(FORTUNE Magazine) – Jim Pflaging is a man used to rejection. His company, Intraspect, makes knowledge management software, and in Silicon Valley, KM just gets no respect. That's a pity, because programs that help companies keep better track of what they do day-to-day are desperately needed in corporate America. Ray Ozzie's Lotus Notes convinced the world of that fact in the 1980s. But few companies have turned KM into a viable business. KM software has typically required users to change their work habits, and getting information into the system has entailed expensive and time-consuming data conversions.

Intraspect may break the KM curse. Its product lets employee groups create searchable electronic filing cabinets on their own intranet sites. Group members fill the cabinet with useful information for all to share--say, details of a winning sales pitch to a key customer. The software also notifies interested parties whenever relevant information appears. That means the folks in legal, who might be planning a trademark-infringement suit against a company, know to hold off because sales is about to land it as a major client.

Sun Microsystems has been using Intraspect for eight months in its 12,000-person sales force, and it's catching on. Sun salespeople are compensated not just on how they do but on how their team does, so they have an incentive to share knowledge. About 20% of the sales force uses the system, says marketing director Mike Douglas, and requests are doubling every month.

Sun, the corporation, benefits too. It now has a database of information about sales pitches that have succeeded and failed. "If we can cut new salesmen's ramp-up time by just 5%, we're looking at another $100 million in revenue a year," Douglas says.

Since the beginning of 2001, Intraspect has boosted revenues by 40%, to almost $45 million a year. And the KM market has become hot enough that Microsoft wants in. The software giant recently pumped $51 million into Groove Networks, Ray Ozzie's Internet collaboration startup. --Fred Vogelstein