Thursday 21 October 2010

KM success story number 17 - $200m per year at Shell

Shell have been implementing Knowledge Management for many years, with a clear framework of KM processes, technologies and roles. One plank in this framework is  Communities of Practice; online global peer networks, often involving thousands of members, enabled by a governance structure, and a simple Q&A technology called SiteScape.

The savings attributable to these communities were reported in CIO magazine in 2007 as follows

Shell International Exploration and Production attributes more than $200 million in direct costs saved and additional income in 2002 to the use of its SiteScape online collaboration forum. The division has clearly contributed to the success of its parent, Royal Dutch/Shell Group, which was ranked number four on the Fortune Global 500 this year. Royal Dutch/Shell increased its revenue a startling 33 percent from 2001 to 2002.
Shell's van Unnik estimates the annual cost of the KM system at about $5 million, with the majority of that sum going toward engaging community members. "The cost is man power," he says, including two to three full-time employees per major online COP (of which Shell has 12). But with an estimated annual return of more than $200 million, the investment is more than sound.

An annual return of $200 million, from an annual investment of $5 million, and that's just from one component of KM.

That's good business, in anyone's book

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