It is relevant to understand in more detail about the basic terms "knowledge" and "Knowledge Management".

"According to Webster's Dictionary, knowledge is the fact or condition of knowing something with familiarity gained through experience or association. Knowledge may also be described as a set of models that describe various properties and behaviors within a domain. Knowledge may be recorded in an individual brain or stored in organizational processes, products, facilities, systems and documents (popularly called "databases").

In reality, though, there exist many possible, equally plausible definitions of knowledge, for the purposes of discussing "Knowledge Management", we will focus upon the following definition of knowledge:

• The ideas or understandings which an entity possesses that are used to take effective action to achieve the entity's goal(s). This knowledge is specific to the entity which created it. :"
  [Source - web site of University of Texas ]

• "Knowledge is the full utilization of information and data, coupled with the potential of people's skills, competencies, ideas, intuitions, commitments and motivations.

• In today's economy, knowledge is people, money, leverage, learning, flexibility, power, and competitive advantage.

• Knowledge is more relevant to sustained business than capital, labor or land. Nevertheless, it remains the most neglected asset. It is more than justified true belief and is essential for action, performance and adaptation. Knowledge provides the ability to respond to novel situations.

• A holistic view considers knowledge to be present in ideas, judgments, talents, root causes, relationships, perspectives and concepts.

• Knowledge is stored in the individual brain or encoded in organizational processes, documents, products, services, facilities and systems.

• Knowledge is the basis for, and the driver of, our post-industrial economy.

• Knowledge is the result of learning which provides the only sustainable competitive advantage.

• Knowledge is the next paradigm shift in computing following data processing 1945-1965 and information management 1966-1995.

• Knowledge is action, focused innovation, pooled expertise, special relationships and alliances.

• Knowledge is value-added behavior and activities.

• For knowledge to be of value it must be focused, current, tested and shared.
  [Definition/description by Denham Grey - Web site of KM Forum]

We know the terms 'data' and 'information'. Date conveys some specific idea about an object or an abstract entity. Information is meaningful data. Thus the terms "bank", "customer" and "service" are data terms, while the statement "banks provide customer service" gives a meaning to the statement to enable us to understand some concrete perception about the activity of a bank.

But not all information is valuable. Only information relevant, pertinent, useful and productive is valuable. Such information qualifies as "knowledge" or "intellectual asset". Therefore, it's up to individual companies to determine what information qualifies as intellectual and knowledge-based assets. Since all Information is not knowledge, companies diligently need to be on the lookout for information overload. Quantity rarely equals quality, and KM is no exception.

In general, however, intellectual and knowledge-based assets fall into one of two categories: explicit or tacit.

Included among the former are assets such as patents, trademarks, business plans, marketing research and customer lists.

As a general rule of thumb, explicit knowledge consists of anything that can be documented, archived and codified, often with the help of IT.

Much harder to grasp is the concept of tacit knowledge, or the know-how contained in people's heads. The challenge inherent with tacit knowledge is figuring out how to recognize, generate, share and manage it. While IT in the form of e-mail, GroupWare, instant messaging and related technologies can help facilitate the dissemination of tacit knowledge, identifying tacit knowledge in the first place is a major hurdle for most organizations. Indeed, the point of a KM program is to identify and disseminate knowledge gems from a sea of information. This is termed as "capturing knowledge".