Importance of knowledge management in South Africa

31 January 2017 | Ashley Hourigan | Opinion

As competition increases locally and globally, organisations are making efforts to find new ways to remain relevant and to sustain their business practices. Organisations are beginning to realise the value, need and importance of information and knowledge management practices to assist in achieving their organisational objectives. Within a South African context, organisations are facing the challenge of leveraging and managing information and knowledge as a strategic resource. The lack of effective management of these resources severely impacts an organisation’s ability to grow, gain competitive advantage, remain sustainable and to innovate. In setting the context for this article, we look at some scenarios in the South African business and service environments that highlight the importance of knowledge management practices.

Ashley Hourigan

Eskom energy crisis

The global energy industry is undergoing significant change with regard to competition, regulatory requirements, and environmental impact and price pressures. Historically, a series of poor investment decisions in infrastructure is said to have caused Eskom’s energy crisis, where the utility was unable to meet capacity demands. Although these limitations were widely known, minimal steps were put in place to address them. The importance placed on information and knowledge management practices would have seen that the right information and knowledge reached the right people at the right time to address these concerns.

Through realising the importance of using, sharing and applying information and knowledge resources throughout Eskom’s operations, the introduction of its eBusiness Incubator programme seeks to promote knowledge creation as well as drive innovation through “knowledge work”. Knowledge work includes the creation, transformation, integration and analysis of data, information and individual knowledge. It also accounts for knowledge gathered from other sources to create value-added products and services.

Through using these methods and having a greater understanding of the role and importance of information and knowledge management practices, the utility is in a better position to carry out effective maintenance on its infrastructure, build closer relationships with customers and suppliers, and provide value-added services for consumers.

Knowledge management in the South African public sector

A number of local and provincial government bodies have begun to recognise the importance of developing and implementing information and knowledge management strategies as a means to improve service delivery.

In efforts to understand the dynamics of public sector and government bodies, they face far more complex issues than those of commercial enterprises. A multitude of skills, systems and business processes are required to formally develop and institutionalise a knowledge management programme on this scale.

Most noticeably, the Department of Public Service and Administration (DPSA) has embarked on a journey to ensure that the case for and benefit of knowledge management in government departments is understood in relation to the environments they operate in. The DPSA aims to create innovative and reusable service delivery models with the intention of improved integration and coordination across departments and the public sector.

These knowledge management programmes ensure that government departments are able to utilise the skills, expertise, as well as experiences and lessons learnt from other public institutions in the development of their service delivery strategies.

Facts about the South African business environment

The South African business environment is primarily a service economy that demands a high level of competency and breadth of skill among its workforce. Currently there is a growing need for professional skills in South Africa, and with current legislation, there is an increased focus on skills development in efforts to achieve this.

There is also a noticeable shift in that organisations are becoming more reliant on their intellectual assets versus their physical assets (however, physical assets still play a critical role in delivery of products and services).

The majority of economic activity in South Africa is based on professional services, which are largely intangible and are seen to provide and apply information and knowledge in problem solving, decision making and leading innovation. With these intangible goods and services, there is a higher demand for educated workers and their ability to apply information and knowledge. The reality is, however, that these resources are scarce in the South African business environment.

Below is a list of the top gross domestic product (GDP) contributors by sector in South Africa:

Sector Percentage contribution
Finance 20.9%
Government 17.4%
Trade 15%
Manufacturing 13%
Transport and communications 10%
Mining 8%
Personal services 5.7%
Construction 4%
Utilities 3.6%
Agriculture 2.3%

Table 1 GDP contributors by sector (Industrial Development Corporation, March 2016)

Looking at the list of top GDP contributors, we see that professional services account for more than 50% of South Africa’s GDP. In an economy where the primary asset is the information and knowledge one holds, and where the reliance on traditional resources such as land, capital and natural resources is lessened, this is a signal that the importance of effective information and knowledge management practices should be in place to manage these assets.

South African challenges: why knowledge management practices struggle

Sustainability – Sustainability of business practices can be impacted by a number of different factors in the macro environment, such as politics, technological change, legislative and regulatory changes, as well as changes in the structure of the economy.

As South Africa is primarily a services economy, and as the demand for professional services rises, the requirements to satisfy roles and occupations have become more reliant on knowledge. We have to ask ourselves the question: Do we have the right people for the job?

Globalisation – Companies now are required to compete in global environments to sustain business practices. This may cause concern as to the instability of differing environmental conditions in various parts of the world. Additionally, the pace at which countries are developing and have begun to develop may leave others in the dark, not giving others the opportunity to compete fairly.

Technology – Advancements and improvements in information and communications technologies and processes mean that organisations can now operate in global markets. Organisations have the ability to access information globally to solve problems, make decisions and innovate.

Transport and communications are in the bottom 50% of core GDP contributors, which is problematic for South Africa as the necessary infrastructures may not be available to effectively support an integrated knowledge management practice.

Culture – Culture has two primary dimensions within the South African context: the first is the level of cultural diversity in South Africa and requirement for transformation in the workplace; the second is organisations’ potential to find and maintain a qualified workforce, which is an important consideration to expand into global markets.

Direction for knowledge management in South Africa

When looking towards the future in determining what the direction for knowledge management in South Africa is, we are able to recognise that firstly there is a growing awareness of the practice. This is mainly evident in the public and private sector. However, the commitment to these practices and level of sophistication in which they are implemented differ vastly.

Secondly, business practices typically include some kind of a knowledge management effort (which may not be formalised or branded as such), which adds value and supports the business strategy, as information and knowledge are recognised as strategic resources.

Thirdly, application of knowledge management practices enhances speed and effectiveness in delivering products and services that are beneficial to consumers. In the case of the South African business environment, services make up the core of GDP and are heavily reliant on the proper use and management of information and knowledge resources.

Lastly, there exists a skill paradox in South Africa, where as much as 26.6% of the eligible workforce are unemployed and typically have lower skills and competencies required by industry. This exhibits a demand for highly skilled labour, but the need cannot be met as the level of competencies are not adequate to perform such roles. Additionally, although there is a demand for labour, there is a high level of unemployment in which the two continuously conflict.

Conclusion

The need for knowledge management practices in South Africa is often overlooked, primarily due to the fact that it adds a qualitative benefit, whereas most organisations want to see the quantitative benefit (return on investment).

Given that South Africa is a services economy, the need for proper access, utilisation and management of information and knowledge resources is given high importance for the improvement of delivery of products and services. As seen with the examples given in terms of knowledge management practices in both private and public sectors, we find that there is a general awareness and basic understanding of the concept.

In both the public and private sectors in South Africa, knowledge management practices are recognised for their importance, but we find there is still a lack of effort and implementation to establish the discipline, while its successes and value-adding elements are yet to be demonstrated. This is further limited by the different challenges identified previously that stifle the knowledge management process.

Although the future looks bright for knowledge management practices in South Africa, there are a number of key issues to deal with first before we can recognise its full value.

Sources

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