Business Solutions with SAP
Knowledge Management

Knowledge Management


SAP Knowledge Management Introduction

Everyone’s heard the buzzwords, ERP, SAP, SOA, you name it. In the technology area they’re everywhere. These are just acronyms for ways companies try to leverage technology for competitive business advantage. Reduce costs, streamline operations, increase revenue, and transform your organization [1].

Since ERP applications like SAP have entered the business world there remains one area that enterprises struggle with –, the realm of capturing and then converting employee “know how” into ERP solutions–, Knowledge Management [2],[3]. I call part of that ability to leverage both employee “know how” and to collaborate with the broader customer community ERP III. For a detailed explanation of the different versions see ERP vs. ERP II vs. ERP III Future Enterprise Applications .

There is a simple and inexpensive way to implement ERP III, enabling your ERP application to transform your enterprise into a learning organization. ERP III is a way to capture that employee “know how” to develop business solutions to create real competitive advantage. In this post we look at this idea in the context of SOA (Service Oriented Architecture), however it can be more widely applied and adopted to virtually anywhere in the enterprise.

Background for SOA, Knowledge Management, and ERP III

The ERP revolution began with integrating the “back office” functions of the enterprise: purchasing, ordering, financials, HR, distribution, inventory, etc. The idea is that the whole enterprise relies upon a common set of data from a single database which provides one version of the truth–, a single version to rely upon or correct. Next came ERP II, extending the ERP application from the back office to the extended supply chain, to the web, to the banks, and beyond.

Enter SOA or Service Oriented architecture, the idea of “universal” and completely reusable application services that can be “plugged in” to other applications. This SOA architecture would then allow for the rapid assembly of dynamic process and application chains as business and opportunity needs arise. SOA (or sometimes SaaS) holds tremendous promise to enhance and extend the idea of ERP II even further, but an idea that will take time and tremendous effort to do effectively.

ERP III and the Learning Organization

The next generation of business transformation is ERP III, or the customer integrated ERP enabled learning organization.[4] However, SOA’s success and timeliness are directly tied to how well an enterprise is able to create a “learning organization” within its development and IT ranks.

This learning organization approach is one of the key backbones to a successful SOA initiative as well. The cornerstone of effective SOA re-use policies and procedures, service standards, and validated service development is directly correlated to how well the enterprise’s developers are able to collaborate and coordinate their efforts (especially in an ad hoc manner).

A learning organization starts with knowledge management and is best supported by a culture which generates and also consumes information.

Service Oriented Architecture, or “SOA” requires a level of participation, collaboration, and information exchange like never before to be successful. True “SOA” requires a blending of technology, collaboration, and cooperation with highly structured standards to achieve a significant level of trust in the development work. While many suggest that this level of collaboration, integration, and reliability within the enterprise may take enterprises as long as 10 years to accomplish, the methods defined in this paper can dramatically reduce that time and effort. [5]

What is Knowledge Management? [6]

A learning organization starts with knowledge management and is best supported by a culture which generates and also consumes information. There seems to be no widely accepted “definition” for knowledge management, and as I review the information on Wikipedia about Knowledge Management I find a rambling discussion of high level theoretical constructs with little substance. As a result I am offering my definition here, and some clarification, which helps to distinguish knowledge from information.

“Knowledge Management is not information management. It is the process of transforming unstructured data into contextual information and then applying that information. Knowledge as “contextual information” is the ability to draw on information and combine it with experience by applying it to a particular situation or circumstance when it is needed. Knowledge Management is the process of capturing, codifying, and disseminating information so that it provides some value in a particular context.” Bill Wood, R3Now Consulting, originally drafted in the late 90’s, updated in 2006.

My personal opinion is that the reason there is little consensus on a Knowledge Management definition is because most “knowledge management” discussions surround information management. What people call “knowledge” is the codification or classification of information. Often “knowledge management” is referred to as the systems that help to capture and codify knowledge but this is still just information in a structured context. They do not take knowledge to the next step of infusing it into the enterprise (or creating a learning organization) by creating methods to take that information and apply it in a value added context for day to day activities. It is only with the application of information coupled with experience and context that something becomes “knowledge”–, it is NOT a system.

Sytems can facilitate knowledge management. Systems contain information, not knowledge. Knowledge is the application of information in a relevant context. Systems do not add context, situations add context.

For the enterprise to continue to “wring value” out of the ERP implementation or other technology investments, the enterprise must change. For effective enterprise level change to take place technology must support the capture, organization, and implementation of the unstructured knowledge and information contained in people’s heads, or jotted down on crib sheets. This is not an easy task.

Knowledge is not data and information. Data consists of facts, observations, occurrences, numbers, and things that are objectively perceived.

Information is a collection of various aggregated or synthesized data points. From there, Knowledge is the mix of information, experience, and context adding value [to a particular situation]…

Knowledge Management is the systematic process by which an organization maximizes the uncodified and codified knowledge within an organization.

Original author(s) unkown, further adapted and modified by Bill Wood.

Why is Knowledge Management So Misunderstood?

Before beginning it is crucial to understand the often misused, misunderstood, and even abused concept of “Knowledge Management.” Contrary to so many of the technology offerings out there, knowledge management rarely (if ever) is a system, however systems can facilitate knowledge management. Systems contain information, not knowledge. Knowledge is the application of information in a relevant context. Systems do not add context, situations add context.

Systems, by their nature and design are information tools. Too many times the term “Knowledge Management” is used to describe information gathering and classification systems–, information systems. Some even call their systems “knowledge bases,” and maybe they are bases for knowledge, however, they are not knowledge management systems. Until information is learned, and then applied, it is not knowledge, it is merely information.

Knowledge Management, Collaboration Tools, and ERP III – Current and Future State

The initial process of implementing SAP requires taking structured and unstructured data, along with the processes from legacy systems and “institutional knowledge” and then you place this information into a highly structured application. At its most effective, the initial SAP implementation captures some cost savings, process improvements, and revenue generating opportunities. However, no initial implementation is able to capture the vast unstructured information and knowledge that resides in people’s heads.

It is only with the application of information, in a particular context, coupled with experience where something becomes “knowledge”–, it is NOT some system.

The SAP enterprise current state, with the application you’ve implemented, and possibly some of the ERP II enhancements, still has the possibility to deliver far greater benefit without significant cost. To capture and leverage that benefit requires an enterprise wide cultural transformation. People must begin to both act and think differently. And this change has to occur not just in the larger enterprise but within the IT organization itself.

To extend the SAP application’s usefulness and achieve greater benefit it is critical to a) capture useful “unstructured” information, b) then organize, classify, or categorize it, and then c) translate it into more useful application solutions. This process also facilitates the implementation of SOA within the SAP environment.

The first step toward the future state is to create a collaborative learning organization. A learning organization is an organization that is constantly acquiring and applying new information and thereby gaining knowledge. Once that information is captured, it can then be structured into solutions, some process based, and others technology based. Some of the solutions can be translated into additional, value added SAP enhancements, additional SAP functionality, or market-based business opportunities around innovation and customer focus.

A Collaborative Knowledge Management Model for a Learning Organization

Based on my time at Grant Thornton (and later Hitachi Consulting) as the SAP Knowledge Manager, I made use of the best resources I could find in the arena of “Knowledge Management.” Based on that research, and leveraging the pioneering efforts of other true knowledge managers, I created the model you see here. It is consistent with much of the literature that exists today, however, in the late 90’s when it was developed, and then in 2000 when it was instituted, it was a pioneering effort.

1) Raw Data: The unstructured data, ideas, “crib notes,” and thoughts that we all have. However in this instance, it is the raw data surrounding the job or responsibility that the individual performs within the enterprise. Sometimes these are the “workarounds” to get something done when you run into obstacles or roadblocks, other times they are just shortcuts or techniques to perform a job or function.

Knowledge Management Process

2) Organized Information: This is the process of capturing and classifying that raw data. This is where the “knowledge bases” and other types of information systems come in. Many enterprises make it this far. Sometimes these are the “workarounds” to get something done when you run into roadblocks or obstacles. Other times they might be the shortcuts or techniques to more efficiently perform a job or function.

3) Acquired Information Experience: This is the interaction with the organized information. This can be through search functions, employed taxonomies, reports, or other methods of accessing the organized information. This is after the capture of the information in steps 1) and 2) above, and involves its wider availability than in the individual who originally developed or “held” the knowledge or information. Few organizations or enterprises make it much further than this. However, this is the beginning of the true learning organization.

4) Applied Experience (Knowledge!): This is the practical application of the organized information after it has been acquired. Whether this acquisition is through word of mouth, training, or some type of information management system (that is wrong named a knowledge management system) or through a “knowledge base”. This is where the cost savings, revenue opportunities, continuous process improvement opportunities, and real competitive advantage begins to come to fruition.

5) Refined Experience (accurate intuition and forecasting): This is more of the inherent “knowing” what to do in a broad variety of contexts that may not be directly related to the task or issue at hand. It is when an individual can draw on that level of inner experiences mixed with intuition and make the right decision or provide the right answers when there is not enough information to make such a determination under normal circumstances. This can also be a type of “making the complex appear to be simple.”

There is a simple and effective method to capture the unstructured information, organize and classify it, and then disseminate it in such a way as to create a true learning organization. This method, outlined below, will help to move your organization through the 5 steps noted here.

Practical and Inexpensive Ways to Move Toward ERP III and SOA Today!

Since I am not a big fan of reinventing the wheel I look for existing ways to solve current problems. To that end, the key to moving ahead on ERP III is to create a collaborative culture, from the collaborative culture, you create a learning organization by using some of the existing collaborative tools. The answer lies in using some of the popular web technologies making a splash today.

Enter the “cool” and the “fun” factor in the enterprise–, “social networking” is one of the hottest, and most vibrant collaborative uses of technology anywhere–, these sites connect people for personal exchanges. While not appropriate for the types of personal exchanges on the world wide web, that same technology can be used to create a collaborative environment around cost savings, process improvements, system enhancements, revenue opportunities, customer acquisition, customer retention, customer experience, enhanced products, better services, and general business improvement for competitive advantage. The list of possibilities is only limited by what you can imagine can be leveraged from participant knowledge. The same technology options which can enable SOA are available to capture the uncodified end user “raw information.”

Forums are One Effective Method of Acquiring, Categorizing, and Synthesizing Unstructured Data and Information

Forums or other social media outlets can also be used to capture SOA related standards, common development services, and to do code or object reviews. They can be used to capture SOA best practices while facilitating broader development community participation in standards, services, and object re-use policies. The collaborative nature, and the ability to offer code improvement suggestions, bug fixes, standards exchanges, or development and solutions discussions, in a threaded forum will prove invaluable to an organizations SOA initiatives.

To make this a reality, the key is to leverage tools, and define a process that captures the unstructured information . Once it is captured, methodically move that to process changes or to structured application solutions within SAP or an SOA initiative.

Defined below is a set of free tools, along with proposed solutions on how to apply those tools in a practical manner. Please keep in mind, this is ONE solution option. There are many more and there are also some very specific and interesting ways to incorporate this type of solution DIRECTLY into the SAP application. Here is one method to get started:

1) ANY networked PC (you don’t really need “heavy duty” hardware here unless you just must have blistering performance)

2) Download the free Uniform Server application that works on Windows. It contains Apache Web Server, MySQL, and PHP (including PHP My Admin). You only need to unzip this file to a local directory, and then double-click (or execute) the Start Server file.

3) Download and Install the latest PHP Bulletin Board open source application: (Set up the MySQL database and copy the web files to the proper local directory of the newly created web server from step 2). To see the forums in action, go to the PHPBB site at:

4) Structure the Groups to match the business department (create a new forum “group”), and then create 4 sub-areas under each department link. A) Cost Savings, B) Revenue Generation, C) Process Improvement, D) System Changes.

5) Structure additional groups to match SOA service development. An SOA topic with sub-forums for A) standards, B) services, C) objects, etc.

6) Have the users create the hyperlinks in their SAP user menu. A hyperlink for that departments topic in the bulletin board is easy to add to the SAP user menu (right click on the favorites menu, then add a web address, it’s really that simple.)

7) Adjust department and user goals to include evaluating forum contributions, based on points earned for participation, and aligned with the forum structure that applies to them (for example, cost savings, revenue generation, SOA standards, etc.)

8) For the system changes option, create an inexpensive interface to read the MySQL table for this area and generate a separate approval / response process. This way the changes, and responses to those change requests, as well as the details of the change request, are captured in an easily searchable database.

9) To produce the most useful solutions, follow a “PDCA” process (Plan, Do, Check, Act). After a discussion thread has reached a certain point where the exchanges have stopped, reduced to a trickle, or a specific date deadline, have someone review the entire threaded discussion, capture the most salient posts (by using the hyperlinks to the posts), and then summarize those hyperlinks into a single post. Call a meeting with the key stakeholders, review the salient points and produce a position paper or some other summary document and then publish that for final review.

The PHPBB forum software contains several developer implemented modifications that are available, and fully supported at no charge [7]. For example they have a “cash” modification that is nothing more than adding a point system based [8] on how active a forum participant is. In combination with the ability to develop groups, and to have moderators approve posts, this is an effective way to manage the information “clutter.”

Goals can be based on the number of points. Posts can be reviewed and approved by the department supervisor, or even a skip-level manager as the moderator. This ensures that the submissions are both high quality, and that they are being reviewed.

Over time, in areas such as manufacturing maintenance, or any other similar situations, enough quality information could be captured to create solution databases. This would facilitate the introduction of PM (Plant Maintenance) [9] for both preventive and predictive maintenance programs.

The searchable nature of the forums allows for quick and easy information retrieval in the short term. Over a longer period of time, the information can be structured and implemented as various types of system solutions to address recurring themes or various business opportunities.

Collaboration, virtual discussions, and even “debates” will ultimately occur in such a way that they help to refine various business issues or problems. In the future, as the issues arise again, going back through the old dialogs may yield a new perspective or new direction for the future. In the end, the cultural change to a learning organization will begin, and along with it new information and ultimately new knowledge will emerge to use for competitive advantage.

ERP III, Knowledge Management, Collaboration, and Learning Organizations – The Conclusion

Competitive advantage and the emergence of the extended enterprise through SOA, and the extended supply chain demand greater collaboration. This collaboration is a key component of creating the learning organization.

SOA and additional benefit realization from an SAP implementation depend heavily on the ability of an organization to capture competitive advantage from the knowledge of the employee base. Even skilled IT contractors must rely heavily upon the acquired knowledge and wisdom of those who actually perform the enterprise’s processes on a day to day basis.

No matter how skilled an IT professional may be, there will always be some things that escape detection or discovery because of the nature of intangible “knowledge” that exists within any individual or organization. The key to leveraging the IT investment in SAP and in implementing an effective SOA program is in finding ways to create collaborative communities to expose that knowledge. This collaboration can become the basis of a “learning organization” that is a key to transforming both the enterprise and the IT infrastructure that supports it. Using today’s “social networking” tools, as a means to advance that collaborative culture is one of the most cost effective ways to accomplish the task of organizational transformation.


[1] SAP as a Change Enabler

[2] Knowledge Management—Emerging Perspectives:

[3] Knowledge Management Journal – Business process modeling through the knowledge management perspective:

[4] Learning Organization from Wikipedia –

[5] Hitachi Consulting, where I previously worked in the SAP practice as a functional consultant and the SAP Knowledge Manager has published a white paper on SOA that explains both its promise and its drawbacks; SOA – CIO Savior or Nemesis,

[6] One important distinction to note here is that this paper will focus on the implementation of the “learning organization” in practical ways throughout the enterprise. This “learning organization” approach has far reaching affects beyond SOA, it has the ability to transform business through the use of enabling technologies.

[7] For example, see this forum which lists many of the validated and approved modifications, along with full support information and enhancement options.

[8] Forum with information for installing, updating, and enhancing or modifying the “cash” (i.e. points) modification to the PHPBB forum.

How to access the modifications while the modification database is unavailable (it is currently undergoing a complete update and re-write).

[9] For example, see SAP’s Plant Maintenance solution:


Contact me today through our site contact form ( ), phone, or e-mail.

Bill Wood
+1 (704) 905 – 5175
Bill Wood contact


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