Analyzing Knowledge Management Capabilities of Software Development Companies in Sri Lanka By Amal Priyantha Madapathage Department of Computer Science & Engineering, Faculty of Engineering, University of Moratuwa, Sri Lanka. December 2007. __________________________________________________________________ Page i Analyzing Knowledge Management Capabilities of Software Development Companies in Sri Lanka By Amal Priyantha Madapathage This dissertation was submitted to the Department Computer Science & Engineering of the University of Moratuwa in partial fulfillment of the requirements for the Degree of Masters in Business Administration in Information Technology. Department of Computer Science & Engineering, Faculty of Engineering, University of Moratuwa, Sri Lanka. December 2007. __________________________________________________________________ Page ii Abstract Knowledge management (KM) has been the subject of much discussion over the past decade. Organisations have realized that they will not survive in the modern knowledge era unless they have a strategy for managing and leveraging value from their intellectual assets, and many KM lifecycles and strategies have been proposed. The term "Knowledge Management" has been applied to a very broad spectrum of activities designed to manage, exchange and create or enhance intellectual assets within an organisation. Software development is a mental exercise. Software is produced by human thoughts that cannot be controlled, gathered or accumulated in the same ways as with physical goods. Knowledge work is fundamentally different in character from physical labor. The thoughts will make the knowledge, which is the main asset for any software development company. Hence the way it is managed is of crucial importance towards avoiding the repetition of mistakes and effective use of existing know-how in value addition process. The capability to do so by individual companies will decide their survival on the competitive market. As an emerging industry in Sri Lanka, software companies should focus on the knowledge management capability. This dissertation tries to analyze the capability of knowledge management of software development companies in four different aspects. Those are management focus, staff perception and attitude, internal process and available infrastructure. We wish to analyze those aspects in Sri Lankan context and give guidelines on managing the knowledge asset. The capability index is derived, after gathering the importance of each aspect by questioning the industry people. Also the current level of capability is assessed, with the use of a derived scale; hence it gives an industry wide analysis. __________________________________________________________________ Page iii Declaration I certify that this thesis does not incorporate without acknowledgement to the material previously submitted for a degree or diploma in any university to the best of my knowledge and I belief it does not contain any material previously submitted for a written or orally communicated by other person except where due reference was made on this. ________________________ Amal Priyantha Madapathage To the best of my knowledge the above particulars are correct Research Supervisor: ________________________ Dr. Sanath Jayasena, Senior Lecturer, Department of Computer Science & Engineering, Faculty of Engineering, University of Moratuwa, Sri Lanka. __________________________________________________________________ Page iv Acknowledgement I would like to thank several people for their contributions throughout the completion of this project, specially, my supervisor Dr. Sanath Jayasena for his guidance over the past two years. I thank Ms. Vishaka Nanayakkara, Head of the Department of Computer Science and Engineering, who always encourages us on research activities. Also, I wish to thank Mr. Shantha Fernando who provided me with valuable materials on capability frameworks. Special thanks go to all other lecturers and staff helped me on this exercise in various ways. I would like to thank my lecturers, including Mr. Kithsiri Samarasinghe, who delivered the subject “Research Skills” during the course, which helped me a lot in the research. I would like to thank all who participated in the questionnaire based survey; those who took their time to add value to this project by sharing the thoughts and experience. Also I thank, all my friends who encourage others to participate for the survey. __________________________________________________________________ Page v Table of Contents ABSTRACT ............................................................................................. II DECLARATION ..................................................................................... III ACKNOWLEDGEMENT ......................................................................... IV LIST OF ABBREVIATIONS .................................................................. VIII LIST OF TABLES ................................................................................... IX LIST OF FIGURES .................................................................................. X 1. INTRODUCTION ................................................................................. 1 1.1. Background ................................................................................................. 1 1.2. Importance of Knowledge Management to Software Development Companies .......................................................................................................... 2 1.3. Research Problem ....................................................................................... 4 1.4. Research Objectives .................................................................................... 5 1.5. Structure of the Dissertation ...................................................................... 5 2. LITERATURE REVIEW ....................................................................... 7 2.1. General ......................................................................................................... 7 2.2. What is Knowledge? ................................................................................... 8 2.2.1. General Meaning ................................................................................ 8 2.2.2. Tacit Knowledge ................................................................................. 9 2.2.3. Explicit Knowledge .......................................................................... 10 2.3. What is Knowledge Management? .......................................................... 11 2.4. Knowledge versus Organizational Culture ............................................ 12 2.5. The Use of Technology in Knowledge Management .............................. 13 2.6. Critical Views on Knowledge Management ........................................... 14 2.7. Knowledge Management Frameworks ................................................... 15 2.8. Assessing the Knowledge Management .................................................. 17 2.8.1. Knowledge Management Capability Check List .............................. 17 2.8.2. Other Findings on Assessing the Knowledge Management ............. 18 __________________________________________________________________ Page vi 2.9. Use of Literature Review .......................................................................... 19 3. RESEARCH METHODOLOGY ........................................................... 20 3.1. General ....................................................................................................... 20 3.2. The Feedback From the Literature Survey ............................................ 20 3.2.1. Knowledge Definition ...................................................................... 20 3.2.2. Social-Cultural Aspects of Knowledge ............................................ 20 3.3. Research Model ......................................................................................... 21 3.3.1. Four Pillars of Concepts ................................................................... 21 3.3.2. Knowledge Management Process ..................................................... 24 3.3.3. Corporate Memory and it’s Usage .................................................... 24 3.3.4. Knowledge Management Capability ................................................ 24 3.4. Operationalization of Variables............................................................... 25 3.4.1. Hypothesis Building ......................................................................... 26 3.4.2. Deriving the Knowledge Management Capability Framework ........ 26 3.4.3. Defining the Indicators and Measures for Variables ........................ 27 3.5. Questionnaire ............................................................................................ 30 3.5.1. Questionnaire Design........................................................................ 30 3.5.2. Guidelines Adopted When Writing the Questionnaire ..................... 31 3.6. Interviews................................................................................................... 32 4. DATA COLLECTION AND ANALYSIS ............................................... 33 4.1. General ....................................................................................................... 33 4.2. Sampling .................................................................................................... 33 4.3. Survey and Feedback ................................................................................ 34 4.4. Statistical Analysis of Data ....................................................................... 35 4.4.1. Descriptive Statistics ........................................................................ 37 4.4.2. Linear Regression Analysis .............................................................. 37 4.4.3. Multiple Regression Analysis ........................................................... 39 4.4.4. Hypothesis Testing ........................................................................... 42 4.4.5. Summary ........................................................................................... 43 4.5. Deriving KMC Index Framework ........................................................... 43 4.5.1. Normalizing the KMC Index ............................................................ 44 4.5.2. Acceptance Region ........................................................................... 45 __________________________________________________________________ Page vii 4.6. Discussion................................................................................................... 47 5. LIMITATIONS OF THE STUDY .......................................................... 50 5.1. General ....................................................................................................... 50 5.1.1. Limited Time Period ......................................................................... 50 5.1.2. Small Industry ................................................................................... 50 5.1.3. Lack of Knowledge on the Subject ................................................... 50 5.1.4. Difficulty to Find Company Information ......................................... 50 5.2. Questionnaire Related Issues ................................................................... 51 6. CONCLUSIONS AND RECOMMENDATIONS ...................................... 52 6.1. Introduction ............................................................................................... 52 6.2. Conclusion ................................................................................................. 52 6.3. Recommendations ..................................................................................... 54 6.3.1. For Industry ...................................................................................... 54 6.3.2. For Future Work ............................................................................... 55 REFERENCES ............................................................................ 56 APPENDIX A: QUESTIONNAIRE ........................................................ A-1 APPENDIX B: RAW DATA – IMPORTANCE ....................................... B-1 APPENDIX C: SUMMARIZED DATA – IMPORTANCE ......................... C-1 APPENDIX D: SUMMARIZED DATA – CURRENT PRACTICE ............. D-1 APPENDIX E: INSTRUCTIONS TO RESPONDERS ................................ E-1 __________________________________________________________________ Page viii List of Abbreviations ANOVA Analysis of Variance CBR Case Based Reasoning CMMI Capability Maturity Model Integrated CRM Customer Relationship Management DMS Document Management System ISO International Standards Organization J2EE Java 2 Enterprise Edition J2ME Java 2 Mobile Edition KM Knowledge Management KMC Knowledge Management Capability KMCI Knowledge Management Capability Index PM Project Manager QA Quality Assurance SEI Software Engineering Institute SLASI Sri Lanka Association for the Software Industry SQA Software Quality Assurance SVA Software Vendors Association TQM Total Quality Management WBS Work Breakdown Structure __________________________________________________________________ Page ix List of Tables Table 2.1: KM Spectrum and Applications ........................................................... 16 Table 3.1: Independent and Dependent Variables ................................................. 25 Table 3.2: Operationalization of Independent Variables ....................................... 28 Table 3.3: Operationalization of Dependent Variable ........................................... 29 Table 3.4: Section Breakdown in Questionnaire ................................................... 30 Table 4.1: Sample Selection .................................................................................. 34 Table 4.2: Response Breakdown ............................................................................ 35 Table 4.3: Weighting the Answers ......................................................................... 36 Table 4.4: Descriptive Statistics ............................................................................ 37 Table 4.5: Linear Regress Result X1 –Y1 ............................................................. 37 Table 4.6: Linear Regression Result X2 –Y1 ........................................................ 38 Table 4.7: Linear Regress Result X3 –Y1 ............................................................. 38 Table 4.8: Linear Regress Result X4 –Y1 ............................................................. 39 Table 4.9: Multiple Regression Result – Full Set .................................................. 39 Table 4.10: ANOVA - Full Set .............................................................................. 39 Table 4.11: Multiple Regression Result – Dropped X3 ......................................... 40 Table 4.12: ANOVA – Dropped X3 ...................................................................... 40 Table 4.13: Multiple Regression Result – Dropped X4 ......................................... 41 Table 4.14: ANOVA – Dropped X4 ...................................................................... 41 Table 4.15: The Lowest Boundaries of X1 X2, and X3 ........................................ 46 Table B.1: Raw data – importance – independent variable ................................. B-1 Table B.2: Raw data – importance – dependent variable .................................... B-3 Table C.1: Summarized data – importance .......................................................... C-1 Table D.1: Summarized data – current practice .................................................. D-1 __________________________________________________________________ Page x List of Figures Figure 3.1: The Research Model ............................................................................ 21 Figure 4.1: Category wise Response Breakdown .................................................. 35 Figure 4.2: KMC Plane .......................................................................................... 43 Figure 4.3: The Lowest Boundaries of X1 X2, and X3 ......................................... 45 Figure 4.4: The Current Practice X1 ...................................................................... 46 Figure 4.5: The Current Practice X2 ...................................................................... 46 Figure 4.6: The Current Practice X3 ...................................................................... 47 Figure 4.7: KMC Index .......................................................................................... 47 Figure 4.8: KMC Index Vs Scale of Companies ................................................... 48 Figure 4.9: KMC Index in Large Scale Companies ............................................... 48 Figure 4.10: KMC Index in Medium Scale Companies......................................... 49 Figure 4.11: KMC Index in Small Scale Companies ............................................. 49