The US and European countries are facing a shortage of highly trained and specialized professionals in various knowledge-intensive high-skill sectors. And, the problem is only expected to worsen.
During the last decade, an increasing number of North American and European companies have successfully outsourced select Business Process Operations, allowing them to save on capital and operational expenses. This success in cost reduction, while improving quality has encouraged many firms to start off-shoring their high-end knowledge work.
However, as companies evolve, not only do their IT strategies change but their business processes also evolve in the quest for operational excellence. Such companies will look for vendors who provide an integrated outsourcing model specific to a particular domain to achieve continuous improvements. It is in this area, that Knowledge Process Management (KPM) will play a critical role. Knowledge Process Management (KPM) is a structured set of knowledge, related to the organizational experience in a given domain or set of domains.
What Is KPO?
Knowledge Process Outsourcing (KPO) is the trend of off shoring high-end knowledge intensive business processes to low wage destinations that require significant domain expertise. The central theme of KPO is to create value for the client by providing business expertise.
What Is KPM?
Information Week describes Knowledge Management as "the process of capturing a company’scollective expertise wherever it resides—in databases, on paper, or in people’s heads—and distributing it to wherever it can help produce the biggest payoff."
The KPM Framework takes into account theSocio-Cultural and Organizational ComponentsTechnology,KnowledgeCreation/AcquisitionDistributionApplicationOrganization/Storage
KPM focuses on building strengths in specialized domains such as pharmaceuticals, biotechnology, finance, engineering design, etc.
KPM builds on KPO, taking process management a step further. KPM offers the client a completely integrated solution by using specialized domain expertise.
What Does KPM Offer Beyond KPO
Domain Experts—Companies are realizing the importance of having specialized professionals such as accountants, scientists, economists etc., spanning various verticals, to ensure continued quality enhancements. Technologies such as databases, can store all the data imaginable, but they cannot store the logic and analytics needed to make sense of that data.
Identification of Knowledge Gaps—KPM companies utilize domain experts across multiple verticals, which allow them to identify pain areas within their specialized industry, through constant interaction with customers and industry experts.
Knowledge Repository—KPM organizations possess domain experts who build libraries containing information of present and past projects relating to that area of specialization. This enables clients to access a rich repository of knowledge that would take years to build.
Centralized Place for all Project Data—Companies cannot treat project management as isolated, linear plans. Underestimating the importance of collaboration among all resources, a centralized project management information site and integrated project components can result in staggering budget overruns. KPM offers a single business management solution in one centralized place for all project data.
Retention and Reusability of Knowledge—Since all knowledge is retained in a repository, clients find it easier to work with a KPM partner when looking for a customized solution or when implementing an internal solution.
Continuous Improvement—KPO involves delegating a specific high-end process or task to a third party. However, with a KPM partner, the domain experts close the loop between the client and the vendor by providing recommendations for improvement, identifying debilitating bugs, providing ideas on architectural improvements, as well as helping the client foresee future needs, thus allowing the company to maintain a competitive edge.
Knowledge Assets—Intangibles such as cross-platform vertical exposure and industry standard quality paradigms, such as Six Sigma, are indispensable if a company is to maintain its competitive advantage. A central repository of data is useless unless people utilize and access the information. Even then, the static data loses its relevance unless the right people update and add to the existing knowledge base.
Supply Chain Management—Domain expertise is the differentiating factor in solving supply-chain problems because one needs to understand industry-specific business processes and practices. Organizations want solutions to address their business problems and they want the people who walk in the door to know their business.
Knowledge Transfer and Process Diversification—KPM enables an organization to align the right people with the right job, at the right time, at a fraction of a cost.Identify gaps and domain knowledge needs.
Library repository-Acquire domain knowledgeStore and organizationdomain knowlegeShare domain knowlegeCreate new domain knowledgeDiscovery of existing domain knowledge Use application domain knowledge
KPM Methodology
KPM combines domain expertise across several verticals to create industry-specific knowledge bases and repositories. This sharing, reuse and retention of knowledge leads to continuous improvement and expansion of the organization’s products and services as well as accelerated project implementation.
Central to the KPM methodology is the assessment and the process-based knowledge map. These techniques help organizations identify their strengths, weaknesses, knowledge gaps and critical business functions. This helps the organization improve resource allocation, while identifying priorities.
KPM Assessment
The KPM assessment evaluates the strengths and weaknesses of an enterprise’s knowledge processes to create a KPM-driven solution.
The intent of this assessment is to identify opportunities for performance improvements across the enterprise. Opportunities for improvement extend across organizational lines and cover managerial, operational, social, and technological issues that are interrelated.
Through a KPM assessment, an unbiased understanding of the company’s business, vision, strategies, operation, and strengths and weaknesses are developed.
Two critical components to a KPM assessment are:
• Involvement of key senior resources
• Reuse of corporate assets
The rapid pace of a KPM project and its short duration mandates reuse. Reusable assets (listed here) expedite the delivery of KPM while minimizing risk.
• Reuse of knowledge assets, such as technical templates, business templates, process templates, and package software
• Reuse of skills with an industry and a technology focus
• Reuse of process assets, including methodology, task structure and work plans, metrics, techniques and iterative delivery
How the operational aspects, social systems and technological aspects of KPM are bound together and leveraged to achieve maximum customer satisfaction is the true focus of KPM.
Process-Based Knowledge Map
One of the integral tools used within the KPM methodology is the process-based knowledge map, which is a diagram that visually displays knowledge within the context of a business process. In other words, the map shows how knowledge should be used within the process and sources of this knowledge Any type of knowledge that drives the process or results from execution can be mapped. This can include tacit knowledge (knowledge in people such as expertise, experience, and intuition) and explicit knowledge (codified knowledge such as documents).
The knowledge map becomes the basis for a knowledge management program, a set of knowledge management activities within a business initiative, or a knowledge management project (such as a community of practice or a collaborative workspace). Needed competencies can be captured on a knowledge map, which are used for a competency/ skill development plan.
The mapping technique has several advantages.
• First, the knowledge map represents a simple, clear visual that is easy to understand, update, evolve, and use. The map becomes a valuable tool during the life of the project.
• Second, the mapping methodology forces participants to identify key knowledge areas that are strategic and/or critical to their business.
• Third, the analysis of the knowledge map generates ideas that are most suited to the organization and the business context.†
Added Value of KPM
KPM delivers higher value to organizations that outsource their domain-based processes, thereby enhancing KPO’s traditional cost-quality paradigm.
KPM creates value for the client by providing business expertise combined with process expertise.
KPM necessitates shifting from simple delivery of ‘standardized processes’ to implementations that demand advanced analytical and technical skills, as well as critical judgment.
KPM enables enterprises to:
• reduce design-to-market lead times
• manage critical hardware efficiently
• provide research on markets, competition, products and services
• enhance organizational effectiveness in business administration
• help in dealing with rapidly evolving business scenarios
• Transferring and implementing large volumes of work for clients in multiple specialized domains
• Sustaining major projects sent offshore
• Leveraging experience in an international environment
• Providing clients with zero risk services and solutions
KPM offers some inherent benefits to the client:
• Low investment
• Low commitment level
• Low risk
• Quick start
• Flexible approach
• Quick Implementation
• Healthy ROI
Companies with their captive units offshore, face major risks and drawbacks:
• Large and long-term investment requiring considerable management time
• Once committed, it’s not easy to withdraw
• Challenges of starting and running an operation in a foreign country
• Intangible assets
• Domain competence
• Scalability
• Bundling of KPO and IT
• Multi-site/Multi-country presenceclientDomain ExpertiseTechnologySolutions.
Summary
Vertical specialization is becoming a market requirement and crucial to market success. More companies are facing an acute shortage of workers with specialized expertise and deep knowledge in specific fields. Consequently, KPM consultants, leveraging their experience and capabilities in particular industry segments, are invaluable.
KPM consultants start with a solid grasp of processes and workflows. Since 70 to 80 percent of a company’s business rules are representational of all businesses operating within a vertical, your KPM partner focuses all his energy and time on adding functionality or customization specific to your needs.
The Future of the IT Professional and KPM
The IT professional of the future will adopt the KPM model. No longer will it be sufficient to say "I work in IT." Instead, a new breed of IT professionals will have technical aptitude, local knowledge, industry expertise and leadership ability.
Gartner predicts that by 2010, six out of ten IT professionals will assume business-facing roles.
The new IT professionals are people whose numerous roles, assignments and experiences enable them to synthesize knowledge and context to fuel business value. They are applying their skills and experiences to situations and challenges, while implementing cross-organizational insight to supplement teams and fill competency gaps.
Your KPM partners with broad insight, deep process knowledge and industry orientated competencies will help companies incorporate innovation and multiple perspectives into IT-based processes, products, services and technologies.
The KPM model is fast becoming an integral component of any organizations planning process. Those that ignore it will do so at their own peril.

© Copyright 2006 Maxil Technology Solutions Inc. All Rights Reserved. www.maxiltechnology.com whitepaper

About the Author
Raj Kosaraju, Maxil CIO and Director
Raj Kosaraju brings more than 15 years of experience to Information Systems consulting and software development.
As co-founder of Maxil Technology Solutions, Inc., Mr. Kosaraju serves as CIO and director of this rapidly growing information technology firm. Mr. Kosaraju works closely with its offshore development partner Ancent Software International Limited in Pune, India, overseeing project planning and the software solutions delivery management practice.