TLE D U
Journal of Information Technology (2000) 15, 281–288
An ERP implementation case study from a knowledge transfer perspective Z OONKY L EE AND JINYOUL LE E
Department of Management, College of Business Administration, University of Nebraska-Lincoln, Lincoln, NE 68588–0491, USA
& Fr ci s G an
An enterprise resource planning (ERP) application is an enterprise-wide package that tightly integrates all necessary business functions into a single system with a shared database. An ERP implementation often entails transferring the business knowledge incorporated in the basic architecture of the software package into the adopting organization. This article proposes a new approach to analysing ERP implementations from a knowledge transfer perspective. It also contributes to a better understanding of competitive advantage based on process knowledge when standardized business processes are implemented by an organization. The article begins by identifying the types of knowledge transferred during an ERP implementation and the factors affecting this transfer. It then investigates how con icts between the business knowledge transferred from the ERP package and the existing organizational knowledge are resolved. During our investigation, we used in-depth interviews, process analysis and documentation analysis in order to analyse an early implementation stage of ERP. The results indicated that the business processes which are incorporated in an ERP package are transferred into an organization along with the business rules inherent in the processes due to process automation, the limited exibility of such packages and the cross-functional nature of an ERP package. The results also suggested that an organization’s adaptive capability concerning role and responsibility redistribution, the development of new types of required knowledge and the introduction of a different knowledge structure in uence an organization’s ability to internalize these standardized processes into business routines that provide a competitive advantage
Knowledge transfer is an important topic in management literature. Some studies have focused on the transfer of best business practices in multinational corporations as they transfer accumulated knowledge from their headquarters to new foreign af liates (Ghoshal and Nohria, 1989; Gupta and Govindarajan, 1991; Kogut and Zander, 1993). Other studies have focused on the transfer of technology, business processes and best practices inside a rm (e.g. Argote, 1999). However, current studies have not focused on the unique knowledge transfer practices involved in an enterprise resource planning (ERP) implementation. ERP is an enterprise-wide application software package. In ERP, all necessary business functions, such as nancial, manufacturing, human resources, distribution and order management, are tightly integrated into a single system with a shared database. While customization is not impossible, the broad scope and close connectivity of all related functions make customization very costly (Davenport, 1998; Davis, 1998). The high cost and long implementation process of customization result in most organizations aligning their business processes with the functionality provided
by the ERP program rather than customizing the ERP package to match their current processes. According to Forrester Research, only 5% of organizations among Fortune 1000 companies that had purchased an ERP application customized it to match their business processes (Davis, 1998). Therefore, implementation of ERP entails using the business models included in the package (Slater, 1998). In other words, the business knowledge incorporated in the basic architecture of the software is transferred into the adopting organization. Most ERP systems contain business process reference models. These are often are called ‘best practices’ because they have been implemented and proven in many world-class companies....