The purpose of this study is to assess the penetration and performance of IT tools in the implementation of Knowledge Management Practices in Software SMEs. Following Factor analysis, Descriptive analysis, and Regression analysis techniques, the study sourced its data from 80 Software SMEs of North India. The research instrument was created using the existing literature. IT is an indispensable part of Knowledge Management Practices and applicability of Information Technology tools improved the Knowledge Management process by increasing the speed, accuracy, cost effectiveness, effective control and operational efficiency, and made the implementation of Knowledge Management Practices easier. IT provided the operational support to the Knowledge Management Practices by increasing the content visibility, proper documentation, completeness, and systematic storage of the knowledge. IT tools also provided better security and more reliability to the Knowledge Management system. The strategic development was the third important area of IT Enabled KM Practices in software industries. These IT enabled KM Practices enhanced the strategic development of the organization by improving KM process, competence, employee participation, decision support, Cross-unit performance and effective integration of systems.