INCORPORATION OF KNOWLEDGE MANAGEMENT INTO ERP CONTINUOUS IMPROVEMENT: A RESEARCH FRAMEWORK Thomas C. McGnns, Central Mchan Unversty, mcn1tc@cmch.edu Dr. Zhenyu Huan, Central Mchan Unversty, huan1z@cmch.edu ABSTRACT Current IS research reardn ERP mplementaton stops short at system start-up and does not address post-mplementaton ssues. In fact, ERP mplementaton s a contnuous mprovement effort and contnued work after system start-up wll larely nfluence the ultmate success of an ERP system. Ths paper contrbutes a four-phase ERP contnuous mprovement model that ncorporates knowlede manaement nto each major mplementaton phase, ths provdes practtoners wth a udelne for nteratn two major IS operatons n an oranzaton and mprove success rates of ERP mplementaton n the lon run. Keywords: Knowlede Manaement, ERP, Implementaton, Contnuous Improvement INTRODUCTION A reat deal of tme, effort, and costs are drected toward the mplementaton of ERP systems. Projectons for 2002 estmated a total of $72.63 bllon would be spent by oranzatons on mplementaton and support of ERP systems (1). ERP projects are a lare commtment by an oranzaton and the nherent sze and scope of these projects lead to complextes not encountered n mplementn leacy systems. Research n ERP mplementaton methodoloes has been focused on the ntal start-up complextes of projects. There has been lttle effort spent n the area of post-mplementaton support (5). Many oranzatons mstakenly see the o-lve of an ERP system as the fnal oal nstead of a mlestone wthn an overall ERP scheme (6) It s our experence that ERP projects rarely have a dscrete and evdent endpont; contnued efforts are requred to lenthen the lfe and maxmze the benefts of these expensve systems. We arue that the whole ERP mplementaton s a contnuous mprovement process. A key methodoloy supportn ERP contnuous mprovement would be knowlede manaement. To succeed n ERP mplementatons, knowlede manaement must be ncorporated nto ERP projects n order to ensure that knowlede s captured once t s created. The creaton of knowlede s not a by-product of an ERP project but an mportant component of the system tself. A framework s needed for the ncorporaton of knowlede manaement nto ERP projects. Ths framework must focus on the practtoners needs and understandns of each mplementaton phase. It must reconcle the creaton of mplementaton delverables and the supportablty of those delverables, whch wll be used by both the ERP project team and the central ERP support unt. To accomplsh ths, oranzatons wll need to embrace knowlede manaement to ensure that the vast amount of knowlede created durn mplementaton s captured and dstrbuted. Ths paper dentfes the steps needed to ncorporate knowlede manaement nto ERP contnuous mprovement. Frst, relevant components of mplementaton methodoloes wll be Volume V, No 2, 2004 612 Issues n Informaton Systems
Incorporaton of Knowlede Manaement Into ERP Contnuous Improvement: A Research Framework revewed. Second, we wll revew knowlede manaement and ts mplcatons wth a focus on the unque challenes of ERP projects. Thrd, we wll dscuss how to ncorporate knowlede manaement nto ERP mplementaton projects. Fourth, the advantaes of ncorporatn knowlede manaement nto ERP mplementaton wll be revewed. The last secton wll provde a summary and concludn remarks. ERP IMPLEMENTATION METHODOLOGIES Current ERP mplementaton methodoloes represent the culmnaton of years of evolutonary learnn. It s our experence that a complete ERP mplementaton spans four dfferent phases: analyss, desn, constructon, and deployment. Each phase has ts own set of mplementaton delverables and project checks & balances. Tradtonally, these phases were seen as a lner process and the man oal of mplementaton was to et the project completed. However; n our opnon, a lnear mplementaton methodoloy s not an effcent use of oranzatonal resources. For complex IS projects lke ERP mplementatons, lnear models cannot uarantee the ultmate success. In ERP contnuous mprovement older applcatons are no loner superseded by newer ones; nstead, modules are reworked and retooled to satsfy updated busness processes and techncal nfrastructures. Oranzatons need to adopt the contnuous mprovement methodoloy seen n fure 1. Analyss Desn Support Group Deployment Constructon Fure 1. Typcal phases of ERP mplementaton & contnuous mprovement As the fure shows, the support roup s the center of the four phases. As project teams are created and eventually dsbanded, the central support roup should be n place to coordnates all necessary delverables for the perpetual support of the ERP systems. Ths assumes that the support roup has access to all the knowlede and delverables from the dfferent project phases. One typcal ERP mplementaton ssue s that thrd party resources are typcally nvolved. These resources nclude subject matter experts (SME) from the software vendor(s) and external consultants. To mantan self-suffcency the oranzaton must capture ntellectual captal created n the mplementaton process and responsbly manae t. KNOWLEDGE MANAGEMENT Sarvary (4) provdes the most relevant defnton of both knowlede and knowlede manaement: Knowlede s nformaton plus the causal lnks that help to make sense of ths nformaton. [Knowlede manaement] mht be seen as a process that establshes and clearly artculates such lnks. How knowlede s created depends on what type the knowlede s. Two types of knowlede exst: tact and explct (3). Explct knowlede can be expressed n words and numbers and shared n the form of data, scentfc formulae, specfcatons, manuals and the lke. Ths knd of knowlede can be readly transmtted between ndvduals formally and systematcally. Tact knowlede s hhly personal and hard to formalze, makn t dffcult Volume V, No 2, 2004 613 Issues n Informaton Systems
Incorporaton of Knowlede Manaement Into ERP Contnuous Improvement: A Research Framework to communcate or share wth others. Subjectve nshts, ntuton, and hunches fall nto ths cateory of knowlede. Knowlede creaton at an oranzaton level s not smply a lnear process. It s the nteracton between the two types of knowlede that result n an evolutonary process. There are four possble converson paths between these two types of knowlede nsde an oranzaton: socalzaton, externalzaton, combnaton, and nternalzaton. The SECI model can be used to represent these four conversons and the nherent relatonshps between them. Socalzaton o Internalzaton Externalzaton o Combnaton : Indvdual : roup o: oranzaton Fure 2. SECI knowlede spral (adapted from Nonaka and Konno, 1998 p.43) In an oranzaton, knowlede can be retaned at three levels: ndvdual, roup, and oranzaton. Knowlede s tact f only an ndvdual can capture t. It becomes explct when t s assmlated nto roups and oranzatons. Each quadrant n the SECI model descrbes how knowlede reconcles n ts two dfferent forms. The process bens n the socalzaton quadrant where only tact knowlede exsts. Ths s the exchane of thouhts and deas between ndvduals leadn to an mproved understandn about the system, whch provdes the ntal trer for knowlede creaton. Once tact knowlede has been created, t s formalzed and standardzed n order to be communcated n roups, whch leads to the creaton of explct knowlede (Externalzaton). Once explct knowlede s created, t can be reconcled wth other peces of explct knowlede created by other mplementaton roups and the knowlede s expressed n a format that t can be retaned at oranzatonal level (Combnaton). The practcal applcaton of explct knowlede s descrbed by the fnal quadrant where each roup and ndvdual assmlates and apples the knowlede (Internalzaton). KNOWLEDGE CHALLENGES IN ERP IMPLEMENTATION Our experences have shown that knowlede manaement n ERP mplementaton methodoloes can face a number of challenes. Frst, knowlede has been captured and processed by transent resources that wll vansh soon after the ERP mplementaton s complete. Therefore, knowlede-carryn bodes are not perpetual n an oranzaton. Second, tradtonal methodoloes do not explctly have a check-and-balance process to ensure that the knowlede ben captured has been assmlated, verfed and stored for future use. Thrd, the body breadth and volume of knowlede ben created prevents t from ben condensed nto a snle delverable at the end of mplementaton. In order to address these ssues, knowlede that has been captured must be transferred to the central support roup that wll mantan the system after mplementaton. It has to be ensured that Volume V, No 2, 2004 614 Issues n Informaton Systems
Incorporaton of Knowlede Manaement Into ERP Contnuous Improvement: A Research Framework knowlede transfers between ndvduals, roups and oranzatons and the knowlede wll be ncorporated nto the post-deployment process. Knowlede manaement as a busness process s composed of three sub-processes: oranzatonal learnn, knowlede producton and knowlede dstrbuton (4). The frst two sub-processes dealn wth the creaton of knowlede have already been addressed by Nonaka et al. (2 & 3), however; knowlede dstrbuton has not been addressed by ERP mplementaton studes. Thus, t s mperatve to revse tradtonal ERP mplementaton methodoloy by ncorporatn knowlede manaement. REVISED ERP IMPLEMENTATION METHODOLOGY By explctly dentfyn the steps requred to enable knowlede manaement n ERP mplementaton, we can mprove our ablty to dstrbute the knowlede created. Four fundamental knowlede requrements need to be dentfed for each mplementaton phase: 1. Each phase requres a dstnct bennn pont, the rules of enaement are explctly descrbed, delverables dentfed and the technques to be used wthn that phase are examned and mplemented. 2. An examnaton of the alnment of the busness knowlede captured durn each phase wth the eventual delverables to be produced. 3. Sub-roups wthn the project team must reconcle ths knowlede amonst themselves to ensure that all requrements are addressed for that phase. 4. The functonal requrements must then be reconcled wth the methodoloy tools as well as the ERP functonalty (relevant wth that phase) to address any necessary compromses. Addtonally, the technques used to capture the knowlede must be documented and updated. Practcal experences wth the use of the methodoloy must be ncorporated to mprove future use. The delverables for each phase wll vary as well as the duraton and resources requred; however, these four eneral steps wll exst n each phase. The proresson nsde each mplementaton phase s lnear,.e., from steps 1 to step 4. At the end of step 4, the ntaton of the next phase of the project bens (startn aan at step 1). Fure 3 s an adaptaton of Nonaka et. al. model, wth mraton throuh the quadrants usn the four steps descrbed above. One teraton of the spral throuh all four quadrants represents a snle mplementaton phase of the project. However, a snfcant departure from the Nonaka et al s model s the explct dentfcaton of the actvtes that occur durn the proresson between quadrants. Nonaka et al. s model only explaned the relatonshp of knowlede as t s chaned from one form to the next. Ths modfed spral model (fure 3) dentfes what actvtes have to occur wthn the project phase to support knowlede proresson between quadrants. Step 1 occurs n the socalzaton quadrant. Tact knowlede from the oranzatons employees, project consultants, and a hh-level understandn of the phase delverables are brouht toether. Veteran employees leverae prevous project experences whle novce employees leverae freshly learned tools and technques. Ths mutual exchane of tact knowlede s nformal and contnues throuhout the phase. Step 2 occurs n the externalzaton quadrant. Possessn the understandn of what the project phase represents and the delverables to be produced, team members ben to formalze the tact knowlede by nteractn wth the rest of Volume V, No 2, 2004 615 Issues n Informaton Systems
Incorporaton of Knowlede Manaement Into ERP Contnuous Improvement: A Research Framework the oranzaton. These formalzaton actvtes are the frst steps n eneratn explct knowlede. Socalzaton Externalzaton Step1 Step 2 Step 4 Step 3 Internalzaton Combnaton Fure 3. Revsed knowlede manaement spral. Step 3 occurs n the combnaton quadrant. Usually, the lare sze of ERP projects forces project teams to specalze n functonal areas. The combnaton phase reconcles the explct knowlede athered by project sub-teams to provde a snle vew of the mplementaton for the oranzaton. Compromses and clarfcaton are made so that the entre roup understands the captured explct knowlede. Step 4 occurs n the nternalzaton quadrant. The delverables and mproved understandn of the busness requrements and processes athered durn the externalzaton and combnaton phases must be nterpreted. Indvduals on the project team perform a holstc revew of the explct knowlede and the technques used to ather t. Ths revew provdes two man benefts; frst, t reconcles newly learned knowlede wth exstn explct knowlede already possessed by the team. Second, t can dentfy mprovement opportuntes for the methodoloy and delverables. These mprovements may manfest themselves as new delverables, mproved documentaton, mproved trann, process refnements, etc. The contnuous mprovement aspect of ths step s crtcal to the complete ncorporaton of knowlede nto ERP mplementaton. These mprovements are then rentroduced to the team and oranzaton at the start of the next cycle. Mern the tradtonal mplementaton methodoloy shown n fure 1 wth the modfed spral approach to phase knowlede n fure 3, we are able to enerate a self-suffcent model (fure 4). Ths model propaates refned knowlede from one project phase to the next and postons project delverables for effcent use by the support roup. Analyss Desn Support Or. Deployment Constructon Fure 4. Improved ERP mplementaton methodoloy ncorporatn knowlede manaement Volume V, No 2, 2004 616 Issues n Informaton Systems
Incorporaton of Knowlede Manaement Into ERP Contnuous Improvement: A Research Framework BENEFITS OF KNOWLEDGE MANAGEMENT Each of the four steps descrbed earler (dentfed n fure 5 by Nonaka et. al s quadrant names) provdes a relatve advantae to the project and oranzaton. The mantude of ts value depends on the oranzatons commtment to knowlede manaement as a whole. Each step does not return a unform beneft curve. Fure 5 provdes a sample representaton of how ths curve could appear to an oranzaton for a ven project phase. Relatve Improvement n knowlee an Socalzaton Externalzaton Combnaton Internalzaton the steps n any ven project phase Fure 5. Representaton of knowlede aned and benefts receved The ntal quarter of the curve (socalzaton) s the steepest n ERP contnuous mprovement. Indvduals may be experencn the project methodoloy for the frst tme. Informal orentaton, alon wth structured overvews of the project and the partcular phase, provdes an envronment where a reat deal of nformaton s exchaned, whch leads to the ntal development of tact knowlede. The next two sectons of the curve are stll postve but return the smallest relatve benefts. The athern of tact knowlede and ts evoluton nto explct knowlede provdes value, but from the perspectve of ndvdual team members t may appear to be just documentaton-of-the-obvous. The steepn curve toward the end of combnaton s due to the new nferences made between knowlede that had prevously been thouht to be unrelated. The fnal secton of the curve contnues the trend from externalzaton and combnaton, but also steepens toward the end due to the mprovement efforts ben appled to the mplementaton process. New delverables ncrease the teams and oranzatons knowlede. Usn such a curve for each phase and lnkn the phases toether provdes a comprehensve vew of the knowlede manaement benefts for a ven project (fure 6). Each ERP mplementaton phase encompasses the entre curve (as seen n fure 5) wth the dashed lnes denotn the step boundares wthn each phase. The post-deployment secton denotes a transton pont; as fure 4 ndcates, ths would typcally be the next analyss phase. Relatve mprovments n knowlee an Analyss Desn Constructon Deployment Post-deployment 'Improvement' curve 'Unrealstc' curve 'Step' transtons wthn each phase Project phases Fure 6. Knowlede manaement curve for an mplementaton project Volume V, No 2, 2004 617 Issues n Informaton Systems
Incorporaton of Knowlede Manaement Into ERP Contnuous Improvement: A Research Framework The extent of the return depends on an oranzatons commtment to ncorporate knowlede manaement nto ERP contnuous mprovement. Partcular attenton should be ven to the unrealstc curve (represented by the dotted lne). Many oranzatons try to save tme durn the ntal phases of ERP project and wat untl the end of the deployment phase to document the whole mplementaton. Ths approach may document the end-state of the knowlede but t s unrealstc to document the whole mplementaton process and knowlede created. For the support roup, understandn why a partcular decson was made s just as mportant as seen how t s mplemented. These causal lnks make up a reat deal of the ERP mplementaton knowlede. The documentaton at the end of a project only shows what the system looked lke, t wll not be able to answer why t looks lke that. The central support roup needs to understand the whole process n order to correctly mantan the system. New requrements and processes must be reconcled to ensure that the ornal ntent s not ben corrupted. SUMMARY Exstn IS research about ERP mplementaton s lmted to the mplementaton as new a system. Most oranzatons do not explctly manae the knowlede created durn ERP mplementaton process. Revsn the tradtonal lnear development methodoloy nto one that s crcular wth a focus on the central support roup provdes the manaeral structure of ncorporatn knowlede manaement nto ERP mplementaton. Explct dentfcaton of the steps wth Nonaka, et al s knowlede spral provdes practcal udelnes for ERP practtoners. Ths ensures that ERP mplementaton allows knowlede to be captured, assmlated, refned, documented and leveraed for the next project phase. Ths cumulatve process bulds a knowlede base that can be used to support the ERP system after the ntal mplementaton s complete. REFERENCES 1. Al-Marshar, M. (2002), Enterprse Resource Plannn (ERP) systems: a research aenda, Industral Manaement + Data systems, 2002 (102, 3/4) pp. 165 170. 2. Nonaka, W. E., Takeuch, H., Umemoto, K. (1996), A Theory of oranzatonal knowlede creaton, Internatonal Journal of Technoloy Manaement, 1996 (11,7+8) pp. 833 845. 3. Nonaka, W. E. and Konno, N. (1998), The concept of Ba : Buldn a foundaton for Knowlede Creaton, Calforna Manaement Revew. Sprn 1998 (40,3) pp. 40-54. 4. Sarvary, M. (1999), Knowlede Manaement and Competton n the Consultn Industry, Calforna Manaement Revew, Wnter 1999 (41,2) pp. 95-106. 5. Van Stjn, E. and Wensley, A. (2001), Oranzatonal memory and the completeness of process modeln n ERP systems: some concerns, methods and drectons for future research, Busness Process Manaement Journal, 2001 (7,3) pp. 181 194. 6. Wlls, T.H. and Wlls-Brown, A.H., (2002) Extendn the value of ERP, Industral Manaement and Data Systems (102, 1/2) pp. 35 38. Volume V, No 2, 2004 618 Issues n Informaton Systems