Measuring Knowledge Management Readiness in ERP Adopted
Organizations: A Case of Iranian Company
1 Golnaz Azhdari, 2 Fariborz MousaviMadani, 3 Mahdi ZareBahramabadi * 1 Member of Young researchers club Azad Islamic University Tehran Central Branch Iran, e-mail: g.azhdari@gmail.com 2 Assistant Professor, Department of Information Technology, Alzahra University, Tehran, Iran, e-mail: mosavif@alzahra.ac.ir 3 The faculty member of The Organization for Researching and Composing University Textbooks in the Humanities (Samt), Tehran, Iran, e-mail: mz.bahramabadi@gmail.com
Abstract Both Knowledge Management and Enterprise Recourse Planning play a crucial role in organizations, also there have been an increasing trend to implement both systems concurrently, but are either implemented separately or in tandem. There are bulks of literature on the importance of KM in all kinds of organizations. There are also lots of recommendations on ERP implementation and post-implementation processes. The key characteristics of ERP and KM are quite different in their orientation, however, with ERP systems focusing primarily on managing physical assets while KM systems leveraging innovation and the utilization of knowledge assets. KM integrated into ERP can improve the business processes managed by ERP to increase firms competitive advantages. Thus the interaction between ERP and KM systems are synergistic and of significant importance. This paper assesses the readiness of KM implementation in an enterprise which has successfully implemented ERP. To this goal we surveyed the KM readiness with KM assessment tools such as KMAT and also different models of KM readiness and critical success factors. Finally, based on the proposed model, KM readiness of the organization under survey was assessed to be in the average level.
The result of the knowledge revolution is represented by a new economy the knowledge- based economy, which is radically different from previous economic types known to mankind [1]. In the era of knowledge economy organizations are increasingly becoming aware of the need for a knowledge focus in their organizational strategies as they respond to changes in the environment [2]. Systematic management of enterprise knowledge, e.g. new ideas, innovations and patents, has paramount impact on business sustainability and growth [3]. In such a highly dynamic environment, enterprises also increasingly recognize that knowledge management is one of the most important factors contributing to business success [4]. Over the past 20 years, KM has progressed from an emergent concept to an increasingly common function in business processes in one hand [5] and has become an indispensible part of the business and also academic agenda on the other hand. Organizations have high expectations for KM to play a significant role in improving their competitive advantage [6]. KM process is the effective sharing of tacit knowledge and effective transfer of explicit knowledge in enhancing organizational performance and innovativeness [7]. In general KM is the systematic process of creating, maintaining and nurturing an organization to make the best use of its individual and collective knowledge to achieve the corporate mission [8]. KM systems are information systems designed to collect, code, integrate, disseminate, and facilitate organizational knowledge. Efficient knowledge management leads to superior business performance such as organizational creativity, operational effectiveness, and quality of products and service [9]. As a result, successful KM implementation is expected to have a positive influence on a company's performance and effectiveness [10].
Measuring Knowledge Management Readiness in ERP Adopted Organizations: A Case of Iranian Company Golnaz Azhdari, Fariborz MousaviMadani, Mahdi ZareBahramabadi International Journal of Information Processing and Management(IJIPM) Volume3, Number1. January 2012 doi:10.4156/ijipm.vol3.issue1.4 2. KM Readiness
Usually organizations spend plenty of time and budget on KM projects. So a clear vision of KM success comes into necessity. The success of KM projects depends largely on the organization readiness to implement it [11]. Readiness assessment projects perform a quick scan of organization for sophisticated KM practices [12]. During recent years, KM strategies are maturing to consider the ability to assess an organizations readiness for such systems [13]. As a result the KM readiness research may help an organization to analyze its preparedness for effective knowledge sharing before a KM system is implemented [14]. Practical implications include more targeted and accurate assessments of KM readiness for firms considering similar strategies. This information will improve an organizations ability to make more actionable decisions based on their KM readiness assessments [14].Awareness and understanding of KM and its benefits are very important. The KM awareness benefits the entire organization and that it relies on developing a KM environment inside and outside the organization that allows the generation of new knowledge, the transfer of existing knowledge, and the application of knowledge to new products, services, and process [12]. KM is a potential way to improve productivity and boost confidence among staff on the job. So, it is necessary to increase the awareness of and readiness for KM [15].
3. IS1 in Organizations and the role of IT in KM
During the information era attributed by generation of tremendous amount of data on a daily basis, enterprises only use IT to integrate each division with various technologies, such as intranet, data warehouse, electronic whiteboard, artificial intelligence and expert systems so that the jumbled business data is well-organized and more integrated [16]. It is obvious that certain methods, such as data mining, can be helpful to an organization in extracting valuable information from a database, particularly when they are applied to marketing, customer relationship management, and e-commerce domains, hence, it is obvious that IT is a crucial enabler for enterprises to achieve a competitive advantage and organizational innovation [17]. IT is recognized in most literature as a key enabler of KM although there are many other factors that are necessary for KM success [18]. Other researchers emphasize on that IT and Organizational Culture [OC) play very important roles in determining the success or failure of the implementation of KM [19]. The regression result for KM model of Salleh that have been conducted on his case study highlights that knowledge sharing process and ICT infrastructure and software, knowledge sharing technologies and communication technologies are the most important KM enablers for the successful KM implementation. This analysis also confirms the significant impact of process and technology as KM enablers to facilitate high organizational performance since the core business in accounting functions and financial services is heavily related to accounting process and information technology [8]. Without the capabilities of IT in terms of both storage and communication, leveraging of knowledge resources would hardly be feasible. A variety of tools are available to organizations to facilitate the leveraging of knowledge. These tools (KMS) are defined as a class of information systems applied to managing organizational knowledge. That is, they are IT-based systems developed to support and enhance the organizational processes of knowledge creation, storage/retrieval, transfer, and application [18]. Common KMS technologies include intranets and extranets, search and retrieval tools, content management and collaboration tools, data warehousing and mining tools, and groupware and artificial intelligence tools like expert systems and knowledge based systems [20]. Other papers emphasis that in the KM process, the absorption, creation, arrangement, storage, transfer and diffusion of knowledge are all dependent on assistance provided by IT [19]. Statistics show that nearly 70% of KM articles in 1998 focus on IT. It is obvious that IT- based KM tools clearly play a vital role in the new knowledge era. Accordingly IT-based tools can facilitate both the exploration of knowledge (i.e. the pursuit of new options through knowledge creation and construction) and the exploitation of knowledge (i.e. the further use of
1 Information System Measuring Knowledge Management Readiness in ERP Adopted Organizations: A Case of Iranian Company Golnaz Azhdari, Fariborz MousaviMadani, Mahdi ZareBahramabadi things that are already known through knowledge capture and distribution) [21]. IT, such as electronic networks and group support systems, could enhance tacit knowledge exchange knowledge workers [22]. The application of IT to support KM apparently influences the of knowledge collaboration within an organization [19]. IT not only helps KM processes but also greatly enhances the value of knowledge assets due to the advancements of the Internet [23]. Consequently IT contributes to the integration of knowledge or even to the stimulation of new knowledge [24]. But we should consider that although IT is the foundation for managing knowledge assets and enables people from different departments to cooperate in its implementation, it is difficult for IT to support all the factors that have influence on the KM [25]. Like many other types of information systems, such as ERP, that break downs are not rooted only in technical reasons, KM have a high chance of failure due to non-technical cultural, behavioral, and strategic factors [26].
4. KM and ERP
During the past 20 years, there was a huge change in organizations, contrasting the physical assets age. Todays workforce is largely mobile, and technology undergoes revolutionary changes [2]. While traditional organizations mainly focused on physical assets, modern high-tech enterprises concern with two major types of assets, physical as well as intellectual assets [4]. Moreover, high-tech organizations are now highly dependent on their intellectual capital rather than their physical assets [27]. Due to the fact that both types of assets need to be properly managed, the integration of KM and ERP becomes a strategic initiative for providing competitive advantages to enterprises [28]. KM and ERP are two main types of information systems that affect the way any enterprise cooperates. These two systems are widely implemented in many organization, but systematic incorporation of KM into ERP project management is strategic and critical [29]. Sometimes they are being implemented simultaneously, or at least their implementation cycles are overlapped [30]. This means that it is possible to implement these two systems simultaneously or in tandem but the interaction between them is more important issue. Since 1990s, enterprise information systems such as ERP systems are developed and implemented mainly for managing physical assets of an enterprise [9]. ERP systems facilitate gathering and dissemination of information across diverse areas of business in order to generate a more accurate measure of performance. ERP software is characterized by its fluid and seamless integration of information across functional divisions and locations. This integration results in more accurate information and reporting of performance data enabling more effective decision making [31]. ERP systems emphasize the efficiency of business processes in enterprises. To achieve this goal, they maintain mechanism for data/information consistency through high degrees of standardization, formalization, and specialization [4]. A successfully implemented ERP can link all areas of an enterprise including customer relation, manufacturing, human resource, financial management, and distribution with customers and suppliers, and forming a highly integrated system with shared data [9].The knowledge-based view of enterprises argues that KM system is the centre of business enterprises and an enterprise's competitive advantage depends upon the effective integration and management of knowledge assets. The information processing-based view considers that ERP is the centre of enterprise management - ERP enhances business performance through minimizing internal and external uncertainties by improving information flow. Although either view has its limitation from systems perspective, they are complementary to each other. Although ERP and KM are based on different management philosophies, ERP and KM systems complement each other to some extent. The distinction between information and knowledge not only suggests their different implication and value for organizations, but also suggests that both ERP and KM system are needed in order to provide and leverage the respective values of information and knowledge. In perspectives of enterprises, the ultimate goals of the two systems are to help enterprise survive in the global market by improving its performance. In summary, ERP and KM systems manage the business from the point of views of physical and knowledge assets, respectively [4]. Measuring Knowledge Management Readiness in ERP Adopted Organizations: A Case of Iranian Company Golnaz Azhdari, Fariborz MousaviMadani, Mahdi ZareBahramabadi Some researchers consider KM as an ongoing process of any organization that is needed for managing knowledge asset. In their papers, they suggest using the platform of ERP to provide tools needed for implementing KM. From managers' point of view, ERP and KM systems should be integrated to attain competitive advantage [4]. With a proper framework in which ERP and KM can cooperate with each other, an enterprise can benefit from the advantages of ERP and KM and be successful in global competition. Increasing requirements for extended enterprises have stimulated the integration of KM functions into ERP systems for knowledge asset management [9]. In the process-based point of view, KM is a process that needs a common platform for its activities and ERP can provide such shared platform in organization [32]. ERP system provides a platform for capturing, creating, storing, and sharing knowledge. KM manages both tacit and explicit knowledge that may be acquired through ERP information platform [4]. Due to the inherent differences between ERP and KM, researchers suggest that it is not possible to take advantage of integrating KM into ERP by simply adding an extra KM module into an ERP system. It is obvious that KM has its own purpose compared with that of ERP, where such purposes may be conflicting to each other to some extent. For example, KM emphasizes the flexibility in business routine, whereas ERP focuses on the standardization of business routines. In integrating KM into ERP, changes are needed in ERP to facilitate KM implementation. Such changes may include knowledge-based management, knowledge presentation and so on. KM, being inserted into an ERP system as a module, can support ERP for better decision making functions. KM can capture knowledge, transfer tacit knowledge to explicit knowledge, and help use or reuse knowledge for ERP purpose. Next generations of ERP systems may include a KM module through achieving trade-off between their contradictions based on two managerial philosophies [9].
5. Survey and the questionnaire
There are plenty of tools that can be used for KM readiness assessment some of them have been used widely in organizations. It means that because of the different aspects of KM, readiness assessment should address a multifaceted view, which most literature lacks to address. Unfortunately, the measurement of an organizations readiness for KM initiatives poses a challenge because no widely-used software package is available to do so [33]. To measure the KM readiness, we developed a 36-item questionnaire adapted from KM enablers, KMAT, KM critical success factors and also KM readiness factors based on similar works. We compared these tools and extracted common factors that researchers complied as affecting the KM readiness. Firstly, knowledge enablers are mechanisms that stimulate knowledge creation, protect knowledge, and facilitate knowledge sharing [14]. Technology, process, people and the organization structure and culture are the key enablers of the KM [8]. In many respects, existence of KM enablers implies a readiness for KM [33].Secondly, the KMAT 2 was developed by the American Productivity & Quality Center and Arthur Andersen in 1995 to help organizations self-assess where their strengths and opportunities lie in managing knowledge. The tool is divided into five sections: the KM process, leadership, culture, technology, measurement. Thirdly, as the final aim of KM readiness assessment is to enhance the final result of KM implementation, it is crucial to consider critical success factors in this survey because successful KM depends on the achievement of critical success factors based on supporting conditions [34]. Jennex and Olfman summarized and synthesized the literature on knowledge management critical success factors [KMCSF] into an ordered set of twelve KMCSFs. The following CSFs were identified from 17 studies which consider over 200 KM projects: knowledge strategy, motivation and commitment, integrated technical infrastructures, organizational culture and structure, enterprise wide knowledge structure, senior management support, learning organization, measures, easy knowledge use, business process fusion and security/protection of knowledge [11].
2 KMAT: Knowledge Management Assessment Tool Measuring Knowledge Management Readiness in ERP Adopted Organizations: A Case of Iranian Company Golnaz Azhdari, Fariborz MousaviMadani, Mahdi ZareBahramabadi 6. Analyzing
We assess some measures which the literature emphasize on them and can affect KM readiness. These measures are KM process, leadership, organizational culture, KM technology, and some specific KM measurements. We use 5 ordered response level questions in Likert scale where an item is simply a statement which the respondent is asked to evaluate according to any kind of subjective or objective criteria; generally the level of agreement or disagreement is measured. We analyzed the KM process readiness by measuring the following indexes. First, whether the staffs work seriously to capture/generate new ideas where the answer was at low level. Second, whether the quality of information that is needed for every day job of staff is available for them and it is in an appropriate level. It means information that is available to staff can address their needs where the answer was at high level. This occurs because of the appropriate documentation tools that ERP software brings forth to the staffs. Third, whether in the organization the gap between the in hand knowledge and needed knowledge have been identified structurally and appropriate process have been launched for bridging this gap. For example, upon strategic alliances some sort of courses has been designed to improve the knowledge level of staff. The answer was at middle level. Forth, whether in organization for transferring the experiences and lessons learned, there is a formal documented process or not where the answer was at very low level. Fifth, to what extent the structure of jobs designed based on KM and in the way of storing and sharing knowledge where the answer was at very low level. Sixth, whether there is an advanced and ethical mechanism for capturing individual information and enterprise knowledge or not, where the answer was at middle level. Seventh, whether tacit knowledge in the organization is valuable and shared or not where the answer was at very low level. We analyze the leadership part of KM readiness by measuring the following indexes. First whether the CEO supports KM and implements the culture of KM in the organization or not, which the answer was high. Second whether organizational strategy designed based on organizational knowledge or not. It means that long term plans formed based on storing and protecting of knowledge during the age of organizational activities which the answer was at middle level. Third, whether organization knows how to earn money by its invisible assets and has some sort of strategy for marketing and selling this knowledge or not which the answer was high. Forth, whether Organization learns from its administration abilities and makes new abilities and usage of it which the answer was high. Fifth, whether staffs evaluated and awarded by participating in expanding organizational knowledge. It means making new knowledge and transferring knowledge, and whether staffs have been awarded for developing organizational knowledge which answer was low. We analyzed organizational culture in KM readiness by measuring the following indexes. First, whether organization leverages sharing knowledge and awards by sharing knowledge Measuring Knowledge Management Readiness in ERP Adopted Organizations: A Case of Iranian Company Golnaz Azhdari, Fariborz MousaviMadani, Mahdi ZareBahramabadi which the answer was high. Second, weather the organization is aware of publishing and storing benefits of the knowledge which the answer was middle. Third, whether there is a trust atmosphere of organization or not which the answer was middle. Forth, whether there is an open atmosphere in an organizational culture or not which the answer was high. Fifth, whether in the organization, team work is valuable and also the organizational culture supports working as a team or not which the answer was high. Sixth, whether creating value for customer is the main goal of KM or not which the answer was very high. Seventh, whether flexibility and motivation for innovation is an actuator of teach or not which the answer was very high. Eighth, whether there is a trend of change in the most of staffs or not which the answer was middle. Ninth, whether the vision of change is one of the motivator factors for change among staffs which the answer was middle. Tenth whether the culture of learning from failure is a norm between staffs or not which the answer was little. Eleventh whether in the organization, fail is not just criticize but learning and experiencing from fail is important which the answer was middle and the final whether the staffs get the responsibility of their learning which the answer was high. We measure the KM technology factor in KM readiness by measuring the following indexes. For KM it is important that technology connect all the staffs and also it connects to external resources. In our case technology in very high level connects all the staffs. In KM implementation, having a good and practical organization memory is important. So it is important that IT creates an organizational memory which is available for all staffs. In our case study the answer was high. Technology should connect organization to their customers. In our case study the answer was high. For KM implementation the organization should develop the infrastructure of IT base on human factors. In our case study the answer was middle. Technology should support the coordinating in the job which is available for staffs on time In our case study the answer was middle. IT tools that have been used in the organization should support from sharing the knowledge between staffs. In our case study the answer was middle. For KM implementation information system should be online, integrated and intelligent In our case study the answer was high. We analyzed KM measurements by the following indexes. First whether staffs believe that special KM in the organization has some sort of priority which the answer was low. Second, whether human resource manager cares the culture of KM and also awards the culture of KM among staffs which the answer was middle. Third whether staffs are optimistic to implementing the KM and also using the benefits of it or not which the answer was middle. Forth we measures whether chief managers lead their resources to develop their knowledge base which the answer was low. Fifth whether the staff innovate some sort of ways of connecting to the knowledge and reaching its finance results from the knowledge which the answer was very low.
7. Conclusion
The results show that in this organization the KM process factors were in the low level, while leadership factors were in the middle level. It is obvious that because staffs, previously, by implementing ERP experience the change, they have a good support of leadership which lead to ERP implementation successfully. Organizational culture was in the middle level. By using the infrastructure of information technology which is available for organization through ERP software, the KM technology factors were in the high level. But the most important thing is Measuring KM factors which were in the low level. It means that while there is a good and adequate infrastructure of technology for KM but still there is not an appropriate care for tacit Measuring Knowledge Management Readiness in ERP Adopted Organizations: A Case of Iranian Company Golnaz Azhdari, Fariborz MousaviMadani, Mahdi ZareBahramabadi knowledge. So it is recommended for this organization to enhance the process of KM and also change the beliefs and behaviors of their staffs toward KM. which directly effects KM implementation.
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Measuring Knowledge Management Readiness in ERP Adopted Organizations: A Case of Iranian Company Golnaz Azhdari, Fariborz MousaviMadani, Mahdi ZareBahramabadi