The most valuable thing to a business person is not one's knowledge. It's the people you have come into contact with over the years as they can be such valuable resources on all fronts.
I have stacks and stacks of business cards which I tend to be terribly lax in terms of organizing them. I tend to scribble notes on the cards in order to remember where I met people and why I thought it was relevant to get their business cards in the first place.
More times than not, at a later time I don't understand my scribblings and equally problematic is that I forget who the person is and why I have their business card in my possession.
What contact management software brings to the table is that it allow you to get all the information you have about people into a usable repository and it places at your fingertips all the contact information you wanted to know about any person or group of people. It also allows you to track your communications with all of your contacts in an organized fashion.
Contact managers are address books on steroids, if you will. You can record historical contact information, keep notes, produce correspondence, perform contact searches, and organize all of this information in a clean, organized, productive way.
You probably have heard of Personal Information Managers or PIMs. PIMs typically have features such as calendaring, scheduling, and address book capabilities. Contact managers have all of those features in addition to the ability to sort, search, and the ability to track your historical communications with your contacts. You can record notes and document whether you phoned them and at what time; whether you faxed them and when and why; whether you met them in person or emailed them, and when you should next followup with them.
One of the features I find of tremendous value is that I can export information from my PIM or my email address book directly into the contact manager software! I can add personal information such as whether they have children, when their birthday is, whether they like to golf or ski, and other great things. There's nothing more flattering to your contacts than when you send them a personal note or holiday gift. If you have stumbled across 5 tickets to a basketball game, you can simply go into your contact manager and perform a search for basketball to find those contacts who like basketball and invite them to that championship game! This is a great way to keep your name or your company's name in the forefront of their minds.
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