
knowledge became the essential ingredient for business success
in global economy.

Proliferation, creation & wisely employment of knowledge are
significant in knowledge based economy.

According to Perry (1999), SMEs must boost, ensure and adopt
knowledge capital to achieve innovation that is linked with how
to manage knowledge.

In other words, managing knowledge wisely is a key for SME
survival in today’s environment business.

Usually, SME can’t afford traditional resources so it must
compete using knowledge to their advance to achieve goals
efficiently & effectively.

New information, communication technologies (ICT) and
internet have facilitated enterprises to gain access to
external sources of knowledge and have provided them
with the opportunity to foster intra/inter-organizational
integration with the aim at achieving higher efficiency,
effectiveness, better quality of services and minimization
of costs.

ERP systems, strategic IT tool, contribute to company’s
success to gain competitiveness by integrating business
process and optimizing resources available.

Thus, SMEs are adopting ERP systems to achieve success.
Purpose of the Research
to explore the rational integration of KM &
ERP in SMEs to create a conceptual
model that helps such companies to
survive in global economy.

A research considered that SMEs aren’t adopting new ICT
tools for several reasons such as:
 lack of financial human resources
 small size
 unpredictability its strategic future.

The Department of Trade and Industry (2003) revealed
that although UK SMEs are adopting internet rapidly which
was beyond government expectations, they aren’t
adopting e-business in that rate.

Nevertheless, UK Federation of small business (2002)
assured that SMEs usage of internet is still undeveloped
since they adopt it for simple issues as sending mails not for
service improvements or process automation.

Large companies benefit from e-business
activities through adopting ICT systems which
link business process and use knowledge
effectively to improve this system.

In contrast, small companies are in risk of
deportation from digital economy if they fail to
achieve digital linking with customers and
suppliers.

This failing is the result of absence in ICT skills
and strategy because most of SMEs don’t
employ ICT skilled professionals.
Studies have shown that SMEs are more
flexible, more adaptable to change to new
ideas and techniques, they do however
face limitations in purchasing and
implementing new systems due to a lack of
human and financial resources.
Another survey finding on the benefits of ICT in
MSEs revealed that:
ICT implementation can reduce cost, improve product
and service quality of SME
 Sales forecasting, pricing can be competitive
advantage if SME used ICT


ERP systems definition:
configurable information system that allows integration and
data sharing within business divisions to operate more
efficiently.

IT growth and methods improvement to manage business
played a great role in ERP development.

Because ERP is expensive and complex company must
make sure before implementation if it is needed and will
add value.


Little studies addressed the implementation of ERP in SMEs.
Mollar (2004) research about of ERP implementation in
midsize Danish enterprise resulted that ERP became a
widespread and contemporary technology.

The notion KM is widespread nowadays in literature
and researches which claims organizations to benefit
from knowledge assets wisely to use in decision
making and accomplish its goals.

The knowledge to be managed includes both
explicit, documented, tacit, subjective knowledge.

To make knowledge available and accessible by
company & outsiders through knowledge cycle it
must be converted from tacit to explicit.
Important issues in KM are:
1. Organisation, distribution and refinement of
knowledge:
o knowledge can be generated by data
mining tools or third party.
o Collected knowledge can be organized by
filtering content or establishing relations
between elements.
o Knowledge is integrated to knowledge
base and distributed for decision support
applications.
Important issues in KM are:
2. Knowledge presentation:
ways to present knowledge.
Knowledge distribution and sharing:
knowledge became accumulated
when shared and IT increased this task.
The Cycle of
Knowledge

Companies now are moving toward the
implementation of KM and hiring “minds” since
knowledge became the fundamental factor for
business prosperity regardless of size and location.

The loss of knowledge is a paramount issue in SMEs
affecting the loss of competitive advantage if
leading employees leave company since it rely on
individuals with the absence of recruiting capacity.

Thus, this was the main reason for development and
growth of KM concepts.

Besides, SMEs lack financial resources to hire
qualified employees so they tend to train less
qualified individuals.

It is concluded that KM is still neglected by
SMEs because they are uncertain of its benefits
on business success.

Finally, Bozbura findings showed that senior
managers refuse to share valuable knowledge
to maintain control and reduce the risk of
dismiss from work since most Turkish SMEs are
family businesses.
It is clear that SME needs to:
 Minimize cost, improve product quality and boost
consumer satisfaction by integrating internal business
process.

Gain competitive edge by using knowledge wisely.

Maintain competitiveness by avoiding knowledge
loss.
It is a necessity for SMEs to implement ERP to reduce
time needed to perform task through integration and
KM to gain competitive advantage to compete.

A conceptual model was developed for the
integration of ERP and KM in the framework of a
research project (2006-2007) funded by the General
Secretariat for Research & Rationales for ERP and KM
integration Technology in Greece.

A model based on knowledge- based view has
evolved for the integration of both KM and ERP in
SMEs.

It should be stressed that this conceptual model has
a sound basis in the comprehensive literature review
and is regarded as an adaptable solution, where a
SME with a traditional business structure uses existing
IT applications and builds upon them.

When ERP and KM integrates, a central
and knowledge databases are created
to collect and share knowledge and
information between business activities.

It also allows automatic update for
information and knowledge enters.

The major benefit of ERP is error
reduction.

SMEs must conduct knowledge audit to select
valuable knowledge from appropriate origins.

For KM to effective and successful, knowledge
sharing must take place and introduce face-to-face
conversations to attain more knowledge.

Also, data mining and information visualization are
knowledge creation technologies should be used in
SMEs.

Eventually, to achieve efficient results, we must
emphasis that business processes are modified or
redesigned if necessary to allow smooth integration.

The success and maximizing of MSEs
competitiveness in knowledge based
economy demands on efficient KM and
managing their intellectual capital, skills
and ideas wisely.

Thus, KM and ERP integration is a
requirement in SMEs

This model should be tested, refined and improved.

This model focused that SME should benefit from KM
and geographically open boundaries to gain
competitiveness.

Professionals should use this model to develop new
platform and extended ERP modules.

A case study is recommended to understand the
complexity of SMEs and the attitude of managers,
owners toward KM.

To develop a successful KM, behavioral and cultural
issues should be solved before technical issues.

Also, MSEs should make sure that KM initiative
suitable for their organizational culture.

Future research should try to close the gap between
theoretical propositions and reality of practice.

Finally, we should assure to provide a distributed
knowledge network that requires the contribution of
the whole value chain from customers to suppliers’
even competitors. The above proposed model can
be the foundation for this need.