Centre Of Digital Enterprise

University of Auckland

Knowledge Management, Relationship Systems, and

Enterprise Systems:The Digital Architecture of the

21st Century Enterpriseby

Dr Brent GallupeQueen’s University, Kingston, CanadaUniversity of Auckland, New Zealand,

May 2003

Centre Of Digital Enterprise

University of Auckland

OVERVIEWBACKGROUND:BACKGROUND:ENTERPRISE SYSTEMS: ENTERPRISE SYSTEMS: -- ““SO MUCH PAIN FOR HOW MUCH GAIN?SO MUCH PAIN FOR HOW MUCH GAIN?””

RELATIONSHIP SYSTEMS:RELATIONSHIP SYSTEMS:-- ““THE GOOD, THE BAD, AND THE UGLY?THE GOOD, THE BAD, AND THE UGLY?””

KNOWLEDGE MANAGEMENT:KNOWLEDGE MANAGEMENT:-- ““CAN KNOWLEDGE BE MANAGED?CAN KNOWLEDGE BE MANAGED?””

CONCLUSIONS CONCLUSIONS AND FRIENDLY PROVOCATIONSAND FRIENDLY PROVOCATIONS

Centre Of Digital Enterprise

University of Auckland

DILBERT ONEnterprise Systems and

Knowledge Management

Centre Of Digital Enterprise

University of Auckland

Elements of Digital Technology

ComputingTechnology

CommunicationsTechnology

Content(Data, Informationand Knowledge)

Centre Of Digital Enterprise

University of Auckland

Moore’s Law

Source: L. Downes and C. Mui, Unleashing the Killer App (Adapted)

1975 1980 1985 1990 1995 2000 2005

Transistors per Chip

10K

100K

1M

10M

8088

80286

80386

80486 Pentium

P6Pentium Pro

“Computer processing power doubles every 18 months”

Centre Of Digital Enterprise

University of Auckland

Metcalfe’s Law

Source: L. Downes and C. Mui, Unleashing the Killer App (Adapted)

1988 1990 1992 1994 1996 1998 2000

Internet Host Computers

50M

40M

30M

20M

10M

2002

"The power of a network grows exponentially every time the size of the network doubles"

Centre Of Digital Enterprise

University of Auckland

Gilder’s Law

Source: G. Gilder, GTR (Adapted)

1986 1989 1992 1995 1998 2001 2004

Internet connectivity in bps

1,000,000

100,000

10,000

1,000

100“Bandwidth access doubles every year”

Centre Of Digital Enterprise

University of Auckland

The Hype Cycle of Emerging Digital Technologies

Visi

bilit

y

Time

Technology trigger

Peak ofinflated

expectations

Trough ofdisillusionment

Slope ofenlightenment

Plateau ofproductivity

“Hype cycle”phase

Source: Gartner Group 1998 (Adapted)

Centre Of Digital Enterprise

University of Auckland

The Digital Architecture for the 21st Century Enterprise

SUPPLIER RELATIONSHIPS

-- SCM --

CUSTOMERRELATIONSHIPS

-- CRM --

ENTERPRISE RESOURCE PLANNING

KNOWLEDGE MANAGEMENT

Centre Of Digital Enterprise

University of Auckland

FAMOUS “ERP” QUOTES

““I HAVE NEVER SEEN A DECENT I HAVE NEVER SEEN A DECENT ERP SYSTEM I DIDNERP SYSTEM I DIDN’’T LIKE.T LIKE.

TROUBLE IS, ITROUBLE IS, I’’VE NEVER SEEN A VE NEVER SEEN A DECENT ERP SYSTEM!!DECENT ERP SYSTEM!!””

FORMER MULTIPLE ERP FORMER MULTIPLE ERP SYSTEM USER, 2000SYSTEM USER, 2000

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What Is ERP?Enterprise Resource Planning (ERP) System

–An integrated set of software modules that shares data across key organizational applications

–The system addresses transaction processing requirements and can accumulate data for management reporting

–Examples of ERP Systems include: SAP, PeopleSoft, Baan, Oracle, JD Edwards

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ENTERPRISE RESOURCE PLANNING

Forecasting Production OutboundLogistics

HRManagement

Finance andAccounting

ERP Footprint

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Extending ERP Systems

Source: T. Vollman & C. Cordon, IMD, 2000

Supplier Customer

PurchaseForecast

Inventory

Manufacture

Schedule

Sell

PurchaseForecast

Inventory

Manufacture

Schedule

Sell

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University of Auckland

ERP – Methodology Phases

1. Design(plan)

2. Deployment(dive)

3. Stabilization(hold breath)

4. Improvement(swim)

5. Transformation(run)

Rel

ativ

e Pr

oduc

tivity

+

–

Time

Source: J. Ross, MIT Centre for Information Systems Research 1998 (Adapted)

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ERP – Development(Building Planes in the Air)

Source: www.eds.com

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University of Auckland

ERP – FUTURE Success FactorsManagement Support– Assign most knowledgeable people 100% time to project– Development of a business case that clarifies objectives– Preparation of status reports based on agreed upon metrics

Organizational Discipline– Learning from sustained standardized processes and data– Understanding the paradox: standardization is key to

flexibilityChange Capability– Ongoing training—forever—on the ERP system and

processes (ongoing knowledge dissemination about ERP)– Incentives to use knowledge about process outcomes and

performance

Source: J. Ross, MIT Centre for Information Systems Research (Adapted)

Centre Of Digital Enterprise

University of Auckland

The Digital Architecture for the 21st Century Enterprise

SUPPLIER RELATIONSHIPS

-- SCM --

CUSTOMERRELATIONSHIPS

-- CRM --

ENTERPRISE RESOURCE PLANNING

KNOWLEDGE MANAGEMENT

Centre Of Digital Enterprise

University of Auckland

FAMOUS “SUPPLY CHAIN MANAGEMENT”

QUOTES

““SUPPLY CHAIN MANAGEMENT IS SUPPLY CHAIN MANAGEMENT IS GREAT. WE JUST DIDNGREAT. WE JUST DIDN’’T KNOW T KNOW HOW TO DO IT!HOW TO DO IT!””ATTRIBUTED TO LEE IACOCA, ATTRIBUTED TO LEE IACOCA, FORMER CEO OF CHRYSLER CORP.FORMER CEO OF CHRYSLER CORP.19951995

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What is Supply Chain Management?

Supply Chain Management (SCM)

– Management of a set of linked activities associated with the procurement, design, production and distribution of a product or service

– Focus of SCM: procurement, inbound logistics and inventory control

– Electronic procurement eliminates paper work and reduces errors

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SUPPLYCHAIN

MANAGEMENT

ManufacturingProcurement

OperationalProcurement

InboundLogistics

ServiceProcurement

InventoryManagement

SCM Footprint

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University of Auckland

Types of SCM - E-Commerce

Infomediation and Metamediation(many-to-many)

Interorganization(one-to-one)

Disintermediation(one-to-many)

Med

iate

dU

nmed

iate

d

Closed (EDI) Open (Internet)

TRANSACTIONS

ARCHITECTURE

Source: M. Sawhney, Northwestern University

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Staying Ahead of Competitors(The Running of the Squirrels)

Source: www.eds.com

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SRS/SCM:FUTURE Success Factors

Management Support– Understanding the dimensions of your supply chain– Anticipating new developments in the Chain– Assigning knowledgeable people to lead SRS/SCM

Organizational Adaptation– Agility in adapting to changes in the Chain– Understanding the paradox: competing through cooperation

Using Your SCM Knowledge– Knowing your suppliers, intermediaries and competitors– Learning from your SRS/SCM processes

Centre Of Digital Enterprise

University of Auckland

The Digital Architecture for the 21st Century Enterprise

SUPPLIER RELATIONSHIPS

-- SCM --

CUSTOMERRELATIONSHIPS

-- CRM --

ENTERPRISE RESOURCE PLANNING

KNOWLEDGE MANAGEMENT

Centre Of Digital Enterprise

University of Auckland

FAMOUS “CRM” QUOTES

““GREAT SUCCESS IN BUSINESS IS NOT GREAT SUCCESS IN BUSINESS IS NOT ABOUT FORCING CUSTOMERS TO ABOUT FORCING CUSTOMERS TO MAKE DIFFICULT COMPROMISES ON MAKE DIFFICULT COMPROMISES ON WHAT THEY REALLY WANT!!WHAT THEY REALLY WANT!!””

DAVID POTTRUCK, DAVID POTTRUCK, COCO--CEO SCHWAB 1999CEO SCHWAB 1999

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What is Customer Relationship

Management?Customer Relationship Management (CRM)– The most common phrase used to describe the shift

from product-focused marketing to a customer-focused approach

– Four step process: identify, differentiate, interact and customize

– “I now know who you are and what you want. You and I interact. Then I mass customize, tailoring the product or service I offer to meet your needs”

SM-195

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CUSTOMERRELATIONSHIPMANAGEMENT

Marketing Sales

Service

CRM Footprint

SM-196

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University of Auckland

Transaction versus Relationship MarketingOne-off exchanges

Brand management Focus Ongoing exchangesCustomer mgmt.

Short-term focus Timeframe Long-term focus

Mass communication Communication Personal comm.

Market research Feedback Ongoing dialogue

Mass markets ormarket segments Market size Markets of one

Market share Criterion Mind share

Transaction Relationship

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E-Loyalty – Your Secret Weapon …

Source: F. Reichheld & P. Schaefer, Harvard Business Review 2000

0

-20

-40

-60

-80

20

40

60

$80

0th year1st year 2nd year 3rd year

Profit per customer

Consumer electronicsBooksGroceriesApparel

Centre Of Digital Enterprise

University of Auckland

CRM – FUTURE Success FactorsManagement Support– Understanding the customer experience at all levels, in all

functions– Anticipating new developments in customer preferences and

behaviours– Assigning knowledgeable people to lead CRM

Organizational Adaptation– Create new roles (customer knowledge czar!)– Reward innovative customer support practices

Using Your CRM Knowledge– Knowing your customers, focusing on valued customers– Learning from “transaction” data and “human” data

Centre Of Digital Enterprise

University of Auckland

The Digital Architecture for the 21st Century Enterprise

SUPPLIER RELATIONSHIPS

-- SCM --

CUSTOMERRELATIONSHIPS

-- CRM --

ENTERPRISE RESOURCE PLANNING

KNOWLEDGE MANAGEMENT

Centre Of Digital Enterprise

University of Auckland

FAMOUS “KNOWLEDGE” QUOTES

““THE MORE I LEARN, THE LESS I THE MORE I LEARN, THE LESS I KNOWKNOW””

ADAPTED FROM GALILEO, ADAPTED FROM GALILEO, EARLY 1600EARLY 1600’’ss

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What is Knowledge Management?

Knowledge Management (KM) is a formal and directed process of organizing information that would benefit others in the company – and then of devising ways of making it easily available by:

– Creating REPOSITORIES of information about best practices

– Setting up NETWORKS for transferring information between employees who interact with customers and those who develop the product or provide the service

– Establishing formal PROCEDURES to ensure that lessons learned in the course of a project are passed along to others doing similar jobs

Source: Harvard Management Update 1999 (Adapted)

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Elements of Knowledge Management

Practices

Processes

PapersPeople

Programs

Patents

Products

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University of Auckland

KNOWLEDGEMANAGEMENT

DataWarehousing

ManagementReporting

DocumentManagement

DecisionSupport

Knowledge Management Footprint

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Typical Knowledge Management Initiatives

Source: M. Earl & I. Scott, Sloan Management Review 1999

CONTACTIVITY

•Meeting spaces•Events•Communities

CAPABILITIES

•Education & development•Management processes•Measurement &

protection

EXPLORATION

•Data Mining•Directories and tools•Groupware•Knowledge-based

systems

CONNECTIVITY

•Videoconferencing•Intranets

Explicit KnowledgeTacit KnowledgeO

rgan

izat

iona

lTe

chno

logi

cal

Inve

stm

ents

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University of Auckland

Knowledge Management Challenges

(Herding Cats)

Source: www.eds.com

Centre Of Digital Enterprise

University of Auckland

Knowledge ManagementFUTURE Success Factors

Management Support– Make knowledge management part of everyone’s job– Foster a culture of knowledge sharing– Incorporate a knowledge management component into all

systemsOrganizational Factors– Don’t rely on technology shortcuts– Don’t start too big with KM initiatives

Change Capability– Change the incentive system – reward knowledge creation

and sharing

Centre Of Digital Enterprise

University of Auckland

The Digital Architecture for the 21st Century Enterprise

SUPPLIER RELATIONSHIPS

-- SCM --

CUSTOMERRELATIONSHIPS

-- CRM --

ENTERPRISE RESOURCE PLANNING

KNOWLEDGE MANAGEMENT

Centre Of Digital Enterprise

University of Auckland

The KBE Centre

Supporting innovative research

in the Knowledge Era

Centre Of Digital Enterprise

University of Auckland

New focus on knowledge as a commodity

Knowledge is the pre-eminent economic resource. Knowledge-based enterprises (KBEs) are organizations that generate wealth as the direct product of knowledge. For these organizations, knowledge and information are their primary raw materials and most important products and services.

Centre Of Digital Enterprise

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A Centre to meet emerging KBE needs

The KBE Centre is a global leader in researching the management of knowledge-based enterprises.

With a $6.5M endowment from Melvin R. Goodes, the Centre was established in 1999 at Queen’s University within the Queen’s School of Business.

Centre Of Digital Enterprise

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KBE Centre Objectives

Knowledge PRODUCTION - learn how best to manage KBEs through multi-disciplinary research activities on a global scale.Knowledge TRANSMISSION - share this knowledge through academic and practitioner channels.Knowledge DIFFUSION - assist public and private sectors in transforming this knowledge into practice to promote innovation.

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Brokerage model key to research partnerships

Create a focus for cutting-edge research on issues of critical importance to management.Research agenda driven by stakeholders -partner organizations, business executives, and academics from around the world.Match research opportunities with the best resources through effective leveraging.Provide research to guide public sector policy to promote innovation and competitiveness.

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Knowledge programs

1. The Alliance EdgeIndustry leaders in the area of strategic alliances and Queen’s School of Business faculty work together.Produce relevant research tailored to a professional audience.

2. E-Commerce ResearchInitiates joint e-commerce research initiatives with private sector organizations and public research institutions

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Knowledge EventsKnowledge Summits - annual fall conference explores topics relevant to knowledge-based enterprises. Knowledge Roundtables - annual spring conference targets an in-depth issue relevant to knowledge creation and management.Speaker Series - distinguished speakers from business and research explore the latest issues in the management of knowledge-based enterprises.Visiting Scholars – students and faculty have the opportunity to work with prominent academics.Knowledge Cafés – students, faculty & practitioners exchange ideas around the topic of knowledge management.

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Knowledge ResourcesKBE Centre News – seasonal publication relevant to KBE issues. Conference White Papers - outlining the latest research, insights, and questions for future research emanating from our conferences.KBE Library - researchers and practitioners can make use of our extensive library of books and articles. KBE Centre website - provides details on upcoming events, research papers, and funding opportunities. (business.queensu.ca/kbe)

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CONCLUSIONS and FRIENDLY PROVOCATIONSEXTENDING EXTENDING ERPSsERPSs WILL CONTINUE TO BE A WILL CONTINUE TO BE A MAJOR CHALLENGE WITHOUT MAJOR CHALLENGE WITHOUT INTEGRATION WITH KNOWLEDGE INTEGRATION WITH KNOWLEDGE MANAGEMENTMANAGEMENT““RELATIONSHIP SYSTEMSRELATIONSHIP SYSTEMS”” WILL BECOME WILL BECOME THE KEY TO SCM AND CRM INITIATIVESTHE KEY TO SCM AND CRM INITIATIVESTHE THE ““DIGITAL ARCHITECTUREDIGITAL ARCHITECTURE”” FOR THE FOR THE 2121STST CENTURY WILL BE THE MANAGED CENTURY WILL BE THE MANAGED INTEGRATION OF:INTEGRATION OF:

““ERP + SRS/SCM + CRS/CRM + KMERP + SRS/SCM + CRS/CRM + KM””

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FAMOUS “FUTURE” QUOTES

““THE FUTURE AINTHE FUTURE AIN’’T WHAT IT USED T WHAT IT USED BEBE””

ATTRIBUTED TO YOGI BERRAATTRIBUTED TO YOGI BERRAFAMOUS AMERICAN BASEBALLFAMOUS AMERICAN BASEBALLPLAYER, 1950PLAYER, 1950’’ss

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The Future: Next Stop, Cyberspace!