Modern Knowledge Management System

Imagine a system that combines a software application used for performing some task, a knowledge management system that contains machine interpretable knowledge related to performing that task, and a reasoner which understands how to interact with the knowledge base within the knowledge management system, the software application, and the human user of that software system. That is basically a knowledge based system.

A knowledge management system (KMS) is a platform that facilitates the capture, storage, organization, sharing, and application of knowledge within an organization, enhancing decision-making and operational efficiency. Knowledge management systems tend to be systems that humans interact with, not software applications.

Modern knowledge management systems should be integrated with software applications and the work they perform, not stand alone databases.

Knowledge has immense value and obvious worth within a specific context.

Data is just raw material.  Data is not "self aware" and therefore only has local context.  Information is self aware and has global context.  Peter Drucker describes information as “data endowed with relevance and purpose.” 

Knowledge is the most precious kind of information and consists not just of simple analysis, but of crucial insights that combine information with context. 

Professional services firms and consulting firms more than most organizations derive revenues from their people's knowledge, skills, and experience.

Accountants, auditors, and analysts and the professional services firms and consultancies they work for capture knowledge about best practices approaches to performing a task or completing a process and share that information across the organization which can sharpen that organization's competitive advantage.

Imagine a professional services firm or consultancy with employees in the United States, in Ireland, and in India where wage rates are dramatically different.  Imagine being able to move professional knowledge to any employee in any of those locations.

Also, knowledge is not a fixed commodity.  If an experienced, skilled accountant, auditor, or analyst leaves your organization to join a rival organization, that employee's knowledge leaves with that employee. These days employees move around a lot and capturing and sharing knowledge has become an enormous challenge.

While knowledge management can be expensive; not managing an organization's institutional knowledge is even more expensive.  What is the opportunity loss of not managing and institutionalizing knowledge?

Professional services firms and consulting firms have developed knowledge management systems to summarize what their consultants know, capture and transfer information about best practices, and distribute that information across their organization. But these systems tend to be about reading information about who has what skills and experience, not actually the performance of tasks and processes using best practices.

Digital information is inexpensive to transfer.  Digital knowledge is a lot like software code.  Digital knowledge, like digital software code, can be written once and used many times.

But transferring digital knowledge in the form of a proprietary digital document as strings of test is very, very different from transferring digital knowledge in the form of a global open industry standard which is a machine interpretable knowledge graph or model based and is semantic or meaning oriented in nature.

The most forward thinking professional services firms and consulting firms will treat much of their accounting, auditing, and analysis knowledge as machine interpretable artifacts.  These organizations do not see knowledge transfer as a one time act; but rather as a process in which best practices are constantly and continuously being adapted, refined, and adjusted to a changing environment in which they operate.  In addition, these organizations will replicate their business models and best practices digitally to make distribution of this knowledge an important part of the way they operate their business down to the smallest detail.  Think about this in terms of how you can go to any McDonalds anywhere in the world and get your fries the same at any location.  Imagine professional service firms and consulting firms being able to distribute their products of accounting, auditing, and analysis in a similar manner.

Think of accounting, auditing, and analysis artifacts existing as canonical best practice based templates that an accountant, auditor, or analyst can pick up, reconfigure, extend, enhance, and otherwise augment within specified boundaries, policies, and best practices.

A template is an artifact that was constructed using an existing best practices based approach that offers some hints about what makes it successful. A template contains kernels of knowledge which helps someone succeed in performing some task. A template enables the effective transfer of best practices based approaches at scale.

When best practice does not transfer, a gap develops between what an organization knows and what is actually put to use when delivering its products.  Templates enable the creation of effective processes that follow best practices at scale.

Sure, though knowledge in an organization can reside within the minds of individuals, knowledge also exists as part of the organization in the form of information such as who knows what and know-how such as how to properly organize an audit bundle. This suggests that even though individual employee's may leave an organization, the organization will still have a body of knowledge, institutional knowledge, contained in its operating principles, which allows the organization's work to continue with little disruption. But that explicit, implied, and tacit knowledge still (a) needs to be maintained and (b) integrated with software applications which can leverage that knowledge in the performance of tasks and processes; not simply sit in a knowledge base for employees to read.

Yes, an organization's knowledge is also embedded in  the organization's principles. But an organization must also have these operating principles integrated with software applications to effectively integrate new employees into their work processes.

The transfer of capabilities is influenced by the degree to which those capabilities may be codified and taught; but also to what extent they are integrated with software applications and the artificial intelligence which drives the applications and the employees using that software in the performance of tasks and processes as they perform their work.

How easily can an accountant, auditor, or analyst transfer their best practices?  Accountants, auditors, and analysts that are best at documenting this knowledge in digital machine interpretable form will be good at transferring important knowledge. Knowledge is a source of advantage. If you know how to do something that someone else does not know how to do; then you have an advantage. Documenting knowledge digitally such that it can be transferred is knowledge.

Additional Information:

• Productivity Boost for Accounting and Audit
• Knowledge
• Thinking Beyond the Document
• Standards Make Markets