In the higher education institutions, they recognize the value of knowledge management (KM) in enhancing organizational performance and productivity. However, the current KM system faces challenges in adapting to modern issues and suffers from inefficient utilization. This paper aims to address these shortcomings by identifying the maturity level of KM using a digital capability maturity model (DCMM). To achieve this objective, data were collected through interviews, questionnaire surveys, and observations, and a descriptive data analysis method was employed. The study utilized the model's eight Business Transformation Management (BTM) disciplines to gain a comprehensive understanding and holistic analysis of digital transformation. The research findings revealed a defined maturity level (Level 3) of Effective Knowledge Worker Digital Capability. This suggests the need for strategic improvements to propel the institution towards a higher level of digital readiness. To elevate the KM maturity level, the paper recommends the development of a web-based Knowledge Management System (KMS) as a pilot project within the IT Operational department, before its potential company-wide implementation. The proposed KMS includes eight essential features, including document management, lessons learned, project management, announcements, schedules, FAQ page, and forum. This web based KMS promises to enhance knowledge sharing, collaboration, and accessibility. Beyond the specific institution studied, the research offers valuable insights for other organizations seeking to evaluate and improve their KM performance. By adopting the digital capability maturity model and considering the suggested features in the KMS, institutions can drive innovation and better adapt to the evolving landscape of knowledge management. Ultimately, this research contributes to the advancement of knowledge management theory and practice in higher education institutions, offering strategies to boost organizational agility and knowledge utilization. The findings can guide decision-makers in enhancing their KM strategies, ultimately leading to improved organizational outcomes and increased competitiveness in today's dynamic and rapidly changing environment. [ABSTRACT FROM AUTHOR]