and consequences of this environment,
usable and guide the organisations own
actions accordingly. For example,
external information can help the
management understand how the price of the competitive product is
formed, and which strategy should be used for a certain market; how
certain customers should be approached; or how the merger of two
competitors could affect the organisation. In general, business intelligence
can be understood as a concept that covers all of the internal and external
information generated and used by the organisation. In order to use
business intelligence to create value for the organisation, it must be
managed accordingly.



Business intelligence is a function that is used by an organisation to

gather, analyse, share, and use information relevant to its actions. The
goal of business intelligence is to gather information that the organisation

deems necessary from different sources and to classify and store it for
further use. A central task is to analyse and combine seemingly non-
related pieces of information in order to understand contexts, and thus be
able to share newly created information with decision-makers. In the best
case scenario, business intelligence management works proactively as a
supporting action for the decision-makers by offering predictions about
happenings in the business environment and their effects on the
organisation. The underlying goal is to enable better decision-making
capabilities, thus enabling a more efficient and profitable business.
Every single organisation uses business intelligence to some
extent. The system for analysing it may not even be conscious or
systematic; it was more likely built for some specific, high-priority (at the
time) need, and thus the information will be unorganised. Information is
gathered and acquired without thinking. Workers consider the meaning
of information, and make decisions about it without even perceiving it as
being business intelligence. As these functions are used systematically
together, they form the business intelligence process. Figure 11 (below)
presents a general business intelligence process and its central functions.
In practise, classifying tasks in different phases is not this simple, as the
phases partly overlap. For example, information is often assessed
throughout the whole process, and the organisations information needs
can be refined or redefined during the process.

Figure 11: The business intelligence process and key tasks

The business intelligence process starts by defining the companys

information needs. The idea is to clarify what information is actually
needed, when it is needed, and in what form. Defining these needs is
essential for the most efficient and responsive way of acquiring
information: when the information that is needed is known, information
gathering can be focussed in a more efficient manner and it is possible to
reduce the amount of useless information that is gathered. Excessive
and/or wrong kinds of information may complicate the decision-making
process. An organisations information needs are often affected by, for
example, the organisations industry and strategy, changes in the business
environment, and uncertainty surrounding the decisions to be made.
Organisational-level information needs to consist of individual
decision-makers needs, which in turn are based on individuals job
descriptions. Because an organisations business environment is
constantly in flux, so too are its information needs. This is why

information needs must be defined and focussed throughout the whole
process, not only at the beginning.
The second phase of the process focusses on gathering
information that is consistent with the identified needs. Information and
information sources are not always reliable, so if using many different
sources, one can attempt to find the most appropriate information from
the available mass. Information sources vary from personal human
contacts to information systems and media. Most of the sources that are
used are often explicitsuch as database reports, news digests, and
consultancy analysesas they are by nature easier to acquire and apply.
Despite this situation, the more difficult to attain sources might be more
useful: human sources are especially valuable. Social media and its
technologies offer business intelligence analysts even more possibilities
to gain interesting information and to identify interesting information
sources. Sorting information that is correct and reliable from the mass of
information that isnt, however, is challenging. On the other hand,
effective searching and classifying algorithms and automated content
updates reduce the load caused by information gathering and offer
possibilities for getting even more value out of information.
When discussing information gathering, one important aspect is
cost-effectiveness: it is not reasonable to spend a thousand euros on a
report that helps save one euro. In addition, ethics and lawfulness are
relevant factors in information gathering, not only because of ethics
principles but also because information gained through suspicious means
may harm the organisation in many ways.
The information acquired isnt always useful for decision-making
as is: it usually must be processed and related to the context of the
company. In the third phase of the process, the gathered information is
trimmed, assessed, and classified so that it can best answer the
organisations needs. The information can be saved to information
systems and archives, where it can be retrieved, shared, and applied.
Information is also saved in the minds of the people who process and use
it as intellectual capital. The acquired information is then combined with
older information and is analysed and given meaning in the organisations
context. Different kinds of models and tools can be used for the analysis:
for example, scenarios, statistical analyses, and information visualisation
The purpose of the analysis, the source material used, and time
availability define what the most fitting method of analysis will be.
Human input is relevant in information analysis, as assessing the meaning
of the information and drawing conclusions from often fragmented and
heterogeneous material is not possible when merely using technological
applications. On the other hand, technology can be a great help in
analysis, especially when working with masses of quantitative data, but
the less data there is and the more qualitative it is, the more important
the role of human interpretation.
It is easier for decision-
makers to understand the meaning of
information (and how to use it) when
the information has been analysed Intelligence activities
and refined into different kinds of need to cater to the
reports. These can take the form of, identified information
for example, market areaspecific needs, but correctly
monthly reports, competitor analyses, identifying those needs
and regular news digests. Catering to is often a challenge
several different decision-makers
needs with the same reports reduces
the costs of regular information gathering and processing and the amount
of time spent on overlapping tasks. Ready information products alone,
however, do not satisfy information needs; and for certain situations,
complementary information queries and analyses must be conducted.
In order for decision-makers to use information, they have to have
the information in a timely manner and in a usable form. Information can
be distributed to decision-makersthe fourth phase of the process
through different channels. Tailored reports can be delivered via e-mail
or with information systems, for example. Less structured information is
mostly shared during personal interactions, such as meetings, phone
discussions, and non-formal meetings. The format of the information or
the channel of distribution, however, does not define the value of the
information. Information that is acquired in a chance talk in the hallway
might be more valuable than a ten-page tailored report sent in an e-mail.

In the business intelligence administrative process fifth and final
phase, the value and impact of the information is measured. Even the
most accurate or highest-quality reports value wont be realised unless it
is used to achieve organisational goals. The information may strengthen
existing ideas or may bring about a totally new point of view. In order to
create value for an organisation, the business intelligence activities must
have an effect on the organisations actions, and they must support the
organisations processes, problem situations, and daily routines.


In order for business intelligence to be effective, it must be a systematic,

well-organised function with the responsible party clearly identified.
Especially in large organisations, business intelligence often has its own
special unit, which may consist of a leader and several analysts who are
responsible for the information. Their job is to put business intelligence
processes into practise by ensuring that decision-makers get the
information they need. The responsible units and peoples titles often
vary between organisations. Some of the descriptions that are used
include business intelligence manager, market analyst, business analyst,
business intelligence unit, and information services. The people responsible
for business intelligence may have different fields of responsibility, such
as information gathering, analysing, or function planning. One person is
often responsible for the whole process, from information gathering to
In practise, it is common that business intelligence is not
organised centrally, nor is the process led in a goal-oriented manner. In
such scenarios where there is a lack of consistent approaches and defined
processes, every organisation gathers information from its sources
according to its own needs and analyses the information from its own
point of view. At the organisational level, separately executed individual
business intelligence processes may lead to overlapping information
gathering and analysis, as well as decisions based on false, contradictory
information. Exploiting social technologies, howeversuch as web
services, wikis, and instant messaging services inside the organisation
enables the organisation to execute individual information management
processes as part of a larger, collective business intelligence process.
When compared to the above scenario, we now have more agile and
diverse interactions, which enhances the finding, sharing, and collective
analysing of information inside the organisation. By using social
technologies appropriately, organisations may develop their business
intelligence processes to be even more participatory and interactive.
By implementing the business intelligence process in a conscious
and systematic manner, information needs can be satisfied accurately and
in a timely fashion. This, in turn, will enable information-based, effective
decision-making and will reduce the risk of failure. At its best, business
intelligence can increase an organisations productivity and profitability
as well as the competitiveness of its products and services. The benefits of
business intelligence are hard to measure, as their effects are both
indirect and intangible.

Further Reading
Blenkhorn, D.L. & Fleisher, C.S. (Eds.). 2005. Competitive Intelligence and Global
Business, Praeger, Westport.
Fleisher, C. S. & Bensoussan, B. E. 2007. Business and competitive analysis.
Effective application of new and classic methods. FT press, New Jersey.
Fleisher, C.S., Wright, S. & Tindale, R. 2007. Bibliography and assessment of key
competitive intelligence scholarship: part 4 (20032006), Journal of Competitive
Intelligence and Management, vol. 4, No. 1, pp. 3292.
Pirttimki, v. 2007. Business Intelligence as a Managerial Tool in Large Finnish
Companies. TUT publication 646, Tampere University of Technology, Tampere.
Vuori, v. 2011. Social media changing the competitive intelligence process:
Elicitation of employees knowledge. TUT publication 1001, Tampere University
of Technology, Tampere.


There are a multitude of different definitions of knowledge management.

According to the narrow definition, the phrase simply refers to making
tacit knowledge visible and managing it. The broad definition equates
knowledge management with actual information and knowledge
management. Our definition in this chapter lies between these two
The ambiguity of these definitions is partly due to language
differences: the English phrase knowledge management can be
translated into Finnish in several different ways, all of which have
different meanings. The problem not only lies with the whole phrase
knowledge management; there is also ambiguity with the word
knowledge itself. In Finnish, the word tieto means knowledge as well
as data and information. In the end, there is no one way to describe
these ideas.
Several definitions of knowledge management have been
proposed in the Finnish IKM literature. In some definitions, knowledge
management aims to manage information, know-how, expertise, and
communications in a wise, meaningful, and goal-oriented way. In others,
the goal of knowledge management is the transferal of information and
experience from where it was previously used to somewhere where it can
be considered new, thus giving value to the end-point of the process. We
can say that knowledge management means efficiently reusing old
knowledge resources, which implies that knowledge management means
managing a system, and especially its intangible assets.
Discussions about the definitions of knowledge management in
the Finnish IKM literature have clearly decreased since the early twenty-
first century, when the concept was first discussed in the Finnish
literature. Instead, recent discussions have revolved around certain
sections of knowledge management, and their practical applications. For
example, authors have discussed the best ways to support innovation
processes in order to create new knowledge, and how to overcome

barriers of knowledge-sharing in order to enable teamwork. This is a
highly valuable direction because in the end, the value of knowledge
management lies in its applications.
Discussions of definitions have also decreased in the international
literature since the end of the twentieth century, when the Japanese
researchers Ikujiro Nonaka and Hirotaka Takeuchi presented perhaps the
best-known description of knowledge management. According to them,
knowledge management can be broadly defined as an organisational
process where knowledge is transformed and refined; its goal is to
maximise the performance of the organisation by creating, sharing, and
adding knowledge and experiences
from internal and external sources. In
order to perform efficiently,
knowledge management needs a good
The value of
organisational and IT infrastructure.
In this process, the external knowledge typically
environment and its internal increases when it is
used or applied
functions enable an organisation to
create new, innovative combinations
from old, existing knowledge.
In this book, knowledge management is seen as a part of a
broader concept of information and knowledge management, with a focus
on increasing the performance of the organisation by the extensive use of
knowledge. To achieve this goal, the organisation must efficiently share
and transfer knowledge, apply existing knowledge, and create new
knowledge. Knowledge management is a philosophical premise and an
approach, as well as a versatile set of actions where knowledge is applied,
supported, and managed.


It is important to understand the deceptively simple idea that the value of

knowledge typically increases when it is used or applied; the value
seldom decreases with use, as is the case with many other business or
industrial resources. There are exceptions, though. With business
intelligence, information gathered for an organisation should be

protected from competitors, as major investments may have been made
to acquire such information. Knowledge that generates competitive
advantage for the organisation itself should not be given away without
compensation. Inside the organisation itself, knowledge canand
shouldbe shared so that it can be refined and made more valuable.
Of the many different levels of information, knowledge, in
particular, is hard to manage due to its intangibility. It is often invisible, it
cannot be touched, and it is hard to measure. There is no way to know
who has it and who possesses certain know-how. Knowledge is human by
nature, and the fact that it is specific to individuals makes its management
significantly more challenging than with lower levels of knowledge such
as data or information.
The challenges that most organisations encounter are usually not
about lack of knowledge, but rather the lack of recognising relevant
knowledge for a given situation. In other words, organisations are unable
to apply their existing knowledge. Another problem they face is if
employees do not have a clear vision of the information the organisation
owns, they cannot exploit it in their own work. One possible problem is
the lack of support from management, as managers may not understand
the value and importance of knowledge and could unknowingly cultivate
the wrong kind of organisational culture as a result. Sometimes
knowledge, and especially its selling, is used as a tool of power, which also
leads to negative organisational culture.
The many barriers to the effective exploitation of organisational
knowledge can be overcome with knowledge management. Most of these
challenges have existed for a long time, but the proper application of
knowledge is complicated by the exponential increase in the amount of
information that companies face and the increasing complexity of
technological solutions, as well as globalisation and networking business.
The development of an information society further increases the
importance of knowledge. This development also has its downsides. For
example, advanced information systems and telecommunications enable
ever more efficient reporting and supervision, which can easily lead to
situations where information is gathered in vain: only for the reports and
for the benefit of supervisors. Gathering useless information takes time,
and in the long run it decreases the motivation of experts to work with it.

Preventing the gathering of useless information is one of the foremost
challenges in IKM today.
To summarise, useless knowledge should not be gathered or
shared, but important knowledge should be shared as efficiently as
possible. One of the biggest challenges of knowledge management in
recent years has been the sharing of information. For various reasons,
knowledge is not shared efficiently enough in organisations. The barriers
of knowledge-sharing may be categorised into three different levels:
individual barriers, organisational barriers, and technological barriers.
Individual barriers include, for example, lack of time or trust.
Organisational barriers may include competitiveness between teams or
units and lack of knowledge-sharing practises in the organisational
infrastructure. Technological barriers could include lack of time to learn
new technologies, or failed communications about the possibilities that
new technologies offer.
In practise, barriers come in a variety of shapes and sizes, and
different levels of barriers are usually tied together: all of which makes it
hard to see where they differ. The point of the classification is to
demonstrate how some of the barriers to knowledge flows are limited to
the individual level, and some to the organisational or technological level.


It has long been recognised that support from management has

considerable influence on the success of knowledge management. The
need for management at both the strategic and operative levels is not
disputed: managers are necessary. Different studies have also argued that
people have a need to be ledeven experts in the field of knowledge
work, and even though they often
have the need for a certain level of
autonomy. Particularly in expert
work, various studies in the Managerial support
literature highlight the role of affects the success of
managers as directors, visionaries, knowledge management
and strategic planners. Clear
direction and goals motivate

experts in their work, even if there are deficiencies in certain other
knowledge management functions within the organisation.
One premise of knowledge management is leadership,
management, and the setting of goals. When starting the process of
knowledge management, the first important mission for such
management is the knowledge management strategy. The contents of this
strategy will be significantly affected by the type of organisation under
consideration. For example, expert organisations and traditional
industrial organisations often have different knowledge needs and
differing practises. Planning a knowledge management strategy in an
expert organisation, where one of the central goals is the creation of new
knowledge and solutions, is done differently than in an industrial
organisation, where one of the main goals is to make products as
efficiently as possible. One approach that is often used to take different
types of organisations into account is to separate the knowledge
management strategy into personifying strategies and codifying strategies.
At the core of a personifying strategy is personal knowledge and the
spread and application of knowledge. The core of a codifying strategy, on
the other hand, is efficient information systems, where information can be
deposited and where it can be efficiently retrieved. The main idea of a
codifying strategy is the accurate codification and storage of information
so that it can be easily retrieved when needed.
Choosing the right kind of strategy can be useful for
understanding the differences between different organisations.
Furthermore, different approaches to knowledge management must
consider both the technical and human approaches. The relationships
between these approaches are shown in Figure 12 (below).
With both the technical and human approaches, the premise of a
knowledge strategy is to manage knowledge in the different phases of its
life-cycle. The difference between technical and human approaches is that
the technical approach emphasises information systems and different
knowledge management systems. Exploiting the information systems and
storing the knowledge in technical systems requires that the knowledge
be explicated and codified; thus the technical approach suits an
organisation that is using a codifying strategy. The human-centred
approach, on the other hand, suits an organisation that is following a
personifying strategy: one whose focus is individual knowledge and
sharing and its application, especially in human interactions. In this
approach, the organisation can be seen as a learning organisation, where
interaction between individuals is supported and emphasised.

Figure 12: Knowledge management strategic approaches (adapted from Maier


Thus it is important to know if an organisation wants to invest in a

personifying strategy/human approach or a codifying strategy/technical
approach, where the focus is on making knowledge explicit. An
organisations knowledge management strategy should cover both
approaches, despite their different emphases: the final strategy should be
a combination of the two. The starting point for choosing the emphasis of
a strategy should be the goal of the organisation. Naturally, the goal and
the strategy chosen will affect operative processes. For example, in an
organisation that wants to produce unique solutions for customers, the
emphasis should be on the personifying strategy. In this case, it would be
most relevant to plan knowledge management practises that would
enable human-to-human interaction so that the learning and creation of
new knowledge will be possible. Of course, even in this case the technical
approach should be taken into account; for example, the question of how
to get individuals to cooperate while using different technical tools could

be addressed. The development and proliferation of social media tools is
constantly opening new doors in this field.
Making knowledge expliciti.e. transforming tacit knowledge
into explicit knowledgeis also central in the SECI model (Socialisation
ExternalisationCombinationInternalisation) developed by Nonaka and
Takeuchi (Figure 13).

Figure 13: The SECI model (adapted from Nonaka & Takeuchi 1995)

The SECI model visualises the transformation of tacit knowledge into

explicit knowledge and back to tacit knowledge in four different phases.
The phases follow each other and form a spiral of information, where
knowledge is increased as the spiral continues. In the socialisation phase,
tacit knowledge is transmitted from one individual to another in social
interactions. For example, in the masterapprentice system, the
apprentice learns skills from the master through socialisation. In the next
phase, externalisation, tacit knowledge is transformed into explicit
knowledge by using different models and concepts. In this phase,
knowledge is transformed into a form that can also be used and
comprehended by others. This phase can also be seen as a basis for the
creation of new knowledge. In the combination phase, explicit knowledge
is assembled into broader sets; in this case we can think about concept
systems, where explicit knowledge is combined into earlier, archived
knowledge. The last phase of the model is internalisation, where explicit
knowledge again transforms through understanding into tacit knowledge.
The four phases of the model are repeated continuously, and they add to
an organisations knowledge capital.
The idea of the SECI model is that organisations should harness
their employees tacit knowledge. When personnel are allowed to speak
their thoughts and ideas out loud and in an open manner and can share
their best practises, innovations can be achieved and functions made
more effective. Another principle of the SECI model is the importance of
transferring individuals knowledge into organisational knowledge. Under
the SECI model, when individual employees leave an organisation, at least
a part of their knowledge will stay in the organisation, as it has been
turned into explicit knowledge. Even though some have criticised the SECI
model for being too simple, it does form an important part of the basic
theories of IKM. The model emphasises the importance of knowledge to
the firm, as well as the practises that enable tacit knowledge to be
exploited more effectively.


Organisations can be seen as structures, in which functions are organised

and coordinated in order to achieve set goals. While learning is often
associated with individual learning, it can also be applied at the
organisational level.
In order to better understand organisational learning, we must
first define learning and organisational learning. Psychologists have long
studied learning, and have researched various phenomena through the
idea of learning curves, among other areas. These studies noticed early
on that the time needed for individuals to complete certain tasksas well
as the number of errors they made while doing sodecreased when they
had accumulated experience doing the task. Observers have detected a
similar learning curve phenomenon not only in individual performance
but also at the team and organisational level: even in whole industries.

All learning in organisations is fundamentally based on individual
learning. On the other hand, even if the learning ability of people in an
organisation is the same, there can be major differences in organisational
learning: some teams, organisations, and industries simply learn faster
than others. These learning differences have encouraged further research
on how to positively affect organisational learning, and how learning can
affect firms success. While organisations can only learn through
individual learning and individual learning experiences, organisations can
affect how learning is enabled in the environment, and which problems
are considered to be solvable and what kinds of solutions can be created
to solve them.


Learning typically influences organisations in the same way that it

influences individuals. As organisations learn, they make fewer mistakes,
use less time for tasks, and perform the tasks more efficiently and with
higher quality. In the end, organisations can react more quickly to
changes in the environment and situations at the organisational level.
Learning also means that the organisation will be able to absorb new
knowledge more quickly and efficiently. The difference between
individual and organisational learning is that an organisation can be
considered to have learned when knowledge and know-how do not
disappear from the organisation even if an individual leaves.
If an organisations business environment were stable and
predictable, the significance of learning would be very small. But many
industries have very dynamic and hard-to-predict business
environments; this is why organisational learning ability may have a
tremendous effect on long-term
Organisational learning has Developing technology
been studied in psychology, changes the way people
sociology, industrial management, communicate and
cultural anthropology, and transfer knowledge. This
management sciences, just to name a has an effect on
few. These scientific fields have organisational learning.
approached the topic from very

different directions, which is a hint that organisational learning is not a
very consistent area. From organisations business perspective, for
example, it is important to study how organisations gather and save
existing business-related information, how organisations knowledge is
adopted and disseminated among everyone who can use it, and how
organisations learn from other organisations. It is also important to
clarify the way to learn from mistakes and failures, how knowledge
learned during projects can be harnessed by the organisation as a whole,
and how organisations efficiently harness tacit knowledge and create new
An especially interesting and topical field within organisational
learning is how ICT can be used to intensify organisational learning. When
talking about learning in routine situations, such as orientation for new
tasks, e-learning offers new and cost-effective ways to develop
employees know-how and learning. Routine decision-making, on the
other hand, can exploit different artificial intelligence and expert systems,
which will enable experts to transfer and exploit their expertise via
computers. When talking about non-routine and non-repetitive decision-
making (and learning from it), decision support systems and group
support systems offer a means to intensify learning. Different simulation-
based systems, such as business games and computer-assisted virtual
prototyping, support experimental learning and offer a means for
management and R&D departments to learn, for example, forecasting and
visualising scenarios. With these tools, it is possible to build simulations
and sensitivity analyses based on the real world. Social media also offer
interesting and topical possibilities for computer-assisted learning: in
Finland, many companiesfor example Valio, Silja Line, and the building
company YIThave established communities where customers can learn
from each other, which is called peer-learning. YIT customers, for
example, can obtain information about different building and decorating
solutions, while YIT learns about its customers needs.

Further Reading
Argyris, C. & Schn, D. 1978. Organizational Learning: A Theory of Action
Approach. Addison-Wesley, Reading, MA.
Hansen, M.T., Nohria, N. & Tierney, T. 1999. Whats your strategy for Managing
knowledge? Harvard Business Review, March-April, 1999, pp. 106116.
Maier, R. 2010. Knowledge Management Systems. 3rd ed. Springer-Verlag, Berlin.
Marchand, D. A. & Davenport, T. H. (Eds.). 2000. Mastering Information
Management. Prentice Hall, London.
Nonaka, I. & Konno, N. 1998. The concept of Ba: Building a foundation for
knowledge creation, California Management Review, vol. 40, No. 3, spring, pp.
Nonaka, I. & Takeuchi, H. 1995. The knowledge-creating company: How Japanese
companies create the dynamics of Innovation. Oxford University press, New York.
Riege, A. 2005. Three-dozen knowledge-sharing barriers managers must
consider, Journal of Knowledge Management, vol. 9, No. 3, pp. 1835.
Sthle, P. & Grnroos, M. 1999. Knowledge Management. WSOY, Porvoo.

Earlier chapters of this book emphasised the role of knowledge in
organisations and society. Data, information, and knowledge cannot,
however, be applied and shared if it is only in oral form. In these
situations, the management and development of organisational functions
is also difficult. Organisations have introduced different information
systems to ease the gathering, storing, sharing, and applying of
One example of the role of information systems that we can
examine is the Choo model (Figure 4 on page 19) perspective. In order to
satisfy the knowledge needs created by an organisations functions,
information systems gather many kinds of information from different
processes. The information that is gathered is often data, which is stored
in different databases and data warehouses. (The first refers to data
storage places, while the latter refer to repositories that offer a somewhat
more organised view of the mass of data.) Data is distributed to different
applications and systems, which transform it into information and
knowledge, either by automatically combining information from different
sources or by facilitating users own insights into the knowledge by
offering graphs and similar visual elements. Users of these systems often
exploit these results by their own actions, which causes different new
inputs for the systems and the process model starts again from the
beginning. It must be noted, though, that the phases of the model overlap
and take place simultaneously throughout the organisation.
Therefore the role of information systems is significant for
organisations functions. Knowledge is not accumulated and distributed
easily if the systems do not support its accumulation and distribution,
either directly via negotiation systems to support personal
communication, or indirectly via the use of expert registries so that the
person that possesses certain kind of knowledge can be located by
colleagues across the organisation. In addition, business intelligence is
hard to exploit if the gathered data is incomplete or erroneous or if it is
presented in an unconventional way. All in all, IKM becomes more difficult

if the organisations intellectual capital is not accumulated and
In this chapter, we take a look at information systems and their
applications in organisations, as well as the units that are responsible for
information systems, information management, and the possibilities that
new technologies offer in linking people together.


Information technology plays different roles in companies, and work in

general. While information managers, marketing experts, and production
engineers all have different needs, they all use information technology as
a tool. The roles that IT plays in an organisation can be roughly separated
into three categories:

IT in a supportive role
IT in an enabling role
IT as the focus of operations

Organisations have traditionally used information systems in supporting

activities. One example of an IT-exploiting organisation is a machine
works company. Even though its operation is technically possible without
developed information systems, production control systems are often
used for production planning and work supervision; payroll is calculated
with the use of software; and sales managers communicate with clients
via e-mail.
IT can also be used as an
enabler of an organisations
operations, as is the case in IT and information
information-creating and applying systems can support
organisations. For example, operations, enable
accounting companies can be operations, or be the goal
considered part of this group, as of operations in a
their operations typically are only company
possible with IT (even if it is

theoretically possible to keep accounts manually).
IT, with its many possibilities, can also comprise an organisations
operation in itself, as is the case with software companies. In these
companies, employees daily work is done solely with IT. The tool for
doing work is IT, as is its end result: even if the company that ordered the
software is the aforementioned machine works company. It is important
to note, though, that the software industry is not the only one where IT is
a target of operations: the same is true for the telecommunications
industry, the computer hardware industry, and the knowledge products
industry. As these examples demonstrate, the boundaries of the roles of
IT are not always clear.
The organisations mentioned above each follow their own
strategy, and apply IT in their functions accordingly. The strategy they use
defines the tools, which is why no two of organisations are exactly the
same, and why there are no exact organisational IT solutions. Some years
ago, the tools that an organisation chose could even affect its
competitiveness; once IT became more common, however, its expense
meant that it was not necessarily widely available. Today, basic
infrastructuresuch as computers, basic software, and
telecommunicationsis available virtually everywhere and at a
reasonable cost. While basic infrastructure is not in itself an investment, it
does holds instrumental value. In 2003, a laptop might have cost 3,000;
by 2015 that same tool could be obtained for 1,000 or less. Technical
development has been a tremendous boon for organisations: component
prices have fallen, and new technologies have entered the market.
Along with basic infrastructure, organisations often have some IT
solutions that maintain and support its core functions. IT solutions come
in many varieties, including general solutions and industry-specific
packages. In the days when technology was less developed than it is
today, software was typically operation-specific. By this we mean that, for
example, the production department used a production system, from
whence information was transferred (via paper) to the marketing
department, which then used its own software. Operation-specific
software copies information and often presumes overlapping work in, for
example, information storage. Technical development strives to remove

overlapping work by integrating different functions into a single
information system, so that information can more easily flow from one
business function to another. This kind of operations management system
can, ideally, cover all of the functions of an organisation.
The defining characteristics of operations management systems
are the size that they can handle and the types of burdens that they can
handle. When examining this kind of holistic software, we must consider
its objectives: support for all of the functions of the organisation. As such,
information systems are always broad and complex. This, on the other
hand, increases investing, maintenance, and renewal costs, and makes it
more difficult to change the system or the processes that are included.
The ability to easily change information systems or processes
requires system modularity. This means that customer organisations
choose the components, or modules, they need from a catalogue offered
by the producer. Most operations management systems have a core part
that is used to manage the business, as well as business process features
and users. With this type of management module, simplified views can be
created for individual users to support their work. This is called the
experts workspace for the system and its resources. In this case, every
employee only gets a view of that part of the system he or she needs. With
this type of modularity, resources (and the complex system as a whole)
can be managed based on needs and cost-effectiveness while at the same
time minimising security risks.
It is important to remember that in IKM, information systems only
have instrumental value. In other words, they are only a tool that is used
to achieve a certain goal. For practical reasons, IT is managed by its own
unit in many organisationsnamely, information managementwhose
objectives and responsibilities can change on a case-by-case basis from
development and management to simple IT support. What role
information management should play in an organisation is a strategic-
level decision. The top-level managers of an organisation should clarify
their vision so that the IT architecture, processes, and organisational units
will form a functioning entity. For example, management could require
that certain software should be used in the interactions between two
organisations, thus saving resources.

We will next turn to information management and the use of IT in



Today, all organisations and their operations depend on properly

functioning information systems. For example, managers require
summarised information about expenditures and revenues, stock levels,
competitors, and customers; the sales team needs information about
individual clients; the production team needs information about raw
materials stock and assembly; and so on. In addition, individual
employees need tools to complete their tasks. Without information
systems, products would be left unproduced, patients untreated, clients
unbilled, and plans undone.
Different needs and functions set the expectations and
requirements for different information systems. A finance management
system has to provide the correct numbers when making financial
statements, health centres must be able to input treatment information to
a patient management system (which must be retrievable when needed),
and a structure designer must be able to plan a pipeline. The job of
information management is to support these and numerous other
organisational and individual needs. We can summarise by stating that
businesses set requirements and provide directions for information
Then again, information systems enable new kinds of approaches.
Social media enables marketing and customer contact differently from
before; online warehouse applications inform customers, as well as
sellers, of stock in real-time; and business intelligence systems produce
information to support decision-making from large masses of data. Video
conference systems decrease the need for travel, supply chain
managementoptimising systems speed the flow of goods, and operations
management systems offer a real-time picture of an organisations

As organisations operations today are almost without exception
based on information systems, a large mass of data accumulates from
their operations. Data flow mostly has to travel between processes and
information systems; it can also be stored in data warehouses for further
analysis. Usually, when making reports (or more complex analyses),
information is gathered from these data warehouses. The most essential
information about an organisations operations is stored, which is one
significant source of information for business intelligence.
The relationship between business and information systems can
be visualised in Figure 14. The job of information management is to
understand business needs and hopes, offer and maintain different
information systems, enable new approaches, and strive to match the
present and future needs of the business and the support that is given to
them by information systems.

Figure 14: The relationship between business and information systems

The business-IT alignment is not a simple one. Business needs and

requirements can be numerous and contradictory. Future needs can
seldom be predicted, and different user groups cannot be served
satisfactory, which is why the arrows in Figure 14 pointing from business
directing and enabling are not completely unidirectional. In addition, the
work of information managementoffering and administrating
information systemsis complicated; systems vary by nature and age
and the increasing connections between them. Compatibility problems
can be created from any of the elements in the figure.
An organisations business is often separated into different
functions: the production department produces, sales sells, finances
manages finance, HR takes care of HR, and management manages. The job
of information management is to offer support to all of these silos, their
differing needs, and the interactions between them. This means that
information management has an excellent view of the whole organisation:
its finances, operations, products, development, and management. When
it succeeds, information management combines different silos and
delivers the right information to those who need it. When it fails,
however, the whole organisation suffers.



A process is a set of linked functions and the resources required to

execute them. They are supported by different information systems.
While working, people use different systems, input data, and query
information. There are hundreds of different processes, as well as
different information systems. Information systems are integrated with
each other to guarantee the steady flow of information and data. Even if
there is only one information system for one process, it should ideally be
linked to other systems. These integrated information systems form an
information systems architecture, where the relationships and flows
between systems are described.
One information system can support several processes. For
example, a student portal, where students can examine courses offered
and plan their studies, can also be used as a teaching planning system,
where teachers and study coordinators can manage study programmes
and examinations. Thus the same technical information system offers
information about offered (and planned) courses and exams for students
and teachers for different processes (e.g. the course passing process or

the course planning process) and user groups. In addition, the system can
be integrated with an interface or connection to house reservation
services and study records. They also have their own APIs (Application
programming interfaces), UIs (user interfaces), and user groups, as they
are used for other things too.
In a similar manner, an organisations operations management
systementerprise resource planning (ERP) or enterprise systems
(ESs)is integrated with other systems. Operations management
systems support a firms production process, and the support can be
executed in many different ways. Sometimes the focus could be on factory
production, while at other times the focus could be on resource
management. Operations management systems, which are integrated
with other systems, can be used to support finances, logistics, supply
chain management, warehouse management, and HR, among other areas.
In addition, it can be joined with different reporting and analysis tools
and systems.
Even while information systems support different business
processes in different ways, together they form a solid system of
systems. In this large system, one information system comprises one
node in the information system architecture. The whole that is formed by
the architecture is often named enterprise architecture, which consists
of the aforementioned systems, information architecture (formed by data
and information), and technology architecture (formed by routers). In the
development and analysis of enterprise architecture, the focus should be
on the relationships between different architectures, rather than on
individual processes or systems. In this way, information systems can
return the maximum value for the business processes in the long run.


The objective of information

management is to produce the
information services required by the
organisation. In principle, this is very
simple: information management The information
provides a computer and software to management function
the user, and the user uses the acquired provides the tools; the
business functions are
responsible for the 64
information that is
handled with the tools
software. In practise, however, it is different: users often have unclear
needs, and satisfying them with complex technology in a cost-effective
and sensible way can be very difficult.
The rapid development and complexity of technology are the main
sources of trouble for information management. New applications and
devices are constantly developed to support a plethora of operations.
Following and assessing the development and expediency of technology
requires a deep understanding of the underlying technologies and
supported actions. Simply following the technology or making
comparisons with other organisations is not enough to guarantee
successful information management service. Along with the attributes of
the technology that is used, one has to understand organisational
approaches and processes, as well as the skills of individual users. Hence,
information management must have a deep and broad understanding of
technologies and organisational culture.
An information system users needs, wishes, skills, experiences,
and expectations vary. Information management must be able to deliver
the appropriate devices and software to structural engineers,
programmers, financial experts, and secretaries, all of whom have
different needs. People who work in different operations will also have
very different educational backgrounds, experiences, and skills in using
the systems. The objective of information management is thus to have a
deep understand of the needs of different user groups, and to provide
them with appropriate support and training.
The separation of different business units also means that the
information and data held by an organisation are separated. For example,
the sales team may have its own information systems, where one can find
data about clients and transactions, and summarised reports of these are
forwarded regularly. The same information, however, could also be of
value to the production, logistics, and billing departments. Even if an
information exchange between the units is attempted with the support of
operations management systems, the information might not necessarily
be comparable, or it might not flow smoothly. In these cases, the
organisational information resources cannot be exploited in a holistic
manner. The execution of data and information flows requires an

understanding of different architectures, infrastructures, information
types, information system interfaces, and business processes.
An organisation could have approximately 300400 information
systems of different ages. The support of information flows between them
leads them to become tightly entangled with each other. Therefore, the
renewal of one information system often leads to the renewal of another
system (or at least its interface). Information system infrastructure
management is an important part of every system acquisition.
Current information systems and devices may be acquired in
multiple ways: acquisitions can be implemented either completely or
partly independently. Information systems can be ready-to-install
commercial or open source products or product packages that are
purchased; they can be purchased as a service, as with cloud services; or
their execution and customisation can be purchased as a service. These
methods can also be used when obtaining computers, phones, or other
devices. All of these different acquisition methods have their pros and
cons, so information management has to assess which is the appropriate
method for any given situation. After this step, the acquisition systems
and other technologies must be fit to be a part of other IT environments
to ensure that the information can flow between units. In addition, the
users must be trained to work with the new system.
Understanding the needs of different users and businesses
requires close cooperation with different stakeholders; this is especially
true in information management leadership. How does information
management get all of the information it needs, and how does information
management affect business needs and approaches? Interpreting
business needs and offering users the possibilities of IT requires close
cooperation between the operative and managerial levels of an
organisation. An information management leader should be part of the
highest management, so that he or she knows enough about the
operations of the organisation and can predict its future needs and thus
affect the exploitation of new technologies.

Figure 15: The fields of the information management function

Figure 15 presents the fields of information management in an

organisation. The objective of information management is to understand
different user groups, to offer them different technologies, and to support
the use of these technologies. In addition, information management aims
to offer new ways of exploiting IT to top management.


As mentioned above, Figure 15 covers the different fields of information

management. The function itself cannot be organised purely based on
these fields, as the function is used in several of an organisations fields.
These can include business interfaces and their understanding, IT
investments, approach design, and IT leadership. Next, some of these
fields will be examined more closely.
The information management function and its leadership is a
combination of different business operations that cover strategic and

operative management and their different fields, starting from general
management and design and moving on to cost and investment
management and HR management. In addition, information management
has different fields of its own. These include information security
management, IT-centred project management, governance specifications,
and architectures responsibility. As a whole, the information management
function can be said to cover four fields:

Understanding business
Managing IT investments
Operative actions required by information systems

By understanding business, information management strives to (in

accordance with Figure 15) both support business units current tasks
and to offer new business possibilities. In other words, by understanding
business, information management attempts to develop and offer
different services that will create real value for users. This is not easy, as
services often cannot be accurately defined; users needs are often
revealed only after acquiring their experiences. In addition, new
information system services change their usage processes, as old, rusty
processes should be forgotten and replaced with new ones. This new
services production for user groups requires close cooperation with
In the governance role, information management defines how
different actions can be performed. These could include instructions on
how to create users, the type of information security policy that is in use,
and what kinds of devices are supported and who is responsible for them.
Again, in principle, a simple task is transformed into a complex one due to
different wishes, stubborn users, and different units requirements. The
production of uniform and high-quality services requires a certain level of
standardisation and common rules.
Various observers in recent years have highlighted the
importance of IT investments and the managing of information
management costs. The whole information management function has

often been the victim of an organisations cost-savings campaign;
meanwhile, it is still expected to offer services of the same quality. In
other words, information management in such circumstances must
produce even better services with fewer resources. This has led to a focus
on information systems development and acquisition, and the need for
better architectures management and the outsourcing of functions.
Operative action is the most important of information
managements everyday operations. This ensures that all of the services
are available and that they work correctly and recover quickly from
errors, no matter if the source of error was information management
itself, outsourcing partners, or
other technologies or
processes. If the services
The information offered are adequate and
management function work correctly, information
enables the operation of management can justify its
other functions. This existence, define different
creates costs, but also approaches and enable new
yields returns when business models, and acquire
systems run smoothly. resources required by
investments. Information
management builds its
reputation with successful
operative action. If IT services do not work, information management
leaders have not done their job properly.
The aforementioned four fields of information management are
tasks that intersect with organisational functions. They all have to take
care of users, business processes and goals, costs, information security,
confirmations, and risks, in addition to other functions. Today, successful
information management is a highly integrated part of an organisations
operations. Information management represents cooperative action
between many actors.


Technology is constantly changing. New technologies enable new models
and shapes of business. As examples of late technological leaps, we could
mention mobile networks, internet, Web 2.0 technologies, and social
media, which have radically changed the behaviour and possibilities of
people who network and share information with each other. This
networking has significant effects on individuals, organisations, and
society, as well as on information and knowledge management.
Traditionally, in order to build a personal network in work life it
was necessary to be physically in the same space with ones co-workers.
For example, employees contacted each other by going to seminars,
trainings, and trade fairs, and managers connected by participating in
trainings and other non-formal occasions.
Today, new IT has enabled us to gain real-time information from a
network of people and organisations. This real-time flow of information
enables us to participate in events and actions related to the network,
often regardless of time or place. For example, it is now possible to attend
virtual trainings, seminars, and product launches before, during, or after
the event itself. Some companies have replaced traditional product
launches with completely virtual launches, and have achieved significant
business benefits. For example, one of Ciscos recent completely virtual
product launches reached ninety times as many attendees and saved over
four-fifths of the costs of a traditional product launch. New IT allows for
several different ways to spread existing information to those who need
Better organisational skills in networking and information-
sharing have enabled people to find know-how and to exploit it despite
the existence of organisational hierarchies and boundaries. Enhanced
networking inside organisations has led to increased serendipity. For
example, putting an idea out for everybody to see and comment on can
lead to some other person from another team or country finding it and
developing it further. Without networking enabled by ICT, similar links
would not exist, as people are spread across organisations and are often
geographically distant from one another.
Along with the exploitation of existing information, new
technologies offer better possibilities for creating new information and
knowledge. New IT allows for completely new organisational formats,
such as with the Linux operating system. Whereas Windows is owned by
Microsoft and is developed by Microsoft employees, no one owns Linux
and it is developed without superiors or hierarchical organisational
structure. Linux development is based on open source programming;
observers have noted that networking enabled by the internet is more
efficient at organising work in communities than in companies. With
communities, organisations can exploit external information and know-
how (for example from clients and users) in order to create new
information and knowledge.
The focus of information and knowledge management should not
only be centred on management, confirmation, and the sharing of
information. It should not be thought of as an additional function for an
organisation, but rather as work for every single individual. People should
be able to freely choose their own tools and networks, and with whom
they share their information, without the organisations interference.
While the first generation of IKM experts was focussed on enhancing
production and efficiency, the second generation is more focussed on
innovations and better decision-making capabilities.

Further Reading
Grant, K., Hackney, R. & Edgar, D. 2009. Strategic Information Systems
Management. Cengage Learning Business Press, London.
Howe, J. 2008. Crowdsourcing: Why the power of the crowd Is driving the future
of Business. Century.
McNurlin, B.C., Sprague, R.H. & Bui, T. 2009. Information Systems Management in
Practice. 8th ed. prentice Hall, Upper Saddle River, NJ.
Ribiere, V.M. & Tuggle, F.D. 2010. Fostering Innovation with KM 2.0. VINE, vol. 40,
No. 1, pp. 90101.
Surowiecki, J. 2005. The Wisdom of crowds. Anchor.
Turban, E., Mclean, E. & Wetherbe, J. 2001. Information Technology for
Management: Making Connections for Strategic Advantage. 2nd ed. Wiley, New

Information and knowledge management is a high-level concept that
brings together many information-focussed approaches. Intellectual
capital and its management, business intelligence, knowledge
management, and information management are certainly familiar
concepts to most people. The relationships between these concepts and
the discussions in the field, however, are very fragmented. This book
offers one way to structure the discussion on IKM. Every chapter also
offers extra reading, which is an easy way to start familiarising oneself
with the different fields of research. The book itself offers a compact and
broad general picture of what IKM is and why it is (or should be)
practised in every organisation.
In practise, the efficient exploitation of information is more
challenging than meets the eye. Information is intangible, and it is hard to
calculate its value. Information and knowledge management offers tools
and structures to better understand and solve these problems. With an
IKM toolbox, individuals, organisations, and networkseven
ecosystemscan enhance their performance. An even better
understanding of the business environment, faster decision-making
ability, and the constant development of operations are just a few
examples where actions can be made to be more rational.
The starting point of this book is the idea of the central role of
information and its management in developing organisational
performance. A few core messages were highlighted, which we will return
to shortly. Figure 16 (below) visualises these messages, as the role of IKM
changes from a supporting function to an integrated strategy.
The problem with thinking of IKM as a supporting function is that
it is easy to think of it as a separate unit or function. Performance
measures include, for example, the number of reports produced,
discussion events arranged, innovation workshops planned, or
transactions made in information systems. This mind-set can be changed
by acknowledging that the business benefit created by this supporting
function is only realised when the services or products are applied in core
actions. The success of IKM may be assessed in the changes made in a
business. The separation of this supporting action creates significant risk.

Figure 16: Information and knowledge management as part of business

The aforementioned change of mind-set can be described more vividly by

dividing it into two parts. Succeeding with this change in an organisation
is not easy, but it can provide significant benefits. These benefits are
gained when:



The benefits of IKM are revealed when information that is gathered is

used knowingly, for example in decision-making or in producing
successful service experiences for customers. This is why IKM should be
seen throughout the organisations actions. The question is also
concerned with attitude. Rather than leaving IKM to a single function or

individual, it should be seen as a way of operating that encompasses the
whole organisation. Every employee should apply information in
everything he or she does. It is not always about massive data queries or
reading and creating reports: even the smallest everyday realisations are
important if they help to develop actions. Tacit knowledge and the
sharing of experiences between colleagues might trigger new ideas and
could lead to broader implementation of best practises.
IKM is easily perceived as a job for management. Naturally, a
companys executives do play a key role in IKM, but attention should also
be focussed on the smaller operative decisions that are constantly made
at different organisational levels. It must be possible to communicate to
employees why information is gathered, how it is applied, and how these
will contribute to the organisations business goals. This means creating
structures that bring forth and enable the exploitation of information in
decision-making. This makes every single individual an information and
knowledge manager, and requires responsibility from everyone to
develop these activities. This is how value is created from information.


IKM aims to enhance organisational performance; this should be the

foundation of every action. Data warehousing induces work and costs, as
well as the gathering and sharing of data inside and outside the
organisation. If these activities are started, they should serve the
organisations business needs. If gathering knowledge or making an
analysis is not tied to organisational goals, they are not justified. Most
organisations know this, but still information systems are built, market
research is conducted, and different information-sharing events are
organised without a clear view of how these actions will serve the
organisational goals in a broader manner than just for the individual.
Special problems arise since the aforementioned IKM activities
are often implemented in a duplicate manner and without knowledge of
other activities. This can easily lead to a situation explained in this book:
when the different IKM fields are seen as separate functions and they
work in different units; the holistic IKM strategy is missing in such cases.
It is both natural and efficient that the marketing unit takes care of
market research, HR of training employees, and the information

management unit manages information architecture. But someone needs
to take care of the whole. When expanding the examination of IKM to
networks and ecosystems, the specification of roles and a common vision
is even more important.
In conclusion, it is important to remember that information and
knowledge management mostly consists of leading and managing people.
The success of the organisation depends on peoples desire and skill to
maintain their own know-how, share their experiences, and look for new
information to develop. When this happens, information and knowledge
management is engaged as a part of normal management approaches. It is
important to ensure that it does not turn into a separate management
function, which brings its own burdens on employees. The goal should
instead be to remove duplicate work, enable the better management of
the masses of information that organisations produce, and to create a
holistic understanding of the goals and meaning of operations.