Experience gives me the assurance that KM exists so it can deliver one or more of these four key tangible benefits to organizations: Operational Efficiency, Customer Intimacy, Innovation and Learning/Competency Development.
Most organizations, boringly enough, look for Operational Efficiency via KM. Because they can't think beyond cutting costs and time. Or because it is easier to prove improvement in efficiency as compared to, say, Innovation or Learning benefits. But, a serious challenge in terms of dipping customer satisfaction or the presence of a significantly novice workforce or a serious passion for breakthroughs (and/or a dying business) urges organizations to look beyond Operational Efficiency. At least, that's what it seems like to me. What is seen as high priority (and as safe) is attempting to be better at operations. Most other initiatives are 'risky' & complicated and, moreover, do not assure benefits. In other words, "Don't rock the boat!" is a prevalent attitude unless there is an alien on the boat or it seems to be capsizing.
Stepping away from the proven outcome(s) of KM, it struck me that the ultimate benefit of an effective KM initiative (with multiple dimensions) actually lies in the process of implementing KM. Let me elaborate. In the attempt to achieve these tangible outcomes, the process of creating an environment that appreciates and celebrates knowledge management involves concepts and philosophies of sharing, learning, collaboration and reuse. What this means is the ushering in of a unified work culture (the lack of which is the bane of many a large organization today). The next thing I see as an ultimate benefit is the necessity of instilling a single and well-defined (and understood) sense of purpose in order to set up such a unified culture! Step out of the CFO-mindset and step into that of a passionate founder and you'll see the meaning and joy of KM as an enabler for a unified work culture and a single sense of purpose!