Knowledge Managementin Enterprise Resource Planning Systems

Daniel E. O’Leary
University of Southern California
3660 Trousdale Parkway
Los Angeles, CA 90089-1421

Oleary @ rcf.usc.edu
From: AAAI Technical Report WS-99-10. Compilation copyright © 1999, AAAI (www.aaai.org). All rights reserved.

Abstract
ERP systems are large. Quantum’s implementation of
Thepurposeof this paperis to investigate the development Oracle’s ERPapplication reportedly has over 40,000
of knowledgemanagementsystems designed to support tables. In addition, increasingly, ERPimplementations
enterprise resource planning systems, such as SAP. are accompanied by large data warehouses, designed to
Knowledgemanagementcan be used in virtually every facilitate data access.
facet of supporting ERP system choice, design,
development,
testing, supporting,and reporting. Thispaper
summarizesa numberof actual examplesand discusses One of the emerging phenomena is the development of
some emerging efforts, focusing on knowledge knowledge management systems to support choosing,
management,with particular interest in case-based designing, developing, testing, implementing, using and
knowledgemanagement. reporting for ERPsystems. The purpose of this paper is
to discuss some of these knowledge managementsystem
Introduction developments,with particular emphasison the potentially
increasing role of case-based reasoning in those
One of the most rapidly growing areas of software knowledge managementsystems.
implementation is what is referred to as "Enterprise
Resource Planning" (ERP) Systems. Perhaps the best Choosing ERP Systems
known of the ERPsystems include those known as the
"big five," SAP,PeopleSoft, Oracle Applications, Baan The need for knowledgemanagementsystems to facilitate
and J. D. Edwards. the choice of ERPsystems was illustrated in Timberjack’s
recent choice of an ERPsystem (Romanowet al. 1998).
ERPsystems provide finns with software that integrates Timberjack was faced with trying to find a system that
functional areas by focusing on processes. ERPsystems met both the needs of their USAand Finnish offices.
provide transaction processing capabilities that help to Sharing information was an important vehicle in
integrate a firm’s information systems. Typically, ERP exchanging ideas on which software vendor to choose.
systems are based on a relational database. Using a Unfortunately, muchsharing was done using paper. As a
relational database and appropriate process design, allows result, not all the critical knowledge
necessaryto facilitate
the firm to capture data once and then make that data decision makingwas readily available to all in a timely
available for use throughout the firm, by all appropriate manner. For example, an important article was made
users. available only to the Finnish office regarding a European
ERPimplementation.
ERP systems have been well-received. It has been
estimated that virtually all of the Fortune 500 firms have A knowledge management system designed to capture
either implemented an ERPsystem or are implementing and make available information regarding the various
an ERP system. Implementation of ERP systems has ERP systems in a timely manner would have been a
grown to be huge business. It has been estimated that helpful device. Such a system could have included both
roughly 50% of the consulting done by the major generic information related to each ERPsystem and firm
consulting finns has to do with choosing, designing, specific developments, such as requirements and other
developing, testing or implemented ERP systems. As a issues.
result, there is a large potential for knowledge-based
support of these systems.

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 has been a push to makeERPreport information available
Implementing ERPSystems: Support for on corporate intranets (O’Leary 1999b). As a result, ERP
report information increasingly is being treated as part of
ImplementationDifficulties firms’ knowledgemanagementsystems.
Developing ERP systems requires that both users and
In the case of Microsoft, expert users were expected to
developers coordinate their efforts. As users find use the reporting capabilities of the ERP system.
problems they need to make the developers aware of
However,for less expert and casual users, a wide range of
those problems and developers need to find solutions. In
information generated from the ERPwas made available
somecases users mayhave the same or a similar problem.
on the intranet. In addition, to makingthe information
If the problemhas been solved, then users need to be able widely available, the moveof information to the intranet
to find out about the previous solution. If the problemhas
minimizedERPcosts that Microsoft incurred, since those
not yet been solved, but others have the same problem,
costs werebased on a per seat level of usage.
then there needs to be a coordination of efforts, because
otherwise resources will be misallocated with the
developmentof duplicate solutions. Developing Data for Input to ERPSystems:
Support for Financial Transactions
Case Study
Using ERPsystems requires that the user be aware not
As part of the development of an ERP, a consultant had only howto use the system, but also understand what they
want to do with the system. In order to get users the
developed a knowledge base that would capture of
knowledge that they need to do their job, a number of
problems and allow tracking of their solution (O’Leary
firms have made"help" available over the intranet.
1999a). As noted by the consultant during an interview
Financial Transactions
(The system is used to)...categorize problems
issue category, e.g., training, system, network,
ERP financial modules require that users be able to
PeopleSoft Configuration Set Up, PeopleSoft
provide transaction information for use in the system.
Module, etc .... a user logs in an issue with
Unfortunately, transactions vary in their difficulty. I
information, such as which module, process, screen interviewed somefinancial system users that indicate that
shot .... (that is the source of the problem). Then,
developmentof transactions for entry into the system can
consultant opens it to solve the problem .... Any
be very difficult. In somecases, only experts are able to
progress or resolution to an issue will be logged into
develop those entries. As a result, there is interest in
this database .... This way ... the project can have
developing system support for those users. For example,
better resource allocation planning.
recently I had a conversation with a representative of one
of the big five ERPfirms whoindicated that their firm
Originally, the system was developed in order to provide was interested in obtaining knowledge-basedsupport for
a quick fix to track an overwhelming number of user those personnel makingfinancial systemtransactions.
support requests. In addition, there had been duplicate
inquiries that ultimately led to redundantefforts, that the Unfortunately, there has been limited research to-date on
knowledge management system now minimized. formal knowledge representation of transaction
However, the system has been so useful that the client knowledge to guide development efforts. Perhaps the
planned to continue to use the system. Future plans only paper to model the knowledge-basedrepresentation
included changing the computing environment, migrating of financial transactions is O’Learyand Kandelin (1992).
the system to Lotus Notes. They developed a domainspecific natural language-based
system that understood accounting language and was able
This knowledge base is now being extended. A case- to use that understanding of events in order to generate
based system is nowbeing designed, couching the data as the resulting financial transaction entries.
cases in order to more fully exploit machineprocessing
capabilities of the cases. Transaction Characteristics

ERP Reporting Systems An important characteristic of financial transactions is

that they tend to repeat themselves. For example, an
Unfortunately (fortunately?), reporting systems for ERP overwhelmingmajority of a firm’s financial transactions
systems are generally perceived as difficult to use. are purchases or sales. Within these two types of
Starting with Microsoft’s implementation of SAP, there transactions there is substantial similarity. The basic form

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of all purchases is roughly the same, including either a Data warehouses open up additional opportunities for
cash disbursement and a purchase or an accounts payable knowledge management and case-based reasoning. In
and a purchase. "Purchases" is a generic account particular, knowledgediscovery can be used to exploit the
sometimes replaced by an account representing the extensive data availability in a data warehouse.
specific item purchases, such as materials or a particular
kind of materials. This repeating nature leads us to Extensions
suggest that a case-based reasoning approach is an
appropriate vehicle to capture and represent knowledge This paper has focused on knowledge management for
about financial transactions. choosing, implementing, using and reporting in ERP
systems. However, knowledge management systems
Althoughtransactions basically "repeat themselves" they could also be developed for other aspects of ERPsystems,
are not always identical. Case-based reasoning is such as, designing, developingand testing.
necessary because, for example, previously stored
financial transactions may need to be modified to make A prototype system design was presented for capturing
new transactions and/or new transactions does not match case-based knowledgeabout financial transactions. The
100%any of the previously stored transactions and thus a case base in support of that system is minimal and could
selection must be madebased on partial match. be further extended.

A Prototype System Summary

Using the M.4 shell, we developed a preliminary system Enterprise resource planning (ERP)systems are receiving
design that exploits the basic underlying database widespread attention. Knowledge management systems
requirementsfor financial transactions (see exhibit 1 for are being developed to facilitate use of those ERP
sample case and a few rules). In particular, research systems. This paper has investigated some of the
suggests that ERPsystems employa database schema that relationships between ERP systems and knowledge
generates information on resources, events, agents and managementsystems, with a focus on the opportunities
locations from the financial transactions (O’Leary, 1998). for use of case-based knowledgerepresentations.
Case attribute information is captured based primarily on
the events for which the system is designed to process.
Additional information in the cases includes the resource References
(e.g., cash) and the direction of change in the resource
(e.g., cash increasing), the external agent (e.g., O’Leary, D., "SAP is REAL,"paper presented at SMAP
particular client) and the location for which the event is 98, NewOrleans, August 1998.
occurring (e.g., central office). In addition, the resulting
O’Leary, D., "James O’Leary Travel Services, III: A
financial systementry, in terms of debits and credits also
is captured. Second PeopleSoft Implementation," Unpublished Case
Study, University of SouthernCalifornia, 1999a.
Data Warehousesfor ERPSystems: O’Leary, D., "Microsofl’s Reporting in SAP,"
Creating Knowledge Unpublished Case Study, University of Southern
California, 1999b.
Increasingly, firms are makingERPinformation on their
intranets. However, typically, ERP-based reports are O’Leary, D., and Kandelin, N., "Accountant: A Domain
designed for a single month,quarter, or year. As a result, Dependent Accounting Language Processing System," in
some users are nowinterested in longer time frames of Expert Systems in Finance, D. O’Leary and P. Watkins,
available data. As a result, firms are implementingdata 1992, Elsevier.
warehousesto facilitate access to a broader range of the
data over longer time periods, such as multiple years. Romanow,D., Keil, M. and McFarlan, W., "Timberjack
Parts: Packaged Software Selection Project," Harvard
Business School, February 25, 1998.

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