Using Knowledge Management Tools to Reduce Risk in Professional Service Engagements

Published in TDAN.com April 2001

Knowledge Management tools — especially those that exist as part of the five Knowledge Management foundation programs — can help identify potential risk factors and unmanaged
assumptions in professional services engagements.


Risk Management and Knowledge Management

Traditional project plans address common sources of risk. This paper provides a mechanism for identifying potential sources of risk that might not be obvious to project planners. It focuses on
unearthing “unmanaged assumptions” about how either the customer or the service provider acquires, structures, stores, or distributes knowledge to those who need it to successfully complete the
project on time and on budget.

Project timelines and budgets are at risk if unwarranted assumptions are made about:

  • Expectations, including unclear expectations, unrealistic expectations, and differing expectations regarding scope changes or change management.
  • Operational issues, including scheduling, data integration, communications within project teams and across the enterprise.
  • Financial issues, including budgeting for adequate levels of documentation.
  • Strategic issues, including a commitment to lessons learned repositories and the availability of previous projects’ notes.


The Importance of Identifying Risk

If potential risk is not identified and analyzed, a project’s outcome cannot be satisfactorily predicted. Ideally, any project would include a risk management component. It would attempt to
identify potential risk events and unmanaged assumptions, analyze potential opportunities and threats, identify the capacity of the customer and the vendor/service provide to mitigate risk, and
develop risk response plans (alternate strategies, corrective actions, contingency planning, procurement of needed resources, contractual agreements).


Why Risk is Often Not Identified

Sometimes, though, only areas of risk directly related to a project’s deliverable (e.g., the technical capacity to develop a particular piece of software) are examined at the start of a project,
while other related areas of the project are ignored. Other times, risk is not identified at all. Reasons include:

  • Disregard for the importance of risk management
  • Cultural/organizational issues
  • Desire for a simple plan
  • Belief that quantifying risks might lead to project cancellation
  • Lack of time or resources
  • Lack of tools.

Knowledge Management offers a toolset that can help identify risk related to the information and knowledge needed to complete the project.


What is Knowledge Management?

One broad definition of Knowledge Management is “a business discipline that focuses on how an enterprise generates, stores, disseminates, and—ultimately—leverages information and
knowledge.”

It seems, however, that every company defines Knowledge Management (KM) differently, depending on the company’s particular needs and goals. They might even think of KM as a discipline that applies
to only a portion of the larger enterprise. For instance, some companies focus on executive information needs or business intelligence, thinking of KM as a way to filter up to the boardroom
targeted information about customers, operations, or competitors. Other companies define KM simply as knowledge bases, intranets, collaboration tools, or document management systems designed to
improve operations or time-to-market. Some groups look at KM in terms of corporate assets — how the discipline can help transfer human-based knowledge into organizational assets. And some
companies look to KM to partner with training, documentation, and other groups to help create a learning organization.

“Success in the marketplace today is directly proportional to the knowledge
that an organization can bring to bear, how fast it can bring the knowledge to
bear, and the rate at which it accumulates knowledge.”
Tom Peters, author, The Pursuit of Wow!
co-author, In Search of Excellence


How Knowledge Management Adds Value

This paper focuses on yet another way Knowledge Management adds value to today’s corporation. It looks at how KM tools and approaches can help manage risk in professional services engagements by
helping to identify potential risk factors and unmanaged assumptions.

In doing so, it will show how a Knowledge Management approach to Risk Management helps answer five questions that are key to assessing the risk inherent in any project:

  1. What do we need to know to complete this project on time and on budget?
  2. Where does this knowledge currently reside?
  3. Where does this knowledge come from?
  4. Where is the knowledge stored?
  5. How are the pieces of data and information that are used to create this knowledge connected?


The Five Knowledge Management Foundation Programs

Whether an organization thinks of Knowledge Management as an enterprise-wide discipline or in more narrow terms, the guiding principals and tools of KM remain the same. They can be thought of as
five foundation programs.

1. Knowledge Audits

Knowledge Audits are methodical examinations and reviews of written and unwritten information assets, including documentation, project notes, training materials, and marketing material, knowledge
bases, and the unrecorded knowledge held by individuals. A Knowledge Audit answers the questions “What do we know?” and “Where does this knowledge reside?”.

2. Knowledge Maps

Knowledge Maps help you find the information assets located during the audit. Knowledge Maps point you to both explicit (codified) information and tacit knowledge (that which is difficult to
quantify and usually resides within individuals). They might appear in many forms, including Yellow Pages that list project members or expertise, intranet pages that contain links to background
documents, Outlook public folders, or flow charts with links to processes for each step. Knowledge Maps — in whatever form — are often the key to finding the information you need
without having to ask another person for assistance.

3. Information repositories

Repositories can store unstructured information (e.g., e-mails in a mail system, slide shows in a LAN-based directory), or structured information (many databases.) Ask: Is information that should
be shared by many stored appropriately? Can you easily search repositories (databases, e-mail systems, LAN-based directories, web servers)? Can you extract information?

4. Data integration programs

Not all data needs to be part of a larger system. But some does. Ask: How is structured data organized across the enterprise? Do databases “talk” to each other? Is information shared or
replicated?

5. Knowledge networks, communities, or practice areas

While information gathering might include electronic means or originate with people, the process of converting information into true knowledge almost always involves people. Who are they? Who do
they interact with inside of the organization as well as outside? How does their shared knowledge flow through the organization?


Suggested Approach to Projects

This paper suggests that a project Knowledge Audit be conducted prior to the setting of project timelines and budgets. The audit should identify the depth and breadth of knowledge — on both
the customer side and the service provider side — required to complete the project. It should assess the presence of, adequacy of, and commitment to Knowledge Maps, information repositories,
data integration, and knowledge networks. The audit should address:


Expectations

Scope change – KM approach discovers: Do written procedures for changing scope exist? Are they followed consistently in other projects?

Change management – KM approach discovers: Do written change management procedures exist? Are they followed consistently in other projects?

Unclear expectations – KM approach discovers: Are expectations clearly stated in other projects? Are they followed consistently in other projects? Is this addressed in lessons learned
repositories?

Unrealistic expectations – KM approach discovers: Are expectations realistic in other projects? Are they followed consistently in other projects? Is this addressed in lessons learned
repositories?


Operational issues

Scheduling – KM approach discovers: Have project timelines been mapped to resource availability? To resources’ expertise? Does this project share resources with other projects? Have
cross-project resource dependencies been addressed?

Data integration – KM approach discovers: Is data integrated? Do written process and data flows exist?

Communication issues – KM approach discovers: Does project plan include communications plan? Do both parties have a history of following such plans? Are project e-mails and other
communications archived? Do lines of communication extend across organizational boundaries? If so, do the boundaries contain communication barriers? Are lines of communication clearly defined? Do
they contain any potential bottlenecks or barriers?


Financial issues

KM approach discovers: Does either party believe they cannot afford to properly document knowledge flow or lines of communication?


Strategic issues

KM approach discovers: What industry groups or individuals were used as resources in planning the project? Are previous project plans available for study? Are lessons learned repositories valued?
Do managers consult best practices repositories? KM approach discovers: Do managers participate in post-project evaluations? Do they contribute to lessons learned repositories? Is this project
vulnerable to hidden agendas or warring vested interests? (Extrapolate from other information)


Expected results

If a Knowledge Audit is performed at the start of the engagement, knowledge-based assumptions should be identified and tested, so that unmanageable assumptions can be converted to manageable risks.
Two by-products of this process warrant note: The project proposal — especially if the Knowledge Audit is performed during the bidding process and if it addresses issues not identified by
competitors — can give your group a competitive edge, demonstrating your organization’s thoroughness, attention to detail, and commitment to realistic budgets and schedules. Additionally, a
knowledge audit will probably identify opportunities for add-on projects or follow-up work.

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About Gwen Thomas

Gwen Thomas is Founder and President of The Data Governance Institute, which provides consulting, executive mentoring, training, program development, and information services, including the web’s largest Data Governance resource, at www.DataGovernance.com and the Data Governance & Stewardship Community of Practice, at www.DataStewardship.com. Gwen has personally assisted many large, mid-sized, and small organizations with their data strategies, data governance and stewardship programs, master data strategies, and other information practices. Gwen is a frequent presenter at industry data events and contributor to IT and business publications. She is also author of the book Alpha Males and Data Disasters: The Case for Data Governance.

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