Managing Knowledge and Global Information System - Essay Example

Global Information System and Knowledge Management Implementing electronic business model in any organization requires a lot of planning and commitment on part of the top management. There are several technologies which go into making an electronic business model successful. HZ Electronics, a traditional photography equipment company has decided to adopt technology to help it compete in an increasingly competitive industry. Implementing the electronic business model connects a company to the World Wide Web. The scope of internet is immense and covers a wide range of objects, geographical locations, organizations and individuals. Implementing the e-business model also means building and maintaining databases. Databases comprise of huge amounts of data and data coming from different sources need to be integrated. The huge amounts of information available over the internet also raise other challenges. The biggest one is proper storage and retrieval of this information, especially inter-organizational information. All this requires knowledge management. Knowledge Management is the process of gathering, analysing, storing and sharing knowledge and information within an organisation. Another problem with such huge amounts of data coming from different sources is that it needs to be brought onto a common platform. All incompatibilities related to storage and retrieval needs to be removed and for this a common format for databases is used within the organization. This is known as Enterprise Systems, that is, systems which support and are used by the entire enterprise. We shall now discuss how HZ Electronics can use Knowledge Management and Enterprise Systems to help them properly and successfully implement the e-business model. We shall also mainly focus on the sales department since this is the department which needs to handle huge amounts of data, coming from different sources on a daily basis, in order to function smoothly and make informed decisions. Success factors for ERP implementation The aim of Enterprise Resource Planning (ERP) systems is to integrate data coming from different sources into a unified system in the organization. This is especially needed in the sales department, since a sales department has to handle data coming from customer, including feedback, suggestions and complaints, from the dealers and from the sales representatives and be able to integrate this data within the organization so as to be able to give back the feedback to the manufacturing department. ERP implementation is a major investment and before we take up such a huge enterprise we need to ensure that it will be successful. There are various factors which go into making ERP implementation successful. The first most important factor, as pointed out by (Poon &Yu, 2006), is the procurement process. To completely satisfy customer requirements, it is important to adopt a well planned, managed and controlled ERP system. The proper implementation procedure is discussed in details in the next section. Other important factors which contribute to making ERP implementation successful are discussed by Ifinedo & Nahar (2006) and Ngai, Law andWat (2008). Ifinedo & Nahar approach was to interview the top and middle management of an organization to study any differences between their evaluations of the success of ERP implementation. Their study revealed that while there were some variations between the evaluations of top management and middle management, with the top management having a more positive view, overall their evaluations were comparable. They were of the view that these variations in the evaluation were due to the fact that the middle management often had wait for any problems on their systems to be updated and made accurate before they could carry out their routine jobs. On the other hand, the top-management, whose work mainly depends on the right information, could have got this information from other non-IT sources and were not dependent on the ERP software and hence, the higher degree of satisfaction among the top management. What this means for the success of the ERP systems in HZ Electronics is that the implementation should be phased and allow the middle managers to go back and forth between their old way of doing things and the new software until all the problems in the implementation process have been properly debugged. Ifinedo & Nahar, as well as some earlier studies, have raised the issue of accuracy and reliability of the data available on the ERP softwares. Here, we would like to emphasize that if proper care is taken while integrating the data this problem will not exist since almost all accuracy related errors are human related. Ngai et al did a more comprehensive research of the success factors in the adoption of ERP and identified 18 critical success factors for successful implementation of the ERP. These 18 factors were “appropriate business and IT legacy system”, “business plan/vision/goals/justification”, “business process reengineering”, “change management culture and programme”, “communication”, “ERP teamwork and composition”, “monitoring and evaluation of performance”, “project champion”, “project management”, “software/system development, testing and troubleshooting”, “top management support”, “data management”, “ERP strategy and implementation methodology”, “ERP vendor”, “organizational characteristics”, “fit between ERP and business process”, “national culture” and “country related functional requirements.” Even at a casual glance, it is obvious that most of these factors are directly related to total commitment of the top management and proper training of the executives. The third important criteria for the success of ERP implementation is selecting the proper methodology and following it meticulously. The best methodology for successful implementation of ERP is discussed in details below. Implementation of ERP The designing and implementation of the ERP is a long process comprising of several steps. The implementation starts at the highest level known as the Enterprise Modelling and ends at the lowest abstraction level or code generation. (Monnerat, Carvalho & Campos, 2008). Monnerat et al have listed the various steps which go into implementation of the Enterprise Systems. For the first step, Enterprise Modelling, a specific workflow is employed, which concentrates on the modelling of function, information, resources, and organization views in order to better capture the organizational aspects and requirements. As detailed by Monnerat et al, the Enterprise Modelling workflow consists of “Objectives Modelling” (defining the strategic planning of the organization), “Process and Activities Modelling” (defining the behavioural and functional aspects of the organization), “Resource Modelling” (human, informational and technological resources), “Information Modelling” (high level description of information handled by the organization) and “Organization Modelling” (structure of departments within the organization). Once this information is captured, the next step is “Requirement Workflow”. Here the basic system requirements are collected, and case studies are identified which represent a specific business process. Also a basic iteration execution plan is defined at this stage. The next step is “Analysis” in which parallel inter-related activities are executed. In this step the case studies, and documents are analysed. Also a set of abstraction test are carried out to check if the business processes identified by the case studies can be practically executed. Another important function carried out at this stage is “Lexicon Building”. Once the “Analysis is complete, the next step is designing and finally the implementation of the ERP. Customer Relationship Management and Supply Chain Management The whole purpose of investing in Enterprise Systems is to improve the profitability of the company. Information Technology helps to make the various systems within the organization efficient and this in turn helps improve the profitability of a company. However, improving the efficiency alone does not guarantee the success of the Enterprise System. The most important challenge for any organisation is satisfying the customer. Once again, technology can help HZ Electronics work wonders in this department. Implementation of ERP will help unify the data from various kinds of sources. In today’s competitive world, customers like to have as many options as possible. The traditional sales model of HZ Electronics of using dealers and resellers has limited reach. If a customer wants to buy an HZ Electronics product, they have to first find a dealer or reseller, then cover the distance from their home to the dealers shop and only then are they able to make a purchase. In today’s information age, when almost everything is available form the comfort of the home at the click of the button, this process may seem extremely long winded. So HZ Electronics must endeavour to make their products available over a variety of channels, such as through internet and direct sales. In order to be successful in adopting these new channels of sales, HZ Electronics will have to entirely reorganize its sales department and automate the Supply Chain management (SCM). SCM is the process which controls the movement of material from the supplier, to the manufacturer, to the wholesaler, to the retailer and finally to the consumer. Since we are concerned with the sales department, we will focus on the movement of the end products from the HZ Electronics warehouse to the consumer. This could be through the traditional channel, of going through the dealers, retailers and finally the consumer or through the electronic age channel of direct sales to the consumer through internet. A direct contact with customer introduces the need for Customer Relationship Management (CRM). CRM entails all and any kind of contact that a company has with the customers, including sales and service. While CRM is also important in the indirect sales channel, it becomes all the more important when the company is interacting directly with the consumer as in online sales. As rightly pointed out by Pombriant (2008), “it takes higher level and greater depth of customer knowledge to understand needs, biases and desires of customers”. According to Pombriant, in order to successfully address these needs, CRM software must have a database for tracking the customer demographics, a community interface to allow the company to give direct feedback and a mechanism for rewarding repeat customers. But even a basic CRM tool with the right kind of customization, when properly utilized, can help an organization build better relations with the customers and this in turn translates into better sales revenue. According to Wolosky (2008), to get maximum benefits from CRM, it must be used a business development tool. The right strategy for CRM adoption by an organization depends on the organization’s culture and by adopting this optimum strategy, CRM can help an organization reach profits which it cannot even dream of. Knowledge Management An organization comprises of a number of departments and different departments may have different ways of processing knowledge. Yet there is always some amount of inter-department sharing of knowledge without which it would be impossible for any organization to work. Even before the advent of the information age, knowledge travelled within the organization through both official and unofficial channels. This exchange of information between various departments helped the departments to be more productive and creative. When even a limited amount of information can help a department improve its productivity, imagine the benefits an organization will accrue through proper management of this company wide knowledge. Unfortunately, in today’s information age, when we are bombarded with so much information from both intra-organizational sources and inter-organizational sources, it can become a huge task just separating the important information from the useless one. An overload of information can actually be negative for any person, department or organization. The need to separate important information from useless information gives rise to Knowledge Management (KM). The Knowledge resource of a company is its most valuable asset. While the economic benefits of KM are still debatable, KM is necessary for an organization going online for several other reasons, the most important being security of organizational information. When an organization has details about the company’s functions available online, security of sensitive data becomes extremely important. But since an ERP system makes all kinds of information available in an electronic format, it is important to classify this information on the basis of its sensitivity and restrict its access. All this requires KM. Another important reason in favour of KM is that organizations which are adept at leveraging and capitalizing their knowledge resource experience better business success and performance improvement (Chan & Chao, 2008). Chan and Chao have also discussed other goals of KM. Among these goals is the reduction in duplication of work, gaining competitive advantages, controlling information overload, improving business processes and inspiring innovation. KM inspires innovation by allowing even junior level employees to share ideas. KM also has other capabilities such as Infrastructure Capabilities, which is development of new knowledge through the connection and interaction of people and networks and Process Capabilities, which is proper storage and retrieval of process knowledge available with the employees, (Chan & Chao). In the context of the sales department at HZ Electronics, these capabilities of KM can help the company properly utilize the information gathered from the customers to improve its processes and qualities and hence provide better customer service. Another potential use of KM can be in helping the sales representatives access the relevant information and making it available to the customers. Implementation of Knowledge Management While implementing KM, it is important to remember that information technology does not come at the expense of the human factor, rather, IT is meant to help human be better prepared for their jobs. The strategy to implement KM is another business strategy, which, like any other business strategy, is a “high level plan that aims at supplying the organization with the knowledge resources that it needs to carry out its vision and goals.” (Sunassee & Sewry, 2003). Just like any new change requires total commitment from all stakeholders, so also implementation of KM also requires the total support and commitment of the top management. Successful implementation of KM requires a creation and management of knowledge culture within the organization. What this means is that all employees must be encouraged to share any and every knowledge they may have regarding the various processes within the organization and this knowledge must be properly managed so as to be easily available to anyone in the organization as when required. Another important matter to be considered for successful implementation is that any new project must be first tested to ensure its workability. Hence, before an organization wide implementation of KM, it is important conduct a Pilot Project to test the feasibility of the KM implantation in the organization and to detect any shortcomings and rectify them in time. Also choosing the right technology is important for the wrong technology could either have too much functionality which are not required and hence prove to overly expensive or be cheap but not have enough functionality. Return on Investment of Enterprise Systems Implementation Before we move any further, we need to understand the impact that implementing the ERP system will have on the organization. Implementation of any Enterprise system is an extremely costly affair and it is important to know for any organization what the return on this investment will be. Hendricks, Singhal and Startman (2007) carried out an extensive study on the impact of Enterprise Systems implementation on organizations. According to them there is a statistically significant 5% increase in return on assets post ERP implementation. The return on sales also improved by 5% in the 180% companies studied in the research. Overall, the profitability of these industries increased in the combined implementation and post implementation period. The profits and benefits increase with the passage of time and the return on investments was shown to be greatest for the early adopters of ERP. This shows that ERP implementation is a long term commitment and in the long run, its benefits far outrun the heavy initial investment. Conclusion Enterprise Systems help to bring information collected from various sources and from different databases onto a common platform used within the organization. The process is time consuming and an extremely costly affair. Due to the high costs of implementing Enterprise Systems, it is important that the top management be totally committed to the process. As we have seen above, total commitment of the top management is the most important factor which makes the ERP successful. Hence if the top management at HZ electronics is committed, there is no reason why ERP implementation cannot be successful. As far as return on investment of implementing the ERP system is concerned, once again we have seen the longer the system has been in place in an organization the better the returns. Hence, this is a long term investment which promises to give better returns with each passing year. Besides, in today’s day and age, no company can afford to ignore technology. Hence, the sooner HZ Electronics adopts the ERP system the better it will be for its business in the long run. References Chan, I. & Chee-Kwong Chao. (2008). Knowledge management in small and medium sized companies. Communication of the ACM, 51(4), 83-88. Retrieved June 27, 2008 from http://portal.acm.org Hendricks, K.B., Singhal, V.R. & Stratman, J.K. (2007, January). The impact of enterprise systems on corporate performance: A study of ERP, SCM, and CRM system implementations. 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