Reference no: EM131253533

Knowledge Management Facilitates Energy Innovation

Repsol is a Spanish oil and gas company with 2013 revenues of over U.S. $76 billion. Repsol's business ranges from exploration, refining, and chemical manufacturing to retail marketing at over 7,000 service stations.

Repsol recognizes that "the key assets in an R&D organization like Repsol are the researchers and technologists, who have the training, experience, knowledge, creativity, and motivation: the necessary ingredients for discovering, improving, and assimilating new technologies." Without such knowledge workers, every stage in Repsol's value chain would dry up.

The value of such people is in what they know. China's Hilong Group, a supplier to the energy industry, lists many examples: geologists and geophysicists who use their knowledge to determine what rocks are beneath the earth's surface that can contain oil or gas, drilling engineers who plan well locations for efficient oil extraction, platform designers who must reduce costs to improve the efficiency of drilling platforms, and others. All of these people are in professions that call for specialized knowledge. Ideally, that knowledge should be available to anyone in the company who needs it.

Consider oil exploration, one of Repsol's core objectives. Geologists set off vibrations at one point and record them at another. They measure how strong the vibrations are at the receiving end, how long it takes the vibrations to get there and how strength and delay vary with vibration frequency. From those measurements, the geologists infer how much oil is beneath the surface and how hard extracting it will be. Oil companies use their conclusions to decide how much to bid for the rights to drill in an area. Companies that understand these measurements well can make reasonable predictions of how much oil will come from an area, will create accurate bids, and will be profitable. Companies that do not understand the measurements will bid too much for a barren oil field and lose money, or they will not bid enough for a rich field and be outbid by others who figure out its true value.

Knowing how to interpret these measurements-or how to do specialized work in any other field-comes from years of study and experience. Even the best expert has knowledge gaps: the expert might not know a fact or process, for example, while someone else at the company probably does. That's where knowledge management (KM) comes in. With a KM system, experts throughout the company can tap into what their colleagues know, no matter where they or those colleagues happen to be.

Before 2011, knowledge management at Repsol was haphazard; it depended on each person's knowing who else might know something plus a few localized knowledge repositories. In 2011, Repsol chose IDOL and Virage software from Autonomy (Cambridge, U.K.) to underpin its corporate knowledge management efforts. The company explains that "Autonomy's enterprise search enable[s] Repsol employees to search across different departments and operating systems, geographic locations and languages, to find timely, relevant information, regardless of data type or format. [It can] deliver personalized information through Agents, which understand users' interests and monitor business-critical information to provide automated alerts [to help] Repsol work more efficiently and quickly identify market trends, risks, or opportunities."

Repsol's new KM system and innovative approach to technology has helped fuel its success. Over the past five years, Repsol has made over 40 oil discoveries, including eight of the biggest in the world. It has used its revenue to prepare for the future, investing heavily in research and development not only in oil and gas, but in new energy and sustainability.

Discussion Questions
1. What types of knowledge did Repsol employees need to access?

2. What sort of knowledge do people use in your chosen career field? How can a knowledge management system help your employer make full use of everyone's knowledge?

Critical Thinking Questions
1. How do knowledge management systems, such as the one Repsol uses, differ from other types of information systems you have read about in this book?

2. Repsol has operations located in 50 different countries. How can KM systems help overcome language and other barriers that complicate the interchange of knowledge?