# A Knowledge Management System for ERP Implementation

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An enterprise resource planning (ERP) is an enterprise-wide application software package that integrates all necessary business functions into a single system with a common database. Its implementation is a complex process in terms of technology preparation and organizational change management. Although the importance of knowledge management (KM) in ERP implementation has been recognized, how to conduct knowledge management has not received deserved attention till now. The main objective of this paper is to develop a KMsystem to manage the knowledge of ERP implementation process. To accomplish this, the article first identifies the types of knowledge in ERP implementation.......

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## Nội dung Text: A Knowledge Management System for ERP Implementation

1. Systems Research and Behavioral Science Syst. Res. 23,157^168 (2006) Published online inWiley InterScience (www.interscience.wiley.com) DOI:10.1002/sres.751 & Research Paper A Knowledge Management System for ERP Implementation Yuan Li*, Xiu Wu Liao and Hong Zhen Lei School of Management, Xian Jiaotong University, Xian, China An enterprise resource planning (ERP) is an enterprise-wide application software package that integrates all necessary business functions into a single system with a common database. Its implementation is a complex process in terms of technology pre- paration and organizational change management. Although the importance of knowledge management (KM) in ERP implementation has been recognized, how to conduct knowledge management has not received deserved attention till now. The main objective of this paper is to develop a KM system to manage the knowledge of ERP implementation process. To accomplish this, the article ﬁrst identiﬁes the types of knowledge in ERP implementation. It then summarizes various KM activities based on a six-stage model. At last, it proposes a KM system that consists of cooperative working platform, consulting platform, individual KM platform, organizational KM platform, and knowledge transfer platform. This system can effectively manage knowledge and provide support for the successful implementation of an ERP system. Copyright # 2006 John Wiley & Sons, Ltd. Keywords enterprise information systems; enterprise resource planning; knowledge manage- ment; systems research; systems engineering; systems approach; MIS; management information systems INTRODUCTION product choice, provide more reliable delivery dates and better customer service, improve In today’s dynamic and unpredictable business quality, and efﬁciently coordinate globe demand, environment, companies face the tremendous supply and production (Li, 2000a; Li and Li, 2000; challenge of expanding markets and rising custo- Umble et al., 2003). In order to accomplish these mer expectations. This compels them to lower objectives, more and more companies are turning total costs in the entire supply chain, shorten to the enterprise resource planning systems throughput times, reduce inventories, expand (ERP). An ERP is a packaged enterprise-wide information system that integrates all necessary * Correspondence to: Yuan Li, School of Management, Xian Jiaotong business functions, such as product planning, University, Xian 710049, China. E-mail: liyuan@xjtu.edu.cn purchasing, inventory control, sales, ﬁnancial Contract/grant sponsor: NSFC; contract/grant numbers: 70121001; and human resources, into a single system with 70472039; 70571063. a shared database (Alavi and Leidner, 2001). Copyright # 2006 John Wiley & Sons, Ltd.
2. RESEARCH PAPER Syst. Res. A successfully implemented ERP can offer of an ERP implementation. These factors include companies the following three major beneﬁts top management support, business plan and (Yusuf et al., 2004): vision, organizational change management and culture, business process re-engineering (BPR), * Automating business process data accuracy, education and training, and ven- * Timely access to management information ´ dor selection and support, etc (Tchokogue et al., * Improving supply chain management through 2005; Kumar et al., 2003; Somers et al., 2004; the use of e-commerce Umble et al., 2003; Sheu et al., 2004; Motwni et al., In the past few years, thousands of companies 2002; Mabert et al., 2003; Al-Mudimigh et al., around the world have implemented ERP 2001; He, 2004). Although different authors systems. The number of companies that plan to may have their own diverse perspectives, they implement ERP is growing rapidly. AMR all consider that the most important factor Research, an authoritative market forecast insti- that inﬂuences successful ERP implementation tution in America, indicated that the ERP market is management, instead of technology; and would grow at annual rate of 37% in recent technology is only a minor factor. Thus, it is 5 years. The sales of the ERP packaged software especially important to investigate the issue of are estimated to be around $20 billion by the year how to enhance management in ERP implemen- 2000 and the eventual market size is predicted to tation process. be around$1 trillion by the year 2010 (Rajagopal, The process of implementing ERP begins with 2002). Even in China, a developing country, ERP planning. After planning is completed, a project has also become a main product in the software team embarks on and then moves through a market and the sales have approached six number of discrete phases. After the system is hundreds million RMB in the ﬁrst half of 2002 up and running, there may be a post-implemen- (Li, 2000b; Li et al., 2001; Chaudhry et al., 2005; tation review and later a stabilization phase Dan et al., 2005; Wang et al., 2005; Xu et al., 2005). (Parr and Shanks, 2000). In the model proposed Surprisingly, given the signiﬁcant investment in by Kwon and Zmud (Kwon and Zmud, 1987; resources and time, many companies did not Rajagopal, 2002), ERP implementation process achieve success in ERP implementation. It is can be divided into six stages: initiation, adop- estimated that the failure rate of ERP implemen- tion, adaptation, acceptance, routinization and tation ranges from 40 to 60% or higher (Umble et infusion (see Figure 1). The ﬁrst or the initiation al., 2003). Some surveys and researches indicate is characterized by both internal and exter- that successful outcome is also not guaranteed nal factors that inﬂuence the organization to even under ideal circumstances. Researchers implement an ERP system. At this stage, the consider that the factors such as organizational change and process re-engineering, the enter- prise-wide implications, the high resource commitment, and high potential business bene- Next Innovation Initiation ﬁts and risks associated with ERP systems make the implementation a much complex exercise ´ (Kumar et al., 2003; Tchokogue et al., 2005). It is Infusion Adoption therefore not surprising that numerous compa- nies have abandoned their ERP projects before completion or have failed to achieve their busi- ness objectives after implementation (Cliffe, Routinization Adaptation 1999). Many experts and scholars have investi- gated this issue from various angles. Some pro- vide valuable insights into ERP implementation Acceptance process and others identify a variety of factors that can be considered to be critical to the success Figure 1. ERP implementation process Copyright ß 2006 John Wiley & Sons, Ltd. Syst. Res. 23,157^168 (2006) 158 Yuan Li et al.
4. RESEARCH PAPER Syst. Res. The successful implementation of ERP Promote Knowledge management System in ERP implementation Support Theory of knowledge management Information technology Figure 2. The relation between KM and ERP implementation agency theory. Ko et al. (2005) proposed an KNOWLEDGE AND KNOWLEDGE integrated theoretical model in which knowledge MANAGEMENT transfer is inﬂuenced by knowledge-related, motivational, and communication-related fac- Knowledge management (KM) is an emerging tors. Although the importance of KM in ERP ﬁeld (Rubenstein-Montanno et al., 2001; Xu et al., implementation has been recognized, how to 2001; Qiu et al., 2003; Sun et al., 2003; Zhang et al., conduct knowledge management to support 2003). It has gained tremendous popularity as such process has not received deserved attention one of the most promising ways for organi- till now. In this paper, a KM system in the zations to succeed in information age. In extant framework of systems theory is proposed to literatures, there are various views about knowl- manage the relevant knowledge of ERP imple- edge (Alavi and Leidner, 2001; Wong and mentation process (Xu, 2000). To accomplish this, Aspinwall, 2004; Wiig, 1997). The deﬁnition of the paper ﬁrst identiﬁes the types of knowledge knowledge adopted here is ‘knowledge is com- available in ERP implementation. It then sum- bined with experience, context, interpretation, marizes various KM activities based on the six- and reﬂection. It is a high-value form of infor- stage model. Lastly, a KM system is proposed mation that is ready to apply to decisions that consists of cooperative working platform, and actions’ (Albert and Baradley, 1997). consulting platform, individual KM platform, Although there are sundry knowledge cate- organizational KM platform, and knowledge gories, the tacit-explicit knowledge classiﬁcation transfer platform. This system can effectively is widely cited. Explicit knowledge is transmit- manage knowledge and provide support for the table in formal, systematic way. It can be successful implementation of ERP systems. processed by a computer, transmitted electro- The rest of this paper is organized as follows: nically or stored in a database (Nonaka and the subsequent section introduces the basic Takenchi, 1995). On the other hand, tacit knowl- concepts and theory of KM. In the third section, edge is associated with personal experiences the knowledge sources in ERP implementation and difﬁcult to fully articulate, and poorly are identiﬁed and various KM activities based on documented. Because it is subjective and intui- the six-stage model are summarized. In Section 4, tive, it is not easily processed or transmitted in a system of KM is developed. Final section will any systematic or logical manner (Lee and Lee, provide a summary about this paper. 2000). Copyright ß 2006 John Wiley & Sons, Ltd. Syst. Res. 23,157^168 (2006) 160 Yuan Li et al.
5. Syst. Res. RESEARCH PAPER Within this context, KM refers to the strateg- consultants and internal experts, the gaps be- ies and processes of identifying, capturing, and tween internal experts and end-users, the gaps leveraging knowledge to help the ﬁrm compete. between end-users from different business units. In general, KM is regarded as a process involving How can these gaps be eliminated? (3) In ERP managing all kinds of knowledge to meet implementation, a lot of new tacit knowledge existing and emerging needs, to identify and will be created through discussion, communi- exploit existing and acquired knowledge assets cation, imitation and practice. How can such and to develop new opportunities (Jarrar, 2002). tacit knowledge be converted to organization- It consists of four basic processes: knowledge available knowledge? (4) The cross-functional creation, store/retrieve, transfer, and appli- interconnectivity of an ERP system requires the cation. Knowledge creation is the most important employees involve in implementation process to process in knowledge management. It is realized have more cross-functional knowledge, how do by the interaction between the tacit and explicit they access such knowledge? (5) When some key knowledge inside an organization. Four possible employees, such as the members of project team, conversion modes between the two types of retire or change job, they will take with them knowledge have been identiﬁed: socialization, valuable knowledge and skills associated with externalization, combination, and internalization ERP project. In order to prevent or reduce (Nonaka and Takenchi, 1995; Alavi and Leidner, interruptions in activities, and enhance overall 2001). The knowledge creation begins in the ability to cope with changes in personnel, how socialization mode. It refers to conversion of can an organization store their knowledge and tacit knowledge to new tacit knowledge thro- skills? ugh social interactions and shared experience among organizational members. After new tacit knowledge has been created, it is formalized and THE IDENTIFICATION OF KNOWLEDGE standardized for facilitating communicating IN ERP IMPLEMENTATION with other organization members. This leads to the creation of new explicit knowledge. Once In an ERP system implementation, there are new explicit knowledge has been created, it can usually three major parties involved the project be reconciled with other explicit knowledge implementation: the organization implementing created by other organizational members and the system (the implementer), the organization the knowledge is expressed in a format that it can developed the ERP system (vendor) and an be retained at organization. Once new explicit organization aiding the implementation (the con- knowledge has been created, the member inside sulting company). Each of these parties contri- organization can combine the new explicit know- butes different knowledge to the project. ledge with own intrinsic knowledge to produce new tacit knowledge. After new tacit knowledge is shared with other members inside organi- The Knowledge From the zation, the knowledge creation activity begins Consulting Company again. Knowledge creation therefore is viewed as a spiral growing process. ERP is not a simple software package. Although The KM in ERP implementation faces a num- there are detailed instructions in product man- ber of challenges: (1) the pivotal knowledge in ual, it is usually difﬁcult to combine the function ERP implementation is possessed by software of software with organizational business. Hardly vendor and consultants. They will vanish soon any organization has the necessary knowledge after the ERP implementation is completed. How and skills to implement an ERP project success- can their knowledge be transferred into the fully without external help (Rubenstein et al., adopting organization? (2) In ERP implementa- 2001). An organization may expect consultants tion process, there exist a lot of knowledge gaps. to transfer their implementation knowledge to They include the gaps between external vendor, their employees so that they can contribute to Copyright ß 2006 John Wiley & Sons, Ltd. Syst. Res. 23,157^168 (2006) A Knowledge Management System for ERP Implementation 161