Notes Worthy?Notes Worthy?

Lotus is delivering its long-awaited knowledge-management products, but now may be a tough time to sell them

information Staff, Contributor

June 25, 2001

5 Min Read
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Lotus Development Corp. keeps adding to its portfolio of knowledge-management products, providing new tools for any company looking to get a better handle on the "tacit" knowledge of its employees. But Lotus may find that it's a tough time to sell high-concept, high-culture IT systems, especially those with difficult-to-prove returns on investment. Lotus' own missteps haven't helped.

Washington, D.C., law firm Shaw Pittman is just starting to test Lotus' K-Station Enterprise Portal and Discovery Server knowledge-management software--months after originally planned. It's taking the first steps to migrate from a rudimentary knowledge-management system and contact database it built on Notes five years ago. The rollout stalled because Lotus didn't ship its knowledge-management software as a single package at the end of last year, as expected.

"We're still very eager to implement our plans," says Nicole Picciotta, CIO at Shaw Pittman. "But it has been sort of a slow process." The project is intended to help staff members take advantage of Shaw Pittman's wide-ranging expertise by tying profiles of its 750 lawyers and other employees to articles, press releases, and other documents.

K-Station, which shipped in December, presents an interface for displaying and indexing search results from the Discovery Server engine and integrates with Lotus' QuickPlace collaboration software. But Discovery Server, which links reports and other documents with the experts who can add context to the information, didn't arrive until March.

The software pioneer that gave the world the first widely used spreadsheet, groupware, and document-management software has identified knowledge management as the next big thing. Lotus last week introduced the K-Station Portlet Software Development Kit and the Lotus Discovery Server API Toolkit, both due later this year, to help developers integrate third-party and custom applications with its knowledge-management software.

Knowledge management has always been a fuzzy concept, with obvious paybacks limited to businesses that make a living on maximizing information flow, such as law, engineering, and life-sciences firms. That makes it a complicated sale to begin with.

At the same time, Lotus, which continued to operate as an independent concern for years after its 1995 acquisition by IBM, is trying to adjust to its new role as a brand within the much-larger parent company.

Not long ago, when IT budgets were still healthy, the outlook for knowledge management was promising. International Data Corp. predicted in October that the market would grow from $1.4 billion in 1999 to $5.4 billion in 2004. But now, other analysts are tempering expectations. "Companies are trying to get a handle on what their needs are before they put too much of an investment in knowledge management," says Ian Campbell, a Nucleus Research analyst.

While IBM doesn't break out revenue for its divisions, when it reported first-quarter results in April, it did say that Lotus' revenue had declined. At the same time, IBM described knowledge management as a "growth business."

It had better be: The groupware and E-mail markets in which Lotus' Domino and Notes reign are saturated. And where there's new business to be won, Lotus, with 50.9% of the E-mail market, faces a tough battle against Microsoft Exchange, which has 27.7%, according to IDC. "We fight every day for every seat," Lotus CEO Al Zollar says. Daniel Kunstler, an analyst with J.P. Morgan & Co. in New York, says there's "very modest" expansion to the nearly 80 million Notes seats already sold.

IBM has a big stake in seeing knowledge management take off for another reason--the potential to sell services around the platforms. It's already helping companies figure out the cultural and strategic issues surrounding knowledge management. "A lot of companies aren't really sure what they want to do," says Tom Hawk, general manager of business-innovation services for the Americas at IBM Global Services.

Expectations for knowledge-management deployments vary widely, depending on the industry. St. Paul Reinsurance Co. in New York thinks the system it's putting in place using K-Station and Discovery Server to connect 300 workers will lead to better underwriting decisions and financial performance, says Andrew Cole, senior VP and CIO.

But in less information-intensive businesses, the benefits aren't so clear. Miami homebuilder D.R. Horton Inc. is implementing Domino Workflow to move forms and contracts electronically and reduce costs. But Max Doyle, assistant IT director at D.R. Horton, isn't ready to embrace knowledge management because the ROI is too uncertain. "It's something that we're not prepared to bite off right now," Doyle says.

Some would-be early adopters have been left hanging as IBM brings Lotus more closely into its fold. In March, Lotus laid off 183 staffers in sales and marketing, cutting into its direct sales force. During the transition, Lotus lost track of Clovis Unified School District in Clovis, Calif. The district wanted to create a knowledge-management database of best practices for teachers and administrators. "The less time we spend reinventing solutions, the more time we have to innovate," CIO Bill Cook says. But earlier this year, its sales contacts either left Lotus or were laid off, he says, and no one told him Discovery Server had been released.

While IBM and Lotus work on synthesizing their operations, rival Microsoft is pushing forward with its knowledge-management strategy, which centers on a document database called the Web Storage System. The data store, which underlies Exchange 2000 Server and Microsoft's new Sharepoint Portal Server, can house structured rows and columns of information and unstructured data such as E-mail messages and Web pages written in HTML and XML.

Zollar says he's not worried about the competition or about the fact that not everybody "gets" knowledge management yet. "These markets take time to develop, and I'm convinced they will," he says. Lotus is even finding that some companies are turning to its knowledge-management platforms for other purposes. Herman Miller Inc., an office-furniture maker in Zeeland, Mich., is testing K-Station as part of a system for managing customer data. Using K-Station, employees will have one interface to client data, says DuAnne Talley, collaborative computing manager.

Lotus is also shopping its knowledge-management software to departments within companies, such as legal or financial groups. "This will evolve into an enterprise standard at a later point," Zollar says. But when that point will come is anyone's guess.

--with John Rendleman and Rick Whiting

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