Nordstrom has taken the first step in trying to increase its competitive advantage by using a knowledge management system (KMS). Their main goal is to give Nordstrom's apparel design team the ability to check in real time the availability and price of materials, such as denim, because it has a view of the supplier databases. It can also keep a tab on the manufacturing schedule and delivery with a view into the databases of manufacturing partners in Asia and Mexico.
Nordstrom's new website will help their bottom line because it will save time and money that was spent using 20 disjointed spreadsheet applications handling raw materials, style designs, suppliers and overseas manufacturers to an advanced, integrated applications environment of databases linked over the Internet. Employees will now be able to find information quicker which allows them to help more customers in the same amount of time as before.
It is sad to say that some companies have not followed the example of Nordstrom and ended up spending millions of dollars on software and still never sees any kind of a return on investment.
Larry Prusak, executive director of IBM's Institute for Knowledge Management, says he's observed about 220 KM implementations and at least half have been "deeply sub optimized" because it was easier and faster to just buy technology than think through the strategic issues. For example, Prusak tells of a global financial services company that spent six years and nearly $1 billion on a KM project to improve the productivity of its financial planners. It was purely a technological exercise, and the company has gained almost no return on investment. He also cites Nynex, the telecom company that has since merged with Bell Atlantic to form Verizon. The company, says Prusak, wasted tens of millions of dollars trying...