Knowledge Transfer in ERP Implementation

Enterprise resource planning (ERP) is an integrated software application in enterprise system that is used to manage organizations' resources. Currently, SAP is the most widely used ofERP systemi package in the market This paper is a case study based on the ERP implementation at the Universitas Islam Indonesia (UII) in Yogyakarta, Indonei " study sees ERP implementation in knowledge transfer persp which explains the process ofbringing explicit business process organization. There arefour stages in understanding the knowledge transf r process at UII: initiation, implementation, ramp up, and integrat on. The most crucial stages are ramp up and integration. During the ramp up organization adopt the "best processes" by configuring their environment so that explicit knowledge are easily transferred to the organizatu n. In the integration, the knowledge is internalized into the organization and seen as agradual processfor the new practices to become partofthe mwreality oftheorganization.


Introduction
Enterprise system is a set of information system tool that many c use to enable information flow inside and between business proc ia.This "xtive in ?s to the rganizations esses in the organizations (Pearlson and Saunders 2006a).The most comm(n discussed system tool in enterprise system is Enterprise resource planning (IRP).ERP is an integrated software application in enterprise system that is usei to manage organizations' resources.ERP combines business management process and information technology concept to be integrally (Basoglu et al. 2007).Thereare many vendors that play as ERP providers, such as SAP, Oracle, People Soft, and JD Edward.Currently, SAP is the most widely used of ERP systens package in the market.It contains 1000 business reference models from different industries thataremapped into organization's business (Lee and Lee 2000).Dosen Fakultas Ekonomi UII Business organization needs ERP to solve it complex business problem.University as a service organization now need an ERP to manage their organization resources.Although the size ofthe business is not as complex as profit organization but the idea of implementing ERP is important as the university needs to manage its internal information as well as to handle vendors and customers problems.
Since ERP consists of integrated modules in a software package, it is forced the organization to redesign its business processes.These processes require a lot of work and conflict within the organizations especially with"the changes in the organization structure (Pearlson and Saunders 2006a).In order to solve the conflict, the knowledge transfer process is important as a mediated process of moving and integrating knowledge from ERP as a software package with its architecture to the legacy value that the business already familiar with.
Knowledge transfer is defined as a transmission ofknowledge and conveying it from one source to the other (Awad and Ghaziri 2004).The sender and the recipient are the parties involved in conveying the knowledge.The sender of knowledge in ERP is ERP software itself and the recipient is the users who used the ERP software as an integral part of their business process.The knowledge transfer in ERP has two characteristics.Firstly, it is a computer package-based knowledge transfer in which only coded business processes are transferred.Secondly, the scope of knowledge transfer is company wide process, which means all organizations business functions are connected to each other Lee and Lee (2000).
Thispaperis a casestudybasedon theERPimplementation atthe Universitas Islam Indonesia (UII) in Yogyakarta, Indonesia.The case description is based on an in-depth analysis of the early stages or ERP implementation in UII.The objective of this paper is to describe the process of change in the organization from the legacy system to ERP, the types of knowledge transfer during an ERP implementation.Moreover, it explores the problem during the implementation process and the organization efforts to solve those problems.
The remainder of this paper is structured as follows.The second section is the literature review related to enterprise system issues and knowledge transfer.
The third section is the research method.The fourth section is the analysis.Fifth section is the analysis and finally the last section discusses the results and presents conclusions.
Literature Review

Enterprise Resource Planning
Enterprise System or Enterprise Resource Planning (ERP) is an integrated softwareapplicationused to manage organizations resources Davenport(1998).
The architecture of an ERP is constructed on one database, one appli a unified interface across the entire enterprise.Therefore, an entire c is able to operate under one application standard which serves hum, 'accounting, sales, manufacturing, distribution, and supply chain cation, and rganisation resources, anagement business processes.These processes require a lot of efforts and ere within the organizations especially withthe changes in the organizati (2) As the wide scope of ERP and its close system connectivity to as well as its fimctions make the ERP software very costly (Dave iport 1998).
1287 Ifunctions (Al-Mashari et al. 2003).Furthermore, Pearlson and Saunders (2006a) mentioned six characteristics embedded in ERP: (1) Integration, in which information system is integrated and flows throughout the cojnpany.(2) ilt consists of modules such as manufacturing, flnancial, human resources and sales.(3).ERP is a commercial package that requires a long term relationship with software vendors and it should be modified on acontinuing bjsis to meet organization's needs.(4) It is a best practice and sometimes causes business process reengineering when ERP is applied in an organization.(5) S)me system customization required asERP integrated with the legacy systems.{() Evolving, in which ERP system is stillbeing developed and designed to be abl; to interact jwith other system such as supply chain management software.
ERP brings advantages into the organization; (1) All modules in ERP can communicate each other through a stand-alone system (2) The in;egration of enterprise systems is important tools for organization to centralize it; operations gives contribution to the firm as the following; (1) Integrated Informition system which the firm can covers all its fimctionalities using the same tools, (2) Tight control of physical flows, tough control of information and financ al flows,(3) ERP provides reliable information and data coherence because the information is traceable, (4) Ease and speed of accessing information caused by ])ersonalised access and a single sign on that creates significant time savings and productivity gains, (5)Umque and identical information in real time forallusers.ERP systems allow users to get the same information at the same time.This prdcess avoids data processing redundancies, (6) more rigours in data management, the firm can give more precise data and information conceming the customers and top management demands.
Despite the benefits, ERP also has disadvantages.The follow ingsjare the disadvantages: (1) Integrated modules forced organizations to redesign their ate conflicts 3n structure, all modules According to Meta group, the total cost of ownership of enterprise system is ranging from $400,000 to $30 million (Pearlson and Saunders 2006a).

SAP
SAP stand for System Analysis and Program development.It was founded in Germany by five formerIBM employees in 1972.Their objective was to develop standard application software for real time processing (Brinkmaim and Zeilinger 2001).SAP's softwareconceptis designed to meet the information requirements of companies throughout the world.Currently, the architecture system that developed in SAP is called as SAP R/3 that works based on a multilevel client-server concept.The applications or modules in SAP R/3 are based on a general business model.The general models are mapped through modules that covers the following areas of business: Financial accounting (FI), Controlling (CO), Executive information system.Material Management (MM), Production Planning (PP), Sales andDistribution (SD), Quality Management (QM), Service Management (SM), Plant Management (PM), Project Planning (PS), Human Resources Management (HR), Office and Workflow fimction.SAP R/3 is also supplemented with software development tools, forexample ASAP which isused tomonitor thesystem inday-to-day operation atthecustomer sites (Brmkmann and Zeilinger 2001).Customization isneeded inSAP implementation.Customization is a process of modifying standard software sothat it meets to company-specific requirement.Customizing in SAP R/3 is a process of the implementation of SAP modules separately from each others and adapts them to the requirements of a business.Theprocess is quick, effective, and costefficient (Brinkmann and Zeilinger 2001).

Knowledge transfer
Knowledge is a summary of information after it is connected with other information andcompared to what is already known.For instance books contain information and it becomes knowledge when a person understands it content and apply those information (Daft 2007).In addition, Pearlson and Saunders (2006b) defined knowledge as a combination of information, experiences, rules, and values.The concepts of knowing such as "knowing whaf, "knowing how", and "knowing why" are embedded in the concept of knowledge.
There are two types of knowledge which are explicit knowledge and tacit knowledge.Explicit is a systematic knowledge that can be codified, wntten down, and transferred to others in documents or other digital means.Explicit knowledge sometimes refers to "knowing about".While tacit knowledge is based onpersonal experience, rule of thumb, intuition, and judgment.It includes professional know-how and expertise, individual insight and experience, and creative solutions that are hard to commimicate and pass on to c knowledge is equated with "knowing how" (Daft 2007).Explicit can be easily collected and organized whereas tacit knowledge are captured, formalized and transferred throughout organizations (20C and Saunders 2006b).Nonaka and Takeuchi (1995) defined explicit knowledge as aknowledge that is transmittable in a formal, systematic way.Thisknowledge can be by a computer, transmitted electronically or stored in a database, knowledge is associated with individual experiment and difficult to is subjective and intuitive, tacit knowledge is not easy to be proc( ssed in any systematic or logical manner. Knowledge transfer as regard to ERPimplementation is about knowledge when business processes are mapped and imitated.Busine ' are mapped through the solution package thatERP provides forbusine iS problems.Therefore, knowledge transfer in bestpractice is defined as dyadic exchanges of organizational knowledge between a source and a recipient.There ar jfour stages of knowledge transfer process regarding best practices (Szulanski 2000).Four stages are described as follows: • Initiation'.Thisstage consists ofevents thatleadto thedecision totransfer.
• Implementation: This stage starts with the decision to proc this stage, resources flow between the recipient and Implementation activities diminish after the recipient begiis using the transferred knowledge.
• Ramp-up: This stage starts when therecipient begins using thetransferred knowledge.During thisstage, therecipient is likely to useneivknowledge ineffectively but gradually improves performance to satisfactory level.• Integration: This stage starts after the recipients achieve satisfactory results with the transferred knowledge.The transferred knowledge becomes routines and institutionalizes to become the new reality of the organization.Brown and Duguid (1991)  These processes are visible and explicitly coded in the software (Zander and Kogut 1995).Secondly, non canonical processes of tacit knowledge transfer.These processes are related to difficult-to-migrate portion of organizational knowledge which isdeeply embedded incomplex social interactive relationships within an organization and have a property of stickiness (Szulanski 2000).The difficulties in migration process occur as ERP is not only a software but also an organizational structure that affects how people work (Hanseth and Braa 1998 as cited by (Lee and Lee 2000)).Therefore, ERP implementations convey business knowledge related to the business processes and this type of knowledge is not easilytransmitted to the adopting organization.
The canonical process in ERP is referred to the implementation process in which the knowledge ofERP system iseasily mapped and transferred.Conversely, the integrationprocess is anon canonical process that involved merging process of theERP models to theexisting values within theorganization.Theconflict occurs during the integration as ERP is the new value which interacts with the existing or current values ofthe organization.The process of intemalization of ERP into the business isimportant asfor the organizational members to appreciate the new value of the system (Lee and Lee 2000).
Following the theoretical fi-amework above, the analysis ofthis study will be discussed using the four stages defined by Szulanski (2000) and canonical and canonical business processes perspective developed by Brown and Duguid (1991) which then adapted by Lee and Lee (2000) to analyse the knowledge transfer process in the University ofNebraska.Lee and Lee (2000) developed their research analysis through the following research model; firstly, canonical knowledge is transferred based on reference models accompanied by business rules.Secondly, canonical knowledge isreceived and accepted inthe organization but the business mles associated with the reference modelsbegin to conflict with the existing business fundamentals ofthe organization.Thirdly, the organization tries to intemalize the business values fi-om the ERP package with its existing business practice.

Research Method
This paper is a case study which provides empirical inquiry that investigates contemporary phenomenon within its real life context.Case study is useful when the boundaries between phenomenon and context arenot clearly evident as quoted by Punch (2005) firom Yin (1994).In this paper, the ERP implementation is a contemporary phenomenon that will bestudied inthe real life context inUII.Moreover, the research question looks atthe knowledge transfer process inERP implementation in the organization.
The data for the case study were collected through two sourc es, namely interviews and documentation analysis.Interviews became the main form of the data collection, supported by a number of available documentations.
Interviews wereintheform of email andphoneinterviews, inwhicn a number ofquestions were asked.Data were eollected via email attachments (Within email mterviews) and note-taking (within phone interviews).Five (5) individuals were 3SSof SAP.
;s currently onal users.
interviewed fortheir experienees during theearly implementation proc Two (2) were project managers; One (1) was steering committee who still supervising the implementation process, and two (2) were operati Supportingdata for this studywere also eollectedthrough documentation analysis.lent within i structure, examined.
Since the authorhad the opportunity to interviewthe key respon JII, intemal documentations such as project plans, theERP model an business process, and some notes of meeting can be collected and Information obtained from those documents was very helpful for casO analyses, j There were anumber of difficulties experienced during collectiig data for this study, such astime constraint and uncertainty ingetting responsefs) from the participants due to their personal affairs.Inaddition, distance made it conduct face-to-face interviews with the participants.Therefore, the email interviews were chosen.In 1994, Un financial accounting system was based on cas recording its transaction records.Theproblem with this system is thj not identify the number of its inventory since all inventory was re ^expenses.The lack ofcontrol ofinventory caused UII lost some ofit; Realizing that the cash basis could not meet the requirement fc ' InAccoxmting term cash basis means theeffects of transacions or other event: cash or its equivalent is received rather than when the transactions or othe Standard information for financial reporting which used accrual basis^, then in 1997, UII developed in house standardized financial information system called SIMKEU (Financial Information System).Each UII faculty and department had SIMKEU for itsfinancial system.Although thissystem madesome improvements with the automation of the system, however, SIMKEU still had weaknesses in which the recording system in the transaction usedcash basis system and it was not connected between each faculty and UII as an enterprise.
With the growing number of faculties and students, encouraged UII to create SIMAK (Academic Information System), SIMIN (Inventory Information System), and SIMSDM (Staff and Human Resource System).Unfortunately SIMKEU, SIMAK, SIMIN, and SIMSDM were not connected to each other through the system.The control of inventory was getting more difficult since the system could not provide real time data and time consuming indetecting the fraud due to the difficulty of accessing the data.Futhermore, although SIMKEU could provide financial report ofUII income and expenditure yet, itwas difficult to trace the expenditure flow througout UIIfaculties and business units.
Realizing the complexities of its intemal problems with integration of all information system, in 2005 UII tried to build in house integrated system.However, this projects failed to solve the complexity ofUIIbusiness processes.After two years having had problems inbuilding in house system, in 2006 UII.decided to buy SAP ECC 6.0.This decision was fully supported by the top management, as he had mentioned that: ...With thedevelopment ofUII asan education institution that has several business units, realtime andaccuracy offinancial information is strongly important for decision making process.The decision tobuy SAP isaway ofsolving problems that occurs asa results oftheinability ofthe current system toprocess fast information and control financial activities such as inventories.
Un started to use SAP in February 2007.After one year (February 2008) of SAP R/3 implementation, UII begins to gain benefits as follows; (1) integrated information system, (2) reliable information data coherence as the information is traceable, (3) Ease and speed of information access by the top management for controlling purpose.These benefits are sumlar with the findings in Alcatel Accrual basis refers to the method of making a comprehensive financial measurement and •.^position by recognising economic events regardless of when cash transaction happen.In accrual basis, revenues and expenses arerelated in the the accounts in the accoimts in the periodto which theyrelateIbid.. triaAkmila, Knowledge Transfer in ERP Implementation: Universitas Islam., Berchet and Habchi (2005).Figure 1, shows the current integrated UII.This integration system is called SIAT (Integrated Accounting In System).project preparation, business blueprint, realization, final preparation, and go live and support.The summary of activities during the five stages described as in There are four stages ofknowledge transfer as outlined by Szulanski (2000).The stages oftransfer process ofERP in UII are described as the following: Llnitiation and Implementation Theinitiation andimplementations stages arecomprised ofallevents thatlead to create transition guides firom UII legacy system to the newsystem.Those two processes took place in the project preparation and business blueprint processes.
Projectpreparation took 31 days.In project preparation, the activities are mainly checkedthe projectplan instruments such as detailedprojectplan,proj ;ct charter, andproject issuelog.Business blueprint is created within25 days.In tl isprocess, the change management and new adopted organization structure is constructed, .^flerproject blue print is clearly defined, the next step is realization (26 days) which some activities such as customizing documentation and train ng for the trainers (UII-SAP team) are conducted.

2.Ramp up
Ramping up process started in thefinal preparation process (17 daysi) in which new organization structure role and responsibilities, user manual an^produced and used for training the end user.The end user training conducted n 10 (ten) days.The end users are staff in the finance and procurement depart cents.The !\P system assistance, edge fi"om embedded il chain of final set-up process was go live and support (20 days) in which the S were running and supported by the help desk is provided for the system -Ramp-up stage is about transferring canonical or explicit know ERP as a source of knowledge to the users as the recipient.Canonical in ERP software package and it reference models that contain form activities represented by process modelling tools (Zander and Kogi t, 1995 as cited by Lee and Lee (2000)) .During ramp up stage (final preparat on and go live and support), the users (staff) begin to received the transferred Imowledge.
In this stage the users or recipients concerned with identifying and usi ig the new knowledge they received firom the training.Through the assistance fi"om UII-SAP team and help desk, the users gradually improve their performance ai^d ramp up toward satisfactory level.

Integration
Integration process in ERP implementation is seen as a continuing using SAP.However, some problems occurred during the first month o1 implementation.This is due to imfamiliarity of the staff with the ac inside SAP financial and some errors happened.For example; the staff only recorded cash transaction, non cash transaction was not r the system and error in joumaling the transaction account since t descriptions were in English term.
Based on interviews with the project manager, those problem incompetency of staff UII has in certain aspects, such as follows: • Most staffs in finance and procurement department are grad process of the system :rual basis iccounting scorded in le account s arose as lated from senior high school, few were holds bachelor degree unfortunately they did not have accounting background.With the background that staffs have, it is easierto leam the cash basis framework rather than accrual basis concepts.
• •• Lack of English language competency so that it is not easy for the staff to operate SAP because SAP used English language as a medium of its system language.
Therefore, additional training is conducted to overcome the problems as stated above.Before additional training was conducted, the UII-SAP team performed tests to checkthe staffability in understanding the SAP system.Theresults were surprisingly low with only six staff (15%) in finance department and four staffs (7.27%) did meet the requirement.After this test second training was conducted by the SAP team to improve the competency ofthe staff.Following the second training, the second test again was conducted to check the improvement.The results showed slightly increase inthe number ofstaff who understand how SAP system works.The detailed results are shown infigure 3 below.
Financial Accounting (FI) -Score ^First test .
-Second test^< ?- the staffs isacontinuos process inSAP implementation inUII.The purpose of this activity is to be able to optimize SAP-ERP system as a current business process inUU.Instead oftraining, rewards also given to staff that were able to performbetter in the new integrated system.Moreover, UH-SAPteam also maintain and fully support all the problems in the integration by fiilly used the help desk function.The help desk plays an important role for providing solution for technical problems error.
2 The standard marie that tomeet therequirement for operating SAP system isless than orequal to70.
The integration process is a non canonical process that involved merging process of the ERP models to the existing values within the organization.During the integration, canonical knowledge is received and accepted in the or janization but the business rules associated with the reference models begin to coMict with the existing business fundamentals of the organization (Lee and Lee 2000).In UII, canonical knowledge from SAP merging into UII-SAP system and began to conflict with the current system (SIMKEU).The problems with staff 2re happen because ofunfamiliarity with the "accrual system" that SAP has.This was natural because the culture of "cash system" has been there for ten years iSIMKEU existed in UII from 1997 to 2007).This is similar with Hanseth and B "aa(1998) observation that the difficulties in migration process occur as ERP is software but also an organizational structure that affects how people wc lot only a rk.In this case, users are required to follow the explicit business processes embecded in the software package.Users are restricted by the nature of the system and became emerging infrastructure that goyems what they are doing (H; Braa, 1998 as cited by (Lee and Lee 2000)).
j As illustrated in the data, during integration, as staffhad problen new system, more tests and trainings are conducted as organizationa he system nseth and s with the efforts to solve the conflict as the new business knowledge imposed to the organization.
\^th continuous training and support by the UH-SAP team staff understand how the new system worked.
As can be inferred from UII integration process is that gradually the new practices (UII-SAP system) become part of the reality of the organization.The efforts to solve the problem with the staff are ways to institutionalize to new system to become integral part of the organization.This is similar with Berger and Luckman (1996) observation as cited by Szulanski (2000) that £s the new practice become institutionalized, it is taken-for-granted become reality of the organization.Moreover, Lee and Lee (2000) observed that the process of institutionalization is similar with the process of intemalization of E^into the business.In this process new system is getting important and organizational members appreciate the new value of the system.I Currently, the SAP implementation in UII is still guided by UII-SAP team.
It is hope that in the near future UII with its internal resources can fiill/ used the integrated system process provided by SAP as UII competitive advantage.Gonclusion Knowledge transfer in best practice is defined as dyadic exchanges of organizational knowledge between a source and a recipient (Szulaniki 2000).
Transferringboth tacit and explicit knowledge is vital in organization.Jhe reason 1297 began to for this is that without the conveying the knowledge, business goal cannot be achieved.In short, this paper illustrates the case study inthe knowledge transfer in ERP implementation in Universitas Islam Indonesia (UII), Yogyakarta, Indonesia.Previously UIIbuild itsown inhouse information system.InFebruary 2007 UII started to use SAP as a tool for UII's integrated information system.
The writer used two approaches inunderstanding the process oftransferring the knowledge.Firstly, the writer looked atthe transfer process through four stages developed by Szulanski (2000).The stages were initiation, implementation, ramp up, and integration.Secondly, analysed the integration process through canonical and non canonical lenses as developed by Brown and Duguid (1991) In conclusion, ERP implementation is different from other technologies regarding the extent to which an ERP influence organizational practice.From a knowledge transfer perspective ERP implementation is seen as a process bringing explicit business processes to the organization.This study sees ERP implementation process should be understood though the stages ofknowledge transfer.The most crucial stages are inthe ramp up and integration stages.During the ramp up stage organization adopt the "best processes" (explicit knowledge) by configuring their environment and provide tools so that explicit knowledge are easily transferred to the organization.In integration, the knowledge is internalized into the organization.Problems arose as new knowledge conflicted with the existing business rules.As a result, organizational capabilities and efforts are needed for solving the problems.Finally, integration is also seen as a gradual process for the new practices to become part ofthe reality ofthe organization.
classified business processes into two types, I namely, canonical and non canonical.Based on these classificatior, knowledge transferinERPtheninvolvedcanonical(explicit) andnoncanonical(tacit)business processes.Canonicals based on an abstract representation of the organization itself.While non canonical processes are what actually happen during the work.Canonical process covers the transferring of explicit knowledge ^mbedded in ERP software package.ERP software is explicit because it has reference models that contain formal chain of activities represented by process modelling tools.
or UH founded in 1945 is a privati:tmiversity locatedinYogyakarta, Indonesia.Theuniversityoffersundergraduate programs in eight faculties withtwenty onestudy programs, six different master programmes (Management, Law, Islamic Studies, Law, Civil Engineering, Psi Industrial Engineering) and two doctorate programmes in law and The number of full time students are 17,846 in 2007.The students different parts of Indonesia.UII also has several business units such companies, hospitalsand pharmacies.

Figure 1 .Figure 2 .
Figure 1.The Integrated Information System at UII