Advanced Topics in Information Resources Management ~ Volume 4

Advanced Topics in Information Resources Management Volume 4 Mehdi Khosrow-Pour, D.B.A. Information Resources Managemen...

Author: Mehdi Khosrow-Pour

60 downloads 1559 Views 3MB Size Report

This content was uploaded by our users and we assume good faith they have the permission to share this book. If you own the copyright to this book and it is wrongfully on our website, we offer a simple DMCA procedure to remove your content from our site. Start by pressing the button below!
Report copyright / DMCA form

DOWNLOAD PDF

Advanced Topics in Information Resources Management Volume 4 Mehdi Khosrow-Pour, D.B.A. Information Resources Management Association, USA

IDEA GROUP PUBLISHING Hershey • London • Melbourne • Singapore

Acquisitions Editor: Development Editor: Senior Managing Editor: Managing Editor: Copy Editor: Typesetter: Cover Design: Printed at:

Renée Davies Kristin Roth Amanda Appicello Jennifer Neidig Jane Conley Cindy Consonery Integrated Book Technology Integrated Book Technology

Published in the United States of America by Idea Group Publishing (an imprint of Idea Group Inc.) 701 E. Chocolate Avenue, Suite 200 Hershey PA 17033 Tel: 717-533-8845 Fax: 717-533-8661 E-mail: [email protected] Web site: http://www.idea-group.com and in the United Kingdom by Idea Group Publishing (an imprint of Idea Group Inc.) 3 Henrietta Street Covent Garden London WC2E 8LU Tel: 44 20 7240 0856 Fax: 44 20 7379 3313 Web site: http://www.eurospan.co.uk Copyright © 2005 by Idea Group Inc. All rights reserved. No part of this book may be reproduced, stored or distributed in any form or by any means, electronic or mechanical, including photocopying, without written permission from the publisher. Product or company names used in this book are for identification purposes only. Inclusion of the names of the products or companies does not indicate a claim of ownership by IGI of the trademark or registered trademark. Advanced Topics in Information Resources Management, Volume 4 is part of the Idea Group Publishing series named Advanced Topics in Information Resources Management Series (ISSN 1537-9329 ISBN 1-59140-465-7 Paperback ISBN 1-59140-466-5 eISBN 1-59140-467-3 British Cataloguing in Publication Data A Cataloguing in Publication record for this book is available from the British Library. All work contributed to this book is new, previously-unpublished material. The views expressed in this book are those of the authors, but not necessarily of the publisher.

Advanced Topics in Information Resources Management Volume 4

Table of Contents Preface .................................................................................................. vi Chapter I A User Perspective of Information Requirements Determination Quality ........................................................................... 1 Douglas Havelka, The Richard T. Farmer School of Business, USA Chapter II Business Alignment in Agile/Virtual Enterprise Integration ............. 26 Maria Manuela Cunha, Polytechnic Institute of Cávado and Ave, Portugal Goran D. Putnik, University of Minho, Portugal Chapter III E-Government: The Future of Red Tape ........................................... 55 Vincent Homburg, Erasmus University Rotterdam, The Netherlands Chapter IV Implementing CRM Systems: Managing Change or Accepting Technological Drift? ............................................................................ 76 Bendik Bygstad, The Norwegian School of Information Technology, Norway

Chapter V Measuring Organizational Readiness for Knowledge Management ........................................................................................ 93 W. A. Taylor, University of Bradford, UK M. A. Schellenberg, University of Bradford, UK Chapter VI Knowledge Management of E-Business Initiatives Within Two Global Organizations: A Comparative Case Study Analysis .......... 115 Mahesh S. Raisinghani, Texas Woman’s University, USA Pegi Proffitt, University of Dallas, USA Jonathan Barham,University of Dallas, USA Michael McCurdy, University of Dallas, USA Chapter VII ERP Systems and Competitive Advantage: A Case Study of Key Success Factors and Strategic Processes ......................................... 144 Thomas Kalling, Lund University, Sweden Chapter VIII Towards an Emotionally Intelligent IT Organization ....................... 173 Eugene Kaluzniacky, University of Winnipeg, Canada Chapter IX Identification and Measurement of the Knowledge-Sharing Requirements in Collaborative Business Processes ....................... 215 Farhad Daneshgar, University of New South Wales, Australia Chapter X The Role of Interactive and Synchronized Multimedia Content in E-Learning ......................................................................................... 232 Dongsong Zhang, University of Maryland, Baltimore County, USA Lina Zhou, University of Maryland, Baltimore County, USA Chapter XI Information and Communication Technology in Supply Chain Management ...................................................................................... 251 Vladimír Modrák, Technical University of Košice, Slovakia Imrich Kiss, Technical University of Košice, Slovakia

Chapter XII The Political Economy of Information Management ....................... 285 Vincent Homburg, Erasmus University Rotterdam, The Netherlands About the Editor ................................................................................. 304 About the Authors .............................................................................. 305 Index ................................................................................................... 310

vi

Preface

One of the most pressing needs of organizations today is new, unique ways to manage their information resources. Researchers and educators alike are developing improved strategies and technologies in order to better organize information. In addition, access to the successful developments of practitioners in the field proves invaluable to businesses and researchers in improving their own systems and information resource management skills. Advanced Topics in Information Resources Management, Volume 4, provides researchers, scholars, professionals, and educators with the most current research on managing the technological, organizational, and human aspects of information use and management. This volume presents new concepts in handling and sharing information resources with organizations and individuals worldwide. Chapter I, “A User Perspective of Information Requirements Determination Quality” by Douglas Havelka, The Richard T. Farmer School of Business (USA), examines a study identifying factors that affect the process quality of the information requirements determination (IRD) process from a user perspective. Identification of factors that impact IRD process quality is described that may give managers guidance in assessing the risk associated with specific development projects. This chapter describes the importance of determining the value of these factors prior to the commitment of resources and identifying the concerns of users. Factors are also identified that may be used to develop metrics for monitoring the IRD process or measure its success or quality. For IT researchers, this contributes both the identification of the critical factors, suggesting that there are many variables that have not received

vii

attention, and an example of an approach to generate potential variables for further study. Chapter II, “Business Alignment in Agile/Virtual Enterprise Integration” by Maria Manuela Cunha, Polytechnic Institute of Cávado and Ave (Portugal) and Goran D. Putnik, University of Minho (Portugal), describes the concept of essential strategic alignment between business strategy and technology in order to improve competitiveness. This chapter focuses on a leading organizational model, the Agile/Virtual Enterprise model, characterized by a fast adaptability face to the dynamically changing market. It also introduces the concept of a Market of Resources as an environment able to assure a permanent alignment of the networked structure with market. Also proposed are alignment strategies between business opportunities and the creation/ reconfiguration of the Agile/Virtual Enterprise that is expected to meet that opportunity. Chapter III, “E-Government: The Future of Red Tape” by Vincent Homburg, Erasmus University Rotterdam (The Netherlands), discusses how governments are increasingly using information and communication technologies (ICTs) to communicate internally, with citizens, and with corporations. This chapter presents e-government as an attempt to increase the efficiency of government operations and service delivery, and also to increase citizens’ trust in public administration. This chapter explores the normative, managerial and technological antecedents of e-governments, and explores the manifestation of e-government. It does so by focusing on goals, visions, and beliefs at national and supranational policy levels and by analyzing the technological and managerial problems encountered at the shop floor of municipal e-government initiatives. Chapter IV, “Implementing CRM Systems: Managing Change or Accepting Technological Drift?” by Bendik Bygstad, The Norwegian School of Information Technology (Norway), presents the expectations of large companies in the use of Customer Relationship Management (CRM) systems, that is, expecting to harvest benefits from dialogue marketing and internal knowledge synergies. This chapter questions how these systems should be implemented and how easily the benefits actually come. The high failure rate of CRM projects illustrates the gap between our intentions and outcomes. Interpreting a longitudinal case study and the research literature, the authors present two options to improve their practice. Chapter V, “Measuring Organizational Readiness for Knowledge Management” by W. A. Taylor and M. A. Schellenberg, University of Bradford (UK), discusses the need for empirical research into the practical difficulties encountered as organizations continue to grapple with the implementation of

viii

knowledge management. This chapter investigates the challenges faced by one multinational telecommunications company in a post-merger environment. The authors develop an instrument to evaluate the knowledge-sharing culture and information infrastructure. By using qualitative and quantitative data from a survey of five European sites, this chapter illustrates how managers can measure gaps between the effectiveness of current practices and their importance, and decide whether to direct resources toward changing employee attitudes, organizational practices, or knowledge management infrastructure. The need for senior managers to be in agreement about the strategic direction of their business and the strategic alignment between business strategy and knowledge management strategy is also highlighted. Chapter VI, “Knowledge Management of E-Business Initiatives within Two Global Organizations: A Comparative Case Study Analysis” by Mahesh S. Raisinghani, Texas Woman’s University (USA), Pegi Proffitt, Jonathan Barham, and Michael McCurdy, University of Dallas (USA), addresses knowledge management (KM) and e-business initiatives within global organizations. It compares and contrasts the experiences of two global corporations as they have conceived and implemented KM initiatives. After in-depth secondary research on the subject, both companies developed their own KM in e-business strategy. The two case studies discussed in this chapter highlight Business-to-Business (B2B), Business-to-Consumer (B2C), and Business-toEmployee (B2E) initiatives at these two global organizations. This provides concepts and viewpoints related to the drivers of KM, the hurdles to KM in an organization, the elements of KM philosophy and process, how KM can come to be understood as a critical part of a company’s competitive strategy, and how to deploy a sustainable KM system that suits business needs of an organization. Chapter VII, “ERP Systems and Competitive Advantage: A Case Study of Key Success Factors and Strategic Processes” by Thomas Kalling, Lund University (Sweden), describes the processes that firms and managers go through in their quests to create and sustain competitive advantages based on so-called Enterprise Resource Planning (ERP) systems. The theoretic framework is extended through a detailed case study of a specific in-house ERP venture in a European multinational manufacturing company in the paper packaging industry. The emergent resource management framework describes cognitive and cultural factors that support or hamper progress, including uncertainty, knowledge gaps, knowledge-transfer issues, and the problems of ensuring that ERP usage is converted into competitive advantage. The framework also addresses managerial implications and potential solutions to such obstacles.

ix

Chapter VIII, “Towards an Emotionally Intelligent IT Organization” by Eugene Kaluzniacky, University of Winnipeg (Canada), discusses the recent focus on the area of emotional intelligence (EI) in business administration circles as well as in IT management. The author presents the suggestion that IT workers need the “soft skills” of emotional literacy, especially when dealing with users and co-workers. This chapter questions how one can develop emotional intelligence and its components. The author also discusses to what degree, and how, IT management might try to move its IT organization on the EI path. Chapter IX, “Identification and Measurement of the Knowledge-Sharing Requirements in Collaborative Business Processes” by Farhad Daneshgar, University of New South Wales (Australia), introduces a modeling language called Awareness Net for both representation and measurement of the knowledge-sharing requirements in collaborative business processes. It is a conceptual model that facilitates representation and analysis of knowledge-sharing requirements of the actors in collaborative business processes. This chapter presents how the representation and measurement are handled by a set of collaborative semantic concepts and their relationships and how the proposed language enforces overall specification of what matters to the actors in collaborative processes when collaborating in business process to keep them aware of the collaboration context. Chapter X, “The Role of Interactive and Synchronized Multimedia Content In E-Learning” by Dongsong Zhang and Lina Zhou, University of Maryland, Baltimore County (USA), proposes an e-learning system with interactive multimedia that can help learners better understand learning content and achieve comparable learning performance to that of classroom learning. The results from an empirical study provide significant evidence to support the authors’ proposition. The chapter also discusses several important issues towards building effective and sharable multimedia-based e-learning systems. Chapter XI, “Information and Communication Technology in Supply Chain Management” by Vladimír Modrák and Imrich Kiss, Technical University of Košice (Slovakia), discusses Supply Chain Management (SCM), one of the important fields of the application of modern information and communication technology (ICT). This chapter focuses on designing a multi-integral logistical center and analyzing it from the aspect of its effectiveness. The impact of ICT on the development of virtual logistical centers and the development stages of SCM is also presented. In addition, the chapter outlines pitfalls of this development trend in an effort to provide practitioners in SCM with a more complex view of this issue.

x

Chapter XII, “The Political Economy of Information Management” by Vincent Homburg, Erasmus University Rotterdam (The Netherlands), discusses how information system development is often seen as a rational process of consecutive design activities aimed at integrated information systems. In this chapter, the development of a Research Information System is analyzed in terms of alternative, political views on information management. This chapter concludes that integration of data schemes should not be a goal for information system development, especially for situations in which interests and objectives vary considerably, and that information system development should be managed as a process in which various stakeholders enter and leave arenas, rather than as a project. Technology has become the backbone of organizations in recent years, and they would not be able to operate efficiently without it. By organizing information and opening up new opportunities for communication, technology facilitates growth and success for both organizations and individuals. Effective management of information resources becomes a necessary goal for all, and this may be accomplished by learning from the research and advances of others within the information resources management and information technology field. An outstanding collection of the latest research associated with the effective utilization of information technology, Advanced Topics in Information Resources Management, Volume 4, provides insight into and assistance in learning how to successfully implement information resources and technology in the companies, schools, and homes of those who depend upon it. Mehdi Khosrow-Pour, D.B.A. Editor-in-Chief Advanced Topics in Information Resources Management, Volume 4

A User Perspective of Information Requirements Determination Quality

1

Chapter I

A User Perspective of Information Requirements Determination Quality Douglas Havelka The Richard T. Farmer School of Business, USA

ABSTRACT

A study was performed to identify factors that affect the process quality of the information requirements determination (IRD) process from a user perspective. A nominal group process was used with three groups of users that have had experience with the IRD process. The results indicate there is a set of factors that users agree impact the quality of the IRD process. A total of 33 factors were identified as critical to IRD process quality. These factors are then classified into five logical categories: management, organization, process, technical, and human resource. The users consider management commitment the most important individual factor for IRD quality. However, the groups ranked the process category of factors highest. By using this set of factors as a checklist during the project planning stage, a manager may identify potentially problematic projects or projects with a higher likelihood of success. This study should benefit information technology (IT) users, IT professionals, project managers, and IT researchers. The identification of factors that impact IRD process quality may give managers guidance in assessing the risk associated with Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

2 Havelka

specific development projects. By determining the value of these factors prior to the commitment of resources, managers may increase the likelihood of recognizing problematic projects or projects with potentially high returns, allowing them to take prescriptive action. By identifying the concerns of users, it may be possible to control and manage the antecedents to the IRD process that have the most effect on users’ perceptions and expectations. Lastly, the factors identified may be used to develop metrics to monitor the IRD process or measure its success or quality. For IT researchers, this study offers two primary contributions: (1) identification of the critical factors suggests that there are many variables that have not received attention, and (2) an example of an approach to generate potential variables for further study.

INTRODUCTION

Cost overruns, missed deadlines, inaccurate features, and out-and-out failure still plague the software development industry despite advances in the development process (Adolph, 2000; Bergey, Smith, Tilley, Weiderman, & Woods, 1999; Johnson, 1995; Schmidt, Lyytinen, Keil, & Cule, 2001). One of the primary reasons for these problems is the lack of clear identification and validation of requirements (Bergey et al., 1999). However, a model of the factors that impact information requirements determination (IRD) does not exist to help managers improve information requirements determination process quality. In fact, there is a lack of understanding about what constructs most significantly impact systems development process quality and specifically the IRD process quality. The objective of this study was to identify these constructs and propose a model of these factors that may provide guidance for managers involved with the IRD process and researchers investigating the IRD process. The primary question addressed by this study is: What are the factors that affect the quality of the IRD process? Several additional aspects of this question are explored, including: How do these factors affect IRD process quality? Which of these factors can be manipulated or controlled prior to the IRD process to improve quality? In addition, a secondary question is addressed to test the validity of the results: Do users agree which factors affect the quality of the IRD process? If users from different organizations and with different backgrounds agree on a set of factors, this would provide evidence that these factors are applicable to a

Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.


3

wider range of development projects and not just to one organization, one type of system, or one type of project. By addressing these questions, several benefits may accrue. First, if the existence of a set of factors agreed to be important to the IRD process is established, then these factors would be likely candidates for managers or researchers to emphasize (or de-emphasize, depending on the nature of the factor) to improve the IRD process. Also, there may be factors that are not considered important by users, indicating areas that may allow more flexibility for managers or perhaps savings in resources dedicated to these factors.

LITERATURE REVIEW

The systems development process can be viewed as a life cycle with a series of stages or phases, beginning with a request and feasibility study of a new system’s potential and concluding with the implementation of the system. The information requirements determination stage has been recognized as critical due to the ripple effect it has on subsequent stages of development (Browne & Rogich, 2001). Requirements determination has been called “the most critical, yet least understood, phase of systems development” (Hevner & Harlan, 1995). “Eliciting requirements from users and other stakeholders is of central importance to information systems development” (Browne & Rogich, 2001). The IRD stage has been identified as a principal reason for systems development project failure for over 20 years (Browne & Rogich, 2001; Davis, 1982; Vessey & Conger, 1994). As the quality of the IRD stage is expected to impact the quality of the systems development process in later stages (Newman & Noble, 1990) and the quality of the implemented system in terms of the completeness, correctness, and consistency (Yadav, 1985), it is reasonable to propose that efforts to improve the IRD should impact the entire development process and the final system. Much research has focused on the definition stage of systems development and several reviews of IRD methods are available (Byrd, Cossick, & Zmud, 1992; Chatzoglou & Macaulay, 1996; Colter, 1984; Taggart & Tharp, 1977; Yadav 1983; Yadav, Bravoco, Chatfield, & Rajkumar, 1988). Most of the attention of prior research has been on devising new and improved tools, techniques, and methods to elicit and specify the information requirements for a system; including: more effective prompting techniques (Browne & Rogich, 2001), an ontological approach for evaluating tools to specify requirements for off-the-shelf software (Soffer, Golany, Dori, & Wand, 2001), a framework for integrating non-functional requirements into specifications (Cysneiros, Leite, & Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

4 Havelka

Neto, 2001), a distributed prioritization process for gathering requirements from various stakeholders for packaged software (Regnell, Host, Dag, Beremark, & Hjelm, 2001), socio-technical and soft approaches for gathering requirements (Atkinson, 2000), an approach to elicit requirements for sociotechnical system design (Sutcliffe, 2000), an analytical technique based on grounded theory for developing qualitative scenarios (Galal & Paul, 1999), the cognitive interview (Moody, Blanton, & Cheney, 1998), an object-oriented specification method (Sibley & Bailin, 1989), use of semantic structuring during interviews (Marakas & Elam, 1998), box-structured methods (Hevner & Harlan, 1995), use of focus groups to elicit deep structure information (Leifer, Lee, & Durgee, 1994), the use of imagery for ill-structured task contexts (Zmud, Anthony, & Stair, 1993), facilitated team techniques (Lockwood, 1989), the use of critical success factors to define information requirements (Bergeron & Begin, 1989), the use of cognitive mapping (Montezemi & Conrath, 1986), classifying an organization to identify requirements (Yadav, 1985), and a technique based on the Role Construct Repertory Test (Grudnitski, 1984). Other research has compared techniques to reduce requirement defects (Lauesen & Vinter,2001), developed a framework to assess requirements capture (Chatzoglou & Soteriou, 1999), and compared modes of group communication on the quality and creativity of requirements activities (Ocker, Fjermestad, Hiltz, & Johnson, 1998). Some research has suggested specific approaches based on the type of system being built, including electronic retailing (Webb, 2000) and executive information systems (Watson & Frolick, 1993; Wetherbe, 1991). Still other research has focused on the effectiveness of different methods in relation to other constructs, such as: the cognitive fit of process and object methods (Agarwal, Sinha, & Tanniru, 1996), communication modes and process structure (Ocker & Hiltz, 1995/96), the use of focus groups to elicit deep structure information (Leifer et al., 1994), the relationship between applications and methods (Vessey & Conger, 1993, 1994), and dataflow versus data-structure modeling (Mantha, 1987). The effects of some factors on the IRD process have been studied, including: time (Daugulis, 2000), the role and importance of a facilitator (Lockwood, 1989; Macaulay, 1999), conflict (Macaulay, 1999; Robey, 1984, 1994; Robey & Farrow, 1982, Robey, Farrow, & Franz, 1986, 1989; Robey, Smith, & Vijayasarathy, 1993), changing and dynamic requirements (Galal & Paul, 1999; Patel, 1999; Paul & Macredie, 1999), requirements creep (Berry, 1998), communication (Coughlan & Macredie, 2002; DeBrabander & Thiers, 1984; Holtzblatt & Beyer,1995; Kaiser & King, Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.


5

1982; Kaiser & Srinivasan, 1982; Kiel & Carmel, 1995; Marakas & Elam, 1998; Montezemi & Conrath, 1986; Ocker et al., 1998; Ocker & Hiltz, 1995/ 96), politics (Markus, 1981, 1983), and the usefulness of having an ignorant analyst on the team (Berry, 1995, 2002). Several researchers have suggested models or frameworks for purposes related to the IRD process. Chatzoglou and Soteriou (1999) proposed a data envelope analysis for the requirements capture and analysis (RCA) process that included an RCA “production” framework composed of moderating factors, inputs, outputs, and the RCA production process. In their results, they note the limitation of their input and output sets and suggest further research is needed to validate them and “shed light on whether these are exhaustive or not” (p. 522). Guinan, Cooprider, and Faraj (1998) studied the effects of technical and behavioral factors on team performance during the requirements definition phase. Overall, they found that the behavioral factors studied tended to have a greater impact on team performance than on the technical factors (Glass, 2000), but both were important. In an earlier study, Chatzoglou (1997) suggested a model including a human, technical, and management component with project characteristics as moderating variables in a study of the effects of these factors on requirements capture completion. He found that there were differences in the importance of factor categories for different projects and different organizations. In addition, a set of quality factors for the information requirements determination (IRD) process has been identified, but it is based only upon the perspective of information systems specialists (Havelka, 2002). User participation and user involvement have long been suggested as significant factors in information systems development project success (Choe, 1998; Doll & Torkzadeh, 1989, 1991; Ives & Olson,1984; McKeen & Guimaraes, 1997). It has also been shown that users view the systems development process differently than information systems personnel (Havelka, Sutton, & Arnold, 2001). The inclusion of users on development teams is advocated primarily to capture the users’ knowledge of their job functions. Given recent research on the effects of user participation and procedural justice on the success of systems development, (Hunton, 1996a, 1996b; Woodroof, 1996), it is useful to determine a user view of the factors impacting the IRD process. Therefore, this study focused on the perspective of users who have been involved with the IRD process. More recent research has explored the integration of nominal group techniques (NGT) with joint application development (JAD) to improve the requirements determination process (Duggan & Thachenkary, 2004). This research found that by using a NGT some of the negative group-related Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

6 Havelka

dynamics found in JAD due to its freely interacting structure could be mitigated and lead to more effective requirements gathering. Also, recent research has focused on human cognition and its impact during requirements determination. Browne and Ramesh (2002) proposed a descriptive model of the IRD process (information gathering, representation, and verification) and identified four classes of difficulties that help to organize and describe problems in each stage of the IRD process (constraints on humans as information processors, variety and complexity of requirements, communication problems, unwillingness of users to provide requirements). They also propose techniques to address the problems identified and improve requirements determination. Another study developed a socio-cognitive process model of technology frames of reference to understand the requirements determination process (Davidson, 2002). The study found that repeated shifts in the frames disrupted the participants’ understanding of the requirements and contributed to a turbulent IRD process.

RESEARCH METHOD AND DATA ANALYSIS

The research used a field study with a series of group meetings. A nominal group technique (NGT) generated the factors (Adam, Hershauer, & Ruch, 1986; Delbecq, Van de Ven, & Gustafson, 1982; Sutton, 1993; Sutton, Arnold, & Havelka, 1998; Van de Ven & Delbecq, 1974). An underlying assumption of the method is that individuals who perform a task can provide valuable insight into the important factors influencing their ability to achieve a high level of productivity when performing the task (Adam et al., 1986). This method has been used successfully in several domains including systems development (Adam et al., 1986; Havelka, Sutton, & Arnold, 1998; Sutton, 1993). By using individuals who have had experience in a problem area, the critical factors influencing the problem can be identified. In this study, users who had participated in the IRD process are asked to identify the factors that affect the IRD process. Each participant is asked to silently and individually generate a list of factors that he or she believes influence the efficiency, effectiveness, and quality of the IRD process. The factors generated are then listed publicly in a round-robin fashion on a flip chart for all participants to view and discuss for clarification. After all the potential factors are listed, each participant is asked to individually evaluate the factors by first separating them into two categories—critical and not critical—and then ranking the critical factors by importance. An overall ranking of the factors for each group was obtained by averaging the individual rankings of each group member.



7

The NGT was applied to distinct groups of users from different organizations and backgrounds to provide representative and comprehensive results. Details of each of the three groups used are presented in Table 1. All the participants in the groups met the conditions to be included in the sampling frame. The sample of users represented seven different organizations and 13 distinct functional areas. Taking the practical conditions of the research environment into consideration, the sample of focus group participants was considered adequate; however, the nonrandom sampling approach used is a limitation of this work. By applying the NGT to three diverse groups of users, the generalizability of the results should be improved. To test the validity of the NGT used and whether the users from different organizations and with different backgrounds tend to agree about the factors, several statistical tests were performed. The first test is used to determine whether there exists agreement between the groups. To determine if the groups can be considered independent, chisquare tests for independence between each of the groups were conducted. The results suggest that the groups are not independent, lending support to the conclusion that agreement among the groups does exist. This is an indication that the users do agree about which factors are critical to the quality of the IRD Table 1. Summary of user groups Group Number of Participants Location Industry

1 7 Rockdale, TX Manufacturing

Functional Area(s)

Accounting Training & HR Quality Control Purchasing

# Years of IT Use Average # Years of IT Use # of Development Projects Average # of Dev Projs Role on Projects

3-16 10.3 1-10 2.4 Consultant Team Member

IRD Techniques Used

# Factors Generated # Critical Factors

Interviews Group Meetings

41 28

2 6 Cincinnati, OH Distribution Manufacturing Public Utility Finance Logistics Technical Sales Support Auditing Human Resources 1-15 7.0 1-20 7.5 Consultant Team Member Primary Developer Meetings Review of Packaged Applications Interviews Observation 29 19

3 6 Cincinnati, OH Marketing Accounting Research Product Development 4-10 6.5 1 1 Consultant Team Member "Informal" Review Existing Systems & SW Packages 19 19


8 Havelka

process. This finding is despite their different organizations, experiences, and backgrounds. The second test performed analyzes the agreement between groups of the factor rankings using Spearman’s Rho (Conover, 1980). The factor rankings are based on the users’ noting the relative importance of each factor. If there is agreement among the groups, they will tend to rank the factors similarly. Spearman’s Rho is a more powerful measure of the relationship between two samples than the chi-square test for independence. The null hypotheses of no agreement in rankings are rejected for all three comparisons at less than a 0.001 critical level of significance. This is further evidence that the set of factors Table 2. Critical factors ranked by user group FACTORS Accountability Budget Communication between users & IT Control of project Current system documentation Current system quality Data Gathering Techniques Feasibility study Flexibility required Goal congruence IT communication skills IT domain knowledge IT technical skills User/IT interaction Management commitment Multiple user groups Outside resources Planning Politics Project initiator Project leader IT/User rapport Systems integration Team composition Technical resources Testing Time constraints Unique system requirements User bias User commitment User ownership User participation Users’ understanding of current system

UG1 18 1 14 16 14 24 20 26 10 4 3 2 5 24 9 11 22 7 20 24 20 13 6 8 17

UG2 5 11 4

UG3 8 7

15 19 7

6 15

2

14 13 3 10

9 6 1 16 16 18 8 13 10

1 18

12 17 3

14 12

16 11 5 2

3

8



9

generated by the groups are similar and are relevant to the IRD process in general, regardless of the organizational setting, project type, etc. The last test used to validate the nominal group process was Kendall’s coefficient of concordance. This measure was used to test the agreement among all three of the group rankings of the factors. With a small number of rankings, Kendall’s coefficient results in a more conservative test than using a chi-square distribution (Conover, 1980). Consistent with the Spearman’s rank correlation statistic and the chi-square test for independence, the null hypothesis of no agreement among the rankings of the groups is rejected at a critical significance level of 0.0291. Based on the results of Kendall’s coefficient of concordance, there appears to be strong agreement in the rankings of the critical quality factors among the three user groups. The results of the statistical tests provide support for the validity of the NGT used. The tests suggest that the set of factors selected as critical by all three of the user groups represents a set of common, relevant factors that affect the quality of the IRD process. The aggregate set of factors given by the three user groups addresses the primary research question: What are the factors that affect the quality of the IRD process? The set of critical factors resulting from the three focus groups is presented in Table 2. The three user groups generated a total of 33 critical quality factors. As can be seen in the Table 2, there appears to be substantial overlap among the groups. The factors selected as critical by all three of the focus groups are discussed in more detail in the discussion section.

A USER-ORIENTED MODEL OF FACTORS THAT AFFECT IRD PROCESS QUALITY

Based on the outcomes of the research study, a logical model of the factors that affect the information requirements determination process quality is deduced. The focus on the user perspective is driven by several reasons. First, research has suggested that the success of an information system may be based on psychological factors such as user involvement and user attitude (Barki & Hartwick, 1994a, 1994b; Doll & Torkzadeh, 1991; Torkzadeh & Doll, 1991, 1994). By addressing the factors that users identify as critical to IRD process quality, managers may be able to improve these perceptions without incurring significant additional costs. Second, the literature on quality management (Adam et al., 1986) and requirements determination (Byrd, Cossick, & Zmud, 1992; Gunter, Gunter, & Jackson, 2000; Sutcliffe, 2000; Viller, Bowers, &


10 Havelka

Figure 1. A user-oriented model of factors that affect IRD process quality. TECHNICAL FACTORS ____________ Current System Documentation Current System Quality Flexibility Systems Integration Technical Resources Unique System Requirements

MANAGEMENT FACTORS _____________ Accountability Budget Control of Project Management Commitment Outside Resources Team Composition Time Constraints

ORGANIZATIONAL FACTORS ________________ Goal Congruence Multiple User Groups Politics IS/User Rapport

PROCESS FACTORS __________ Communication Data Gathering Techniques Feasibility Study User/IS Interaction Planning Testing User Participation

IRD PROCESS QUALITY

PERSONNEL FACTORS ___________ IS Communication Skills IS Domain Knowledge IS Technical Skills Project Initiator Project Leader User Bias User Commitment User Ownership User Understanding of Current System

Rodden, 1999) emphasizes the importance of including the customer in the process of developing products or systems for those customers. Lastly, tools have become available to users that allow them to develop applications for themselves. By identifying the factors that these users consider to be critical, management should be able to improve the quality of the applications these users are developing. The model suggested is composed of five categories of factors: management, organization, process, technical, and human resource. These categories were determined by analyzing each factor to determine a higher level construct to which the factor was an attribute, a component, or a subordinate. A total of 33 factors were identified and selected as critical to IRD process quality. A graphical view of the user-oriented IRD process quality model is given in Figure 1. Each of the components of the model is described below with a discussion of its impact on IRD process quality.

Management Factors

The user groups selected seven factors that can be considered Management Factors. The common element among these factors is the ability of the organization’s management or management systems to control or influence each of these factors’ impact on a given systems development project and,



11

Table 3. Management factors FACTOR Management commitment Accountability Budget

Time constraints Control of the project Outside resources Team composition

DESCRIPTION The level of importance that upper-level management places on the successful completion of the project, the emotional or psychological obligation to the project. The existence of an individual within the organization who is ultimately responsible for ensuring the project’s success. The financial resources available to complete the project. These resources may include personnel assigned, equipment and software required, and release time for users to sufficiently participate in the project. The amount of time allowed for completion of the intermediate tasks and for final completion of the requirements gathering process. Whether the project was funded, managed, or initiated by the IT group within the organization or one of the user groups that would be impacted by the project. The existence of personnel from external sources on the project. The composition of the team, their levels of competence, qualifications, skills, and experience for the specific project.

specifically, the requirements-gathering stage of the project (see Table 3). Management commitment determines whether adequate financial, human, and technology resources will be available. A project that lacks accountability would be more likely to fail. Accountability may exist in different roles, that is, a project manager or a champion from a user group, but this person must have an active interest in the project’s success. The budget and time constraints as critical factors for IRD process quality come as no surprise; the project management triad of schedule, budget, and requirements is well established (Frame, 1995). Time constraints were most difficult when the users were asked to participate in a project and continue their normal job functions. Control of a project by an IT group or a dominant user area led to less responsiveness to users’ requirements. Outside resources were considered more likely to be responsive to users’ suggestions and needs, especially when being paid by the user area’s management. Lastly, the mix of personalities on the project team was considered as important as the competence of individual team members.

Organization Factors

These factors are related to the interaction among groups or individuals from different areas within the organization. The definition or description of


12 Havelka

Table 4. Organization factors FACTOR Goal congruence

Multiple user groups Politics

Rapport between IT and user groups

DESCRIPTION Agreement among management, the IT department, and user areas affected by the project on the purpose of the application being considered and the deliverables of the project. The existence of more than one user area that would be affected by the system being designed. Refers to conflicts of interest, posturing, or organizational issues that are not directly related to the project, but may have an influence on the successful completion of the project. The general level of goodwill and trust between the IT department and the client departments involved with the project -- their working relationship.

these factors is provided in Table 4. Goal congruence is critical to IRD process quality by focusing the development team on the purpose of the project. Without goal congruence, disagreement among user groups and the IT group were more likely to occur. The presence of multiple user groups influences the IRD process quality in several ways: adequate representation from all areas affected is needed — inadequate input from a specific user area early in the IRD process may cause rework to be required; the integration of data and process requirements from separate business units is necessary to avoid problems related to formats of reports, ownership of data, access to data, and integration of new applications with existing systems; and communication problems among user areas must be addressed, including logistical difficulties in getting people together for meetings and “semantic confusion” among users from different areas. Politics affects the quality of the IRD process primarily by wasting resources that could be used productively on other activities. Lastly, rapport influences the IRD process quality indirectly, by improving communication between all the stakeholders and increasing the level of “trust” among all the members of the IRD team.

Process Factors

Process factors include items that are related to the organization’s process or method of gathering and specifying information requirements. These factors are described in Table 5. The most important aspect of user participation was the inclusion of the “correct” users. The quality of communication between users and IT was considered to be much more important than the quantity. The quality of user/IT interaction was considered a separate and distinct factor that



13

Table 5. Process factors FACTOR Communication between users and IT specialists Data gathering techniques Feasibility study

User/IT interaction Planning

Testing User participation

DESCRIPTION The quantity and quality of communication including feedback from and to one another during the information requirements-gathering process. The actual procedures used to determine and discover the specific information needs of the client/users. The complete analysis of the economic, technological, and operational plausibility of the application as defined by the study; the study should indicate the general purpose and limitations of the project. The amount and type of group activities performed and other modes. The amount of preparation performed for the actual gathering of the specific requirements for the application, tasks to be performed, who is responsible for the tasks, and what deliverables are expected. The activities and time spent to verify and validate the information requirements specified during the process. The active, substantive participation of the actual end users of the application in the information requirements gathering process, this includes identifying the correct end users and their performance of specific tasks and activities.

would impact IRD process quality. Data-gathering techniques that allowed users to “get it over with” or that “doesn’t interfere with my work” and were the least intrusive techniques possible to get the requirements documented quickly were preferred. A completed feasibility study was believed to be a critical factor due to the “scoping” nature of the report, that is, the requirements would be more easily identified and defined if the project has well-defined boundaries and limits. Distinctly, planning was thought to force the specification of details, such as task responsibility, that would produce higher quality requirements. Testing was considered critical due to the importance of validating the requirements as they are elicited and specified, particularly with users who were not participating in the requirements-gathering process. Again, the importance of ensuring that the true requirements are incorporated into the final requirements document was emphasized to reduce the amount of rework later and to ensure the system developed is the system desired.

Technical Factors

These factors are related to the technology currently being used or technical issues related to the development of the new system (see Table 6). Current system documentation affects IRD process quality by providing


14 Havelka

Table 6. Technical factors FACTOR Current system documentation Current system quality Flexibility Systems integration Technical resources Unique system requirements

DESCRIPTION The level and understandability of written procedures, input documents, output documents, and data used for the work system being studied. The properties and attributes (positive or negative) of the current system that may affect the gathering of requirements. The number of different types of tasks that must be performed by the system under study, usually identified for different user groups. The impact that the application under consideration will have on other systems within the organization. The computing resources (hardware and software) available for development of the application. The presence of requirements that are new or that have not been addressed in previous applications.

information about how the business process is currently being supported. Current system quality also impacts the IRD process. If the current system were completely out of date, it would encourage more participation from the users. Or, if the current system was meeting most of the users’ needs, there may be user resistance to a new system. Flexibility impacts the IRD process quality due to the level of complexity it necessitates. Similarly, system integration affects IRD process quality; as the number of systems needing integration increases, the risks to successful completion also increase. Technical resources available affect IRD process quality by limiting the features or functions possible. Lastly, unique system requirements impact IRD process quality by increasing the risk of failure due to the lack of experience with fulfilling the requirement. The constructs identified as technical factors appear, to a great extent, to be “given” for the project, that is, they are constraints that should be recognized and planned for but may not be easily changed or manipulated.

Personnel Factors

These factors are related to human resources that are critical to IRD process quality (see Table 7). IT communication skills are expected to directly impact the communication with users and the quality of the IRD process. IT personnel domain knowledge increases the ability of the team to correctly and quickly specify the requirements. IT personnel technical skills are expected to impact the IRD process quality through the identification of time-saving technology or by recognizing the feasibility of specific features prior to the design and development. User bias influences IRD process quality in different



15

Table 7. Personnel factors FACTOR IT personnel communication skills

DESCRIPTION Defined as the reading, writing, speaking, and listening skills of the IT personnel on the project team. IT personnel domain knowledge How well the information systems personnel understand the purpose, the tasks, and the outputs of the work processes that the application is to support. IT personnel technical skills The level of competence and knowledge of the IT personnel with regard to available hardware, software, techniques, and methods. Project Initiator The manager who initiated the project, specifically whether this manager comes from a user group or the IT area. Project Leader The presence of an individual on the team who drives the project. User bias The users’ "willingness to change" or to try new technological approaches to support the work system. User commitment The level of emotional and psychological obligation to the successful completion of the project. User ownership A psychological attachment to the system or business process. User understanding of current system The level of knowledge that the users participating in the information requirements-gathering process have regarding current manual and computer-based processes and procedures used to perform their duties.

ways: a lack of recognizing the advantages of a new information system, resistance to work process changes, or the construction of a system that mimics the system being replaced. User commitment affects IRD process quality by influencing the quality of user participation and other factors. User ownership was considered to be distinct from user commitment and is similar to the definition of ownership as some form of a “right.” User understanding of the current system impacts the IRD process quality through the users’ ability to provide knowledgeable information about the features and functions of the current system that were useful and necessary and those that were difficult to perform or were not needed. Some organizations explicitly recognize the importance of having a project leader and name a high level manager as the “sponsor” or “champion” for the project. Whether the IT department initiates the project or a user area does is critical to IRD process quality. If the IT area drives the project, the project may encounter resistance from users who feel threatened or simply resist change. On the other hand, if a project is userdriven, the IT personnel may not feel the urgency or importance that the project may require. Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

16 Havelka

DISCUSSION

Taking an overview of the focus group results reveals some additional interesting information. Using a weighted average of the three groups’ rankings for each factor (adjusted for factors not considered critical by the group) gives an indication of the overall and relative importance of each factor. Table 8 shows all the factors in order of their average ranking. Based on this view of the data, management commitment to the IRD process is clearly the most important factor. This finding should not be surprising. A project with strong upper management support is more likely to get the resources and attention Table 8. Factors by average ranking FACTOR RANK Management commitment 2.3 Communication between users & IT 4.0 IT domain knowledge 5.0 User commitment 6.7 Team composition 7.7 Goal congruence 8.7 Budget 12.3 Feasibility study 14.0 User/IT interaction 14.0 User participation 15.0 Time constraints 15.3 Systems integration 15.7 Data Gathering Techniques 16.3 IT communication skills 17.0 User bias 17.7 Unique system requirements 19.3 Planning 20.3 Current system documentation 21.7 Accountability 24.3 User ownership 25.3 IT technical skills 26.0 Project leader 26.3 IT/User rapport 26.7 Control of project 27.3 Current system quality 27.3 Multiple user groups 28.0 Politics 28.0 Users’ understanding of current system 28.3 Project initiator 28.7 Technical resources 29.3 Outside resources 30.7 Testing 30.7 Flexibility required 31.3



17

needed to succeed. Following management commitment, several factors are ranked highly (average < 10): communication, domain knowledge, user commitment, team composition, and goal congruence. Of these factors, communication has probably received the most attention from researchers (Bostrom, 1989; Cronan & Means, 1984; DeBrabander & Thiers, 1984; Janson, Brown, & Taillieu, 1997; Janson & Woo, 1996). IT domain knowledge has been discussed in prior literature as being important to the IRD process, but at least one author has argued that domain ignorance is critical to successful requirements engineering in the sense that the analyst would then question assumptions and make these explicit (Berry, 1995). The impact of user commitment, team composition, and goal congruence on the IRD process has received little attention from researchers. Using the averages to evaluate the relative importance of each component of the suggested model reveals that overall the process factors were ranked higher than the other components. Table 9 presents the average rankings of the factors in each component of the model. This may give managers some direction in allocating resources to projects. The results of the study validate some commonly held beliefs regarding the IRD process, that is, management commitment is critical to process quality. They also reveal some unexpected information that should help managers better apply the scarce resources available or reduce risks. Several constructs that were expected to be important were not identified, not the least of which is requirements stability or requirement “creep.” Perhaps users do not see this as a critical problem or perhaps it is not as important as previous research has implied. Regardless, the absence of the construct is conspicuous. Another potentially telling phenomenon is the identification and selection of IT communication skills, communication between users and IT specialists, Table 9. Average ranking of factors for model components COMPONENT AVERAGE RANKING Process

16.3

Management

17.1

Personnel

20.1

Organizational

22.8

Technical

24.1


18 Havelka

interaction between user and IT, rapport between IT and users by the user participants. But none of the user groups identified users’ communication skills as a factor. Could it be that users view communication during requirements determination as the primary responsibility of the IT members of the team? Obviously, the users recognize the importance of interaction with the IT personnel. Further research may be needed to investigate additional aspects of communication during the IRD process.

CONCLUSION

This chapter reports the results of an empirical study focused on identifying factors that affect the quality of the information requirements determination process. The study used a series of focus groups composed of users who have had experience with the IRD process for software development. By developing a model for IRD process quality based on the user perspective it is hoped that improvements can be achieved by recognizing the constructs considered most important by the user/clients, thereby improving the usefulness, ease of use, and productivity of the information systems developed.

REFERENCES

Adam, E.E., Hershauer, J., & Ruch, W. (1986). Productivity and quality management as a basis for improvement. University of Missouri, College of Business Research Center, Columbia, MO . Adolph, S. (2000). Lost in chaos: Chronology of a failure. Software Development Magazine (Online), January. Retrieved March 5, 2005 from http://www.sdmagazine.com/documents/s=821/sdm0001b/ Agarwal, R., Sinha, A.P., & Tanniru, M. (1996). Cognitive fit in requirements modeling: A study of object and process methodologies. Journal of Management Information Systems, 13(2), 137-162. Atkinson, C.J. (2000). Socio-technical and soft approaches to information requirements elicitation in the post-methodology era. Requirements Engineering, 5(2), 67-73. October. Barki, H. & Hartwick, J. (1994a). Measuring user participation, user involvement, and user attitude. MIS Quarterly, 18(1), 59-82, March. Barki, H. & Hartwick, J. (1994b). User participation, conflict, and conflict resolution: The mediating roles of influence. Information Systems Research, 5(4), 422-438, December.



19

Bergeron, F. & Begin, C. (1989). The use of critical success factors in evaluation of information systems: A case study. Journal of Management Information Systems, 5(4), 111-124, Spring. Bergey, J., Smith, D., Tilley, S., Weiderman, N., & Woods, S. (1999, April). Why reengineering projects fail. CMU/SEI-99-TR-010, Software Engineering Institute, Carnegie Mellon, Pittsburgh, PA. Berry, D.M.(1995). The importance of ignorance in requirements engineering. Journal of Systems & Software, (28), 179-184. Berry, D.M. (1998). Software and house requirements engineering: Lessons learned in combating requirements creep. Requirements Engineering, 3(3/4), 242-244, July. Berry, D.M. (2002). The importance of ignorance in requirements engineering: An earlier sighting and a revisitation. The Journal of Systems and Software, 60: 83-85. Bostrom, R.P. (1989). Successful application of communication techniques to improve the systems development process. Information and Management, 16, 279-295. Browne, G.J. & Ramesh, V. (2002). Improving information requirements determination: A cognitive perspective. Information & Management, 39, 625-645. Browne, G.J.& Rogich, M.B. (2001). An empirical investigation of user requirements elicitation: Comparing the effectiveness of prompting techniques. Journal of Management Information Systems, 17(4), 223240, Spring. Byrd, T.A., Cossick, K.L., & Zmud, R.W. (1992). A synthesis of research on requirements analysis and knowledge acquisition techniques. MIS Quarterly, 16(1), 117-138. Chatzoglou, P.D. (1997). Factors affecting completion of the requirements capture stage of projects with different characteristics. Information & Software Technology, 39, 627-640. Chatzoglou, P.D., and Macaulay, L.A. (1996). Requirements capture and IS methodologies. Information Systems Journal, 6, (3), 209-225. Chatzoglou, P.D.& Soteriou, A.C. (1999). A DEA framework to assess the efficiency of the software Requirements Capture and Analysis Process. Decision Sciences, 30(2), 503. Choe, J. (1998). The effects of user participation on the design of accounting information systems. Information & Management, 34(3), 185-198. Colter, M.A. ( 1980). A comparative analysis of systems analysis techniques. MIS Quarterly, 8(1), 51-66. Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

20 Havelka

Conover, W.J. (1980). Practical nonparametric statistics (2nd ed.). New York: John Wiley and Sons. Coughlan, J. & Macredie, R.D. (2002). Effective communication in requirements elicitation: A comparison of methodologies. Requirements Engineering, 7(2), 47-60. Cronan, T.P.& Means, T.L. (1984). System development: An empirical study of user communication. Data Base, 15(3), 25-33, Spring. Cysneiros, L.M., Leite, J.C., & Neto, J. (2001). A framework for integrating non-functional requirements into conceptual models. Requirements Engineering, 6(2), 97-115, June. Daugulis, A. (2000). Time aspects in requirements engineering: Or “every cloud has a silver lining.” Requirements Engineering, 5(3), 137-143, October. Davidson, E. (2002). Technology frames and framing: A socio-cognitive investigation of requirements determination. MIS Quarterly, 26(4), 329359, December. Davis, G.B. (1982). Strategies for information requirements determination. IBM Systems Journal, 21(1), 4-30. DeBrabander, B.& Thiers, G. (1984). Successful information system development in relation to situational factors which affect effective communication between MIS-users and EDP-specialists. Management Science, 30(2), 137-155. Delbecq, A.L., Van De Ven, A.H.,& Gustafson, D.H. (1982). Guidelines for conducting NGT meetings. In D.R. Hampton, C.E. Summer & R.A. Webber (Eds.), Organizational behavior and the practice of management., pp. 297-298. Glenview, IL: Scott, Foresman, and Company. Doll, W.J.& Torkzadeh, G. (1989). A discrepancy model of end-user computing involvement. Management Science, 35(10), 1151-1171, October. Doll, W.J. & Torkzadeh, G. (1991). A congruence construct of user involvement. Decision Sciences, 22(2), 443-453, Spring. Duggan, E.W.& Thachenkary, C.S. (2004). Integrating nominal group technique and joint application development for improved systems requirements determination. Information & Management, 41, 399-411. Frame, J.D. (1995). Managing projects in organizations (Rev. ed.). San Francisco, CA: Jossey-Bass Publishers. Galal, G.H.& Paul, R.J. (1999). A qualitative scenario approach to managing evolving requirements. Requirements Engineering, 4(2), 92-102, July. Glass, R.L. (2000). Software requirements success predictors - behavioral factors beat technical ones. The Journal of Systems and Software, 51, 85-86. Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.


21

Grudnitski, G. (1984). Eliciting decision-makers’ information requirements: Application of the Rep Test methodology. Journal of Management Information Systems, 1(1), 11-32, Summer. Guinan, P., Cooprider, J., &Faraj, S. (1998). Enabling software development team performance during requirements definition: A behavioral versus technical approach. Information Systems Research, 9(2), 101-125, June. Gunter, C.A., Gunter, E.L., & Jackson, M. (2000). A reference model for requirements and specifications. IEEE Software, 17(3), 37-43, May/ June. Havelka, D. (2002). Requirements determination: An information systems specialist perspective of process quality. Requirements Engineering, 6(4), 220-236. Havelka, D., Sutton, S.G., & Arnold, V. (1998). A methodology for developing measurement criteria for assurance services: An application in information systems assurance. Auditing: A Journal of Practice & Theory, 17, 73-92 (Supplement). Havelka, D., Sutton, S.G., & Arnold, V. (2001). Information systems quality assurance: The effect of users’ experiences on quality factor perceptions. Review of Business Information Systems, 5(2), 49-62, Spring. Hevner, A.R. & Harlan, D.M. (1995). Box-structured requirements determination methods. Decision Support Systems, 13, 223-239. Holtzblatt, K. & Beyer, H.R. (1995). Requirements gathering: The human factor. Communications of the ACM, 38(5), 30-32. Hunton, J.E. (1996a). Involving information system users in defining system requirements: The influence of procedural justice perceptions on user attitudes and performance. Decision Sciences, 27(4), 647-671, Fall. Hunton, J.E. (1996b). User participation in defining system interface requirements: An issue of procedural justice. Journal of Information Systems, 10(1), 27-48, Spring. Ives, B.& Olson, M. (1984). User involvement and MIS success: A review of research. Management Science, 30(5), 586-603. Janson, M., Brown, A., & Taillieu, T. (1997). Colruyt: An organization committed to communication. Information Systems Journal, 7(3), 175199. Janson, M.A.& Woo, C.C. (1996). A speech act lexicon: An alternative use of speech act theory in information systems. Information Systems Journal, 6(4), 301-329.


22 Havelka

Johnson, J. (1995). Chaos: The dollar drain of IT project failures. Application Development Trends, 2(1), 41-47, January. Kaiser, K.M.& King, W.R. (1982, March). The manager-analyst interface in systems development. MIS Quarterly, 6(1), 49-59. Kaiser, K.M.& Srinivasan, A. (1982). User-analyst differences: An empirical investigation of attitudes related to systems development. Academy of Management Journal, 25(3), 630-646. Kiel, M.& Carmel, E. (1995). Customer-developer links in software development. Communications of the ACM, 38(5), 33-44. Leifer, R., Lee, S., & Durgee, J. (1994). Deep structures: Real information requirements determination. Information & Management, 27(5), 27585, November. Lockwood, D.L. (1989). Using facilitated team techniques to define information systems requirements. Journal of IS Education, 1(4). Macaulay, L.A. (1999). Seven-layer model of the role of the facilitator in requirements engineering. Requirements Engineering, 4(1), 38-59, August. Mantha, R.W. (1987, December). Data flow and data structure modeling for database requirements determination: A comparative study. MIS Quarterly, 11(4), 531-545. Marakas, G. & Elam, J. (1998). Semantic structuring in analyst acquisition and representation of facts in requirements analysis. Information Systems Research, 9(1), 37-63, March. Markus, M.L. (1981, November). Implementation politics: Top management support and user involvement. Systems, Objectives, Solutions, 1(4), 203-215. Markus, M.L. (1997). Power, politics, and MIS implementation. Communications of the ACM, 26, 430-444. McKeen, J.D.& Guimaraes, T. (1997). Successful strategies for user participation in systems development. MIS Quarterly, 14(2),133-150. Montezemi, A.R.& Conrath, D.W. (1986). The use of cognitive mapping for information requirement analysis. MIS Quarterly, 10(1), 45-56. Moody, J.W., Blanton, J.E.,& Cheney, P.H. (1998). A theoretically grounded approach to assist memory recall during information requirements determination. Journal of Management Information Systems, 15(1), 79-98. Newman, M. & Noble, F. (1990). User involvement as an interaction process: A case study. Information Systems Research, 1(1), 89-113, March. Ocker, R., Fjermestad, J., Hiltz, S.R., & Johnson, K. (1998). Effects of four modes of group communication on the outcomes of software requireCopyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.


23

ments determination. Journal of Management Information Systems, 15(1), 99-118, Summer. Ocker, R. & Hiltz, S.R. (1999). The effects of distributed group support and process structuring on software requirements. Journal of Management Information Systems, 12(3), 127-154, Winter. Patel, N.V. (1999). The spiral of change model for coping with changing and ongoing requirements. Requirements Engineering, 4(2), 77-8, July. Paul, R.J.& Macredie, R.D. (1999). Guest editorial: Managing dynamic requirements. Requirements Engineering, 4(2), 63-64, July. Regnell, B., Host, M., Dag, J.N., Beremark, P., & Hjelm, T. (2001). An industrial case study on distributed prioritization in market-drive requirements engineering for packaged software. Requirements Engineering, 6(1), 51-62. Robey, D. (1984). Conflict models for implementation research. In R.L. Schultz & M.J. Ginzberg (Eds.), Applications of Management Science, Supplement 1, pp. 89-105, Greenwich, CT: JAI Press. Robey, D. (1994). Modeling interpersonal processes during system development: Further thoughts and suggestions. Information Systems Research, 5(4), 439-445. Robey, D. &Farrow, D.L. (1982). User involvement in information system development: A conflict model and empirical test. Management Science, 28(1), 73-85. Robey, D., Farrow, D.L., & Franz, C.R. (1989, September). Group process and conflict in system development. Management Science, 35(10), 1172-1191. Robey, D., Smith, L., & Vijaysarathy, L. (1993). Perceptions of conflict and success in information systems development projects. Journal of Management Information Systems, 10(1), 123-139. Schmidt, R., Lyytinen, K., Keil, M., & Cule, P. (2001). Identifying software project risks: An international Delphi study. Journal of Management Information Systems, 17(4), 5-36, Spring. Sibley, E.H. & Bailin, S.C. (1989). An object-oriented requirements specification method. Communications of the ACM, 32(5), 608-624, May. Soffer, P., Golany, B., Dori, D., & Wand, Y. (2001). Modeling off-the-shelf systems requirements: An ontological approach. Requirements Engineering, 6(3), 183-199, October. Sutcliffe, A.G. (2000). Requirements analysis for socio-technical system design. Information Systems, 25(3), 213-233, May.


24 Havelka

Sutton, S.G. (1993). Toward an understanding of the factors affecting audit quality. Decision Sciences, 24(1), 88-105, February. Sutton, S.G., Arnold, V., & Havelka, D. (1998). A methodology for developing measurement criteria for assurance services: An application in information systems assurance - Reply. Auditing-a Journal of Practice & Theory, 17, 103-107. Taggart, W.M., Jr. & Tharp, M.O. (1977). A survey of information requirements analysis techniques. Computing Surveys, 9(4), 273-290. Torkzadeh, G. & Doll, W.J. (1991). Test-retest reliability of end-user computing satisfaction instrument. Decision Sciences, 22(1), 26-37. Torkzadeh, G. & Doll, W.J. (1994). The test-retest reliability of user involvement instruments. Information & Management, 26(1), 21-31. Van de Ven, A.H. & Delbecq, A.L. (1974). The effectiveness of nominal, Delphi, and interacting group decision making processes. Academy of Management Journal, 17(4), 605-662. Vessey, I. & Conger, S. (1993). Learning to specify information requirements: The relationship between application and methodology. Journal of Management Information Systems, 10(2), 177-201, Fall. Vessey, I. & Conger, S. (1994). Requirements specification: Learning object, process, and data methodologies. Communications of the ACM, 37(5), 102-114, May. Viller, S., Bowers, J., & Rodden, T. (1999). Human factors in requirements engineering: A survey of human sciences literature relevant to the improvement of dependable systems development processes. Interacting with Computers, 11(6), 665-698, July. Watson, H. & Frolick, M. (1993). Determining information requirements for an EIS. MIS Quarterly, 17(3), 255-270, Sept. Webb, L.A. (2000). Information requirements determination for electronic retailing: A consumer-based perspective. In Proceedings of Americas Conference on Information Systems, Long Beach, CA, August 10-13, (pp. 216-219). Wetherbe, J.C. (1991). Executive information requirements: Getting it right. MIS Quarterly, 15(1), 51-65. Woodroof, J.B. (1996). Discussion of user participation in defining system interface requirements: An issue of procedural justice. Journal of Information Systems, 10(1), 49-51, Spring. Yadav, S.B. (1983). Determining an organization’s information requirements: A state of the art survey. Data Base, 14(3), 3-20.



25

Yadav, S.B. (1985). Classifying an organization to identify its information requirements: A comprehensive framework. Journal of Management Information Systems, 2(1), 39-59, Summer. Yadav, S.B., Bravoco, R.R., Chatfield, A.T., & Rajkumar, T.M. (1988). Comparison of analysis techniques for information requirement determination. Communications of the ACM, 31(9), 1090-1098. Zmud, R.W., Anthony, W.P., and Stair, R.M.J. The use of mental imagery to facilitate information identification in requirements analysis. Journal of Management Information Systems, 9(4), 175-192, Spring.

ENDNOTE

An earlier version of this paper was published in the Information Resource Management Journal, 16(4), October-December 2003.


26 Cunha & Putnik

Chapter II

Business Alignment in Agile/Virtual Enterprise Integration Maria Manuela Cunha Polytechnic Institute of Cávado and Ave, Portugal Goran D. Putnik University of Minho, Portugal

ABSTRACT

The concept of strategic alignment between business strategy and technology is essential for improving competitiveness. The driving force of business is to fully satisfy customer needs with the right products/ services, at the right price, and with the required quality and responsiveness in a global competitive market. In this context, by alignment we mean the actions to be undertaken to gain synergy between business, that is, a market opportunity, and the provision of the required product, with the required specifications, at the required time, with the lowest cost and with the best possible return. In this chapter we focus on a leading organizational model, the Agile/Virtual Enterprise model, characterized by a fast reconfigurability or adaptability face to the dynamically changing market and introduce the concept of a Market of Resources as the environment able to assure a permanent alignment of the networked structure with market. We also propose alignment strategies between business opportunities and the creation/reconfiguration of the Agile/Virtual Enterprise that is expected to meet that opportunity. Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

Business Alignment in Agile/Virtual Enterprise Integration

27

INTRODUCTION

The concept of alignment was initially introduced in the field of Information Systems and Technology. It is widely accepted that the effective use of Information and Communication Technology (ICT) to leverage the skill and knowledge base of the organization can provide competitive advantage in the marketplace (McFarlan, 1984). The model proposed by Galliers (1991, 1993) defends different strategies associated with an organization and the corresponding Information Systems—the information strategy, the implementation strategy, and the human resources strategy—recognizing also the need to manage the organizational change. The potential benefits to be gained from the effective deployment of ICT obliges organizations to consider the alignment of their ICT and their business (Shams & Wheeler, 2000). In this sense, alignment refers to actions undertaken by management to gain synergy between ICT and the enterprise’s information systems, products, markets, and business administration by ensuring that internal policies match external policies in these areas. Henderson and Venkatraman (1994) propose two definitions of alignment: traditional linkage, by “ensuring that Information Systems activities are linked to business requirements,” and strategic alignment, by “selecting the appropriate alignment perspectives for achieving business objectives.” In this chapter, we adopt a perspective based on the second definition. The driving force of business is to fully satisfy the more and more demanding customers with the right products/services, at the right price, and with the required quality, at the right time, in a global competitive market. At the same time, although the constant stream of innovations in goods and services allows manufacturers and service providers to offer higher quality products, it increases customers’ expectations and, thus, requires higher levels of competition. In this context, we define alignment as the actions to be undertaken to gain synergy between the business—that is, the market opportunity (or business opportunity) and the provision of the required product, with the required specifications, at the required time, at the lowest cost, and with the best possible return (financial or other). We believe that this concept can support the necessity of aligning business (market opportunities) with the enablers of the most recent business models, namely the Agile/Virtual Enterprises (A/V E) model. In particular, we propose alignment strategies between business and the integration of resources in an A/V E to answer to a market opportunity, supported by the environment of a Market of Resources.


28 Cunha & Putnik

With this contribution, we intend to provide a better understanding of an environment supporting the Agile/Virtual Enterprise integration process – a Market of Resources, developing a set of alignment strategies that must be verified in order to increase the potential success of A/V E integration. The chapter introduces the Agile/Virtual Enterprise model, discusses the support of A/V E integration by the creation of a Market of Resources, describes its structure and the processes of selection and integration of resources in an A/V E, and finally presents a strategy for business alignment and its operational components.

BACKGROUND

This background section introduces some emerging networked and reconfigurable organizational models, in particular, the A/V E model, discusses the corresponding reconfigurability dynamics requirement, presents the main networking and reconfigurability dynamics disabling factors (that should be overcome if we want to make the A/V E model a competitive reality), and finally discusses infrastructures to support A/V E integration. In our context, A/V E integration must be understood as including the processes of search for potential partners, selection and negotiation between them, and the integration of the selected in an A/V E. A/V E reconfiguration involves the same activities.

The Emerging Organizational Models

If traditionally the goal of the enterprise was to fulfill the customer requirements using its internal limited set of resources, the knowledge and physical resources associated to the development and production of most of today’s products often exceed what a single firm is able to accomplish. Firms search for cooperation with other companies, under several formats. One of the most widely discussed areas in recent business literature is that of organizational network structures, as the basic principle to achieve flexibility and quick response in a highly complex and competitive environment (Bradley, Hausman, & Nolan, 1993; Byrne, 1993; Davidow & Malone, 1992; Handy, 1995; Miles & Snow, 1986; Naisbitt, 1982; Naisbitt & Aburdene, 1985; Toffler, 1985). To answer these requirements of flexibility and responsiveness, several models have been proposed since the “Virtual Factory” suggested in 1990 by Peter Drucker (1990). According to Cullen (2000), the Kauffman’s (1995) metaphor of a “knowledge landscape” suggests that firms can improve their fitness within that



29

landscape by sharing knowledge between firms and by extending the sum of the whole beyond its individual components. The Core Competence Theory (Prahalad & Hamel, 1990) outlines that success and failure of an organization are necessarily based on its unique or specific potentials, assets, or resources. Core competencies are a competitive advantage and should provide access to a wide range of markets, should substantially contribute to the benefit of the product, should be visible for the client, and also hard to copy and out of competitors’ reach. In a network-based structure, each partner contributes with its best practices and core competencies to achieve the highest competitiveness of the structure as a whole. A successful company must acquire the capability to achieve and explore the competitive advantage in synergy (Yusuf, Sarhadi, & Gunasekaran, 1999), which requires a shift from “self-centred close-enterprises” (Browne & Zhang, 1999) to these reconfigurable, networked and information-based organizational models, corresponding to the recent approaches of the Extended Enterprise (Browne, Sacket, & Wortmann, 1995; Browne & Zhang, 1999), Agile Manufacturing (Kidd, 1994), the Virtual Enterprise (Byrne, 1993; Drucker, 1990; Goldman, Nagel, & Preiss, 1995), the Agile Enterprise (Nagel & Dove, 1993), the Agile/Virtual Enterprise (Cunha, Putnik, & Ávila, 2000; Putnik, 2000), the Intelligent Enterprise (Quinn, 1990), the Smart Organization (Filos & Banahan, 2001) and the One Product Integrated Manufacturing (OPIM) (Putnik & Silva, 1995) models, each with its characteristic nuances. In this chapter, we will address the Agile/Virtual Enterprise paradigm, in the sense that it is the expression of a dynamically reconfigurable informationbased global networked organizational structure. The Agility Forum (Dove, Hartman, & Benson, 1996; Nagel & Dove, 1993) has defined agility as the ability of an organization to adapt proficiently (thrive) in a continuously changing, unpredictable business environment. To the authors, an Agile Enterprise is a broadly change-proficient enterprise, an enterprise that exhibits competency at dealing with change in the important competitive business practices of its business sector. Vernadat (1999) proposed a definition for agility as the ability to closely align enterprise systems to changing business needs in order to achieve competitive performance. In summary, business alignment implies agility. According to several definitions (Browne & Zhang, 1999; Byrne, 1993; Camarinha-Matos & Afsarmanesh, 1999; Cunha, Putnik, & Avila, 2000; Davidow & Malone, 1992; Preiss, Goldman, & Nagel, 1996; Putnik, 2000), virtual enterprises (in a broad sense) are defined as “agile” enterprises, that is, as enterprises with integration and reconfiguration capability in useful time, Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

30 Cunha & Putnik

integrated from independent enterprises—primitive or complex—with the aim of taking profit from a specific market opportunity. After the conclusion of that opportunity, the virtual enterprise dissolves and a new virtual enterprise is integrated, or it reconfigures itself in order to achieve the necessary competitiveness to respond to another market opportunity. We designate by resource any function, service or product provided by independent enterprises (resources providers), who are potential candidates to integrate an A/V E. The resource is a recursive construct; resources can be primitive or complex, where a complex resource consists of a meaningful combination of primitive resources.

Reconfigurability Dynamics: The Agile/Virtual Enterprise Requirement

In a context of fast change, Virtual Enterprises and, in particular, A/V E, tend to last for a shorter and shorter time, while simultaneously presenting a highly dynamic reconfiguration, assuring or pursuing a permanent alignment of the partnership with business opportunities (Cunha & Putnik, 2002). There are several factors determining the performance of the A/V E model. In the BM_Virtual Enterprise Architecture Reference Model (BM_VEARM) (Putnik, 2000), the author presents “fast adaptability” or “fast reconfigurability” as the most important characteristic for the competitive enterprise, enabling the agile alignment with the market, a characteristic intrinsic to the A/V E organizational paradigm. A/V E reconfigurability face to the unpredictable changes in the environment (market) implies the search and selection of substitute resources to be allocated to the task to be performed in order to satisfy new circumstances (new tasks, optimization of old tasks, “deadlocks,” etc.), that is, to be permanently aligned with the market that originated its creation. An A/V E can have as many instantiations as required either by product changes or as a requirement of quality and competitiveness improvement. It should be noted that reconfigurability dynamics must not be confused with operational dynamics. In other words, while operational dynamics is solved by means of a fixed structure, reconfigurability dynamics require the partnerships’ permanent reconfiguration. In order to achieve its maximum competitiveness, that is, to be competitive in delivery time, quality, and cost, and to yield satisfactory profit margins, the implementation of the A/V E model requires a supporting environment assuring reconfigurability dynamics, that is, assuring fast transition between instantiations of an A/V E.



31

An environment designed to assure the A/V E requirement of reconfigurability dynamics, should present as main characteristics the ability of (1) flexible and almost instantaneous access to the optimal resources to integrate in the enterprise, the negotiation process between them, selection of the optimal combination, and its integration; (2) design, negotiation, business management, and manufacturing management functions independent from the physical barrier of space; and (3) minimization of the reconfiguration and integration time (Cunha & Putnik, 2004). The first characteristic implies the existence of a market of independent candidate resources for integrating an A/V E. This market role provides: (a) the environment and technology and the corresponding procedure protocols, that is, “an open system architecture” for the efficient access to resources, efficient negotiation between them, and its efficient integration; and (b) a domain for selection of participant resources providers in an A/V E, large enough to assure the best or near the best options. The second characteristic implies the utilization of advanced ICT to the operation of the market of independent resources, that is, technologies providing technical conditions to efficiently accede to the globally distributed resources providers, efficient negotiation between them, and its efficient integration. The third characteristic is necessary in order to provide reconfigurability as fast as possible.

Two Factors Against Networking and Reconfigurability Dynamics

The main critical aspects associated with the A/V E model—a model precisely based on networking and reconfigurability dynamics—are the transaction costs and the leakage of private information. A/V E integration activities (such as selection of eligible resources providers, negotiation among them, selection of an optimized combination of resources providers, contractualization, and enforcement) can be too complex and too delicate. There is a vast spectrum of available resources providers, each with different characteristics, leading to difficult selection and integration decisions. The costs of networking are composed of both the explicit cost of carrying out the transaction and hidden costs due to coordination difficulties and contractual risks. The major costs associated include (1) the transaction costs and (2) the leakage of private information.


32 Cunha & Putnik

Transaction Costs Firms can carry out their transactions internally (within the firm’s boundaries), outside the firm (completely externalized), or in the grey area between the firm and the marketplace (Oster, 1994). Every organization has a set of strategic decisions that involve the decision of which transactions are to be made internally and of which transactions will be made using the market (use of external resources providers). This set of decisions is known as the “makeor-buy” decisions. The principles governing these decisions were first articulated in 1937 by Ronald Coase (1937), the father of transaction costs economics, in his pioneering work The Nature of the Firm. Transaction Cost Theory (Coase, 1937; Williamson, 1975) is an often-employed framework in a firm’s choice between internalizing the function or relying on the market. Several recent schools of thought developed other institutional modes of economic governance, for example, Collins (1990; 1997) and Powell (1991); however, this is out of the scope of our work. Transaction costs include the time and expense of negotiating, writing, and enforcing contracts. They include the adverse consequences of opportunistic behaviour, as well as the costs of trying to prevent it. In the A/V E model, transaction costs are the firm (re)configuration costs associated with partners search, selection, negotiation, and integration, as well as permanent monitoring and the evaluation of the partnership performance (Cunha & Putnik, 2003b). Externalizing functions can involve high transaction costs, and networking relies intensively on extending the enterprise boundaries, and on partnering functions. The A/V E model is extremely dependent not only on networking, but on dynamically reconfiguring, so the concept of A/V E requires tools to overcome the transaction costs barrier. Leakage of Private Information A firm’s private information is information that no one else knows and gives a firm an advantage in the market. Most of the times, this private information is a core competitive advantage that distinguishes a firm from its competitors. It may concern production know-how, product design, or consumer information. Networking or partitioning tasks between resource providers increases the risk of losing control of such type of information, which can be safeguarded only through complete contractual agreements and, furthermore, through an environment assuring trust and accomplishment of the duty of seal. The implementation of the A/V E model requires tools to enable the preservation of the firm’s knowledge. Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.


33

Infrastructures to Support Virtual Enterprise Integration

Any infrastructure attempting to support the A/V E requirement of reconfigurability dynamics must be able to offer the following functionalities (Cunha, Putnik, & Carvalho, 2002): • • • • • •

Responsiveness or almost real-time answer, as one instantaneous physical structure (or one instance) of an A/V E may last (at most) only for a few days or even hours. The permanent alignment of the A/V E with the market (business) requirements, which can justify a dynamic process of A/V E performance evaluation and the analysis of reconfiguration opportunities. The ability to find the right potential partners for A/V E creation/ reconfiguration and further efficient negotiation. Monitoring the performance of every integrated resource, increased trust and the highest possible performance of the A/V E. Reduction of the time-to-contract and risk minimization in a contractual agreement. Provision of knowledge support in A/V E creation/reconfiguration (which should be provided by a mediator or broker).

Several supporting infrastructures and applications must exist before we can take advantage of A/V E organizational model (Carvalho, Putnik, & Cunha, 2002), such as: electronic markets of resources providers, legal platforms, brokerage services, efficient and reliable global information systems, electronic contractualization and electronic negotiation systems, and software tools. Information and Communication Technologies, Internet, and Internetbased Agent technology are the main technologies for the implementation of a wide set of applications, ranging from assisting with procurement processes, up to contributing to several functionalities required by the virtual enterprise model in general, in terms of quality, flexibility, speed, and cost efficiency. These techniques or applications, which were developed to support isolated activities such as procurement, partners search and selection, negotiation, and enterprise collaboration within supply chains or extended enterprises, include Webbased applications and solutions (sometimes dispersedly developed), such as electronic marketplaces, directories and search engines; electronic automated negotiation applications; online auctions and bidding systems; market brokerage services (with different possible degrees of automation); agent-based applications for partners search and negotiation, etc. (Cunha, Putnik, Carvalho, Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

34 Cunha & Putnik

& Ávila, 2002). However, they do not support the most critical functionalities required by the A/V E model, such as knowledge support (to avoid bad specifications of resources requirements or of negotiation parameters), trust, historical information on performance of resources providers in previous partnerships, monitor and control of the resources providers performance after integration, etc.) (Cunha & Putnik, 2003a). If these systems do not cover the full process of A/V E integration, they could hardly support the A/V E model. The organizational challenges of (1) partitioning tasks among partners in the distributed networked environment so that they fit and take advantage of the different competencies in an A/V E, (2) integration of the same, and (3) coordination and reconfigurability management in order to keep alignment with the market requirements are of main concern and can determine the success or failure of an A/V E project. The implementation of the emerging models, such as the A/V E, requires the support of an environment able to assure the abovementioned functionalities and to cope with the reconfigurability dynamics requirement. Cunha, Putnik, and Ávila (2000) have proposed the Market of Resources concept as a possible alternative to these existing tools, developed without the purpose of responding to the A/V E requirements. In Cunha, Putnik, and Silva (2005) and Silva, Putnik, and Cunha (2003), the authors discuss how the existing technology can support the development of the Market of Resources concept. The general model of electronic commerce, in particular when concerning business-to-business relations, suggests that Internet provides more information, more choice opportunities and more opportunities to establish networks, lowering the cost of information and reducing information asymmetries. This is generally classified as the “democracy of Internet”. However, the new models like A/V E or the new forms of value creation, where market information concerns information about resources (complex and primitive) to integrate, although reinforced by the ability to use more globally distributed resources and by lower transaction costs provided by ICT and by Internet usage, claim for a wider support environment, assuring better quality and better response at lower time. This corresponds to the Market of Resources concept. Table 1 summarizes the contribution of some technologies and environments to the main networked (more or less dynamic) models: Virtual Enterprise, Extended Enterprise, Agile Enterprise /Manufacturing, A/V E and One Product Integrated Manufacturing (OPIM). The importance of reconfigurability dynamics for each model is also illustrated.



35

Table 1. Techniques and environments contributing to virtual enterprise models (adapted from Cunha, Putnik, Carvalho, & Àvila 2002, and Cunha, Putnik, & Silva, 2005) Environments

Techniques

Importance of WWW Electronic Agent-based eMarket Market of reconfigurability dynamics searches auctions brokerage places Resources Network models Extended Enterprise

X

X

X

X

Agile Enterprise / Manufacturing

X

X

X

X

Virtual Enterprise

X

X

Agile/Virtual Enterprise

X

OPIM

X

medium X

medium

X

X

high

X

X

X

high

X

X

X

high

Ability to support fast reconfigurability

low

high

The techniques included in Table 1 (WWW searches, electronic auctions, and agent-based brokerage and negotiation) contribute to activities of all the models in the first column, but do not support the models, as this was not the purpose of their development. The Market of Resources is proposed as an ideal environment to support the requirement of fast adaptability of the most dynamic models life cycle (A/V E and OPIM), as validated by the authors and demonstrated in Cunha and Putnik (2003b, 2003c). Electronic marketplaces were designed to cope only with procurement needs in supply chains and electronic business models (not included in Table 1) and can accomplish the requirements of the Extended Enterprise model. Functionalities of the Market of Resources are not indispensable for the Extended Enterprise as they are for the other four models included in Table 1. The Extended Enterprise model and the Agile Enterprise/Manufacturing are not characterized by a high reconfigurability dynamics. Other similar Market of Resources concepts, services, and products include the new generation of high value-added electronic marketplaces, ealliances, electronic institutions, breeding environments, and virtual clusters; however, they have not been developed to address the A/V E model requirements. Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

36 Cunha & Putnik

MARKET OF RESOURCES AS AN ENVIRONMENT FOR A/V E INTEGRATION

BM_Virtual Enterprise Architecture Reference Model (BM_VEARM) is a virtual enterprise reference model conceived for enabling the highest interorganizational dynamics of an A/V E (Putnik, 2000). The main tools suggested in the BM_VEARM (Putnik, 2000) for managing, controlling, and enabling networking and dynamics, overcoming the two disabling factors, are: 1. 2.

3.

the Market of Resources as an environment for enabling and managing efficient A/V E integration, assuring virtuality at low transaction costs and reduced risk of knowledge leakage; the broker or organization configuration manager, which is the main agent of agility and virtuality, acting either between two operations of the A/V E (off-line reconfigurability providing agility only) or online with the operation (online reconfigurability, providing virtuality and a higher level of agility) (Ávila, Cunha, & Putnik, 2003; Ávila, Putnik, & Cunha, 2002; Ávila, Putnik, & Cunha, 2005); and virtuality, which makes possible the transition from one physical structure (instance) to another in a way that the enterprise or process owner is not affected by the system reconfiguration and is not aware of the reconfiguration (i.e., virtuality means that the underlying service structure and reconfiguration process are hidden).

This section introduces the Market of Resources as an environment for A/V E dynamic integration and business alignment, according to the BM_VEARM.

The Market of Resources Concept

Offer and demand are usually matched under several different circumstances, from unregulated search to oriented search or from simple intermediation mechanisms to the market mechanism, all with the possibility of being either manually performed or automated (Cunha, Putnik, & Gunasekaran, 2002). A marketplace of resource providers will provide the matching between firms looking for potential partners for integration and firms offering their resources, facilitating A/V E integration, and offering a larger number of business opportunities. The Market of Resources is an institutionalized organizational framework and service assuring the accomplishment of the competitiveness requirements



37

for A/V E dynamic integration and business alignment. The operational aspect of the Market of Resources consists of an Internet-based intermediation service mediating between offer and demand of resources to dynamically integrate in an A/V E, that is, mediating between candidate resources providers (integrating the Market of Resources knowledge base) and clients (organizations looking for resources to integrate an A/V E) to answer to a market opportunity (Cunha, 2003; Cunha & Putnik, 2003a). Brokers act within the Market of Resources as intermediation agents for agility and virtuality. Independent resources providers subscribed to the Market of Resources. This subscription corresponds to the formal description of the resources using a Resources Representation Language and its integration in a knowledge base. In Cunha and Putnik (2003b, 2003c) and Cunha, Putnik, Gunasekaran and Ávila (2005), the interested reader can find the discussion and validation of the ability of the Market of Resources to efficiently support A/V E integration, and the proof that the service assures low transaction costs and increased efficiency when compared with the traditional Internet-based technologies (directories and search engines), besides assuring the partners’ knowledge preservation. This aspect of leakage of knowledge is being dealt with through a specific regulation, presently under development by the authors’ research group.

Process Structure of the Market of Resources

The overall functioning of the Market of Resources initially introduced in Cunha, Putnik, and Gunasekaran (2002) and later in Cunha, Putnik, Gunasekaran, and Àvila (2005) is represented in Figure 1, using an IDEF01 diagram. It consists on the creation and management of the Market of Resources as the environment to support the A/V E Design and Integration and the A/V E operation, offering technical and procedural support for the activities of identifying potential partners, qualifying partners, and integrating the A/V E, as well as coordination and performance evaluation mechanisms. We designate by market the environment where business takes place. A customer is the entity giving rise to a business opportunity and is considered outside the Market of Resources. The client entity (or A/V E Owner) is the bridge between the Market of Resources and the customer. Client is the one requiring the integration of an A/V E to answer the market, that is, to satisfy the customer.


38 Cunha & Putnik

•

•

Process A.1.—Market of Resources Creation and Operation This process corresponds to the creation and operation (management/ maintenance) of the environment proposed from the technological aspects (such as the creation of databases and development of software tools, implementation of communication systems) up to the definition and permanent adaptation and updating of the managerial aspects (such as regulation and rules, criteria for selection, management and brokerage procedures, organization of the Market, commitments definition, evaluation, etc.), and including the performance of the Market itself in order to improve the Market of Resources organization. Process A.2.—A/V E Design/Integration This process consists of three main activities: A/V E Request, Resources Selection, and A/V E Integration. A/V E Request consists of treating the request presented by the A/V E owner, and involves the design of the A/V E configuration/reconfiguration (A/V E project) that matches the requirements to produce the desired product. Resources Selection involves the search for the eligible resources providers to participate in the

Figure 1. IDEF0 representation of the global process for the Market of Resources and for A/V E design, integration and operation (adapted from Cunha, Putnik & Gunasekaran, 2002) A/V E Integration Management

Virtual Enterpr. Ref. Model Project Management

A/V E Management

Client/Server Project Constraints A/V E Contract Integration Results Selection Results

Operation Results

Market of Resources Management Focused Markets

Resources

Market of Resources Management Market of Resources Creation and Operation

A1

Operation Failure Market of Resources Management Focused Markets A/V E Contract

Market of Resources A/V E Design / Integration Client Search Constr./Negot.Param. Requirements for Resources Selection

Selection Failure Integration Failure Dissolution

A2

A/V E Operation Raw Materials Specification Product Requirements Process Plan

Resources Representation Language Algorithm to Organise the Market Database and Software Tools Communication Tools Simulation Tools

Products A3

Algorithm for Optimal Search Algorithm for Search over the Focused Domain



39

A/V E to be created/reconfigured, negotiations among them, and then selection of the “best” combination of resources to be integrated in the A/V E. The redesign or reconfiguration of an A/V E, implying the substitution / integration of new resources, is also considered in this process, as is the dissolution of the A/V E. Integration consists of formalizing the A/V E (contractualization) and the establishment of procedures regarding the integration of the participants and the implementation of management and evaluation techniques. Process A.2. is detailed in Figure 2. Process A.3.—A/V E Operation The service provided by the Market controls the operation of the integrated A/V E, tracking the performance of each resource provider and restructuring the A/V E design (reconfiguring the A/V E) whenever necessary to assure business alignment. The operation results are of interest to keep actualized historical information about the performance of the resources providers, to be taken into consideration in future selection processes, and to adjust the management procedures.

•

Focusing on discussing the alignment between (1) the client of the Market of Resources, (the one capturing and traducing the customer or the market requirements for a certain business opportunity into product requirements), (2) the entities involved in A/V E integration, that is, candidate enterprises or Figure 2. IDEF0 representation of the A/V E design and integration processes (Cunha & Putnik, 2004) C1 Market of Resources Management C2 Virtual Enterpr. Ref. Model

C4 A/V E Integration Management

C3 Client/Server Project Constraints

A/V E Contract

I4

A/V E Project

A/V E Request

Market of Resources

I1 Operation Failure

Dissolution

O6

Selection Failure A21

I2 Operation Results I6 Requirements for Resources Selection

Resources Selection

I5 Client Search Constr./Negot.Param. I3 Focused Markets

Selection Failure

O4

Selection Results

O1

A/V E Contract

O3

A22

A/V E Integration

Request Contract

Integration Results Integration Failure

A23

O2 O5

Selected Resources

Resources Representation Language M1 Database and Software Tools M2 M3 Communication Tools

M5 Algorithm for Optimal Search M4 Algorithm for Search over the Focused Domain


40 Cunha & Putnik

resources providers (mapped into resources), and (3) products/services/ operations (into which resources are mapped), this contribution is centered on Process A2., which is detailed in Figure 2 and, especially, on Process A2.2., as detailed in Figure 3. To keep the dynamics of the A/V E model, the optimal search of resources to integrate should be obtained almost in real time. The complexity of the resources selection in general means that a compromised domain size (as a base for the solution space construction) should be used for each resource search. This concept, as proposed in Cunha (2003) and Cunha et al. (2000) is designated by Focused Market of Resources and is defined as a subset of the Market of Resources where a given search for an independent resource is to take place. For each search, the Market of Resources proposes a Focused Domain (composed by Focused Markets of Resources), reasonably dimensioned to allow a good match at a limited time. The first step of the design and integration process is the design of the A/V E; that is, the A/V E Project (Process A.2.1.), which means (1) the translation of the specification parameters provided by the client and traducing the Market Requirements (input flow “Requirements for Resources Selection”) into “Normalized Resources Requirements,” and (2) the translation of the Figure 3. IDEF0 representation of Process A.2.2.—Resources Selection (Cunha, Putnik, Gunasekaran, & Ávila, 2005) Market of Resources Management C1

C2 Virtual Enterpr. Ref. Model

Resources Req. not match Neg. Parameters not match

I1 Selection Failure I4 Focused Markets I2 A/V E Project

Focused Domain Identification A221

Focused Domain

Focused Domain Filtering A222

I3

Eligible Resources

Automatic Search

Candidate Resources

Selection Failure

Client Search Constr./Negot.Param.

O1

A223

Bargaining Based Negotiation A224

Direct Negotiation A225

Selection

Selection Results

O2

Selected Resources A226

M1 Resources Representation Language

M3 M4 M2 Database and Software Tools Communication Tools Algorithm for Search over the Focused Domain

O3

M5 Algorithm for Optimal Search



41

specific search constraints defined by the client under the format of “Negotiation Parameters” (input flow “Client Search Constraints / Negotiation Parameters”) into “Normalized Negotiation Parameters.” The Resources Selection Process (A.2.2. in Figure 3) takes place in three phases: (1) eligible resources identification (Processes A.2.2.1. and A.2.2.2), (2) negotiation, that is, the identification of candidate resources (Processes A.2.2.3., A.2.2.4. and A.2.2.5.), and (3) final selection or identification of selected resources (Process A.2.2.6.). The process corresponds to visiting all the elements proposed by the focused domain in order to identify negotiation parameters (availability, time to respond to the demand, or time to offer the resource, and costs), and perform an optimal search algorithm considering the client’s negotiation parameters and subjected to the client project constraints (time to complete the product, cost, etc.). The A/V E Integration (Process A.2.3.) consists of the formalization of the partnership: establishing procedures, normalizing processes, interoperability, responsibilities, and commitments. While selection means to check availability and to find the best resources that meet the requirements, integration means effective allocation and formalization of the partnership.

The Market of Resources Entities and Relationships The entities present at the Market of Resources are:

1.

2.

Clients (the client of the Market of Resources)—those looking for a product, components, or operations to integrate an A/V E, according to an A/V E project. Information considered relevant consists on information about the product to be produced and its process plan, the negotiation parameters, project constraints, etc. Agile/Virtual Enterprise—the set of integrated resources providers with respect to the A/V E project who are able to answer to a market opportunity. The A/V E created/reconfigured is itself a complex entity, made up of the client (A/V E owner) and the resources integrated to provide the operations to manufacture the product or its parts. The resulting A/V E is expected to produce the specified product, according to the process plan defined by the client, respecting all the project constraints. Information considered relevant consists of information concerning the network, dependencies between the nodes, the contract and commitments between the integrated resources and the client, and all the details, in order to manage the process.


42 Cunha & Putnik

3.

4.

5.

Resources Providers (enterprises registered in the Market of Resources to specifically provide resources / add value to products or processes)— resources providers are mapped into resources (Products and Operations). Information considered relevant consists of information about the enterprise, its structure, products/operations provided, provision conditions, negotiation details. The same enterprise can be present in the Market offering several resources. Products (we are including services in product entity, so when referring products, we are referring to products and services)—resources providers are mapped into components or parts of products. Information considered relevant: data about conditions under which resources providers provide each product or part, negotiation details, availability. Operations associated to each component of a product; elementary operations performed by resources providers while executing an operation on a specific product or part—resources providers are mapped into operations, and operations are mapped into products. Information considered relevant: information concerning conditions under which resources providers provide each operation, negotiation details, information to allow further production control and evaluation.

Figure 4. The Entity-Relationship Diagram for the entities of the Market of Resources



43

Using a simplified representation of an Entity-Relationship Diagram2 (Chen, 1976), Figure 4 shows how the five entities described above are interrelated. The information associated with the referred entities can be represented at several different plans or dimensions. •

•

•

At the first plan, we can have the product and its structure (bill of material) of components or parts. At a parallel plan, we propose the process plan, which is the set of operations necessary to produce the product (components and assemblies). A mapping is made between the two plans (lattice). This way, we say operations are mapped into products. Resource providers are linked either to products or to operations, representing all possible instances of adding value to a product or producing a product or component. Resource providers are mapped into products and into operations. Products and operations that resources providers can perform are presented in meaningful groups or sets called patterns for client search (“Client Search Constraints,” in Figure 2).

BUSINESS ALIGNMENT IN AGILE/VIRTUAL ENTERPRISE INTEGRATION

Business alignment in A/V E integration is complex and challenging, as alignment has to incorporate immaterial components in the relationships within the integration of resources. It is not just an internal strategy but a set of integrated and inter-related integration strategies that must be verified so that the integrated A/V E is able to meet the objective giving rise to the A/V E itself, that is, to meet the market requirements (Cunha, Putnik, Gunasekaran, & Ávila, 2005). The introduction of the A/V E concept and the corresponding supporting environments requires the definition of business alignment strategies. If organizations respond to market requirements (end-users requirements), traducing these requirements into a project of A/V E and pushing them along the process of selection and integration of resources providers under the format of an A/V E, the role of the Market of Resources is to assure the permanent (dynamic) alignment of the resulting A/V E with the market. The MARKET OF RESOURCES is the environment enabler for efficiency and effectiveness in the integration process and, thus, supports the virtual enterprise alignment with business. Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

44 Cunha & Putnik

Strategic alignment between business and AV/ E integration involves a mix of dependencies between market requirements, product requirements and resource providers requirements (process requirements must also be considered, but we opted to include them in resources requirements). The MARKET OF RESOURCES must assure to the client the alignment between the market and the resources providers selected and integrated in the A/V E. Also, the Market of Resources must try to assure that the client has correctly captured the market requirements, which is a task performed by a broker (the Market of Resources offers a knowledge-based service). This way, the process must align the client with the market (business) and then align the resources (by the selection and integration processes) with the client and with business. Integrating an A/V E corresponds to aligning the five entities discussed in the previous section with business. The Market of Resources is expected to guide the client in aligning the A/V E with the market opportunity. The process consists of pushing the market requirements downstream. The proposed referential for alignment must consider: 1.

2.

3.

Market Alignment (alignment with customer or market requirements) Before the creation of the A/V E, the client traduces the customer requirements into product specifications and projects the system of resources for the A/V E. The A/V E project consists of the generic identification of the characteristics of the resources that will accomplish the execution of the process plan to the required product, that is, the process plan that will allow the production of the product verifying the market requirements. Product/Service and Operations Alignment Aligning the product with the specifications, that is, with the market requirements. Operations provided by the selected resource providers must conduct to the desired product. Resources Providers Alignment Aligning resources providers with the market requirements represents which characteristics resources providers must assure, so that the client can trust that the selected set of enterprises is able to be integrated into an A/V E able to produce the product that meets the requirements previously captured by the client (market requirements). Resources providers requirements include economical, managerial, and organizational aspects.



45

Table 2. Checklist of requirements to be considered in alignment Market Alignment

Product / Service / Operation Alignment

Resources Providers Alignment (Partners / Enterprises)

− Price, Cost and Profit

− Cost

− Availability

− Quality

− Quality

− Quick Response: the desired product, on time, in the required conditions

− Integrability

− Ability to meet Product /Service /Operation requirements

− Transparency and legality

− Standards

− Trust and confidence − Correct capture of market /customer requirements

− Interoperability between different providers

− Certification − Dependability − Flexibility − Responsiveness − Competitiveness and Proactiveness − Past information of previous A/V E integrations

These three sets of requirements for alignment are grouped in Table 2 and detailed in the following sections. Tables 3 to 5 present the items on the checklist of Table 2, followed by operational analysis questions. They are not exhaustive listings, but the main aspects are included. The aspects of Product/Service and Operations Alignment and Resources Providers Alignment are implemented through the Algorithm for Search over the Focused Domain (see Figures 2 and 3). The Algorithm for Optimal Search (see Figure 3) checks the other aspects of Resources Providers Alignment that are not verified by the Algorithm for Search over the Focused Domain.

Market Alignment

The client must have a correct capture of the business opportunity and must traduce it either into product /service requirements or into the A/V E project accordingly to the rules /instructions provided by the Market of Resources to start the process. The aim of the A/V E must be clear and consistent with the application of the “client search constraints” and “negotiation parameters,” defined by the Market of Resources, input flows of process A.2. in Figure 1. The product /service and resources alignment will determine the requirements for resources selection, also an input flow of process A.2. The success of the A/V E depends of the satisfaction of the market requirements. The definition of the requirements for the resources providers Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

46 Cunha & Putnik

Table 3. Market alignment Requirements for Alignment

Analysis Questions

Price, Cost, and Profit

- Is the client aware of the financial flows of the business? - Is he confident the budget will be met? - Does he have management and control mechanisms?

Quality

- Is the client aware of the level of quality required by the market /customer? - Is he sure to answer in conformity with it? - What mechanisms will be used for control and recovery?

Quick Response

- Is the client aware of the schedule to produce the product? - Is the client convinced that the schedule can be met? - Does he make realistic provisions for the phases of selection, integration, and start operation of an A/V E?

Transparency and legality

- Is the client committed to following the rules and procedures proposed by the Market of Resources, assuming a transparent position face to the market and to the resources to be integrated?

Trust and confidence

- Is the client a serious enterprise? Is he known from previous participations? - Can the resources trust him? Inspires confidence? And concerning the market (customer)?

Correct capture of market/ customer requirements

- Is the product correctly specified?

alignment is basilar to the success of the A/V E in responding to the market, but is not enough. Product and resources alignment should also be assured so that the final product is able to meet the market requirements. The client must show a transparency and legality image to the integrated resources and, at the same time, win trust and confidence from the market. These aspects must drive all his behavior. Before proposing the optimal combination of resources to be integrated in the client’s project of A/V E, the service provided by the Market of Resources must assure that the requirements for Market Alignment in Table 3 are met by the client, in order to minimize the risk of failure.



47

Table 4. Product/Service/Operations Alignment Requirements for Alignment Cost

Analysis Questions - Is it possible to control costs over the partnership? (see (Cunha & Putnik, 2000). - Is it possible to individualize costs per operation? - Can volume discounts be negotiated in a global A/V E?

Integrability

- Can products / operations be fully integrated? In what phases? - In what dimensions is integrability possible?

Interoperability between different providers

- Is there complete compatibility of parts /operations to be integrated?

Quality

- Is it possible to identify the source of a defective part (traceability)?

- Can an operation started by a partner (resources provider) be finished by another resources provider, due to a change in the A/V E project?

- Is it possible to conduct competitive benchmarking on a globally disperse A/V E? Standards

- Are all suppliers of parts/products/operations using the same or compatible standards?

Product/Service and Operations Alignment

Some requirements are organizational—cost, quality, time to output / answer—while others are related to technology—integrability (interoperability, portability, and other dimensions of integrability) between different providers of resources, standards. Technology is an enabler but can also represent a barrier. Table 4 lists the main analysis questions needed to meet the requirements for Product/ Service/ Operations Alignment.

Resources Providers Alignment (Partners/Enterprises)

To assure competitiveness, the client must have the following from the resources providers to be integrated in the A/V E: quick response in providing the service /performing the operation; quality adjusted to the price; flexibility (intra-flexibility); and historical information of previous A/V E integration. This last item of information (an intangible element) must be kept by the Market of Resources and is the result of the management/evaluation process that the Market performs during an A/V E operation, quantified under specific performance metrics.


48 Cunha & Putnik

Table 5. Resources providers alignment Requirements for Alignment

Analysis Questions

Availability

- Is the enterprise available to participate in the A/V E in the dates proposed?

Ability to meet Product /Service /Operation requirements

- Can the enterprise assure the supply of the required product /part, service, or operation according to the specifications?

Certification

- Is the enterprise certified to supply the required product/part, operation, or service?

Dependability

- Is it a primitive or a complex resource? Does it depends of other resources? - Are the resources dependent on other projects that may affect the present project? - What is the degree of dependence of the final product on the resource under evaluation?

Flexibility

- Is there intra-flexibility of the enterprise offering the resource (primitive or complex)? - What set-up times?

Responsiveness

- Is the enterprise able to answer in the proposed time? - What is the estimated time to produce the product/part or to perform the operation?

Competitiveness and Proactiveness

- Is it possible to have information concerning the enterprise’s benchmarking? What are the rankings?

Past information of previous A/V E integrations (successes and failures)

- Are there records of results of performance in other integrations? If so, they must be taken into consideration.

Table 5 lists the main analysis questions related with the requirements for Resources Providers Alignment.

CONCLUSION AND FUTURE TRENDS

This chapter intended to provide a better understanding of the environment supporting the Agile/Virtual Enterprise integration process and to contribute to the potential success of A/V E integration. We have detailed the support to A/ V E integration by the creation of a Market of Resources and proposed a referential for alignment and its operational components to assure the alignment between business requirements and the integration of resources providers in an A/V E. Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.


49

The development of environments to support the virtual enterprise model, in general, are of increasing importance, and the Market of Resources tends to be a contribution in that direction. However, it is an innovative approach when compared with the other developments that literature provides, which are not as integrated as the Market of Resources and cover only aspects of the virtual enterprise life cycle, in a less dynamic approach to the virtual enterprise concept. The service provided by the Market of Resources is able to cover a virtual enterprises’ extended life cycle (the life cycle corresponding to a highly dynamic virtual enterprise model), understood as integrating the A/V E design, the contractualization with a market of resources, and managing reconfigurability and business alignment (Cunha, Putnik, & Ávila, 2004). The introduction of the proposed alignment strategies requires the support of operational procedures and the development of tools, namely the development of the expert systems appearing as mechanisms in the IDEF diagrams under the designation of algorithms for search. A more detailed specification of the model, the construction of a demonstrator for the service, and the development of management procedures are now being researched, in order to fully demonstrate its potential. Some validation has already been undertaken, as mentioned in the chapter, and some results can be found in Cunha and Putnik (2003b, 2003c).

REFERENCES

Ávila, P., Cunha, M. M., & Putnik, G. D. (2003). A contribution for the classification of resources selection algorithms for agile/virtual enterprises integration brokerage. In G. D. Putnik & A. Gunasekaran (Eds.), Proceedings of the First International Conference on Performance Measures, Benchmarking and Best Practices in New Economy (pp. 676-681), Guimarães, Portugal, June 10-13. Portugal: University of Minho. Ávila, P., Putnik, G. D., & Cunha, M. M. (2002). A contribution for the classification of resources selection algorithms for agile / virtual enterprises integration. In L. M. Camarinha-Matos (Ed.), Balancing knowledge and technology in product and service life cycle, (pp. 65-72). Dordrecht: Kluwer Academic Publishers. Ávila, P., Putnik, G. D., & Cunha, M. M. (2005). Broker performance for agile/virtual enterprise integration. In G. D. Putnik & M. M. Cunha (Eds.), Virtual enterprise integration: Technological and organizational perspectives, (pp. 166-185). Hershey, PA: Idea Group Publishing. Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

50 Cunha & Putnik

Bradley, S. P., Hausman, J. A., & Nolan, R. L. (Eds.) (1993). Global competition and technology. In Globalisation technology and competition: The fusion of computers and telecommunications in the 1990s (pp. 3-31). Boston, MA: Harvard Business School Press. Browne, J., Sacket, P. J., & Wortmann, J. C. (1995). Future manufacturing systems - Towards the extended enterprise. Computers in Industry, 25, 235-254. Browne, J. & Zhang, J. (1999). Extended and virtual enterprises: Similarities and differences. International Journal of Agile Management Systems, 1(1), 30-36. Byrne, J. A. (1993). The virtual corporation: The company of the future will be the ultimate in adaptability. Business Week, 98-103, February 8. Camarinha-Matos, L. M. & Afsarmanesh, H. (1999). The virtual enterprise concept. In L. M. Camarinha-Matos & H. Afsarmanesh (Eds.), Infrastructures for virtual enterprises (pp. 3-14). Porto, Portugal: Kluwer Academic Publishers. Carvalho, J. D. A., Putnik, G. D., & Cunha, M. M. (2002). Infrastructures for virtual enterprises. In A. Baykasoglu & T. Dereli (Eds.), Proceedings of the 2nd International Conference on Responsive Manufacturing (pp. 483-487), Gaziantep, Turkey, June 26-28. Chen, P. (1976). The entity-relationship model: Towards a unified view of data. ACM Transactions on Database Systems, 1(1), 9-36. Coase, R. (1937). The Nature of the Firm. Economica, 4, 386-405. Collins, H. (1990). Ascription of legal responsibility to groups of complex patterns of economic integration. Modern Law Review, 53, 731-744. Collins, H. (1997). Quality assurance and contractual practice. In S. Deakin & J. Michie (Eds.), Contracts, co-operation and competition: Studies in economics, management and law. UK: Oxford University Press. Cullen, P.-A. (2000). Contracting, co-operative relations and extended enterprises. Technovation, 20, 363-372. Cunha, M. M. (2003). Organization of a market of resources for agile and virtual enterprises integration. Doctoral thesis, University of Minho, Guimarães, Portugal. Cunha, M. M. & Putnik, G. D. (2000, November 1-2). The virtual enterprise paradigm and the new challenges for management accounting information systems. Paper presented at the 10th Annual Business Information and Technology Management Conference: e-Futures. Manchester, UK: Manchester Metropolitan University. (CD-ROM).



51

Cunha, M. M., & Putnik, G. D. (2002). Discussion on requirements for agile/ virtual enterprises reconfigurability dynamics: The example of the automotive industry. In L. M. Camarinha-Matos (Ed.), Collaborative Business Ecosystems and Virtual Enterprises (pp. 527-534). Boston: Kluwer Academic Publishers. Cunha, M. M., & Putnik, G. D. (2003a). Agile/virtual enterprise enablers: A comparative analysis. In D.N. Sormaz & G.A. Süer (Eds.), Proceedings of Group Technology/Cellular Manufacturing – World Symposium 2003, (pp. 243-247). Colombus, Ohio, USA: Ohio University. Cunha, M. M., & Putnik, G. D. (2003b). Market of resources versus e-based traditional virtual enterprise integration - Part I: A cost model definition. In G. D. Putnik & A. Gunasekaran (Eds.), Proceedings of the First International Conference on Performance Measures, Benchmarking and Best Practices in New Economy, (pp. 664-669). Guimarães, Portugal, June 10-13. University of Minho. Cunha, M. M., & Putnik, G. D. (2003c). Market of resources versus e-based traditional virtual enterprise integration - Part II: A comparative cost analysis. In G. D. Putnik & A. Gunasekaran (Eds.), Proceedings of the First International Conference on Performance Measures, Benchmarking and Best Practices in New Economy (pp. 667-675), Guimarães, Portugal, June 10-13. University of Minho. Cunha, M. M., & Putnik, G. D. (2004). Trends and solutions in virtual enterprise integration. Tekhné - Review of Politechnical Studies, 1(1). Cunha, M. M., Putnik, G. D., & Ávila, P. (2000). Towards focused markets of resources for agile / virtual enterprise integration. In L. M. CamarinhaMatos, H. Afsarmanesh, & H. Erbe (Eds.), Advances in networked enterprises: Virtual organisations, balanced automation, and systems integration (pp. 15-24). Berlin: Kluwer Academic Publishers. Cunha, M. M., Putnik, G. D., & Ávila, P. (2004). Virtual enterprises’ extended life cycle. In Proceedings of SymOrg 2004 - IX International Symposium, (pp. 85-99), Belgrade, June 6-10. University of Belgrade, Faculty of Organisational Sciences. Cunha, M. M., Putnik, G. D., & Carvalho, J. D. (2002). Infrastructures to support virtual enterprise integration. In R. Hackney (Ed.), Proceedings of 12th Annual BIT Conference - Business Information Technology Management: Semantic Futures, November 1-2. Manchester, UK: The Manchester Metropolitan University (CD-ROM). Cunha, M. M., Putnik, G. D., Carvalho, J. D., & Ávila, P. (2002). A review on environments supporting virtual enterprise integration. In M. Vladimír, Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

52 Cunha & Putnik

L. M. Camarinha-Matos, & H. Afsarmanesh (Eds.), Balancing knowledge and technology in product and service life cycle (pp. 133-140). Boston, MA: Kluwer Academic Publishers. Cunha, M. M., Putnik, G. D., & Gunasekaran, A. (2002). Market of resources as an environment for agile / virtual enterprise dynamic integration and for business alignment. In O. Khalil & A. Gunasekaran (Eds.), Knowledge and information technology management in the 21st century organisations: Human and social perspectives (pp. 169-190). London: Idea Group Publishing. Cunha, M. M., Putnik, G. D., Gunasekaran, A., & Ávila, P. (2005). Market of resources as a virtual enterprise integration enabler. In G. D. Putnik & M. M. Cunha (Eds.), Virtual enterprise integration: Technological and organizational perspectives (pp. 145-165). Hershey, PA: Idea Group Publishing. Cunha, M. M., Putnik, G. D., & Silva, J. P. (2005). Information technology infrastructure and solutions. In G. D. Putnik & M. M. Cunha (Eds.), Virtual enterprise integration: Technological and organizational perspectives (pp. 151-165). Hershey, PA: Idea Group Publishing (forthcoming). Davidow, W. H. & Malone, M. S. (1992). The virtual corporation Structuring and revitalising the corporation for the 21st century. New York: HarperCollins Publishers. Dove, R., Hartman, S., & Benson, S. (1996). An agile enterprise reference model with a case study of Remmele engineering. Agility Forum. Retrieved from http://www.parshift.com/aermodA0.htm Drucker, P. F. (1990). The emerging theory of manufacturing. Harvard Business Review, May/Jun, 94-102. Filos, E., & Banahan, E. (2001). Towards the smart organization. An emerging organizational paradigm and the contribution of the European RTD programmes. Journal of Intelligent Manufacturing, 12(2), 101-119. Galliers, R. D. (1991). Strategic information systems planning: Myths, reality and guidelines for successful implementation. European Journal of Information Systems, 1(1), 55-64. Galliers, R. D. (1993). Towards a flexible information architecture: Integrating business strategies, information systems strategies and business redesign. Journal of Information Systems, 3(3), 199-213. Goldman, S., Nagel, R., & Preiss, K. (1995). Agile competitors and virtual organizations: Strategies for enriching the customer. New York: van Nostrand Reinhold. Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.


53

Handy, C. (1995). Trust and virtual organization. Harvard Business Review, 73(3), 40-50. Henderson, J. C. & Venkatraman, N. (1994). Strategic alignment: A model for organizational transformation via information and communication technology. In T. J. Allen & M. S. Scott (Eds.), Information technology and the corporation of the 1990s: Research studies (Vol. 9, pp. 202-220). New York: Oxford University Press. Kauffman, S. (1995). Technology and evolution: Escaping the red queen effect. The McKinsey Quarterly, 1. Retrieved July 10, 2004 from http:/ /www.mckinseyquarterly.com/ Kidd, P. (1994). Agile manufacturing: Forging new frontiers. Reading, MA: Addison-Wesley. McFarlan, F. W. (1984). Information technology changes the way you compete. Harvard Business Review, 62(3), 98-103. Miles, R. E. & Snow, C. C. (1986). Organizations: New concepts for new forms. California Management Review, 28, 62-73. Nagel, R. & Dove, R. (1993). 21st century manufacturing enterprise strategy. Bethlehem, PA: Iacocca Institute, Lehigh University. Naisbitt, J. (1982). Megatrends: Ten new directions transforming our lives. New York: Warner Books. Naisbitt, J. & Aburdene, P. (1985). Re-inventing corporation. New York: Warner Books. Oster, S. M. (1994). Modern competitive analysis (2nd ed.). New York: Oxford University Press. Powell, W. (1991). Neither market nor hierarchy: Networks forms of organisation. In G. Thomson (Ed.), Markets, hierarchy and networks: The co-ordination of social life (pp. 265-276). London: Sage. Prahalad, C. K. & Hamel, G. (1990). The core competence of the corporation. Harvard Business Review, 68(3), 79-91 , May/June. Preiss, K., Goldman, S., & Nagel, R. (1996). Cooperate to compete: Building agile business relationships. New York: van Nostrand Reinhold. Putnik, G. D. (2000). BM_virtual enterprise architecture reference model. In A. Gunasekaran (Ed.), Agile manufacturing: 21st century manufacturing strategy (pp. 73-93). UK: Elsevier Science. Putnik, G. D. & Silva, S. C. (1995). One-product-integrated-manufacturing. In L. M. Camarinha-Matos & H. Afsarmanesk (Eds.), Balanced automation systems - Architectures and design methods (pp. 45-52). London: Chapman & Hall. Quinn, J. B. (1990). The intelligent enterprise. New York: The Free Press. Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

54 Cunha & Putnik

Shams, R. M. & Wheeler, F. P. (2000). On the strategic alignment of business and information systems: Defining informational dimensions of alignment. Paper presented at the 10th Annual Business Information Technology Management Conference, BIT’2000, 1-2 November, Manchester, UK. Silva, J. P., Putnik, G. D., & Cunha, M. M. (2003). Technologies for virtual enterprise integration. In A. Gunasekaran & G. D. Putnik (Eds.), Proceedings of the First International Conference on Performance Measures, Benchmarking and Best Practices in New Economy (pp. 706-711), Guimarães, Portugal, June 10-13. Toffler, A. (1985). The adaptive corporation. New York: McGraw Hill. Vernadat, F. (1999). Research agenda for agile manufacturing. International Journal of Agile Management Systems, 1(1), 37-40. Williamson, O. (1975). Markets and hierarchies: Analysis and antitrust implications. New York: Free Press. Yusuf, Y. Y., Sarhadi, M., & Gunasekaran, A. (1999). Agile manufacturing: The drivers, concepts and attributes. International Journal of Production Economics, 62, 33-43.

ENDNOTES

1

2

IDEF stands for ICAM DEFinition methodology (ICAM—Integrated Computer-Aided Manufacturing). IDEF diagrams illustrate the structural relations between two processes and the entities present in the system. The processes (represented as boxes) transform the inputs into outputs (respectively the left and the right arrows of a process), using the mechanisms for the transformation (the bottom arrows of a process) and constrained by control information or conditions under which the transformation occurs (the top arrows). In the representation, squares represent the entities, the arrows indicate the relationships, and the respective line ends.


E-Government: The Future of Red Tape 55

Chapter III

E-Government:

The Future of Red Tape Vincent Homburg Erasmus University Rotterdam, The Netherlands

ABSTRACT

Increasingly, governments are using information and communication technologies (ICTs) to communicate internally, with citizens, and with corporations. The electronic interactions between governments, citizens, and/or corporations are usually referred to as e-government. E-government as such attempts to increase the efficiency of government operations and of service delivery (i.e., “reduce red tape”), but also to increase citizens’ trust in public administration. Some authors even foresee democratic renewal, in conjunction with a drastically reengineered government apparatus. This chapter explores the normative, managerial, and technological antecedents of e-governments and explores the manifestation of e-government. It does so by focusing on goals, visions, and beliefs (“rhetorics”) at national and supranational policy levels (i.e. the American and European e-government policies) and by analyzing the technological and managerial problems encountered at the shop floor of municipal egovernment initiatives (“reality”).


56 Homburg

INTRODUCTION

For more than a century, western public bureaucracies have been constructed and constrained by a paradigm known as “traditional public administration.” As noted by Wilson with respect to the American administration in the end of the 19th century, traditional public administration is a reaction “… the poisonous atmosphere of [city] government, the crooked secrets of state administration, the confusion, sinecurism, and corruption ever again discovered in the bureaux at Washington” (Wilson, 1887, p. 206). In order to curtail the influence and power of the tiny cogs in the wheels of public sector organizations (Bovens & Zouridis, 2002) and, in general, to map ways to restrict personalistic, patrimonial, and patriarchal modes of governance, the ideal type of bureaucracy has its value. However, actual manifestations of bureaucracy also bear a number of well-known drawbacks with them, such as diminished performance, cumbersome operations, lack of citizen orientation, and other phenomena usually referred to as “red tape.” Therefore, the classic public administration paradigm has been criticized since the 1970s. With the expansion of the scope of markets, citizens increasingly began to think more as customers even in their experience as users of public services. At the same time, a governance discourse—also labeled “new public management” (NPM)— emerged, in which “reinvention,” “re-engineering,” and “entrepreneurial government” played an important role (Hammer, 1990; Osborne & Gaebler, 1992). Guy Peters (1996) has identified four basic, dominant patterns in new public management practices (1996): • • • •

market government (emphasizing “pay for performance”); participatory government (emphasizing empowerment and flatter organizations), which enables citizens to speak up; flexible government (virtual organizations, temporary allocation of staff to tasks); and deregulated government (managerial freedom).

In general, it can be stated that underlying all patterns of practices is a notion of departure from the classic public administration paradigm. This change of view on how governments should work has been fueled by a new kind of rationalization or reform: e-government (or, in general, the use of Internet technologies). Initially, it was focused on improving and reengineering internal processes, but later it also included the redesign of external relationships in order to improve public administration’s accessibility and quality of service provision. E-government has a techno-optimistic, analytical flavor and seems Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.


to reinforce the effects new public management has on the organization and processes of public sector organizations throughout the industrialized world. For example, in the American National Performance Review, administrative restructuring by means of applying information and communication technologies (ICTs) was aimed at creating customer-focused public bureaucracies (Fountain, 2001). Fountain stated that the use of modern information technologies, like new public management techniques, affects the chief characteristics of the classic public administration paradigm and, therefore, they reshape the production, coordination, control, and direction processes that take place within the public sector (Fountain, 2002). Some even foresee a Web-enabled government (Dunleavy & Margetts, 2000). Symonds (2000) projected that “[r]einventing government, a fashionable but premature idea a decade ago, is at last being made possible by the Internet” (p. 5). Furthermore, Bellamy and Taylor (1998) claim that “[t]he patterns of organizational change which are so commonly associated with the information age are remarkably consistent with the patterns associated with current forms of managerialism in public administration” ( p. 37; see also van Duivenboden & Lips, 2001; Heeks, 2001). In conclusion, it can be stated that governments throughout the industrialized world are implementing reforms, both managerial and technological in nature. However, from neither theoretical insights nor from empirical studies, is it clear exactly what trajectories of change can be discerned (Homburg, 2004), and in various writings it is often unclear what kind of e-government is meant or what the underlying information strategy actually is. Therefore, in this chapter, the concept of “e-government” is explored as a managerial, technological, and institutional innovation in the public sector. This chapter is structured as follows. In the next section, the concept of egovernment is defined. Then, the democratic antecedents of e-government are discussed, whereas the “rhetoric” of national e-government policies is revealed in the following section. The next section deals with implementation issues and information resource management challenges of e-government initiatives., followed by presentation of conclusions.

E-GOVERNMENT DEFINED

The Dutch municipality of Dordrecht offers various services on its awardwinning Web site. The Web site offers opportunities to request (and pay for electronically) permits, download forms and brochures, make appointments with civil servants, track-and-trace requests, request e-mail notification of council discussion of a specific topic. The site also occasionally hosts interacCopyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

58 Homburg

tive sessions with the mayor or with city administrators to discuss topics like urban renewal, facilities for the youth, public safety, and so forth. The presence of Dordrecht on the Internet is an example of e-government; the site allows for electronic interaction between local government on the one hand and citizens and corporations on the other hand. The interaction consists of service delivery but also of electronic deliberation. Furthermore, it addresses citizens as well as corporations (for whom a dedicated bar on the Web site has been created). For specific services, cross-organizational information exchanges (for example, with the Chamber of Commerce) have been realized. Many writings on e-government refer to comparable initiatives to describe and delineate the concept of e-government. Actually defining e-government is not an easy task—the concept itself seems to be based more on pragmatic experiences and visions (European Commission, 1996, 1997, 2000; National Audit Office, 2002; National Performance Review, 2000) and management consultancy (inspired by e-commerce experiences) than on a solid theoretical view. In terms of academic knowledge, there is an abundance of empirical research that is focused on the effects of ICT on the functioning of public administration (Danziger & Viborg Andersen, 2002; Snellen & van der Donk, 1998), but a solid theoretical base seems to be lacking (exceptions include Bekkers, 1998a; Gazendam, 1993; and Homburg, 1999). In practice, nowadays, the emphasis of ICT application in various countries’ public administrations is on service delivery, in most cases by using the Internet. A definition of e-government therefore could refer to the production and delivery of government services through ICT applications (Moon, 2002). As such, a definition focusing on service delivery does not differ significantly from “e-commerce for governments.” Critics (Chadwick & May, 2001; Grönlund, 2003), however, state that such a view does not take the specific role of government (as opposed to private sector companies) into account. And, referring to the example of the municipality of Dordrecht mentioned above, only a part of the interactions are included in this definition. For example, at first sight, it may seem that the target population of egovernment initiatives is citizens, just as customers are the target population of e-commerce initiatives. This is partly true, but if one takes a closer look it can be seen that the citizen is a much more multidimensional concept than a customer in an e-commerce transaction. It is possible to distinguish many roles citizens (as primary stakeholders) can play in relationship to governments: customers of public services and goods, voters, taxpayers, subjects of regulation, or contenders of decisions. In the international practice of e-government,



various types of e-government services can be discerned (Chadwick & May, 2001). A dominant type of e-government is G2C with a focus on service delivery (Chadwick & May, 2001; Moon, 2002). This type predominantly addresses citizens and businesses in their roles of customers. In practice, this type often takes the form of citizens receiving information, contacting civil servants and/ or performing transactions using a Web site as a one-shop-no-stop delivery channel. Fountain (2001) provides the example of an International Trade Data system that provides businesses with licenses and permits that are required under international and federal legislation. In practice, such a form of service delivery brings along a need for G2G interaction because tens of agencies are involved in the execution of policies regarding international trade, safety, health inspection, and so forth. Such a type of e-government necessitates the design and implementation of Web services and other means of electronic communication and, more urgently, the coordination and information exchange between various, often compartmentalized, public bureaucracies. In the United Kingdom, the result of this kind of coordination is named “joined-up government.” Another form is G2C interaction aimed at voters. This type of interaction is often referred to as online voting. At this moment, online voting takes place in Australia (Australian Capital Territory), Brazil, Canada, Germany (Niedersachsen), New Zealand, and the United States (California), among other places (Aarts, Leenes, & Svensson, 2001). In many cases, e-voting occurs alongside postal voting and regular voting. A third form is G2C interaction with “citoyens” (Moon, 2002). This type of interaction often takes place in discussion forums and is aimed at participation of citizens, interest groups, and other stakeholders in the policy and decision-making process about, for instance, urban and rural planning projects like the reconstruction of a neighborhood, a shopping mall, or the planning of a rail road. Grönland (2003) mentions examples of local electronic forums in the Swedish city of Bollnäs, where citizens engage in electronic discussions with the local politicians. And, apart from these forms, which are all targeted at proactive, responsible and demanding citizens, there are some services that target the less benevolent aspects of citizens. E-government services can also be used for criminal prosecution or enforcement of legislation. Sometimes, this occurs in concurrence with or under the heading of service delivery. For example, in many countries, internal revenue services (tax agencies) are front-runners in the application of e-government. One of the more important motives for tax agencies to use e-government services is to promote compliance of taxpayers by supplying them with accurate and more compelling information. Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

60 Homburg

In general, it can be stated that there are reasons to assume that egovernment services in practice mark a deviation from: • •

the classic public administration paradigm, because of its focus on citizens in various roles and other means of (inter)organizational coordination than on a functionally differentiated form; and e-commerce initiatives because of the multifaceted nature of the citizens as customers, Good Citizens (“citoyens”), voters, and subordinates of the state.

In this chapter, we focus on the communicative and reforming aspects of e-government initiatives. We therefore define e-government as the use of information and communication technologies, especially Internet and Web technology, by a public organization to support or redefine the existing and/or future relations with “stakeholders” in the internal and external environment in order to create added value. In this definition, stakeholders can refer to other governments (for example, to make one-stop shopping possible), but also to citizens in various roles (customers, voters, subordinates to the state or “citoyens”).

DIRECTION OF REDESIGN: DEMOCRATIC ANTECEDENTS

By stating that e-government is essentially about redefining and redesigning relationships with stakeholders in the environment, it is not immediately clear what kind of direction the redesign should take. In fact, neither the egovernment nor the new public management literature is very consistent in this respect (Gruening, 2001; Homburg, 2004). And in fact, various trajectories are to be observed in various countries (OECD, 2003). The kind of direction is inherently entwined with the view on democracy one has. Typically, two models can be discerned (Chadwick & May, 2001; Homburg, 2004). A first model can be labeled as consumer democracy. Other authors refer to this trajectory as digital new public management (Dunleavy & Margetts, 2000) and a “managerial model” (Chadwick & May, 2001). In general, this trajectory emphasizes service delivery to firms and citizens in their roles of consumers of services, purely within the executive realm. In order to do this, executive organizations may deliver services proactively through



profiling their clients. Accountability is sought in reporting on performance of the service delivery, preferably directly to the users of services (for example, by querying user panels). In a way, the consumers’ preferences penetrate executive organizations (Bekkers, 1998a) by “magnetizing” the orientation of the executive organization in terms of both service delivery and accountability. Underlying information processes focus on generating performance indicators in terms of costs and quality of services for accountability purposes. As stated by Chadwick and May (2001), A key claim is that ICTs will allow for more accurately targeted communication of citizen requests and faster responses. Long-established state objectives […] can be furthered through support and facilitation of the information economy and the enhancement of agencies such as the police, the armed forces, the prison service and the courts (p.6). A central tenet of this model of democracy is that government should deliver public services to citizens; the better the services match the preferences of citizens, the more democratic the government is. A second model is concerned with mediating the interaction between citizen and government. It is referred to as consultation (see also Chadwick & May, 2001), and it borrows slightly from new public management the notion of participatory government and especially leans on specific participation services as exemplified in the e-government literature. Typical examples that fit within this trajectory are advisory referendums, e-voting, and electronic town meetings. This model builds upon the assumption that knowledge that is required for policy formulation and policy execution is discursive and malleable. Furthermore, the model assumes that knowledge emerges from interaction between societal groups. In this trajectory, electronic discussion environments are the basis for transforming social capital into policies. This trajectory borrows slightly from new public management the notion of participation and breaking down governments, but especially from e-government’s focus on participatory services. Accountability focuses on process and is targeted directly at citizens in their role of “citoyens” or Good Citizens.


62 Homburg

E-GOVERNMENT INITIATIVES IN VARIOUS COUNTRIES

Introduction

If we look at the practice of e-government in many countries, we see that there is a growing tension between the panoramic view of a new and better government and a number of implementation problems. In order to clarify this, it is noteworthy to take a look at the phase in which the policy programs regarding e-government have been formulated, and to look for ‘rules’, vision, and sources of inspiration that guide the behavior and interactions of individuals, groups, and organizations in and around public administration. This is especially important because, as has been mentioned before, the bulk of inspiration of many e-government initiatives in the industrialized world can be found in policy documents and consulting reports, rather than in theoretical concepts. In essence, the question to be answered is: what is the rhetoric of egovernment in various national e-government policies? The answer is dealt with in the next two subsections.

United States

In the United States (U.S.), visions of e-government emerged in the context of the National Partnership for Reinventing Government. In the 1990s, the Clinton/Gore Administration viewed e-government technologies as vehicles to reengineering government. In fact, application of ICTs was at the heart of the New Public Management-inspired National Performance Review of 1993. The line of thinking was developed further in the first decade of the new millennium (National Audit Office, 2002; National Performance Review, 2000). In fact, the Access America program can be regarded as an update of the National Performance Review (NPR), with the noteworthy addition of the Internet (which, of course, wasn’t mentioned in the first NPR reports). In the national policy documents, there is a strong belief that ICTs in general can assist in the creation of customer-focused public bureaucracies (Chadwick & May, 2001; Fountain, 2001). In the Access America program, it is explicitly recognized that the Internet can be used to “re-engineer” the relationship between government and citizens. The main focus is on reengineering service delivery by creating virtual agencies that should cooperate seamlessly to deliver service components (unemployment benefits, child support, social security benefits, Medicaid, Medicare) to citizens, in such a way that citizens do not have to contact several agencies to have the service delivered to them.



In 1999, it was clear that the progress with respect to the creation of Webenabled virtual agencies was slower than expected. As a reaction, the FirstGov portal was introduced in 2000. FirstGov offers a rather all-encompassing scheme of federal public services, and it is considered to be the nearest any government has come to presenting an easily navigatable interface to public services, with an emphasis on servicing individual consumers of public services (Chadwick & May, 2001). On the whole, federal policies regarding e-government in the United States clearly emphasize service delivery (and thus emphasize a new public management- and a consumer-democracy orientation) and do not focus on participatory arrangements.

European E-Government Initiatives

European e-government initiatives are analyzed here at two levels: at the level of the European Union and at the level of a number of nation states, namely the United kingdom, The Netherlands, and Denmark. European Union E-Government policies (European Commission, 1996, 1997, 2000; Grönlund, 2003) stem from the European Commission itself (Information Society Project Office) and are in a large part inspired by the High-Level Group on the Information Society (Bangemann Commission). In general, policies are aimed at fostering the advantages of the Information Society. In general, there is no attention towards either service delivery in a consumer-democratic model, or to participation in a participative conception of democracy. In national policy programs, however, attention is in fact given to these aspects. For example, in the United Kingdom (UK) documents Modernising Government (Minister for the Cabinet Office, 1999) and E-Government: A Strategic Framework for Public Services in the Information Age (Minister for the Cabinet Office, 2000), e-government (defined as information age government) is an aspect of modernizing government that has only one purpose—to make life better for citizens and business. The emphasis lies on the improvement of electronic service delivery in such a way that it reflects real lives and delivers what people really want, and on a more effective use of the Government’s information resources. In order to accomplish these goals, all parts of government have to work better together— joined-up government is needed. In the document, attention to an ICT-strategy that will establish crossgovernment coordination machinery and frameworks on such issues as digital signatures, smart cards, Web sites, and call centers is requested.


64 Homburg

In the eyes of the UK government, it is important to develop a corporate ICT strategy for government that encourages the convergence and interconnection of ICT systems of individual public service agencies. In such a strategy, key objectives are formulated, frameworks for technologies that require stronger coordination are identified, a Government Secure Intranet will be developed, and attention is given to the protection of privacy and other human rights while, at the same time, providing a clear basis for sharing data between departments. Effective implementation requires a focus on delivering defined business objectives with measurable benefits, strong leadership, clear accountability, improved project management, and attention to risk management. The UK vision of the citizens expresses the idea that people are exercising choice and demanding higher quality, not only in the private sector but also the public sector. This implies a genuine partnership between those providing services and those using them. Moreover, it implies that government must consult with and listen to citizens instead of independently imposing solutions. Also, it states that government should not only serve those who embrace the new technology. The information age should increase the choices of how citizens and businesses receive services, not restrict it. The Internet is just one of the service delivery channels citizens can choose. In the document EGovernment: A Strategic Framework for Public Services in the Information Age, e-government is primarily seen as the development of a new set of service delivery channels for citizens and business. In the Danish vision of e-government From Vision to Action: The Information Society 2000, (Ministry of Research and Information Technology, 1995), e-government is embedded in the idea of the revolution of the information society—a worldwide short circuit of time, space, people, and processes. In relation to the functioning of the public sector, ICT should support the realization of a number of special values. ICT should support the free access to information and exchange of information, support democracy and give the individual the opportunity to exercise his influence, support personal development in his working situation and in his leisure time, support openness in the public sector by making it more transparent, contribute to the promotion of efficiency and rationalization in public institutions, enable them to provide better services, and ICT should be used to sustain the disadvantaged of society. A subsequent document Towards E-Government: Vision and Strategy for the Public Sector in Denmark (Digital Task Force, 2002), stated that e-government should systematically use digital technologies to introduce new ways of thinking and transforming organizations and work processes for improving the quality of service and efficiency.



In the Danish strategy, collaboration between the private and public sector is seen as a necessary condition for Denmark’s transition toward the Infosociety. The public sector should carry its share of the work by realizing the ICT applications. The focus is on implementing a relatively small number of projects with realistic goals and clear deadlines. The emphasis is on the realization of a comprehensive and interconnected electronic service network for the public sector. In the Danish vision of the position of the citizen, attention is paid to the increased social polarization into a two-tier society with IT winners and losers. The winners are those with a higher education who are able to master the new technology, who know the possibilities of the Info society and who are able to learn and to develop the necessary qualifications. Attention is also paid to the risk of “Big Brother.” Because ICT is a natural element of everyday life, it is possibly placing individual citizens under central surveillance. The Danish report proposes the use of ICT to support the personal development of the citizen and to give individuals the opportunity to exercise their influence to harness this threat. In The Netherlands, the e-government goals, as formulated in Action Program for Electronic Government (Ministry of the Interior and Kingdom Relationships, 1999) and The Digital Delta (Ministerie van Economische Zaken, 1999), are increasing the accessibility of government, improving the quality of public services, and enhancing the internal efficiency of government. E-government requires the Dutch government to take an active focus on its role as producer of public services. In a subsequent document Contract with the Future (Ministry of the Interior and Kingdom Relationships, 1999), the scope of e-government is broadened—the political participation of citizens is also mentioned as an area that deserves stimulation. In the Dutch view on electronic government, the emphasis lies primarily on the establishment of virtual services counters that are theme oriented, such as living and building, care and welfare, companies, and on the reduction of administrative costs for companies. In all of these counters, several (semi-) government organizations will have to work together. An important project, which is focused on the improvement of the internal efficiency of government, is the realization of authentic basic registers in which public data that will be shared by several parties are stored. In The Netherlands, the emphasis is on the citizen as a consumer of government services. In Contract with the Future, a relationship between the rise of the empowered and intelligent citizens and the process of individualization is identified. This new citizen demands a government that is responsive to


66 Homburg

his needs, that is able to organize an open and horizontal dialogue, and that is able to organize its internal processes in a transparent way.

Reflection: Conceptions, Barriers, and Challenges of E-Government

From the various national policies on e-government, it is possible to construct the “rhetoric” of technology policy in terms of observed risks, challenges to be tackled, and view on the nature of the redesign of the relationships between government and its surrounding stakeholders. A first striking observation is that a dominant type of redesign of information relationships takes place in the context of a new public management type of orientation. There seems to be an emphasis on service delivery and a focus on customers of public services. As such, in many policy documents (notably the American, British, and, to a lesser extent, the Danish and Dutch), the view of the citizen as “consumer” takes preference over a view of citizen as “citoyen.” In our interpretation, this especially has to do with an implicit view on democracy and the normative roots of administrative reforms. A second observation is that the primary obstacle for service orientation is the absence of “joined-up government” (United Kingdom), virtual agencies (United States), or, in general, cooperative structures between various agencies that enable information exchange and joint service delivery. As such, this is not a stunning conclusion, and it is quite compatible with the Red Tape metaphor. In Modernizing Government, the UK government gives a number of reasons why the UK government and governments in other countries are lagging behind in their quality of service delivery. One reason is that organizations consider their own interests, and public services are organized around the needs of risk-avoiding providers rather than the users, who have no serious means to express their desires and interests regarding the quality of service delivery. Also, an assessment was made of the barriers that obstruct information age government. The most important barrier is that government has followed a largely decentralized approach to IT development. The result in the UK is that government is unable to maximize the benefits of IT for government as a whole. It is noteworthy to state that, in various countries, executive institutions like Internal Revenue Services are experimenting with personalized Web services. In some cases, however, the multifaceted character of government makes it hard to actually put these services to work. For example, the Dutch Internal



Revenue Service decided not to implement personalized services (named http:/ /www.mijnbelastingdienst.nl, which translates into something like http:// www.MyIRS.nl) because the Internal Revenue Service thought of itself not only as public service provider, but also as enforcer of tax laws. As an enforcer of tax legislation, the agency does not want to increase administrative transparency too much because it would enable and probably promote calculative behavior of citizens. So, the IRS as public service provider might be willing to offer digitalized services tailored to the needs of citizens, but the IRS as enforcer is, for understandable reasons, not willing to offer personalized services. Third, it is of interest to take notice of the methods and instruments that are proposed to make virtual organizations or joined up government possible. Especially in the U.S. and the UK, there is an emphasis on nation-wide egovernment strategies, in which standardization is promoted. In the Danish and Dutch policy documents, on the contrary, local initiatives and even public private partnerships are encouraged. In the Danish policies, the public sector (and Danish companies) is unable to adequately redefine working routines and develop new IT-based products. But apart from capabilities, such an approach is rejected because a view on the Information Society as a centralist, surveillance society which threatens privacy is rejected. Obviously, these national policies take a more pragmatic and bottom-up approach, whereas the AngloSaxon approach seems to emphasize a centralized perspective. And fourth, when analyzing the policies that are aimed at redesigning the relationship between government and citizens, it is worth looking at the way the polar ends of the relationships are viewed. From the first remark, it is clear that a dominant view of government in the reform is that of a primarily serviceproviding, preferably seamless web of agencies. On the other polar end, there is the citizen. Most noticeable in the Dutch case is the view of the citizen as an intelligent consumer who is willing and able to make choices according to individual (rather than political) preferences. This view is more or less present in the UK and U.S. policy documents. The Danish line of thinking marks a different path here, as it is also concerned with questions of the Digital Divide. These aspects are almost completely ignored in the Anglo-Saxon national policy documents.


68 Homburg

CHALLENGES OF THE IMPLEMENTATION OF E-GOVERNMENT INITIATIVES

Information Resource Management Challenges of E-Government Initiatives

In the previous section, the information strategies and contexts of actual egovernment initiatives have been described. It should be clear now that egovernment initiatives have different emphases in various national settings. In order to eventually realize e-government, the strategies, goals, objectives, and visions have to be implemented in actual e-government systems. The implementation of e-government initiatives tends to raise complex challenges for information resource management (Homburg & Bekkers, 2002; van Venrooij, 2002). The reasons for this claim are, at least, threefold. First, e-government initiatives do not merely imply technological innovation, but also organizational and even institutional transformation (Meijer & Zouridis, 2004). For instance, electronic service delivery may in practice question historically grown practices concerning territorial foundations of governments, discretionary power of bureaucrats, foundations of bureaucracy, and the structure of policy-making processes. For information resource management, this implies increased complexity of processes and sometimesunexpected resistance from political levels. Second, many e-government interactions between governments and citizens (for example, the delivery of public services) result from the actual execution of legislation. Changes in legislation may occur frequently (Gazendam, 1993), thus resulting in a continuous need to adjust and modify not only actual information systems, but also organizational procedures and structures involved in the delivery of services. In the e-government practice, procedures to draft or revise legislation and to design and implement e-government services often happen at the same time (van Venrooij, 2002), thus resulting in a continuous need to coordinate and adjust both trajectories of change. In general, legal requirements are by no means a stable design requirement. Third, and probably foremost, many e-government initiatives do not take place at a relatively simple organizational level. In practice, developing electronic public service delivery, especially the integration of various back offices, involves various agencies, and many e-government initiatives require at least a sectoral (i.e., social services sector, tax and customs sector, environmental sector) rather than an organizational perspective. This necessitates all kinds of inter-organizational coordination and may even imply that existing boundaries, authorities, and jurisdictions start to blur (Bekkers, 1998b; Homburg, 2001;



Homburg & Bekkers, 2002). In practice, in order to successfully implement egovernment services, data models, procedures, and organizational requirements have to be coordinated and integrated. This requires the active involvement and cooperation of a diverse set of stakeholders. A very important competence for e-government information managers, therefore, is what is nowadays called “stakeholder management” (van Venrooij, 2002). With stakeholder management (sometimes referred to as “process management,” as by Homburg and Bekkers [2002]), reference is made to the actual management of decision-making processes regarding the development and use of interorganizational information systems, in terms of the governance of cooperative arrangements. So, not only does the content of cooperative arrangements (data models, procedural arrangements, and information requirements) require attention, but the process of cooperation, like the generation of trust between various agencies (Allen, Colligan, Finnie, & Kern, 2000), the selection and mobilization of actors in various phases of the decision making and design, and the design and agreement of procedures to settle disputes between agencies also have to be dealt with. In practice, this goes beyond a project management approach. Project management approaches tend to focus on content (data models, procedures, design requirements) and seem to have severe difficulty dealing with processual issues of stakeholder involvement, varying objectives, and, over time, changing interests of stakeholders that are typical of e-government initiatives. It is therefore not surprising that in many e-government initiatives in practice, socalled “battles of the back offices” (Homburg & Bekkers, 2002; Kraemer, Dickhoven, Tiernet, & King, 1987) are taking place.

Dilemmas in Implementing E-Government Initiatives

Information resource managers face various dilemmas in the actual implementation of e-government initiatives due to the complex nature of e-government initiatives (i.e., the involvement of a large variety of stakeholders from various agencies and the continuously changing design requirements stemming from newly drafted or revised legislation) (van Venrooij, 2002). First, there is a tension between design requirements stemming from a classic bureaucratic focus on equity before the law, legislative quality, and so forth on the one hand, and design requirements resulting from a focus on citizens or customers of public sector organizations on the other. In practice, these requirements may conflict with one another, and various stakeholders involved in the design and development of e-government services may adhere to various values involved in e-government initiatives. This requires careful consideration,


70 Homburg

balancing requirements, and stakeholder management skills apart from project management skills. Second, there is a tension between matters of privacy and customer orientation. Customer orientation may require extensive exchange of information between various agencies, for example, in order to prevent agencies from repeatedly asking citizens to submit information they have submitted many times in the past to other agencies. However, especially in the context of public service delivery, the ability of public sector agencies to draft a rather complete and integral picture of citizens raises issues of the protection of privacy. Therefore, the values of protection of privacy and adequate service delivery have to be confronted almost continuously when designing e-government services. Third, there is a tension between a redistribution of tasks and responsibilities for the sake of a better-informed, responsive, and citizen-oriented electronic government on the one hand, and the need to safeguard “checks and balances” in government on the other hand. This tension is most notable in judicial systems in the context of penal law enforcement. The exchange of information about subjects between, for example, police offices and magistrates might serve the efficiency and, to some degree, customer orientation of penal law enforcement; however, a basic value in penal law enforcement in Western countries is the separation of powers (“checks and balances”) between judicial and executive branches. This value of separation of powers thus imposes restrictions on the technologically feasible information exchange in back offices of penal law enforcement.

Pace of Change in E-Government Implementation

In the introduction of this chapter, we mentioned that many e-government initiatives are inspired by e-commerce experiences. Characteristic of many ecommerce initiatives is a commercial market imperative, embodied in the rise (and sometimes, quick fall) of innovative enterprises, often start-ups and radical organizational transformation of service-delivery processes. Given the challenges and dilemmas involved in setting up, designing, and developing e-government services, it may not come as a surprise that government information resource managers and e-government executives—because of the “checks and balances” of government apparatus—cannot easily start up innovative enterprises or programs to capture opportunities for improving the value provided by governments to its citizens. Possibilities for radical redesign and transformation cannot be denied, but, in many cases, e-government implementations are characterized by incrementalism rather than radical change.



The message here is that this incrementalism can be understood as a manifestation of the continuous balancing of diverse and sometimes contradictory design requirements, rather than as a result of sometimes-claimed structural incompetence of government and a continuous process of waxing and waning that some authors attribute to public sector operations (for a discussion, refer to Homburg, 1999, and Homburg & Bekkers, 2002). For the actual management of e-government, these challenges and dilemmas underline the importance of stakeholder-management and process- management techniques and competences, and the ability to confront and deal with complex and sometimes even contradictory design requirements. Inherent in this is that the pace of change in e-government is often lower than might be expected from e-commerce experiences.

CONCLUSION

Over the past ten or so years, governments throughout the world have adopted e-government initiatives to redesign their relationships with citizens and corporations, and, in the process, they have also reformed themselves to be able to cope with the requirements posed by redesigning relations. In this chapter, we have opted for a rather broad view on these redesigns (and thus on e-government) so that in principle it includes e-voting (where the citizen is addressed as voter), service delivery (where citizens and corporations are addressed as consumers), and electronic deliberative meetings (where citizens are addressed as Good Citizens or “citoyens”). Although it is sometimes claimed that e-government is the public sector mirror image of e-commerce, we have argued that, in fact, e-government is far more complex, comes in a variety of manifestations, and raises painstaking technological, organizational, and institutional issues. At the roots of e-government initiatives, not only technological choices have to be made with respect to the design and development of, for example, digital public service; the often implicit views of citizens and of our current model of democracy play decisive roles in the way in which e-governments take shape and should be managed. Moreover, the foundations of governments, the variety of roles government agencies can play, and the existence of separation of powers (“checks and balances”) and juridical basis for service delivery raise intriguing information resource management dilemmas and issues with respect to the way services can be rendered. For example, it has been noted that possibilities for personalized services by national Internal Revenue Services are sometimes hampered by the fact that government agencies are both service Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

72 Homburg

providers and law enforcers at the same time. And actual technologically feasible possibilities for information exchanges in the back office of penal law enforcement are restricted by separation of powers between judicial and executive branches in penal law enforcement. It has also been noted that normative choices with respect to the envisaged manifestation of electronic government services tend to vary, and in various national and federal policies, different choices are being made. Predominantly, throughout various industrialized countries, there seems to be an implicit choice for the consumer democratic model as the funding principle of e-government types of reforms. However, as we have argued above, this may very well still result in conflicting design requirements stemming from normative grounds (for example, “checks and balances”) for government-citizen interaction, and thus in a need to confront and deal with conflicting values and norms in actual egovernment implementations. For the information resource management of e-government initiatives, this means that the development and design of especially the back office of egovernment systems both consists of substantive issues (so, the development and refinement of data models, organizational procedures, and so forth) and processual issues (the design of decision-making procedures in which actors with varying interests interact with one another, the generation of trust between actors, the design and effectuation of procedures to settle disputes, and so forth). However, overall, e-government initiatives tend to be bound by legal and institutional boundaries, at least more than comparable e-commerce counterparts. Thus, designing and implementing e-government, again most likely more than e-commerce, requires a careful balancing act between various interests, stakeholders, politicians, and system developers, and, most importantly, between various conceptions of what the actual identity and operating procedures of governments are.

REFERENCES

Aarts, C. W. A. M., Leenes, R. E., & Svensson, J. S. (2001). Kiezen op afstand Monitor. Den Haag: Ministerie van Binnenlandse Zaken. Allen, D., Colligan, A., Finnie, A., & Kern, T. (2000). Trust, power and interorganizational information systems: The case of the electronic trading community TransLease. Information Systems Journal, 10(1), 21-40. Bekkers, V. J. J. M. (1998a). Grenzeloze overheid. Over informatisering en grensveranderingen in het openbaar bestuur. Alphen aan den Rijn: Samsom. Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.


Bekkers, V. J. J. M. (1998b). Wiring public organizations and changing organizational jurisdictions. In I. T. M. Snellen & W. B. H. J. v. d. Donk (Eds.), Public administration in an information age (pp. 57-77). Amsterdam: IOS Press. Bellamy, C. & Taylor, J. (1998). Governing in the information age. Buckingham, UK: Open University Press. Bovens, M. & Zouridis, S. (2002). From street-level bureaucracy to systemlevel bureaucracy: How information and communication technology is transforming administrative discretion and constitutional control. Public Administration Review, 62(2), 174-184. Chadwick, A. & May, C. (2001). Interaction between states and citizens in the age of the Internet: ‘E-government’ in the United States, Britain and the European Union. Paper presented at the American Political Science Association (APSA), September 2, San Francisco, CA. Danziger, J. N. & Viborg Andersen, K. (2002). Impacts of information technology on public administration: An analysis of empirical research from the golden age of transformation. International Journal of Public Administration, 25(5), 591-627. Digital Task Force. (2002). Towards e-government: Vision and strategy for the public sector in Denmark. Copenhagen: Projekt Digital Forvaltning Den Digitale Taskforce. Duivenboden, H. P. M. v. & Lips, A. M. B. (2001). Taking citizens seriously. Paper presented at the European Group of Public Administration (EGPA), Vaasa, Finland, September 7. Dunleavy, P & Margetts, H. (2000). The advent of digital government: Public bureaucracies and the state in the information age. Paper presented at the Annual Conference of the American Political Science Association, Washington, D.C., September 4. European Commission. (1996). Working and living in the information society: People first (Green paper). Brussels: European Commission, Directorate General V Employment, Industrial Relations and Social Affairs. European Commission. (1997). Building the European information society for all of us. Brussels: European Commission, Directorate General V Employment, Industrial Relations and Social Affairs. European Commission. (2000). Government online. Brussels: European Commission, Directorate General V Employment, Industrial Relations and Social Affairs.


74 Homburg

Fountain, J. (2001). Building the virtual state. Washington DC: The Brookings Institute. Fountain, J. (2002). A theory of federal bureaucracy. In E. Kamarck (Ed.), Governance.com. Democracy in the information age. Washington DC: The Brookings Institute. Gazendam, H. W. M. (1993). Variety controls variety. On the use of organization theories in information management. Groningen, The Netherlands: Wolters-Noordhoff. Grönlund, A. (2003). Emerging electronic infrastructures (Exploring democratic components). Social Science Computer Review, 21(1), 55-72. Gruening, G. (2001). Origin and theoretical basis of new public management. International Public Management Journal, 4(1), 1-25. Hammer, M. (1990). Don’t automate, obliterate! Harvard Business Review, 68(4), 104-113. Heeks, R. (2001). Reinventing government in the information age: International practice in IT-enabled public sector reform. London: Routledge. Homburg, V. M. F. (1999). The political economy of information management. Groningen, The Netherlands: SOM. Homburg, V. M. F. (2001). The politics and property rights of information exchange. Knowledge, Technology and Policy, 13(3), 49-66. Homburg, V. M. F. (2004). New public management and e-government trajectories of a marriage between managerial and technological reform in government. Paper presented at the Information Resource Management Association (IRMA), New Orleans, LA, May 24. Homburg, V. M. F. & Bekkers, V. J. J. M. (2002). The back-office of egovernment (Managing information domains as political economies). Paper presented at the HICSS, Waikoloa Village, Waikoloa, Hawaii, January 7-10. Kraemer, K. L., Dickhoven, S., Tiernet, S. F., & King, J. L. (1987). Datawars: The politics of modeling in federal policymaking. New York: Columbia University Press. Meijer, A. & Zouridis, S. (2004). E-government as institutional transformation. Paper presented at the Information Resource Management Association (IRMA), New Orleans, LA, May 25. Minister for the Cabinet Office. (1999). Modernising government. London: Minister for the Cabinet Office.



Minister for the Cabinet Office. (2000). E-government: A strategic framework for public services in the information age. London: Minister for the Cabinet Office. Ministerie van Economische Zaken. (1999). De Digitale Delta. Den Haag: Ministerie van Economische Zaken. Ministry of Research and Information Technology. (1995). From vision to action: Info-society 2000. Copenhagen, Denmark: Ministry of Research and Information Technology. Ministry of the Interior and Kingdom Relationships. (1999). Contract with the future. Den Haag, The Netherlands: Ministry of the Interior and Kingdom Relationships. Moon, M. J. (2002). The evolution of e-government among municipalities: Rhetoric or reality? Public Administration Review, 62(4), 424-433. National Audit Office. (2002). Better public services through e-government. London: National Audit Office. National Performance Review. (2000). Conversations with America. Retrieved February 25, 2005 from http://govinfo.library.unt.edu/npr/ converse/conversa.html Organisation for Economic Co-operation and Development (OECD). (2003). The E-Government Imperative. Paris: OECD. Osborne, D. & Gaebler, T. (1992). Reinventing government: How the entrepreneurial spirit is transforming the public sector. Reading, MA: Addison-Wesley. Peters, B. G. (1996). The future of governing: Four emerging models. Lawrence, KA: Kansas University Press. Snellen, I. T. M. & van der Donk, W. B. H. J. (1998). Public administration in an information age. A handbook. Amsterdam: IOS Press. Symonds, M. (2000, June 24). The next revolution. The Economist, p.5. van Venrooij, A. (2002). Nieuwe vormen van interorganisationele dienstverlening. Delft, The Netherlands: Eburon. Wilson, W. (1887). The study of administration. Political Science Quarterly, 2(2), 206.


76 Bygstad

Chapter IV

Implementing CRM Systems:

Managing Change or Accepting Technological Drift? Bendik Bygstad The Norwegian School of Information Technology, Norway

ABSTRACT

Many companies have large expectations of the use of Customer Relationship Management (CRM) systems, expecting to harvest benefits from dialogue marketing and internal knowledge synergies. How should these systems be implemented? And how easy do the benefits come? The research approach is a longitudinal, six-year case study of a company implementing CRM both as a marketing principle and as an information system. The implementation was, from the outset, regarded as an organizational experiment, and the case is laid out in some detail to provide a somewhat “thick description” of the social setting and actors’ behavior. The high failure rate of CRM projects illustrates the gap between our intentions and outcomes. Interpreting a longitudinal case study and the research literature, we find two options to improve our practice. From a managerial view, we should treat CRM projects as complex challenges, needing tight project control and the application of change management techniques, focusing on the marketing process and data quality. In contrast, we could accept that the mechanisms at work at Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

Implementing CRM Systems

77

the micro level are only partly controllable by management techniques, and we should let the infrastructure grow organically.

INTRODUCTION

Increasingly, companies’ ability to implement new IT solutions is of crucial importance for the company’s ability to change (Applegate, McFarlan, & McKenney, 1999). Both strategically and economically, it is therefore vital that a company has the skills to implement information systems fast. As documented in IS research, implementing information systems into an organization is hard and often unsuccessful (Markus & Benjamin, 1997). This is also the case with Customer Relationship Management (CRM) systems, and perhaps even more so. While there are well-known and impressive success stories (Hines, 2002; SAS, 2002), failure rates of CRM projects may be as high as 70% (Tafti, 2002). Comparing the large expectations regarding CRM with the actual results in companies, a picture of sobering consideration and sometimes downright disappointment emerges. Why is it so difficult? It is documented that most problems in CRM implementation are not technical. Instead, common problems include organizational change and fluctuation, different views on customer information, and changes in the business, for example, mergers (Schwartz, Schliebs, & Wyssusek, 2002). Argyris and Schön (1996) describe the gap between intent and realization, between what our strategists have recommended that we do and what we are actually capable of doing, as a major challenge for strategic management theory. The core of the challenge is not related to the strategic analysis itself, but to the level of real-time microactions, that is, all the small decisions managers and employees make during the implementation of change and creation of knowledge. Examples may include problem solving, communication with employees, inter-departmental conflicts, and single customer relationships—situations where the battle of change and learning really happens. We suggest that studying these microactions and the defensive routines at work in an organization is relevant for understanding the implementation puzzle of CRM. This chapter tells the story of a six-year CRM project and describes in some detail how a knowledge-based organization addressed the challenge. The gap between intent and outcome may also be described as technological drift (Ciborra, 2000). Arguing that the modern knowledge-based organization cannot be as planned and controlled as an industrial enterprise, Ciborra suggests that the alignment between technology and organization is a process of conflict and negotiations between different actors, including the Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

78 Bygstad

technology itself. This process is only partly controllable in a modern organization with empowered employees. On the level of microactions there will often be choices and options of behavior. There may be several ways of reaching a goal or solving a problem. The actual behavior may be influenced as much by practical considerations using technology as by managerial goal-setting, and the accumulated result of these small decisions may gradually alter the course of how information systems are used. We think this aspect is underrated in the change management literature and will illustrate this point in the actual case. The chapter is structured as follows: first, the case methodology is described. In the next section, there is a brief outline of the promise of CRM systems. Then, two process perspectives on implementation are presented, and the case is described in some detail, focusing on the implementation process and actor behavior. The following section outlines two different views for interpreting the case: a management view and a “drift” view. Finally, the chapter concludes with lessons learned and some implications for further research.

METHODOLOGY: A CASE STUDY IN A NORWEGIAN NON-PROFIT ORGANIZATION

This chapter tells the story of a Norwegian non-profit, knowledge-based organization, the Institute of Technology (TI) in Oslo, that started implementing a CRM system in 1993. The focus of this case is on the implementation process, which lasted six years. The author was the IT manager at the Institute in this period. Using a qualitative and interpretive approach (Miles & Huberman, 1994), the study focuses on behavior as a practitioner experienced the project, using only very simple theoretical concepts. Data was collected throughout the project. 1992: Requirements Specification, Contract with vendor 1993: CRM project report 1994-1998: Semi-annual user satisfaction surveys 1994: Organization development project 1 1995-97: Organization development project 2 1998: Specification for new version



79

IS success and failure is a complex area. In this study, we make a simplified use of DeLone and McLean’s (1992) model, focusing on actual use and user satisfaction, individual impact, and organization impact. Apart from the benefits of hindsight, the discussion also sets the case in a wider perspective.

THE PROMISE OF CRM SYSTEMS

Theories on relationship marketing were developed at the end of the 1980s under the motto “from transaction to relation” (Hakansson & Snehota, 1995). Researchers showed that companies have both economic and social relationships. In addition to economic transactions, there is, sometimes, a development of trust. These relationships may give benefits to both sides; among them are a higher degree of customer loyalty, lower marketing costs, mutual learning, and other forms of strategic cooperation. Developing long-term customer relationships is a part of the company’s strategy development and should involve every level of the company (Hakansson & Snehota, 1995). Since relationship marketing is heavily dependent on the richness of customer information and also on frequent communications with the customers, the pioneers were aware at an early stage of the potential benefits to be derived from IT. Today, CRM systems represent a large and growing part of the software industry (Tafti, 2002). Ciborra and Failla (2000) describe CRM as an information infrastructure, consisting of processes, people and technology. CRM is linked to the Business Process Reengineering (BPR) thinking in the way that CRM is also process oriented, and focused on dramatic and fundamental change. CRM structures and supports all activities in a business transaction lifecycle, from the first lead to fulfillment. Figure 1 illustrates simplified assumptions about the positive effects derived from a good CRM system. As shown, CRM is a long-term business strategy, where the CRM system is an important component. The reason for the high expectations is that the CRM systems seem to connect the two central resources of the modern, “flat” and decentralized company, namely, the core competence of the knowledge workers and the company relationships to its most important customers (Kay, 1993). A CRM system holds three promises for the knowledge-based organization: •

First, it gives each worker a tool to manage his or her personal contacts, activities, documents, and so forth. As Drucker (1999) has stated,


80 Bygstad

Figure 1. The basic assumptions on the effect of CRM systems Good CRM system Focuses and supports all marketing activities

Good customer relations

Higher ROI over time

Well organized and targeted marketing

• •

“managing oneself” has become the management challenge for the knowledge worker. Secondly, it provides a tool for dialogue marketing, allowing the company to individualize marketing activities, whereby the customer gets only the information he or she wants and needs (Hakansson & Snehota, 1995). And finally, it represents a synergic potential for the company. If all this information could be utilized in market analysis and product concept development, it might be a basis for new products and markets, transcending the barriers of business functions and locations.

This is not trivial. If successfully implemented, this implies that the CRM systems could be an important technology for the non-hierarchical, knowledgebased organization of the 21st Century. Figure 2 shows the rich functionality of a medium-sized Norwegian CRM system, SalesMaker, used in the TI case.

THE CASE: COULD A FORMER GOVERNMENTAL INSTITUTE, BECOME A FLEXIBLE AND MARKET DRIVEN COMPANY WITH THE HELP OF CRM?

TI was made a private foundation in 1989. The main market was the smalland medium-sized companies in Norway (being 95% of all the Norwegian companies) that are too small to do their own technology development and transfer. The services provided were technical consulting, practical courses in disciplines like welding, testing, and calibration, and also ISO certification. There were branch offices in other cities in Norway and an international section, the Norwegian Technology Attachés.



81

Figure 2. Features of Norwegian CRM system SalesMaker Prospects Offers Segments Projects Campaigns Documents Archives Other applicationes

SalesMaker Sales meetings

Products

Activities CUSTOMER

Budget Sales Report generator

SQL database

As a private organization, TI had to earn its own income, and the governmental support was gradually reduced during the 1990s from 50% to 25%, while the total income increased from 125 million NOK to 185 million NOK. The 260 employees were not accustomed to marketing and selling services. After privatization, all the managers were recruited from the private sector, while the technical consultants were retained from the former organization. The latter were primarily interested in technical matters and regarded marketing as a possibly necessary but unwanted activity. The culture in the technical departments was practical: the manager of the furniture department, with a lifelong experience with electrical sawing tools, was proud to say about job applicants: “Well, it’s OK that he has a Ph.D., but then at least he shouldn’t have more than nine fingers!” TI’s only real competitive advantages were the 8000 small- and mediumsized customer companies and thousands of personal contacts. Could this asset be capitalized and become the springboard for developing TI into a modern and market-driven company? And could CRM play an important role in this transformation? The director thought so, and in 1992 she commissioned a major project called “The Customer Project.” The objectives were: 1994: Better financial control of the consulting projects (about 4000 each year); 1995: More effective and efficient marketing by systematic dialogue marketing; and Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

82 Bygstad

1996: Develop long-term relationships with the most important customers. It was easier said than done. In 1992, the Institute did not even have a LAN, and the workforce absolute strangers to the concept of CRM. How was this to be accomplished?

Methodology: Software Engineering—Or Organization Development?

Around 1990, IS projects were often analyzed in terms of success factors (Kwon & Zmud, 1987). The critical success factors (CSF) for the Customer System were assumed to be strategic alignment, cross-functional synergies (BPR-inspired), workforce participation (Scandinavian school), technically competent implementers, and a sound technical solution. This was rather “by the book,” and was augmented by the teaching of the TI consulting staff. The CSFs give, however, not much guidance on how IS should be implemented. In practice, there was a choice of two models, the Software Engineering or the Organization Development model. The SE approach takes as a point of departure that an information system is developed and implemented into an organization (Sommerville, 2001). The mainstream of the IT industry—like Microsoft—has traditionally focused on the functional attributes of the system (features, platforms, etc.). The Scandinavian school has focused more on the user participation and acceptance. At both schools, however, the starting point is the technology and the emphasis is on structure and rationality. The Organization Development (OD) model originates in the behavioral sciences, and the point of departure is that organizations are stable organisms that change slowly and reluctantly (Argyris & Schön 1996). To succeed, the organization should prepare for the change, then change slowly, and lastly institutionalize the change (“freeze”). The OD discipline has traditionally not been very interested in IS, and has focused on the irrational aspects of change processes, and observed that the normal outcome from a change process is a gap between intentions and results. One reason for this gap, among other factors, is resistance to change. At TI we chose the software engineering approach, following the recommendations of the vendor of the CRM system. This did not imply that the Customer Project was seen a purely technical project. On the contrary, great effort was made to ensure user participation and organizational alignment. One of several measures was to merge the IT and marketing departments into a single unit assigned the responsibility for the CRM implementation. Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.


83

Table 1. Chronology of the CRM project 1991-1994 Chronology Autumn 1991 Winter 1992 Spring 1992 Rest of 1992 Autumn 1992 January 1993 Spring 1993 Autumn 1993 Spring 1994

: IT strategy, concluding with the Customer Project, is approved. : A project group and a steering group are established. A requirements document is made after interviewing all departments. : Contract with Software Innovation purchasing SalesMaker (first customer) Analysis and design: A consultant firm produces a business model in DFD and E/R-diagrams. Central users participate. : Database is implemented and prototyping in a 4GL is done in close cooperation with different user groups. Installation of LAN, WAN, and servers. : User training with in-house instructors. Managers were sent to courses to learn to use the report facilities. : System set into production. : System in production, but technical problems in client/server technology : Data quality problems. : Data quality problems attacked, but not solved. Confidence in system declining.

The First Attempt in 1993/94: Crises

The Customer System was based on SalesMaker from the Norwegian company Software Innovation, extended with an in-house developed module. The system was, at the time, very modern: Windows based, integrated with both the financial system and with office software like MS Word. For an organization not familiar with CRM systems, it appeared complex, with many screens and a new terminology including words like “contacts,” “relationship,” and “campaigns.” Focusing on screens and terms, all users were trained. The first problem encountered was technical: the client/server technology at this time was not stable, and created a continuous demand for user support. Also, the quality of the in-house-developed module was not satisfactory and demanded additional support. An even larger problem was the fact that the core of the system, the customer information, had quality problems. The reason was trivial: when registering a new customer, the user should check if the company was already registered. If this was not done, the result may be a double or a triple registration of the customer (each spelled a little bit differently), which in short time creates chaos in the system. When users did not check if the company was not already registered, the reasons were stated as: • • • •

“The response time for search is too long.” “I was in a hurry because we had to send the invoice today.” “I noticed that the original registration was wrong.” “I thought this was a daughter company.”


84 Bygstad

Table 2. Chronology of the CRM project 1994-1998 Chronology Autumn 1994

1995 1996-98

1998

: The "Elephant Method" was developed: A step-by-step method to use the Customer System in dialogue marketing: Define your market, find the potential customers in the system, produce the brochure, mail it to the potentials, follow-up by telephone, register the response, correct any wrong information, summarize the learning. Easy, when assisted by marketing staff. : The Elephant Method was a success in most departments, both in terms of user satisfaction and in financial savings in the DM activities. : The Giraffe Project: Aimed at changing organization and culture: - Marketing teams established - Each team had a marketing plan, with clear objectives - All customers segmented into groups, according to profitability. Main responsibility for each customer is assigned to individuals. - Marketing activities are focused on "A-list" customers, aiming on creating partnerships. - A number of motivating and learning activities are initiated by the IT/Marketing dept. : Project is evaluated partly successful, but local (department) culture is stronger than central push.

This was the origin of a vicious circle. The existence of double and triple customers very quickly threatened the confidence in the system. “One cannot trust the new system— it is useless,” became a common comment. The positive users became reserved in their use, and the negative ones had lots of complaints in the company canteen. The result of these problems was that the system was not used by as many users as intended. In spite of several activities to increase the quality of information, parts of the organization lost faith in the concept. The system did not give the expected benefits because it contained incorrect information and lack of trust reduced the pool of users. It also became evident that the user participation strategy had had little effect. One reason why the data quality problem persisted was that the system was not considered important enough to spend the necessary time to learn it properly. It was not integrated in the dayto-day working routines. The investment was still financially sound, because the dialogue marketing, as a tool for the marketing department, was beginning to work. But the implementation had failed on important points, and TI began looking for another way to succeed.

1995-98: Second Attempt—Elephants and Giraffes

Joke: How do you proceed to eat a whole elephant? Answer: One bite at a time!



85

In the autumn of 1994, the steering group initiated a task force, consisting of IT specialists, marketing staff, and line managers, to help a troubled department to do its marketing activities more systematically. This attempt was gradually developed into the “Elephant Method” (after the how-to-eat-anelephant-joke), which was a step-wise method for market segmentation and Direct Marketing (DM). This method was gradually implemented in most departments during 1995, and led to more sales of TI’s course portfolio, while the volume of DM was cut by half. The direct savings from reduced DM volume were substantial—at least half a million NOK each year. Together this was the first visible success of the system, and this was also acknowledged by the organization. The experience illustrated two mechanisms. First, the departments needed hands-on guidance in using the CRM system in a way that gave a commercial effect. Second, it showed that only very concrete results could change the attitudes in the departments. Traditional user training and general information had very little effect. In 1996, the perspective was broadened. Under the motto “stretching a little further,” the Giraffe Project was started. Its aim was to concentrate the marketing activities on the most important customers (“A-list” customers) to increase the profitability of the Institute, that is, to make it less dependant on government money. All managers, secretaries, and key consultants were taken to kick-off meetings and follow-ups to listen to national “relationship gurus” and discuss the concept. All departments were organized into marketing teams, and systematic reporting to the top management group every month was instigated. The following two years, the Giraffe-1 and Giraffe-2 were run continuously, with a focus on changing the culture from a focus on technical disciplines to focusing on the customer. The whole bag of OD tricks were used, such as image and brand building, team building, leadership development, skills development, parties, and prizes. The results were generally positive, but progress was slow. Some departments worked very systematically and achieved good results. Others were more half-hearted and gave priority to other activities. A few were ignoring the whole project and worked with other concepts. The attitude of the manager and the most senior consultants seemed to determine the culture. Also important was the fact that the CRM system did not support all kinds of products and that two departments completely lacked a core of loyal customers and were working in a spot market.


86 Bygstad

Summing up, in 1998 the CRM strategy had worked for five years. While having a partial success, the process was not self-sustainable. It was still dominated by central staff pushing reluctant technicians into the market. The local cultures were a stronger influence than the central push. Only when the commercial perspective was very short was there any real commitment to the project. Thus, while the DM activities continued to be rather successful, the more long-term approach of using customer relationships more strategically was much harder to achieve. The Giraffe ambition of changing the culture was therefore judged to be a failure. The IT and Marketing Departments were now questioning whether the whole concept was wrong, not only the implementation. Our concept was built on releasing the potential synergies in cross-functional coordination. Did such a potential really exist? Or is it, at the end of the day, only within the individual projects that there are synergies? Is the modern knowledge organization too culturally complex and immune to this kind of standardization? Should the focus be changed to satisfy the more immediate needs of the knowledge worker?

Third Attempt 1998-2000 and Summing-Up the Case

A new version of the Customer System was introduced at the start of 1998. The emphasis was now changed to the consultant users, and focused on calendar, document support, and personal contacts. This was well received, but also signified a lower ambition on the organizational level. Of the three original goals of the system—the first two, financial control of projects and more efficient direct marketing—were achieved. The DM activities were concentrated in a new unit, and the “A-list customer” concept was implemented throughout the whole organization. The third and most important goal—to establish partnerships with the “Alist” customers in a cross-functional cooperation and use this systematically in changing the organization—had mainly failed. This goal was more or less abandoned, and the departments were left to develop their customer relationships individually. Using DeLone and McLean’s (1992) key concepts of actual use, user satisfaction, individual and organizational impact, we may summarize the case in the following table. As Table 3 shows, the four implementation periods achieved different results. Concerning the organizational impact, the greatest success was the team development activities of the Elephant Method, which, in addition to increased sales, had a direct financial impact of saving at least half a million NOK each of the following five years. This paid for the whole CRM investment.



87

Table 3. Summarizing the project, using DeLone and McLean’s (1992) key concepts Period 1993-94 1994-97 Elephant Method 1995-98 Giraffe Project 19982000

Implementation strategy Software Engineering

Actual use

User satisfaction

Individual impact

Organizational impact

Medium

Low

Low

Low

Team development

High

High

High

High (but variable)

Organization development Voluntary, individual use

Medium

Medium

Variable

Medium

Medium

Variable

Medium (and variable) Low

However, the organizational impact of the more ambitious Giraffe Project was harder to measure, as it was more variable. In some departments, the revenues were increasing due to more focus on profitable customers, but the crossfunctional benefits were small. The next section will discuss these findings.

DISCUSSION

A single case from a small country is hardly a convincing empirical base from which to generalize. We would rather argue that the findings are consistent with other research, and use the case to discuss some important aspects of CRM implementation. This section offers two interpretations of the case, first from a management view, then from the “drift” view.

The Management View

Summing up the CRM implementation research from a management perspective Tafti (2002) concludes that success stems from a combination of four factors, described in Table 4. The factors in Table 4 are congruent with other streams of IS implementation research, for example, Swanson’s implementation puzzle (Marble, 2000).


88 Bygstad

Table 4. Factors for CRM implementation success (Tafti 2002) Factor Strategic planning CRM project management Technology (CRM system) Change management

Description Understanding how CRM should be used to reach important business objectives. A team with necessary skills and resources, combining the steps of an IT project and a marketing project, focusing on the CRM process and data quality. A carefully selected solution, easy to use, and appropriately scaled. First investigate whether the company accepts change. Then implement a change process supported by top management, focusing on training, incentives and user acceptance.

Reviewing the TI case, it is reasonable to say that the strategic understanding was sufficiently developed and supported by top management. It is also reasonable to conclude that the software solution was adequate, after the initial problems. The first implementation failure (1993-94) is neatly explained by the other two factors: • CRM project management: The first part (1993-94) of the TI project was organized as an IT project, lacking marketing expertise and process focus. As a result, there were data quality problems and user resistance. • Change management: There was no assessment at the start of the project of the company’s ability to change, only a decision that it should. When problems appeared, they were attacked by more training initiatives, but lacking real user incentives, this was not successful. During the second implementation attempt (1995-98), the focus was changed in the Elephant and Giraffe Projects. The project was redefined as a marketing project dealing with the marketing process and focusing on business results. The CRM system was now perceived more as a tool, not an end, and user acceptance grew during the small Elephant Projects. In the terms of Argyris and Schön (1996), examples of the critical real-time microactions could be identified as the trivial situations when small, important decisions are made, such as:



• • •

89

When a department manager decided to support an Elephant initiative (or not). His reasons were often practical: Did we succeed last time we tried? Did my colleague have some problems when he used this method? When IT staff and marketing staff decided to spend enough time to solve a practical problem, rather than just blame the system. When a secretary was told to correct the misspelled names of employees of a customer and did so immediately.

The sum of these small and outwardly insignificant actions seems to make the difference between success and failure. In this sense, the management view explains important parts of the case. It supports the findings in the case that the structure of a traditional IT project is not well suited for CRM implementation, and that large-scale organizational interventions of change management are critical. But the problems of the Giraffe Project are a warning that something may be wrong in this analysis. The main problem is a particular distribution of roles, where central staff is pushing reluctant line managers to overcome user resistance to a new system. This setting is well known in implementation research, and it is well established that this “push” will usually not solve the resistance. In some organizations, the solution was to redesign the process, to change the incentive structure (Markus & Keil, 1994). This was attempted at TI by establishing marketing teams with assigned team leaders and economic incentives to succeed, but this proved to be a failure in most cases. Reasons are discussed in the next section.

The Drift View

After documenting several examples of large discrepancies between IT visions and plans and the actual outcome, Ciborra (2000) asserts that the solution cannot be more managerial control, which has proven to be part of the problem. Instead, he asks “why not play with the idea of a different partition between the limited scope for our management of the infrastructure and the scope for the infrastructure itself to manage us?” (p.40). In this context, implementation is less about managerial decisions and more about creating a self-feeding process where an infrastructure of an installed base provides useful services for new users, which will increase the installed base, and so on. Regarding the CRM (system, people, and routines) as an infrastructure, we may ask what mechanisms are critical for implementation. Returning to Argyris and Schön’s (1996) term, it seems that the microactions that glued the


90 Bygstad

infrastructure so well together in the Elephant Projects did not work in the more ambitious, knowledge- management approach of the Giraffe Project. Why not? One answer may be that the first type of project had support in pre-existing capability in the organizations’ formative context - the institutional arrangements and cognitive frames (Argyris & Schön, 1996), while the Giraffe Project was a foreign and abstract concept, in the language of management. The system and the concepts could not be translated into a departmental culture that had a very practical problem-solving way of working. The technical teams at TI were small and tightly knit, and the members much preferred working on their own projects to formal cross-functional coordination meetings. The most important learning was in the projects, and it was shared with the other members during the irregular coffee break. Such teams, seen from within, have no need for a CRM system. Instead, there is a case of technological drift, that is, the system is used in a way that is not planned. In the TI case, the drift was towards a more voluntary and individual use of the system (1998-99). From the management point of view, this was an unplanned and partly unwanted development, because it took most of the knowledge synergies out of the project. Was it equally unwanted from the drift view? This is a hard question to answer, because the expected marketing and knowledge synergies from CRM require that an organization defines its knowledge and actions in rather standardized classes that could be registered into the system, and that the employees loyally keep this information up-to-date. TI’s experience was that, while this may be possible, it is expensive and time-consuming, and TI never succeeded in making this a self-sustainable process. As Schwarz, Schliebs, and Wyssusek (2000) point out, while CRM is focused on valuating the customers, successful implementation of CRM is really dependent on the actions taken based on this valuation. In a knowledge-based organization, this is hard to accomplish by force; it has to be voluntary and based on a conviction that it makes sense. The drift observed in this case may thus be regarded as a sensible compromise between the knowledge workers and the CRM system.

CONCLUSION

Implementing CRM is hard. As Ciborra and Failla (2000) bluntly states, “CRM seems to have no built-in mechanisms by which it acquires its own momentum and the diffusion becomes a self-feeding process” (p. 116).



91

This seems to leave us with two alternatives. The first is to accept an upward struggle of organizational interventions and, in particular, use the managerial tools of change management. As this case and others (Schwartz, Schliebs, & Wyssusek, 2002; Tafti, 2002) have shown, the challenge is a large one and not necessarily successful. The second option is to accept the technological drift—that the system will be used in other ways than intended. The mechanisms at work at a micro level are only partly controllable by management techniques, and often so interwoven with local culture and routines that in practice it is impossible to predict the outcome. In the view of CRM’s close ties to strategic management and BPR, this is a paradox. Further research could look into this paradox and, in particular, study the micro level actions in successful CRM projects.

ACKNOWLEDGMENTS

I thank the anonymous reviewers of IRMJ and my colleagues, Asle Fagerstrom and Cecilia Haskins, for critical and useful comments. I also thank my former employer for accepting publication of this material.

REFERENCES

Applegate, L., McFarlan, F.W., & McKenney, J. (1999). Corporate information systems management. Boston, MA: Irwin McGraw-Hill. Argyris, C. & Schön, D.A. (1996). Organizational learning II. Reading, MA: Addison-Wesley. Ciborra, C. (2000). From control to drift. Oxford, UK: Oxford University Press. Ciborra, C. & Failla, A. (2000). Infrastructure as a process: The case of CRM at IBM. In C. Ciborra, From control to drift (pp. 105-124). Oxford, UK: Oxford University Press. DeLone, W. H. & McLean, E.R. (1992). Information systems success: The quest for the dependent variable. Information Systems Research, 3(1), 60-95. Drucker, P.F. (1999). Managing oneself. Harvard Business Review, 77(2), 65-74. Hakansson, H. & Snehota, I. (1995). Developing relationships in business networks. London: Routledge.


92 Bygstad

Hines, M. (2002). GM’s CRM guru outlines her strategy to project success. SearchCRM. Retrieved February 20, 2005 from http://searchcrm. techtarget.com/qna/0,289202,sid11_gci811687,00.html Kay, J. (1993). The foundation of corporate success. Oxford, UK: Oxford University Press. Kwon, T. H.& Zmud, W. (1987). Unifying the fragmented models of information systems implementation. In J.R.B.R. Hirscheim, Critical issues in information systems research, (pp. 227-251). Chichester, UK: Wiley. Marble, R. P. (2000). Operationalising the implementation puzzle: An argument for eclecticism in research and practice. European Journal of Information Systems, 9, 132-147. Markus, M. L. & Benjamin, R. (1997). The magic bullet of IT-enabled transformation. Sloan Management Review, Winter, 55-68. Markus, M. L. & Keil, M. (1994). If we build it, they will come: Designing information systems that people want to use. Sloan Management Review, 35(4), 11-25. Miles, M.B. & Huberman, A.M. (1994). Qualitative data analysis. Thousand Oaks, CA: Sage Publications. SAS. (2002). SAS Warehouse Administrator® lies at the heart of Sprint’s CRM platform. Retrieved February 25, 2005 from http://www.sas.com/ success/sprint_crm.html Schwartz, M., Schliebs, O., & Wyssusek, B. (2002). Focusing the customer: A critical approach towards design and use of data warehousing in corporate CRM. In L.V.S. Lakshmanan (Ed.), Proceedings of the 4th International Workshop on Design and Management of Data Warehouses (DMDW 2002) at the 13th Conference on Advanced Information Systems Engineering (CAiSE 2002), Toronto, Canada, (pp. 9096). Sommerville, I. (2001). Software engineering. Harlow, UK: Pearson Education. Sprint (2002). http://www.sas.com/news/success/sprint.html Tafti, M. H. A. (2002). Analysis of factors affecting implementation of customer relationship management systems. Proceedings of Information Resource Management Association Conference, Seattle, WA, May 19-22, (pp. 782-785). Hershey, PA: Idea Group Publishing.

Sources from Institute of Technology

Annual Reports 1989-98 Project documents from the Customer Project 1991-99 User satisfaction evaluations 1994-98


Measuring Organizational Readiness for Knowledge Management

93

Chapter V

Measuring Organizational Readiness for Knowledge Management W. A. Taylor University of Bradford, UK M. A. Schellenberg University of Bradford, UK

ABSTRACT

While organizations continue to grapple with the implementation of knowledge management, there remains a need for empirical research into the practical difficulties they encounter. In this chapter, we investigate the challenges faced by one multinational telecommunications company in a post-merger environment. We develop an instrument to evaluate the knowledge-sharing culture and information infrastructure and, by using qualitative and quantitative data from a survey of five European sites, we illustrate how managers can measure gaps between the effectiveness of current practices and their importance, and decide whether to direct resources toward changing employee attitudes, organizational practices, or knowledge-management infrastructure. More significantly, we highlight the need for senior managers to be in agreement about the strategic direction of their business and the strategic alignment between business strategy and knowledge-management strategy. Without such consensus, knowledge management is likely to remain, at best, a series of fragmented and unrelated initiatives at local levels. Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

94 Taylor & Schellenberg

BACKGROUND

In today’s knowledge economy, it is often asserted that for organizations to compete effectively they need to focus on creating and using intellectual assets (Grant, 1996; Murray, 2002). Ask most business leaders if knowledge is important to their company’s future and they will say yes without hesitation. Ask them why it is so important, or how they plan to harness their organization’s knowledge for competitive advantage, and the answers will be less convincing (Pollard, 2000). The key transition is from appreciating the importance of knowledge to being capable of managing it or, perhaps more accurately, being able to create the organizational conditions that facilitate the generation, sharing, and application of knowledge (Alavi & Leidner, 2001; Collison & Parcell, 2001). Defining these appropriate organizational conditions is still a focus of research and subject to much debate. The problem is exacerbated by the fact that implementation of knowledge management is context dependent, such that there is no universal recipe or methodology (Coakes, 2003; Probst, Raub, & Romhardt, 2000). This chapter investigates the implementation of knowledge management in a global telecommunications company that provides data network services to multinational clients. We examine the challenges of managing knowledge in a post-merger environment. In particular, our results illustrate the practical difficulties in creating a conducive knowledge-sharing culture in such a merged organization, especially when it is organized around a business unit structure. We also show how the information infrastructure assumes critical significance in underpinning knowledge-sharing efforts, particularly to move beyond localized knowledge sharing and maximize the benefits of global organizational knowledge. Especially since the Telecom Reform Act of 1996, the telecommunications industry has been experiencing intense competition, with several competitors facing serious financial difficulty, bankruptcy, and even break-up. Coupled with the rapid rise of hybrid networks, the challenge for many surviving network providers is to maintain profit margins through efficient asset management of their physical products while migrating to a more services-oriented business model, where additional revenues derive from enhanced network solutions, integration services capabilities, and telecommunications consultancy. This places greater emphasis on the importance of managing knowledge to support and secure such a change in strategic intent (Figure 1). Our research in the focal firm was motivated by the need to investigate the preconditions that influence the implementation of knowledge management (Alavi & Leidner, 2001; Gold, Malhotra, & Segars, 2001; Walczak & Zwart, Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.


95

Managed services Managed network solutions applications

Pure asset utilisation Network services or Network related services

Extended services

Consulting, project management

Core services

Pure services

Position to strengthen

Figure 1. The role of knowledge in asset utilization and service-based business models

2003). Only a few approaches to this are emerging from the current literature (Bock & Kim, 2002; Holt, Bartczak, Clark, & Trent, 2004), and this is recognized as an important research theme (Kim, Yu, & Lee, 2003). In practical terms, we developed this notion into three related questions: 1. 2.

3.

Where is the company now, in terms of its culture and information infrastructure and its current methods for sharing and accessing knowledge? To address this question we used an employee survey. Where is the company going with regard to its business strategy? Answers to this question are necessary to ensure the correct focus for knowledge management efforts to support the strategic intent (Hansen, Nohria, & Tierney, 1999). We interviewed three senior executive vice presidents in the firm to explore this issue. What should be done to improve the firm’s business transformation through knowledge management? The answers to the preceding questions provide fertile clues regarding whether the focus of change and improvement should be on employee attitudes, organizational practices, or knowledge-management infrastructure. We consider this more fully in our discussion of results.

In the next section, we review the pertinent issues for improvement of knowledge- management practice in multinational organizations. We then Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.


outline our research methods for investigating the focal firm, before presenting results of a survey of the organization’s knowledge workers in five European countries. These results are contrasted with our findings from key informant interviews with three executive vice presidents. We conclude by discussing the significance of the findings for research and management practice.

ENABLERS OF KNOWLEDGE MANAGEMENT

From the extant literature, there is consensus that Knowledge Management (KM) requires a parallel focus on people, processes, and technology (Massey, Montoya-Weiss, & O’Driscoll, 2002; Tiwana, 2002), but that technology should only be seen as a fundamental support element. At best, IT only makes connection possible but does not make it happen (O’Dell & Grayson, 1998). While KM cannot be implemented without technology (Malhotra, 2000), the bottlenecks are usually psychological and organizational. The inherent danger is to place information technology at the center of KM implementation, endeavoring to push information and knowledge toward employees rather than creating the demand-pull for knowledge by enthusing employees with a desire for knowledge (Kluge, Stein, & Licht, 2001). In a recent survey of KM practices, one of the most recurring weaknesses was that companies lacked the right cultural context to nurture reciprocal trust, openness, and co-operation (Kluge et al., 2001). To create such cultures, companies need to build social capital (Ghoshal & Naphiet, 1998) such that employees feel interconnected through their personal networks. In essence, connecting employees is more about building personal relationships and the development of a knowledge-friendly culture (Davenport, DeLong, & Beers, 1998; Walczak & Zwart, 2003) than the physical connections afforded by IT systems. However, in a global organization, face-to-face relationships are not always possible, giving rise to difficulties in accepting knowledge from unknown outsiders—the “not-invented-here” syndrome (Kluge et al., 2001). Instinctively, employees tend to rely more heavily on “nearest” knowledge from physically proximate colleagues, perceiving such knowledge to be more dependable (Thomas, Kellog, & Erickson, 2001). In multinational companies, organizational structure is also important for leveraging knowledge assets (Abell & Oxbrow, 1997; Gold et al., 2001). When structured into business



97

units, inter-unit rivalry and competition can impede collaboration and knowledge sharing, reflecting the “tyranny” of the business unit structure (Prahalad & Hamel, 1990). Undoubtedly, personalization strategies (Hansen et al., 1999) that include, for example, “Yellow Pages” directories can help to connect people in an organization, yet it is far from easy to construct such systems (Stewart, 2001). Equally, high-touch collaborative technology environments that enable virtual communities do not necessarily lead to collaborative cultures (Tissen, Andriessen, & Deprez, 2000). Technology-mediated communities of practice may be a constructive way to build relationship capital (Wenger & Snyder, 2000), and circumvent the barriers of a business unit structure, but there is, as yet, very little empirical evidence of their effectiveness (Lesser, 2001). As with most new organizational initiatives, the role of senior managers is crucial. They are responsible for identifying and communicating the role of knowledge management within the organization’s strategic business plans, and for ensuring that the business strategy and knowledge strategy are in close alignment (Abou-Zeid, 2003; Zack, 1999). All too often, this link is relatively weak and poorly understood (Davenport, 1999; Davenport et al., 1998). Clear definition of the contribution of knowledge to the achievement of business strategy is essential in order to specify which knowledge must be managed and which measures are needed to assess performance improvement (Holsapple & Joshi, 2000; Treacy & Wiersema, 1996). Senior managers also influence the prevailing organizational culture and the commitment of resources to the implementation of KM practices (Bukowitz & Williams, 1999). In this chapter, we assess the effectiveness of knowledge-management capability in the focal organization and the importance that employees assigned to knowledge management for the future success of the organization. We also compare these findings with results from interviews with senior executives in the firm, contrasting the dichotomous perceptions between these two groups. Our method is outlined below.

RESEARCH METHOD

Research Setting and Sample Selection

The focal firm is one of the largest global telecommunications companies, with around 12,000 employees in more than 100 countries. Its core products are global data networks and related services, and its market focus is multinationals in the Global 2000 list of firms. The company has requested anonymity and therefore cannot be identified.



The employee sample was drawn from the Marketing and Sales Departments in five European countries of the focal firm, namely, Switzerland, United Kingdom, Germany, The Netherlands, and Belgium. The sample frame comprised of 389 knowledge workers, excluding clerical and administrative staff, and a random sample of 102 participants was selected. Each person was telephoned to establish willingness to participate in the survey. Key informant interviews were also conducted with three senior executives responsible for professional services, strategy, and product marketing, respectively.

Instrument Development

The survey instrument used items derived from previous surveys of KM (Davis, McAdams, Dixon, Orlikowski, & Leonard, 1998; KPMG, 1999). Item statements were modified to suit the specific context of the focal firm and the questionnaire was pilot tested prior to distribution. The survey was structured into five sections dealing with employees’ perceptions of: • • • • •

the knowledge sharing culture; the information infrastructure; current sources of information and knowledge; usefulness of knowledge-sharing methods; and the most appropriate incentives for stimulating knowledge sharing.

Items were ranked on a 5-point Likert scale in terms of (a) the importance for the future success of the organization, and (b) the effectiveness of current practices, each anchored by 1 = strongly disagree and 5 = strongly agree. Each section included open questions to permit further comment and opinion. We also gathered categorical data on respondents, including their country, department, and position in the organization. The survey was distributed by e-mail, with 90 completed questionnaires returned, representing a response rate of 88%. The interviews with senior executives explored their views of the long-term goals and strategies of the firm and their personal commitment to knowledge management in this context. We were particularly interested in the degree of consensus regarding the need to change the business model from a focus on effective asset management to a true value-added services orientation. All interviews were tape-recorded and transcripts analyzed for key themes.



99

Data Analysis Procedures

First, we used the chi-square test of significance to test for differences based on country, department, or position. No significant differences were detected. We then used t-tests to evaluate differences in item means for importance and effectiveness, where the presence of significant negative scores represents employees’ thirst for a better knowledge culture and infrastructure and a demand-pull for improvement. Conversely, a significantly positive score would indicate an activity where management was doing more than employees believed to be necessary. The sample size did not permit the use of advanced statistical analysis due to the low case-to-variable ratio. However, for an exploratory study, we believe that analysis of the differences in mean values for the ratings of the importance and effectiveness of each item gives a good initial indication of issues worthy of deeper investigation.

RESULTS

We firstly present data that indicates the current effectiveness of the knowledge-sharing culture and the support provided by the information infrastructure, together with employee perceptions of the importance of these dimensions. In each table, we also include the gap between the mean values for importance and effectiveness.

Knowledge-Sharing Culture

There were ten statements in this section, covering issues concerned with learning, knowledge sharing, and the openness and helpfulness of employees (Table 1). Clearly, the results in Table 1 suggest that there is a significant gap between the importance (I) assigned to each of these behaviors and the effectiveness (E) of current levels of practice. The largest gaps relate to: 1. 2. 3. 4. 5.

The time available for creative thinking, which is eroded by spending too much time on “firefighting” problems; Having a process to avoid re-inventing the wheel by being able to re-use and build upon the work of others; Giving more time and attention to learning from mistakes and failures; Developing a more trusting and open climate in the organization; and Being more responsive to requests from others.



Table 1. Gaps in knowledge-sharing culture Item Time is allowed for creative thinking (versus always firefighting) Looking for best practices or work that can be re-used is a natural standard process Considerable time and attention is given to learn from failures and errors A climate of openness and trust permeates the organization People are responsive (e.g., e-mails and voice mail get answered in a timely manner) Recording and sharing knowledge is routine and second nature All employees are ready and willing to give advice or help on request to anyone else on the organization Employees take responsibility for their own learning Informal networks across different parts of the organization are encouraged We have unrestricted access to non-confidential or personal information Overall (n = 90) 1 = strongly negative 5 = strongly positive

Importance 4.38

Effectiveness 2.47

Gap -1.91

4.54

2.70

-1.84

4.70

3.06

-1.64

4.52

3.19

-1.33

4.28

3.08

-1.20

4.16

2.98

-1.18

4.38

3.48

-0.90

4.05 4.03

3.23 3.26

-0.82 -0.77

3.74

3.35

-0.39

4.05

3.23

-0.82

Employee responsiveness is not only about willingness to reply, but also about the support mechanisms to enable communication, particularly the information infrastructure.

Information Infrastructure

A similar pattern emerged for the assessment of the importance and effectiveness of the information infrastructure, as illustrated in Table 2. All items in Table 2 display large gaps between what users expect and the current reality of information provision.

Table 2. Gaps in information infrastructure Item Importance 4.59 We can rapidly find necessary information on our IT systems Our IT system provides excellent ease of access to 4.56 information We have up-to-date information from our IT systems 4.58 Our IT infrastructure is an excellent source of 4.47 information and knowledge We can trust the information in our IT systems 4.59 IT is a key enabler of efficient knowledge sharing 4.22 Overall 4.50 (n = 90) 1 = strongly negative 5 = strongly positive

Effectiveness 2.72

Gap -1.87

2.86

-1.70

3.01 3.10

-1.57 -1.37

3.24 3.11 3.01

-1.35 -1.11 -1.49



101

We also explored employee’s views about their preferred ways of accessing knowledge and information and their perceived usefulness of a range of access methods available in the organization.

Importance of Knowledge and Information Sources

Currently the most important sources of knowledge are from local sources within the respondents’ own departments (Figure 2). There is also a considerable amount of learning by doing and learning through contact with other local departments in each country. Noticeably, inter-country learning is of significantly lower importance. This finding about inter-country learning is complemented by the findings relating to the usefulness of knowledge-sharing methods, as discussed in the next section.

Knowledge-Sharing Methods

In Figure 3 we can see that the most useful methods for sharing knowledge and information are face-to-face and via the company intranet. Respondents’

Figure 2. How important are the following knowledge/information sources? Own department in other countries Self study on own initiative Training and workshops Professional Services Practices Local sources within other departments Learning by doing Local sources within own department

3.5

3.7

3.9

4.1

4.3

4.5

Me an score

Figure 3. How useful are the following knowledge/information methods? Phone and conference calls On-line collaboration E-mail Manuals and printed information Face-to-face communication Intranet data base

3

3.2

3.4

3.6

3.8

4

4.2

4.4

Mean score



comments made it clear that product information was shared through the intranet, while face-to-face communication facilitated local knowledge sharing within their own departments and geographically adjacent departments. We explored this further by asking about the importance and effectiveness of local, within-country knowledge sharing compared with global, intercountry and inter-business unit sharing (Table 3). These results suggest that the largest gaps between importance and effectiveness of current practices exist at the global level of knowledge sharing. Overall, these respondents attach more importance to knowledge sharing than is currently reflected in company practices, but the gap is more pronounced at the global level. Moreover, by plotting the mean values for the answers to the local and global items respectively, we can see that, although the firm is viewed as being better at managing local knowledge, the overall gap between global and local knowledge sharing is not as significant as the overall improvement needed in effectiveness (Figure 4). Table 3. Gaps in sharing local and global knowledge Item We appraise individuals on how they share knowledge and information globally We are improving the global sharing of knowledge We proactively encourage global sharing of knowledge and information We are improving the local sharing of knowledge We appraise individuals on how they share knowledge and information locally We proactively encourage local sharing of knowledge and information (n = 90) 1 = strongly negative 5 = strongly positive

Importance 3.66

Effectiveness 2.14

Gap -1.52

4.08 4.24

2.64 2.86

-1.44 -1.38

4.01 3.69

2.89 2.62

-1.12 -1.07

4.32

3.36

-0.96

Figure 4. Overall gap between local and global knowledge sharing Im p o rta n ce 5.00

4.50

GAP 4.00

3.50

E ffectiv en ess

3.00 2.00

2.50

3.00 2.50

3.50

4.00

4.50

5.00

O v e ra ll M e a n L o ca l S h a rin g O v e ra ll M e a n G lo b a l S h arin g

2.00 (n = 9 0 )



103

The preceding results provide a way to assess an organization’s current state of readiness to implement knowledge-management practices. These methods provide answers to our first research question: “Where are we now?” and should be evaluated by senior management before going further along the path toward implementation (Hansen et al., 1999; Kim et al., 2003).

Strategic Intent—Where Are We Going?

We now consider the interviews with the three senior executives in the focal firm to compare their understanding of the strategic direction of the firm and the consequent implications for knowledge management (Table 4). The interviews revealed significant disparities in the three respondents’ views across each of the themes contained in Table 4. For example, in relation to most desirable business model, the strategic direction of the organization, and the urgency for changing, the executives were polarized, with in extremis, the Executive VP of Strategy espousing the status quo, whereas the Executive VP of Professional Services advocated an immediate and proactive shift away from current products toward a value-added services portfolio. Similarly, while they all acknowledged the importance of knowledge management, they differed on its strategic priority. This lack of strategic consensus was also mirrored in their views about the need for top management commitment, inter-country knowledge sharing, culture change, and employee incentives. Therefore, in relation to the second fundamental question, “Where are we going?,” this firm appears not to be ready to adopt knowledge management because of its inability to articulate a clear and shared strategic direction, from which a knowledge-management strategy should be derived (Massey et al., 2002). These executives’ views contrast sharply with our earlier results, which highlighted the gaps in the current culture and IT infrastructure. In particular, employees reflected a strong requirement for a change to a more open, creative, and learning-oriented culture and much better access to accurate information to enable their sharing of knowledge. Our findings are further emphasized by the employees’ views about the kind of incentives they believe would stimulate them to share knowledge (Figure 5).

Incentives for Knowledge Sharing

The results in Figure 5 indicate that respondents regard non-financial incentives as more useful. Their supplementary comments suggested that the incentives should become embedded in the company culture to avoid knowledge sharing becoming a “mercenary action for money.” Comparing these results with the related comments from our interviews with senior managers in


Employee incentives for sharing knowledge

Culture change for KM

Inter-country sharing

Top management commitment

Urgency of moving to knowledgeintensive services Importance of Knowledge Management for the firm

Clarity of strategy

Business model

There should be a view that we are a global company, and that information should be available globally, but not yet. It is not a priority for many managers or employees. We are still focused on assets, processes, and economics.

We don’t share well yet, but we must. We are not yet where we need to be.

We could mandate knowledge sharing in job descriptions.

There is very little we can do to change our culture because we have over 100 cultures in the different countries.

This is not a problem. There is no blockage to sharing information.

You ask if KM will happen. You ask me to predict the weather!

Beyond endorsing the investment, I don't think we need them.

We should not only define the framework of the things to do, but also the dimensions of the culture we want to create. We need to find a mechanism to motivate people, but I don't know if they need to be financial or something else.

KM is no silver bullet. We need strategy, commitment, and direction and I don't think we have that today.

Knowledge is absolutely crucial to where we need to go, but we do not yet have a clear strategy for managing knowledge.

I don't see a fundamental shift away from what we are doing today. Doing a better job on what we offer today is central to our future strategy. I'm probably not as focused on moving to knowledge-intensive services as our Professional Services VP. While KM is important, what we really need is better internal measures and performance data — product statistics, network costs, etc. Top management recognizes the need for more complete and accurate internal data and better information systems to make the right decisions. I have no specific view about this - it is not my responsibility.

You can't draw a nice black and white line between networks and services. Wisdom is that you should choose one or the other, but I think we need to be in the middle. It is difficult to know. It is important to make a choice. If all senior executives agreed, we would not have to worry about the decision. We can still grow the scale of our current business. Eventually, economic logic will push us.

Not everybody at the top agrees with the current strategy, but we need to move to getting 40% of our revenues from services like IBM does. It is unclear where we are making the most of our margin. We have to focus more on skills and value-added service, and see network products as commodities. We have to shift right now.

We need to expand our core of network products, and we are basically happy with what we sell today.

Executive VP of Products / Marketing

Executive VP of Professional Services

Executive VP of Strategy


Table 4. Selected quotations from interviews with executive vice presidents



105

Figure 5. Which incentives would be most effective in stimulating knowledge sharing? Make it mandatory to share Holidays, meals, gift tokens A criterion for promotion Financial through bonus system Personal recognition within the organization Individual feedback that their knowledge was used 2

2.5

3

3.5

4

4.5

Mean score

Table 4, it appears that senior executives are not in close-enough touch with employees’ views and do not understand the importance of one of the key levers for effective knowledge sharing.

DISCUSSION

We set out to investigate the current status of knowledge-management capability in the focal firm. In both the knowledge-sharing culture and the information infrastructure, there were significant gaps between the effectiveness of current levels of practice and the importance assigned to these practices. These gaps represent the latent employee expectations for improvement in these key areas and are guidelines as to where management needs to focus its efforts. If the importance scores had been lower, then there would also have been a need for managers to stimulate more awareness of the need for knowledge management by stressing its business value. In the following sections, we review our findings and use illustrative quotations from the qualitative data in the survey.

Knowledge-Sharing Culture

The results in Table 1 indicated several areas where the organization needs to close the gap between current practices and employee expectations. One of the most important areas for improvement is the climate of openness and trust throughout the organization. Several respondents commented on this lack of openness and attributed it primarily to the competition and rivalry between the organization’s business units.



“Business units have been trained to be protective of their knowledge. Competitive behavior is built into the organization mainly because of the current sales incentive plan.” “Again and again business units fight over who will get a particular customer. I have lived through cases where this fight took up to 80% of the time available to answer a proposal, and then we have to finally rush an answer.” Another reason given for low levels of openness and trust was the recent merger. “Trust has partially broken down since the merger, and has since then not been fixed. What we need to achieve is to make employees feel they belong to something more than their business unit. We need to create communication channels across business units that break down the silo structure that prevents knowledge flowing efficiently across the organization. The thirst for knowledge should become more powerful than the influence of the silo guardians.” It appears that there is a significant thirst for knowledge, as evidenced by the scores for the importance of the ten cultural items, and that management needs to develop a cross-cutting communications infrastructure that enables interconnection across temporal and geographical boundaries. A second area for improvement is the ability to re-use and build upon the work of others to avoid re-inventing the wheel. In this regard, we cite two pertinent respondents’ comments below: “I know that there’s not a day or a week that passes where we are not working on a new proposal that might be relevant somewhere else in the organization. Often, what enables us to win a new proposal is not just the features and functionalities of our services, which we have in boilerplates, but mainly the knowledge of where we have done it before and the type of people we can direct to that sort of project. If we look at our re-use of knowledge globally on a scale of 1 to 10, we are probably around 2.” “We have to re-use what somebody else has learned instead of spending 100 hours doing it again. Let’s remember that part of our business is highly repetitive; Knowledge Management will tell us what we do not know that we know.” Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.


107

Central to improving knowledge re-usability is the connectivity and accessibility of information in the company’s intranet, which is currently fragmented. These results underscore the interdependence between culture and infrastructure, and we consider the latter more fully in the next section.

Information Infrastructure

The information infrastructure was also shown in Table 2 to be deficient in terms of the reliability and timeliness of information and ease of system use. The following comments give additional insights into the nature of the disparities. “We have too many information sources and a huge amount of data resulting in difficulties finding the right information. On Lotus Notes, we have 12589 databases and who knows how many on the Intranet. Probably 90% of the databases are dead.” Access to codified information was not the only problem. Respondents also commented on the difficulty of connecting with a key contact in another country. This can be a particular hindrance for sales and marketing staff who are often at customer sites. “Finding information produced in another country can be very difficult. I was recently looking for a proposal made in the UK, and it took me approximately an hour before I found the person that was able to help me. Unfortunately he was in his car and could not mail me the proposal, and there was no other way to get it.” Even fundamental mechanisms for contacting colleagues, such as a complete and up-to-date telephone directory, seem to have been neglected in the post-merger scenario. “Today, more than one year after the merger, we still haven’t managed to have a completed and updated phone book. It is left to individuals to register either in Lotus Notes and/or the intranet, but some people are neither in one or the other system (and we are just talking about contact information).”

Sources of Information and Knowledge

We then investigated the respondents’ most valued sources of information and knowledge, highlighting the relative lack of importance given to sources in



other geographical units of the organization. These findings were complemented by the results for the perceived usefulness of knowledge-sharing methods, where there was comparatively little perceived value in knowledge sources in respondents’ own departments in other countries. It may be that employees have not yet recognized or do not believe in the benefit of working with colleagues in other countries. Such reliance on immediate coworkers is not uncommon (Alavi & Leidner, 2001), but it does limit the potential for exposure to new knowledge, since individuals in the same group tend to possess similar information (Robertson, Swan, & Newell, 1996) and can be subject to groupthink (Janis, 1982). From the qualitative comments, many respondents cited reasons that were again concerned with inter-business unit rivalry, erosion of trust after the merger, and the difficulties of knowing who to contact and how to contact them. This lack of regard for organizational information and knowledge beyond respondents’ own geographical unit was underlined by the results relating to local versus global knowledge sharing (Table 3), where the largest gaps existed at the global level. Development of an effective communications infrastructure would provide a baseline for addressing these barriers, including a comprehensive telephone directory, a “Yellow Pages” catalog of experts, and, possibly, communities of practice that link experts in common fields across the business units, potentially circumventing what one respondent referred to as the “silo guardians.”

Incentives for Knowledge Sharing

It is unquestionably important to create an environment wherein employees are stimulated to share knowledge (Szulanski, 1996). Mere exhortations to share are rarely sufficient, while mandating it is unlikely to succeed (Huber, 2001). Management practitioners and some researchers often advocate the use of financial incentives as extrinsic motivators of knowledge-sharing behaviors (Ba, Stallaert, & Whinston, 2001; Koudsi, 2000), founded on the notion of rational self-interest, yet there is substantive evidence that extrinsic rewards are, at best, short-term incentives that can undermine intrinsic motivation to share knowledge (Bock et al., 2002; Moore & Birkinshaw, 1998; Osterloh & Frey, 2000). Conversely, others cite intrinsic stimuli such as recognition, personal pride, or desire to be perceived as a thought leader as the key to develop sharing behaviors (Pfeffer, 1998; Rappleye, 2000). Taken as a whole, the literature on appropriate incentives for knowledge sharing is incongruent and inconsistent, and “our ignorance in these matters is considerable” (Huber, 2001).



109

Our interviews with senior executives underpin this conclusion and highlight the lack of understanding of this complex issue in the focal firm. One of the interviewees did not recognize the need for incentives, anticipating that knowledge sharing would happen spontaneously, while another thought that mandating sharing behaviors in job descriptions would be an adequate solution. The third interviewee at least recognized the need to find appropriate motivators but admitted ignorance as to what they might be. The most logical action would be to ask employees, which in this case revealed a diverse set of responses (Figure 5). While the respondents were most positively disposed to non-financial rewards associated with self-esteem and recognition, these factors were closely followed by financial motivators such as promotion and bonus payments. These findings have two practical implications for senior managers. First, top management should explore employees’ views about the most important incentives for knowledge sharing and understand what is most likely to engender desired behaviors. Second, where employees express preferences for a mixed-economy of financial and non-financial rewards, there is clearly no straightforward solution. While this endorses the complexity and ambiguity in the literature, it poses a challenge for management that is difficult to resolve. Nonetheless, to be aware of what matters to employees is a first and vital step toward effective knowledge sharing.

Strategic Alignment

Finally, we explored the strategic direction of this telecommunications company and the perceived importance of KM to support the strategy. We discovered a lack of clear consensus among senior executives, and this is perhaps the most significant of our findings and the one with the most serious ramifications. We echo Davenport’s (1999) observation that for knowledge management to succeed, it must “affect the most important areas of the business, improve the firm’s most critical objectives, and be viewed as an integral part of strategic business objectives.” The danger for companies such as this is that when faced with survey evidence that there are significant gaps in the culture or IT infrastructure, improvement activities can be sanctioned under the umbrella of knowledge management without having clarity or consensus about the underlying purpose or desired outcomes (Abou-Zeid, 2003; Kim et al., 2003; Zack, 1999). Clear business strategies are critical to ensure that knowledge management activities support business drivers and performance objectives (Murray, 2002; Poage, 2002). One employee’s comments seem



especially apposite: “Management should be aware that we are all sitting in the same boat and that it is very exhausting to paddle while the cox is always changing direction, hoping to find the right way.”

CONCLUSION

As a contribution to research, the chapter adds to the small number of empirical case studies of knowledge-management practices. The approach used in this research provides managers with a tool to evaluate their organizations’ current knowledge-management capability, both in terms of the culture and supporting infrastructure. By measuring gaps between perceptions of current practices and their importance, managers can identify areas for improvement and decide whether to direct resources toward changing attitudes, practices, or infrastructure. Taken together, these results illustrate the challenges facing a telecommunications company operating in a highly competitive and rapidly changing environment. In such markets, there are inevitable pressures on time, such that unless the organization recognizes the need to set aside time for creative thinking and learning from failures and errors, this will not happen. Moreover, while mergers are common occurrences, senior managers need to address their potential impact on knowledge-sharing capability and ensure that, at least in the short term, the disruption of a merger does not erode personal networks of contacts or the openness of the merged organization to share with new colleagues. Our data suggests that the knowledge-sharing support platform inadequately satisfies the knowledge appetite of respondents. Harmonizing the information infrastructure of a merged organization can be a critical challenge, not only to reconcile a plethora of databases, but also to provide a comprehensive “Yellow Pages” facility to facilitate contact with key people. Our results also underscore the longer-term challenge to enhance the effectiveness of a business unit structure by ensuring that inter-unit rivalry does not inhibit global knowledge sharing. Perhaps most strikingly, the interview data revealed how important it is to achieve consensus among senior managers about strategic direction, without which knowledge management is likely to remain, at best, a series of fragmented and unrelated initiatives at local levels.



111

REFERENCES

Abell, A. & Oxbrow, N. (1997). People who make knowledge management work: CKO, CKT, or KT? In J. Liebowitz (Ed.), Knowledge management handbook. Chapter 4. Boca Raton, FL: CRC Press. Abou-Zeid, S. 2003. Developing business aligned knowledge management strategy. In E. Coakes (Ed.), Knowledge management: Current issues and challenges, (pp.156-172). Hershey, PA: IRM Press. Alavi, M. & Leidner, D. E. (2001). Review: Knowledge management and knowledge management systems: Conceptual foundations and research issues. MIS Quarterly, 25(1), 107-136. Ba, S., Stallaert, J., & Whinston, A. B. (2001). Research commentary: Introducing a third dimension in information systems design - The case for incentive alignment. Information Systems Research, 12(3), 225-239. Bock, G. W. & Kim, Y.-G. (2002). Breaking the myths of rewards: an exploratory study of attitudes about knowledge sharing. Information Resource Management Journal, 15(2), 14-21. Bukowitz, W. R. & Williams, R. L. (1999). The Knowledge management fieldbook. London: Pearson Education Ltd. Coakes, E. (2003). Preface. In E. Coakes (Ed.), Knowledge management: Current issues and challenges. Hershey, PA: IRM Press. Collison, C. & Parcell, G. (2001). Learning to fly: Practical lessons from one of the world’s leading knowledge companies. Albany, OR: Capstone Publishing Ltd. Davenport, T. (1999). Knowledge management and the broader firm: Strategy, advantage and performance. In J. Liebowitz (Ed.), Knowledge management handbook. (2.1-2.11). Washington, DC: CRC Press. Davenport, T. H., DeLong, D. W., & Beers, M. C. 1998. Successful knowledge management projects. Sloan Management Review, 39(2), 43-57. Davis, S., McAdams, A., Dixon, N., Orlikowski, W., & Leonard, D. (1998). Twenty questions on knowledge in the organization. London: Ernst & Young Center for Business Innovation. Ghoshal, S. & Naphiet, J. (1998). Social capital, intellectual capital and the organizational advantage. Academy of Management Review, 23(2), 242-266. Gold, A. H., Malhotra, A., & Segars, A. H. (2001). Knowledge management: An organizational capabilities perspective. Journal of Management Information Systems, 18(1), 185-214.



Grant, R. M. (1996). Toward a knowledge-based theory of the firm. Strategic Management Journal, 17(Winter Special Issue), 109-122. Hansen, M.T., Nohria, N., & Tierney, T. (1999). What’s your strategy for managing knowledge? Harvard Business Review, 77(2), 106-116. Holsapple, C. W. & Joshi, K. D. (2000). An investigation of factors that influence the management of knowledge in organizations. The Journal of Strategic Information Systems, 9(2-3), 235-261. Holt, D. T., Bartczak, S. E., Clark, S. W., & Trent, M. R. (2004). The development of an instrument to measure readiness for knowledge management. Paper presented at the 37th Hawaii International Conference on System Sciences, January 5-8, Hilton Waikoloa Village, Island of Hawaii (Big Island), IEEE Computer Society. Huber, G. P. (2001). Transfer of knowledge in knowledge management systems: Unexplored issues and suggested studies. European Journal of Information Systems, 10, 72-79. Janis, I. L. (1982). Psychological studies of policy decisions and fiascoes (2nd Ed.). Boston, MA: Houghton-Mifflin. Kim, Y.-G., Yu, S.-H., & Lee, J.-H. (2003). Knowledge strategy planning: Methodology and case. Expert Systems with Applications, 24, 295307. Kluge, J., Stein, W., & Licht, T. (2001). Knowledge unplugged: The McKinsey & Company survey on Knowledge Management. New York: Palgrave. Koudsi, S. (2000). Actually, it is like brain surgery, Fortune, March 20, 233234. KPMG (1999). Knowledge management research report, 20. London: KPMG Consulting. Lesser, E. L. (2001). Communities of practice and organizational performance. IBM Systems Journal, 40(4), 831-841. Malhotra, Y. (2000). Role of organizational controls in KM: Is KM really an oxymoron? In Y. Malhotra (Ed.), Knowledge management and virtual organizations. (pp. 245-257). Hershey, PA: IRM Press. Massey, A. P., Montoya-Weiss, M. M., & O’Driscoll, T. M. (2002). Knowledge management in pursuit of performance insights from Nortel. MIS Quarterly, 26(3), 269-289. Moore, K. & Birkinshaw, J. (1998). Managing knowledge in global service organizations: Centers of excellence. Academy of Management Executive, 12, 81-92.



113

Murray, P. (2002). Knowledge management as a sustained competitive advantage. Ivey Business Journal (March-April), 71-76. O’Dell, C. A. & Grayson, C. J. 1998. If only we knew what we know: The transfer of internal knowledge and best practice: Free Press. Osterloh, M. & Frey, B. S. (2000). Motivation, knowledge transfer and organizational forms. Organization Science, 11, 538-550. Pfeffer, J. (1998). The human equation: Building profits by putting people first. Boston, MA: Harvard Business School Press. Poage, J. L. (2002). Designing performance measures for knowledge organizations. Ivey Business Journal (March-April), 8-10. Pollard, D. (2000). Becoming knowledge powered: Planning the transformation. In Y. Malhotra (Ed.), Knowledge management and virtual organizations. (pp.196-213). Hershey, PA: IRM Press. Prahalad, C. K. & Hamel, G. (1990). The core competence of the corporation. Harvard Business Review, 68(3), 79-91. Probst, G., Raub, S., & Romhardt, K. (2000). Managing knowledge: Building blocks for success. London: John Wiley & Sons. Rappleye, W. C. (2000). Knowledge management: A force whose time has come. Across the Board: The Conference Board Magazine, January, 59-66. Robertson, M., Swan, J., & Newell, S. (1996). The role of networks in the diffusion of technological innovation. Journal of Management Studies, 33, 335-361. Stewart, T. A. (2001). The wealth of knowledge: Intellectual capital and the twenty-first century organization. New York: Doubleday. Szulanski, G. (1996). Exploring internal stickiness: Impediments to the transfer of best practice within the firm. Strategic Management Journal, 17(Winter Special Issue), 27-43. Thomas, J. C., Kellog, W. A., & Erickson, T. (2001). The knowledge management puzzle: Human factors in knowledge management. IBM Systems Journal, 40(4), 863-884. Tissen, R., Andriessen, D., & Deprez, F. L. (2000). The knowledge dividend: Creating high-performance companies through value-based knowledge management. Harlow, UK: Financial Times Prentice-Hall. Tiwana, A. (2002). Knowledge management toolkit: Practical techniques for building a knowledge management system (2nd Ed.). Saddle River, NJ: Prentice-Hall PTR. Treacy, M. & Wiersema, F. D. (1996). The discipline of market leaders. Reading, MA: Addison-Wesley. Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.


Walczak, S. & Zwart, D. (2003). Organizational knowledge management: Enabling a knowledge culture. In Proceedings of the Information Resources Management Association International Conference, Philadelphia, 18-21 May, pp. 670-673. Wenger, E. C. & Snyder, W. M. (2000). Communities of practice: The organisational frontier. Harvard Business Review, 78(1), 139-145. Zack, M. H. (1999). Developing a knowledge strategy. California Management Review, 41(3), 125-145.


Knowledge Management of E-Business Initiatives within Two Global Organizations

115

Chapter VI

Knowledge Management of E-Business Initiatives within Two Global Organizations: A Comparative Case Study Analysis Mahesh S. Raisinghani Texas Woman’s University, USA Pegi Proffitt University of Dallas, USA Jonathan Barham University of Dallas, USA Michael McCurdy University of Dallas, USA

ABSTRACT

The concept of Knowledge Management concerns the creation of structures that combine the most advanced elements of technological resources and the indispensable input of human response and decision making. This chapter addresses a very interesting topic—Knowledge Management Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

116 Raisinghani, Proffitt, Barham & McCurdy

(KM) and e-business initiatives within global organizations. It compares and contrasts the experiences of two global corporations as they have conceived and implemented KM initiatives. After in-depth secondary research on the subject, both companies developed their own KM in ebusiness strategy. The two case studies discussed in this chapter highlight Business-to-Business (B2B), Business-to-Consumer (B2C), and Businessto-Employee (B2E) initiatives at these two global organizations. This provides concepts and viewpoints related to the drivers of KM, the hurdles to KM in an organization, the elements of KM philosophy and process, how KM can come to be understood as a critical part of a company’s competitive strategy, and how to deploy a sustainable KM system that suits the business needs of an organization. We now know that the source of wealth is something specifically human: knowledge. If we apply knowledge to tasks we already know how to do, we call it productivity. If we apply knowledge to tasks that are new and different, we call it innovation. Only knowledge allows us to achieve those two goals. —Peter F. Drucker (2002)

INTRODUCTION

Many organizations approach Knowledge Management (KM) as a set of principles, practices, and technologies focused on innovation and optimization of their core internal Business-to-Employee (B2E) and Business-toBusiness (B2B) processes. Most KM efforts are being delivered as enterprise portals, combining unstructured and structured information aggregation and contextual, personalized delivery within standards-based frameworks. Knowledge or know-how is contextual and ranges in form from codified (explicit knowledge) to experiential (tacit knowledge). Examples of codified knowledge are information in databases, data warehouses/marts, previous work products, documents, and software code. Examples of experiential knowledge include techniques and insights gained from personal experiences and interactions. Although the discipline of Knowledge Management is only about a decade old, the definitions of Knowledge Management range from narrow, utilitarian views to much more conceptual and broad perceptions. One definition of KM is that it is “about connecting people to people and people to information to create competitive advantage” (Hoyt, 2001). Another definition of KM states that it caters to the critical issues of organizational adoption, Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.


117

survival, and competence in the face of increasingly discontinuous environmental change. Essentially it embodies an organizational process that seeks synergistic combination of data- and information-processing capacity of information technologies and the creative and innovative capacity of human beings (Malhotra, 1999; 2000a; 2000b; 2001). This definition not only recognizes the discontinuous environment, but also the importance of both techno-centric and socio-centric approaches. The traditional view of KM primarily relies on the prepackaged or “taken for granted” interpretation of the knowledge. Such knowledge is generally static and does not encourage the generation of multiple and contradictory viewpoints in a highly dynamic and ever-changing environment. Definitional elements include the distinction between information and knowledge and the procedural aspects of this resource. Understanding the difference between information and knowledge and how to transform one to the other answers the question of what a knowledge base can be. A complete definition, such as the one by Beckman (1999) that describes Knowledge Management as “the formalization of and access to experience, knowledge, and expertise that create new capabilities, enable superior performance, encourage innovation, and enhance customer value,” also includes the connection between the system and the users, or just how the system is used in a given environment. An organization’s intellectual capital, as some authors refer to it, is the complex and ever-changing mix of information resources and the workers themselves. “To conceive of knowledge as a collection of information seems to rob the concept of all of its life…Knowledge resides in the user and not in the collection. It is how the user reacts to a collection of information that matters” (Churchman, 1971). “The business problem that Knowledge Management is designed to solve is that knowledge acquired through experience doesn’t get reused because it isn’t shared in a formal way. Whether it’s how to avoid remaking mistakes, to assure the reuse of proven best practices, or simply to capture what employees have learned about suppliers, customers, or competitors, Knowledge Management is the concept under which information is turned into actionable knowledge and made available effortlessly in a usable form to the people who can apply it” (Angus, Patel, & Harty, 1998).



Unfortunately, there is no universal definition of KM, just as there is no agreement as to what constitutes knowledge in the first place. For this reason, it’s best to think of KM in the broadest context. Succinctly put, KM is the process through which organizations generate value from their intellectual and knowledge-based assets. Most often, generating value from such assets involves sharing them among employees, departments, and even with other companies in an effort to devise best practices (Santosus & Surmacz, 2003). As time progresses, organizations will begin defining KM on their terms, including appropriate management incentives to support KM initiatives within each of the organizations. While management and knowledge workers are grasping to understand Knowledge Management, it seems so obvious to start with the customer. First and foremost, it is pertinent to anchor the initiatives to a solid foundation, which, in all cases, should be customer needs. Regardless of the potential payoffs— top line or bottom line, time savings, or relationship improvement—the underlying value proposition should be firmly grounded in the customer-centric focus. An effective KM program should help a company foster innovation by encouraging the free flow of ideas, improve customer service by streamlining response time, boost revenues by getting products and services to market faster, enhance employee retention rates by recognizing the value of employees’ knowledge and rewarding them for it, streamline operations, and reduce costs by eliminating redundant processes (Amidon & MacNamara, 2000; Barua et al., 2001; Boeri & Hensel, 2001; Harris & Jacobs, 2000). Although one may acknowledge the benefits of managing intellectual capital as part of the most valuable corporate asset in e-business, the actual implementation of such a practice is often overwhelming. To understand how this affects a company’s strategy, we looked at two large, global organizations. The chapter derives data from the interviews conducted by the authors with employees and managers of two organizations practicing KM, as well as from secondary sources. The first company is a global information technology (IT) company that is a provider of technology solutions for the travel industry and the other a global telecommunications company. Once the top management team members of the two companies had decided that their organization could benefit from the management of intellectual capital, the next question was, “How do they actually do it?” This chapter explains how two global companies addressed their internal KM initiatives within their e-business organizations.



119

BACKGROUND

KM starts with electronic repositories for knowledge, but that is the easy part. The greater challenge comes in building a knowledge-oriented culture and changing the work habits and attitudes of employees who often see knowledge as status rather than something to be shared. The interviews and online surveys of employees conducted by the authors at these two global firms found that several respondents did not know their companies had KM initiatives, while other respondents in the same work groups were keenly aware of these initiatives. KM is a way of thinking. It is not necessarily just about having electronic files that can be accessed by a given group. KM provides a methodology for creating processes within the organization to promote knowledge creation and sharing. It is for this very reason that processes— rather than technology— drive KM (Orr & Higgins, 2000). The ability of firms to marshal and deploy expertise is one of the few sources of sustainable competitive advantage. Intangible resources that are the source of such firm capabilities are embedded in the knowledge of their employees, in the design of organizational structures, in the operational processes, and in the complex synergistic interactions of these factors. As a result, there is increasing acknowledgement in both the popular business press and in the scholarly literature of the importance of KM in organizations. Thomas W. Brailsford, manager of knowledge leadership for Hallmark Cards, claims that “Knowledge Management is an oxymoron; knowledge is inseparable from people and their work.” KM focuses on understanding how knowledge is acquired, created, stored, and utilized within an organization. Organizational KM processes that are grounded in the sociology of knowledge and based on the view of organizations as social collectives and “knowledge systems” are as follows: (1) creation, (2) storage/retrieval, (3) transfer, and (4) application (Alavi & Leidner, 2001; Nissen, Kamel, & Kishore, 2000). Learning occurs when individuals create new knowledge by combining explicit knowledge accessed from KM systems with their prior knowledge, normally in tacit form. These four processes enable end-users to generate and share knowledge while interacting with their KM system. According to Dan Holtshouse, director of business strategy knowledge initiatives at Xerox, there are ten domains of knowledge that give structure to the activities around which KM plans should be built (www.xerox.com; also, see Figure 1a). Companies that have mastered these domains are promoting knowledge sharing and best practices, making that sharing an enterprise-wide



responsibility, and capturing and re-using past experiences. They are also embedding knowledge in their products, services, and processes. The World Bank is a case in point. Instead of focusing on lending, the World Bank wants to be thought of as a place where you can get expertise on how to use money. In all the countries in which it has offices, the World Bank wants to capture the best practices that have been developed and make them available worldwide. It is putting in the infrastructure and bringing together the communities so that expertise can be made available on its Web site. KM leaders are now building and mining customer-knowledge bases, mapping the knowledge of experts, and mixing explicit and tacit knowledge to achieve innovation. Finally, they are trying to manage their intellectual assets and—most difficult of all—are laboring to measure the value of knowledge in all its forms.

TYPES OF KNOWLEDGE INITIATIVES

The purpose of this exploratory research is to determine if there is a correlation between KM of e-business initiatives within two organizations. To add clarity and focus to the research question, a case study analysis of two global corporations was chosen as the primary research methodology. Although the implementation of KM in general is context-dependent, we were interested in exploring the common threads (if any) between these two global organizations from an ontological perspective. An ontology (Jurisica, Mylopoulos, & Yu, 2004) enumerates and gives semantic descriptions of concepts, defining domain-relevant attributes and various relationships among them. For example, an ontology describing wines would include concepts like vintages, wine regions, wineries, and grape varieties. It will also include relations such as produced by, made from, color, year, and body of wine. Similarly, the ontology of the two organizations in this study is explored. A qualitative research methodology of a case study was employed to take a closer look at KM of e-business initiatives in two global organizations. A case study was considered most appropriate since it allows for the adoption of multiple case, data-collection methods (Yin, 1984), which was thought to be important in order to develop the rich case description needed to build theoretical understanding. Methods of data collection for this case study included on-site observation and documentation and semi-structured face-toface interviews. Stake (1995) suggests that adopting multiple methods is important, not only to enhance the richness of findings but also to ensure validity and consistency through the process of triangulation across the different Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.


121

Figure 1a. Top 10 domains for Knowledge Management (www.xerox.com) Instituting Responsibility for Knowledge Sharing

Sharing Knowledge and Best Practices Leveraging Intellectual Assets

Understanding and Measuring for Value of Knowledge

Capturing and Reusing Past Experiences Embedding Knowledge in Products, Services, and Processors

Top 10 Domains for Knowledge Management

Building and Mining Customer Knowledge Bases

Mapping Networks of Experts

Producing Knowledge as a Product Driving Knowledge Generation for Innovation

sources of primary and archival case material. Hence, documents (such as press releases, media articles, minutes, and reports) and intranet sites were used to further enhance the richness of the material collected. Case research has the advantage of allowing the researcher(s) to study the concepts in a realistic setting and place the research in the context of the environment in which it naturally occurs. The ability to focus on the dynamic interaction in each of the two global organizations and the ability to probe a situation in depth to study the aspects of a situation were considered important for this study. The disadvantage is that it is difficult to replicate, due to the variety of extrinsic factors that are present in any real setting. While there were no prior hypotheses at the outset of the inquiry, patterns emerged from the data that suggested the key issues and theoretical linkages. Since the two organizations and the subjects interviewed for this study wished to remain anonymous, interviews were not tape-recorded. The authors also felt that recording the interviews would be impractical as it may lead to more inhibited, “politically correct” responses by the subjects. To validate the data, each author monitored all conversations designated as research, and notes were subsequently compared. The 25 subjects in each organization were selected based upon the authors’ knowledge and the recommendation of the senior management at each of the two companies who identified the employees, managers, and knowledge workers associated with various KM initiatives. The importance of these two case studies in terms of their relationship with one Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.


another is that they are both large, global organizations that have a need for KM of e-business initiatives. Next, we present the two case studies and use a conceptual framework similar to Galliers and Newell (2001) to guide the inquiry and cross-case analysis.

CASE 1: A GLOBAL IT COMPANY

For decades, the global IT company has been developing innovations and transforming the business of travel. From its original system, to advanced airline yield management systems, to leading travel Web sites today, this firm’s technology has traveled through time, around the world, and touched all points of the travel industry. The IT company is a provider of electronic distribution services for the travel industry around the globe as part of KM technologies. The IT company supplies information and systems support to travel agencies through its global data center. It also develops software tools for the travel industry. This company enables airline, hotel, rental car, and cruise vendors to distribute detailed information about their products to the travel agency community. In addition, the IT company now provides application programming interfaces (APIs) and development assistance to the travel industry for using the Web in new and innovative ways to contact customers. The corporation built its original systems and services on a platform of mainframe computers—first, providing access to airline reservations, and then expanding into hotel, rental cars, and cruise lines. Today, the IT company has a global presence in numerous countries assisting thousands of travel agencies. The IT company provides access to the travel industry by supporting a variety of operating systems residing on their clients’ terminals. The Microsoft Websolution platform now in use supports real-time access to data and services provided by the mainframe central reservation system. The company’s customers connect to the systems through multiple networks, using just about every standard and nonstandard operating system and network protocol. The IT company must supply its customers with a wide range of APIs and graphical user interfaces (GUIs). The company develops or works in cooperation with the customers to provide customized and extensible applications. Now, the Web, as the tool of implementation of KM in e-business, has brought a new challenge to the IT company. The travel industry needs to present more of its information on browsers, either as part of its business sites or by offering its customers access to a Web-delivered product. With the Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.


123

Figure 1b. The global IT company’s internal KM implementation lifecycle (Source: Interviews with global IT company’s management)

Model Current State

Align with Business Change

Understand Plans for Future

Perform Transition Planning

Conduct External Research

Define Future State

advancement of information flows between the IT company and its customers, the use of knowledge within the IT company has become the central point for discussion. The IT company owns internal means of basic KM principles, and how those principles impact daily operations is the focal point of the internal KM processes for the IT company (See Figure 1b).

The Need for KM at the Global IT Company

The majority of data sources within the company either replicated data or had redundant data within them. Therefore, meaningful search and retrieval could not be done, as navigating to the required data was cumbersome if not impossible. More often than not, multiple data sources were required for obtaining the desired results. This approach was difficult, time consuming, and, in some instances, technically infeasible. There was no access to accurate enterprise-wide data because the information infrastructure was fragmented throughout the organization. Every group or department had its own information, which was not shared throughout the IT company. There was no central repository for the knowledge worker to obtain and use a centralized data source of information. For example, many applications or Web sites maintained their own employee database separate from the Lightweight Directory Access Pro (LDAP) e-mail server. Employeerelated information from multiple point sources was the norm instead of the exception. Management could not get access to detailed financial information



without relying on financial analysts and multiple spreadsheets. If the data in these spreadsheets was tied to organizational data, it was usually incorrect or outdated. Under this current model of unstructured information, many employees were working on mundane data-manipulation activities that were necessary to feed information to the decision makers and frontline sales force. The IT company was not effectively leveraging its workforce or its business intelligence. This situation arose for various reasons. First of all, there was no common architecture to create common KM standards. Each implementation team had the ability to choose the platform, data definition, and access mechanisms to obtain knowledge. Simply saying “use Informix” did not constitute a uniform approach to the management of data that must roll up to a common enterprise view. There was also no common means to access the data that led into homegrown departmental data repositories. These issues fostered an environment of knowledge redundancy/duplication, created data definition issues, and led to a fractured view of business information.

Issues and Concerns Regarding KM

Based upon the interviews with senior management, knowledge workers at the IT company agreed that KM was important to their job, although less than half of those surveyed were aware of any formal KM initiative. This implies that communication of the KM initiatives at the IT company needed to be addressed. A common understanding of what KM is must exist among all employees of the IT company. Second, there must be improved processes for ensuring proper distribution and sharing of knowledge within the business units and across the organization. Knowledge workers at the IT company want to share knowledge, not just figures. They do not want to continually “reinvent the wheel”; rather, they want to learn from the successes and opportunities of others. Organizational structures and personnel can change often — KM would help shorten the learning curve — benefiting the company’s customers and its knowledge workers. There was also a reoccurring theme of redundancy and rework. There needs to be more alignment of organizational goals and awareness of progress made against these goals by an enhanced focus of job tasks, thereby increasing productivity. The use of technology was a strong indicator on how to best implement a KM initiative. The participants of the survey felt frustrated and isolated due to the lack of a formal internal KM structure.



125

The Global IT Company’s Solution to Internal KM Proposed Solution

The IT company has already identified some areas of improvement for KM and the internal architecture of the KM system as illustrated in Figure 2— although nothing formal has been initiated. The IT company needs to implement the physical architecture of the KM system illustrated in Figure 2 , for better management and control of information throughout the organization. Each segment is designed to functionally align the IT company’s internal systems strategies with its business strategies and support the prioritization and planning of the IT company’s internal KM initiative. Figure 2. Physical architecture of the KM system (Source: Interviews with global IT company’s management) BCA Productivity and Office Automation / Legal / Strategic Planning Corporate Services / Corporate Communications DDM • • • • •

CRM

Demand Forecasting Prioritization Capacity Planning Resource Management Labor Tracking

• • •

ERP

• • • • • •

Sales Force Automation Marketing & Advertising Sales Management

RCM • • •

IRP

Accounting Human Resources Finance MRP / Warehouse Inventory Management Procurement

• • • • •

Asset Mgmt. Change Mgmt. Customer Order Mgmt. Problem Mgmt. Workforce Mgmt.

Billing Billing Detail Management Collections

ESM

• • • • • •

Event Mgmt. Remote Mgmt. Network Mgmt. Security Admin. Software Dist. Cap / Perf. Mgmt.

EIM Data Warehouse / Reporting / EIS / DSS/ Document Management / Imaging



The Global IT Company’s Proposed KM Strategy

The following briefly discusses a proposed structural resolution to many of the IT Company’s internal architecture and KM problems. Next, we discuss each of these segments of the IT Company’s proposed KM strategy. Business and Corporate Administration at the Global IT Company The BCA business segment includes the business areas that support the business operations for the IT company’s Knowledge Management. The BCA portfolios include: productivity and office automation, messaging, Web portals, corporate services, and corporate communications. The BCA’s overall objective is to lay down the foundation for creating a doorway for all the knowledge workers to get the content and data within and beyond the enterprise, that is, providing knowledge workers with a uniform starting place for finding information and completing tasks. The concepts central to this initiative are content and data aggregation, collaboration and community services, and personalization. The primary business objectives for BCA are to: • • • • •

more fully enable knowledge workers and promote productivity and growth by improving corporate communication and collaboration; provide better information for knowledge workers at all levels; increase productivity and efficiency; reduce support costs; and leverage existing IT investments.

After general evaluation of the existing and future business needs, the IT company researched the related solution requirements for Knowledge Management. It was determined that the project scope should be significantly expanded to include the following elements as well: • •

Focus on leveraging Web services: Within the company, there has been a pronounced shift toward the use of Web services to deliver dynamic service offerings personalized to the user’s business needs. Web content and document management requirements: There are numerous existing business needs for managing Web publishing activities, managing documents, and incorporating related business process workflows. All of these can best be deployed within the context of a portal solution.



127

Demand and Delivery Management at the Global IT Company The Demand and Delivery Management (DDM) focuses on the IT Company’s staffing needs. As new projects are introduced, the need for resources increases. DDM systems allow project managers to obtain the knowledge to forecast resource demands, plan capacity, prioritize, and allocate resources accordingly. The DDM portfolios identified at the organization were demand tracking and forecasting, prioritization, program/project management, resource management, time tracking, and tracking of demand for the IT company’s resources. DDM will capture the need for human resources and will distribute demand notification to appropriate portfolios for forecasting equipment, facilities, and infrastructure resources. The IT Company will rank the requests for demand based upon organizational strategy and the ability to deliver. DDM provides the ability to effectively allocate human resources to defined priorities. The DDM also provides the ability to consistently plan, manage, and report on work throughout the organization, using established methods for managing and completing work activities on time, within budget, and according to specifications. This allows the tracking of actual time to feed project management, billing, payroll, and financial reporting. By implementing DDM, the IT Company has more control over the information of resources. Customer Relationship Management at the Global IT Company The IT Company’s Customer Relationship Management (CRM) system is an enterprise-wide business strategy designed to optimize profitability, revenue, and customer satisfaction by organizing the enterprise around customer segments, fostering customer-satisfying behaviors, and linking optimized processes. CRM is enabled through a set of discrete applications and technologies that focus on automating and improving business processes in front-office areas such as marketing, sales, customer service, and support to enable one-to-one marketing. Implementing CRM for the IT Company will provide a wide range of benefits to the organization such as the ability to: •

•

Capture and effectively utilize all data resulting from customer “touch points.” Touch points include the IT Company’s Web site, help desks, field service, sales force, account executives, marketing, product installations, service centers, and so forth. Enhance productivity in front-office functions through applications such as contact management and calendar management for the sales force.



• •

Streamline front-office workflow through application integration to enhance efficiency by eliminating silos and fostering best practices. Optimize front-office resource utilization by providing business KM through applications such as customer data warehousing, data mining, and analytical tools.

Revenue Cycle Management at the Global IT Company Revenue Cycle Management (RCM) focuses on business areas within the IT Company that are closely related to creating and processing client invoices and how that knowledge is managed. Billing cycles, processes, details, and terms are all included. Accounts receivable aging, overdue analysis, and collections are also part of RCM. Invoice management, pricing, and usage management are the key RCM components in managing this knowledge. Enterprise Resource Planning at the Global IT Company The concept of Enterprise Resource Planning (ERP) for the organization encompasses the systems, information, and processes associated with a specific set of functional areas. These areas include accounting, finance, procurement, warehouse management, and human resources. Traditionally, these functional areas have their own computer systems, each of which is optimized for the particular way that the department performs its work. Today, the ERP model strives to combine these functional areas into a single KM repository. This integrated approach allows the business areas to more easily share information and seamlessly communicate with each other. The benefits of integrating ERP processes include the following: • • • • •

Eases the exchange of data among other corporate functional areas; Unites all major ERP business practices within a single family of software modules; Achieves reduction in the costs of hardware, software, and maintenance associated with multiple systems; Drives towards shared data structures versus multiple, segregated data structures; and Provides an opportunity to re-engineer business processes into a “best practices” business process that the ERP delivers.

Infrastructure Resource Planning at the Global IT Company The Infrastructure Resource Planning (IRP) includes those areas within the firm that are responsible for acquiring and managing corporate assets used to Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.


129

support business operations. The five portfolios identified for the IRP were asset management, change management, customer order management, problem management, and workforce management. Deploying a successful IRP infrastructure is a key piece for the IT company success, as it allows the organization the ability to deploy assets quickly and manage them effectively. Efficient deployment and management translates into lower costs throughout the organization. Assets managed by IRP systems include desktops, mid-range equipment, network and data center equipment, facilities infrastructure, and software. The IT Company’s IRP processes manage equipment ordering, asset installation, problem identification, problem resolution, and change implementation. This is a key fundamental part of managing the knowledge for corporate assets. Enterprise Systems Management at the Global IT Company The Enterprise Systems Management (ESM) is comprised of the business areas associated with managing a distributed computing environment. ESM systems are designed to increase system availability and performance through monitoring and managing network services, user security, job scheduling, software distribution, and software upgrades. For the corporation, the ESM portfolios that have been identified are: event management, remote management, network management, security administration, software distribution, and capacity/performance management. Enterprise Information Management at the Global IT Company The Enterprise Information Management (EIM) includes all business areas that provide data that management relies upon to make quick and accurate decisions. The portfolios in the EIM area that the IT Company needs to identify are: data warehousing, reporting, enterprise application integration, decisionsupport systems, document management, and imaging. The objective of this effort is an enterprise-wide data warehousing and reporting environment that facilitates the sharing of business information and knowledge across the IT Company (spanning all organizational, product/ service, and system/platform boundaries). EIM integrates data across applications on multiple platforms in a manner that is transparent to the end user. It also provides an end-to-end view of business information by providing common definitions of enterprise data. This also integrates into the overall internal systems architecture and support of the IT Company’s enterprise systems efforts. EIM delivers the competitive advantage by providing the right knowledge, to the right knowledge worker, in the right form, at the right time. Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.


CASE 2: EXTRANET PORTAL EXPERIENCE AT A GLOBAL TELECOMMUNICATIONS COMPANY

A global Internet and communications leader (referred to as the “Telecommunications Company” [TC] in this case to disguise its identity) has capabilities spanning optical and wireless products and services for the Internet and intranet infrastructure and e-business in 150 countries and territories. The success story of this global telecommunications company encompasses more than 100 years of technological, social, economic, and political change. From its beginnings as one of the pioneers in the creation of the worldwide telecommunications network—surely one of our greatest inventions, this company has played a key role in the remarkable history of communications technologies over the last century. Today, the Telecommunications Company (TC) is firmly positioned in the heart of the Internet revolution. The TC’s overall e-business strategy is focused in two separate areas: 1. 2.

How to do business directly with their customers both today and in the future, and How to capture information from customers, suppliers, partners, and employees for internal use by the company’s knowledge workers.

The sharing of information between the company, customers, and suppliers (see Figure 3) would facilitate taking orders, getting products and services to the customer, and receiving payments faster. But there are interim objectives as well, such as: • • •

Gathering knowledge through intelligent Web tools to anticipate what customers want and when; Accepting an order faster and actually having the inventory on hand are two different things; and Sharing information throughout the supply chain is more important than ever with the large amount of outsourcing that is taking place in the industry.

Through the Internet the customer would have one URL, a personalized portal that would verify his identity, allow him access, and provide a personalized view of his favorite sites on the TC’s extranet. A customer could configure complex switches, look up prices, place orders, view order status, Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.


131

Figure 3. E-business information sharing (Source: Interviews with global telcommunication company’s management)

Channel Partners

Customers

eBusiness Applications Work Force

Suppliers

exchange large documents, give future forecast information, and even download software capable of turning on features in an existing telecom switch. This is part of a concept referred to as Enterprise Self-Service (ESS). ESS is the accessibility of an enterprise’s applications, information, and business processes, across the Web and over wireless devices, to effectively serve its employees, partners, and customers in a personalized and collaborative way. The promise of ESS is measurable benefits. It cuts costs because it unifies Web sites, streamlines business processes, and reduces sales expenses and service costs, all while enabling an enterprise to share knowledge. The reality might be something different. Change has not always come easy. It is a substantial adjustment for the TC’s customers and employees to share information in a less formal manner. Previously, a representative for the customer would request information. The representative from the TC would gather the information and fax or mail it to the customer. In today’s world, the customer wants the information now. The change was reasonable; the TC had to find solutions. In the quest for providing and sharing knowledge with customers and employees, a growing number of unregulated intranet/extranet sites were being developed on the TC’s network. Like most large corporations, the global TC was feeling the strain of the growing number of unregulated sites managed by multiple groups within the corporation. Product groups had set up sites to features their products and programs. Customer account teams had set up Web sites to post information very specific to their accounts. Since most of the TC’s Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.


employees and the customer’s employees were knowledge workers, they needed access to this knowledge. These unsanctioned Web sites were beginning to cost the corporation millions of dollars. An actual figure is unknown, but it was becoming clear there had to be some control and consolidation of the data. The e-business operations organization was formed. This was not to police the network but to actually make it a user-friendly experience for the customer while limiting the need for multiple sites. To accomplish this consolidation, the Company decided to move toward providing personalized portals to employees and customer alike as one of its e-business KM initiatives. In addition to allowing secured exchange of information and access to other Web pages throughout the TC’s site, the portal was a widely accepted Web tool. Within a company’s network, Business-to-Employees (B2E) allows employees to have access to the greatest amount of the enterprises knowledge assets. The Business-to-Business (B2B) partners have somewhat restricted access to the information, and the end-user (B2C) has extremely limited access to information. Figure 4 shows the access levels of each of the constituents. Personalization allows each user to customize his view of the information to meet his own specific requirements. Controls are in place to limit the “areas” a user may browse, but there is some degree of flexibility in the view of the material presented. Armed with this new technology and the need to address change, the TC set out to dismantle the myriad of Web sites existing in organizational silos that focused on individual customer communities and to consolidate them into a handful of enterprise portals. These portals would be supported by a centrally managed, highly scalable environment with distributed administration and content management capabilities. E-business operations placed its focus on the customer, with plans to extend the company’s reach further than ever before by concentrating on a best-in-class, Web-enabled customer experience. “It’s all about execution and leveraging the Internet to extend our reach,” said one company VP responsible for the e-business strategy and operations. To accommodate all the major accounts and to bring costs in line, a personalization project was conceived and implemented. Each customer’s employees would be given access to a customer-specific Web site that would be personalized using off-the-shelf portal technology. Sites would be much easier to create and maintain, and a designated employee either from the company account team or the customer could grant secure access to approved personnel.



133

Figure 4. Information access per e-business model (Source: Interviews with global telecommunication company’s management)

Confidentiality

Finance Systems Policies & Procedures Product / Service Information

B2C

General Information

B2B

B2E

Quality of Content & Applications

It is the claim of the portal industry that portals can extend an enterprise’s information, resources, and business processes to employees, partners, suppliers, and customers in a unified and collaborative manner and reduce operational costs by 25% over a one-year period. The primary cost savings is the reduction of servers on a company’s network. If true, the benefits of implementing the portal strategy clearly outweighed the cost of implementation.

The Results of the Portal Implementation

The portals were implemented, and information was transferred from existing account team Websites to these new communities. The implementation team was pleased with the results. But the customers had a different opinion of the new portal than the TC’s management. The customers would have liked a portal, but they would have preferred the portal to be on their Web site, not their suppliers’. Additionally, there was actually more management required than before the implementation of the project. New users had to be added to the communities one at a time instead of, as with the older systems, added in bulk. Information that was fed to the sites from a central server was not kept up-todate. As a user signed in, there might be news of an event or tradeshow that had already past. The personalized portals are still in use today because that is the only controlled extranet access the telecom company will allow, but they are not exactly a success. Many of the accounts teams have abandoned them altogether.



CROSS-CASE ANALYSIS

From a conceptual standpoint, KM is a framework within which the organization views all its processes as knowledge processes. In this view, all business processes involve creation, dissemination, renewal, and application of knowledge toward organizational sustenance and survival. KM was found to be necessary for both the organizations in this study because what worked yesterday may or may not work tomorrow with respect to the assumptions about the optimal organization structure, the control and coordination systems, the motivation and incentive schemes, and so forth. To remain aligned with the dynamically changing needs of the business environment, both these organizations felt the need to continuously assess their internal theories of business for ongoing effectiveness and ensure that today’s “core competencies” do not become the “core rigidities” of tomorrow. These two case studies also found that KM shifts the organization to an ongoing organic mode of functioning. KM facilitated continuous and ongoing processes of learning and unlearning, thus minimizing the need for imposing topdown “radical change.” Furthermore, “fundamental rethinking” does not materialize in the form of top-down reshuffling of organizational processes, people, and structures. It is ingrained in the day-to-day operations of the business at the grassroots level and driven by the people who interact with the external environment on the frontlines of the business. These are the people in both these global organizations who are directly in touch with the dynamically changing reality of the business environment. Today’s business world does not put a premium on playing by predefined rules but, rather, on understanding and adapting as the rules of the game—and the game itself—keep changing (Stewart et al., 2000; Usoro, 2001). Examples of such changing business rules, conventions, and assumptions are suggested by the emergence of virtual corporations and business ecosystems. There are some generic KM strategies that were common between these two global organizations. The first is that these two organizations choose to use knowledge to support innovation. The main strategic thrust of the two organizations we studied is “What don’t we know that we should know or need to know?” Only after they analyze these knowledge needs can they take action, whether it is through internal development or acquisition (for example, IBM buying Lotus to learn more about groupware). The second strategy uses knowledge for replication. So, for example, corporate headquarters of Intel or McDonalds will come up with the design for



135

the best microchip factory or fast-food restaurant, create a blueprint, and replicate this design point-by-point worldwide. The third strategy we found in these two organizations is the knowledge diffusion and absorption model. This happens when company executives start thinking, “Part of our company knows how to do X very well, and we wish the rest of the company knew how to do it as well.” But how do you get the message out? This knowledge strategy was not evident in either organization since it usually involves transferring a group of employees so that they can show by example the changes that need to be made. Lastly, there is the idea of commercializing knowledge. This is a very viable strategy for both the organizations in our two case studies. Although the IT company has made more progress in implementing this strategy than the TC, the full potential of this strategy has not been realized by either organization. Each organization needs to take a closer look at in-house, promising ideas that can be leveraged but have not sold for whatever reason, and evaluate whether changing technology and/or customer needs have now made this idea marketable.

IMPLICATIONS FOR MANAGEMENT

The concept of leveraging a company’s intellectual capital is being approached with the development of KM practices. After interviewing vice presidents, managers, and knowledge workers, and reviewing articles, business journals, and various trade journals, a common theme permeated our findings. Both primary and secondary research validated that employees at both these global organizations, as well as the general research community, thought they knew what KM was; however, when comparing the information, there was little consensus. This lack of consensus was a common theme, since most knowledge workers do not agree on what constitutes KM. If the business world and academia cannot agree on a common definition of KM, how can knowledge workers expect to understand management’s KM initiatives? The rationale for KM and the practicalities of its implementation were often discussed together by the employees in these two organizations. Some companies automate KM by using a codification strategy that reuses codified knowledge to provide high-quality, reliable, and fast information-systems implementation (e.g., Anderson Consulting and Ernst & Young); others employ a personalization strategy to provide creative, analytically rigorous advice on high-level strategic problems by relying on their people to share knowledge through more traditional means (e.g., McKinsey & Company and Bain & Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.


Company) (Hansen et al, 1999). Productive utilization is the reason for the existence of any technology, so providing a rationale for KM without the capability of implementation is not convincing to the audience of these sources. A commonly expressed view is that the need for KM is technology driven. The vast amount of information produced and distributed so effectively by technology must be received, organized, filtered, re-packaged, distributed, and recycled. Individuals and organizations are motivated by either the desire to take advantage of greater resources or the fear of significant loss and waste from not being able to efficiently use available resources. Technological solutions to these needs are in the beginning stages, and the applicable parameters impacting those solutions are still being discovered. Of more interest, as uncovered by these two case studies, are the human considerations for implementation. The key considerations for managers are motivating employees to share knowledge, measuring knowledge that is captured, providing incentives to share knowledge (perhaps by storytelling to ignite action [Denning, 2000]), and addressing the implications of employees leaving the company/retiring (i.e., taking knowledge with them). From a holistic, systemic perspective, knowledge is not simply a “tool” or “resource” so much as a social construct. It is a reciprocal, interdependent process of learning arising from knowledge transfer, information flow, and communication—a socio-technical perspective that amalgamates the “dualism” of people and technology.

IMPLICATIONS FOR RESEARCHERS

After reading numerous documents regarding KM in various organizations, an unmistakable definition of KM has still not emerged. A clear understanding should have defined it by now and become part of common vernacular. In contrast, Re-engineering, the buzzword of the 1990s, was clearly defined as “the radical redesign of a company’s business processes ... in order to meet the demands of a modern economy” (Hammer, 1995). In order to have consistent meaning to different individuals in different enterprises, a definition of KM will have to emerge. The authors argue that the term KM is contextual. Some key questions for future research are as follows: Is KM the management of the intellectual property each employee possesses? Should employees be required to share this knowledge? Is KM the information covertly gathered from customers as they travel through your site or call into your call center? Is KM all the data captured in a data warehouse/CRM tool Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.


137

or is it the multitude of structured and unstructured server farms within the enterprise? Is it simply knowledge when it’s not shared and KM when it’s shared? Or, is it only considered KM at the time the information is put to use, whether shared or not? As computer-based systems evolve from isolated functional support systems to interactive knowledge-support systems, more sophisticated technology will be used for automating and manipulating information effectively, to add value to human endeavors. This combined with an explicit recognition of tacit knowledge and related human aspects, such as ideals, values, or emotions, is necessary for developing a richer conceptualization of KM.

FUTURE TRENDS

One of the key questions based on our two case studies is, “What knowledge is important to the employees, senior management and customers?” In both companies, internal attitudes toward KM seemed to take second place behind operational efficiencies and customer interaction. As time goes on, it is clear that information and knowledge are the forces within the business units to automate their operations. At the information level, data integration between old systems and new systems, old process and new processes, will enable more Web operations. Figure 5 illustrates the difficulties encountered in implementing KM by organizations (Davis, 1999). Many firms that participate in KM have difficulty trying to quantify or justify its costs and savings into present-day dollars. Management feels that the KM initiatives help the company share resources, but at what cost? Companies think that KM helps their operations, but our investigation showed that neither company has measured the effectiveness of its KM initiatives. The primary reason is that KM is difficult to measure. Without an industry-by-industry standard, an organization may have difficulty proving its success in implementing KM initiatives. KM means different things to different people; therefore, knowledge workers have difficulty in understanding their firms’ KM initiatives. Knowledge workers from both the Global IT Services Company and the Global Telecommunications Company were questioned about their firm’s knowledge initiatives with contrasting results. Without a general consensus on its definition, Knowledge Management will continue to be questionable. If this continues, companies will continue to struggle with measuring the effectiveness of their Knowledge Management initiatives. Advanced knowledge analysis tools will be embedded into a range of business applications, which themselves will be Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.


Figure 5. Difficulties in implementing KM (Source: Davis, 1999)

linked through an enterprise portal to other Knowledge Management tools and resources. The distinction between Knowledge Management and business intelligence (data warehousing, Online Analytic Processing [OLAP], and data mining) will become increasingly blurred in terms of functionality offered and competing vendors, as acquisition and mergers create more companies that span both markets (Pelz-Sharpe, 2004). KM promotes development and application of tacit, explicit, and embedded intellectual capital; that is, leveraging understanding, action capabilities, and the intellectual assets to attain the enterprise’s ultimate goals, for example, to ascertain profitability, ensure long-term viability, or deliver quality services. This perspective of KM suggests a number of developments in coming years that include: 1. 2.

A developing area of increasing insight is the role that understanding—or meaning-connected knowledge—and abstract mental models play in intellectual work. Future knowledge-management practices and methods will be systematic, explicit, and relatively dependent upon advanced technology in several areas. However, overall we expect Knowledge Management to become more people-centric as the recognition spreads that it is the



3.

4. 5.

6.

139

networking of competent and collaborating people that forms the basis for the behavior and success of any organization. Management and operating practices will change to facilitate Knowledge Management in many ways. Incentives will be introduced and disincentives eliminated to promote innovation. Effective knowledge exchange, learning, and application of best knowledge practices will be the norm in all work situations. There will be efforts to embed knowledge-management perspectives and considerations into regular activities throughout the enterprise. New practices will focus on a desired combination of understanding knowledge, skills and attitudes when assembling work teams or analyzing requirements for performing work. For example, Awazu and Desouza (2004) discuss the open-source revolution in KM. Most organizations will create effective approaches to transfer personal knowledge to structural intellectual capital. Increased transfer will allow better utilization and leveraging of the intellectual capital.

CONCLUSION

This chapter explored how two global corporations, an IT service provider and a telecommunications firm, addressed and executed their own KM initiatives. These firms had different customers—one internal and the other external—but similar issues and results. Across the board, professionals, managers, researchers, and academicians have different views as to what knowledge management is. This confusion was evident within our two case studies. Management felt strongly about certain KM initiatives, while professional knowledge workers had different opinions. In addition to a clear understanding of KM, employees have to be part of developing the process that captures the knowledge and shares it with the appropriate stakeholders/ employees. It is critical that the management and employees define and buy into the process. In both of these organizations, knowledge workers told researchers that processes were not in place to capture information in a format that facilitated sharing it with others. Companies are still relying on the “tribal” knowledge of the organization; that takes people — a rare resource in many companies today (Coffman, 2003). It also takes an understanding of a company’s organization before a customer can locate the knowledge. Many workers are not even aware that they are a rare source of information. So, which is the best approach—the technology to search for the right answer or relying on the right people? Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.


Larry Prusak, executive director of IBM’s Institute for Knowledge Management, cites Nynex, the telecom company that has since merged with Bell Atlantic to form Verizon. The company, says Prusak, wasted tens of millions of dollars trying to build a system that would store the expert knowledge of its most valuable employees (Berkman, 2001). The trouble was that the systems couldn’t reproduce the problem-solving processes of its experts. “[Nynex] didn’t think through what an expert knows and why they’re experts in the first place,” states Prusak. The key lessons learned from these two case studies (that were also common threads between the two organizations studied) are to focus on business results; adopt a common KM model that is well understood across the global organization; focus on process, people, and technology; deliver value at regular intervals; and move fast. Moreover, strong leadership is paramount to the success of KM of e-business initiatives and e-business system implementation. The concept of KM suggests the creation of structures that combine the most advanced elements of technological resources and the indispensable input of human response and decision-making. The authors conclude KM is about how an organization can capture a body of tacit and explicit knowledge to be more efficient and effective in its daily processes. In many companies, these initiatives are formal technological solutions, and in other companies, these are informal employee networks. Perhaps a hybrid solution would be the best, since search tools are unable to efficiently understand the simple nuances of why a solution would work, and employees may not be able to find every document in the company related to a particular subject. In the final analysis, KM should be well integrated within a company by inculcating this practice throughout the organization. In order to transform intellectual assets into business value, organizations need strong collaboration with their internal and external communities. They must develop a supportive atmosphere of openness and trust in order to effectively leverage their workers’ knowledge for competitive advantage and develop business processes that can take advantage of the IT architecture. Future work should focus on building a cumulative tradition in KM theory and practice.

REFERENCES

Alavi, M. & Leidner, D. E. (2001). Review: Knowledge management and knowledge management systems: Conceptual foundations and research issues. MIS Quarterly, 12(1), 1-10.



141

Amidon, D, M. & MacNamara, D. (2000). The seven Cs of knowledge leadership: Handbook of business strategy. Wilmington, MA: Entovation International Ltd. Angus, J., Patel, J., & Harty, J.(1998). Knowledge management: Great concept…but what is it,” Information Week, March 16. Retrieved September 12, 2003 from http://www.informationweek.com/673/ 73olkno.htm Awazu, Y. & Desouza, K.C. (2004). Open knowledge management: Lessons from the open source revolution. Journal of the American Society for Information Science and Technology, 55(11), 1016-1020. Barua, A., Konana, P., Whinston, A., & Yin, F (2001). Managing e-business transformation: Opportunities and value assessment. Retrieved September 28, 2003 from http://cism.bus.utexas.edu/main4.html Beckman, T. J. (1999). The current state of knowledge management. In J. Liebowitz (Ed.), Knowledge Management Handbook. (pp. 1-1–1-21). New York: CRC Press LLC. Berkman, E. (2001). When bad things happen to good ideas. Retrieved August 16, 2004 from http://www.darwinmag.com/read/040101/ badthings.html Boeri, R.J. & Hensel, M.. (2001). Knowledge management and e-commerce: No longer the odd couple. Information Insider, February 2. Retrieved September 10, 2003 from http://www.emedialive.com/news/2001/01/ news0101-17.html Churchman, C.W. (1971). The design of inquiring systems: Basic concepts of systems and organizations. New York: Basic Books. Coffman, T. (2003). Personal interview with Tammy Coffman, Customer Facing Manager, Nortel Networks Global Operations. Davis, B. (1999). Knowledge management: Get smart. InformationWeek.com, April 5. Retrieved August 28, 2003 from http://www.informationweek. com/728/km.htm Denning, S. (2000). The springboard: How storytelling ignites action in knowledge-era organizations. Retrieved August 28, 2003 from http:// www.stevedenning.com/what_knowledge.html Drucker, P.F. (2002). Retrieved from http://www.ppkm.net/kl2002_intro. html Galliers, R.D. & Newell, S. (2001). Electronic commerce and strategic change within organizations: Lessons from two cases. Journal of Global Information Management, 9(3), July-September, 15-22.



Hammer, M. (1995). The reengineering revolution. New York: Harper Collins Publishers. Retrieved September 17, 2003, from http:// eaglestalent.com/talent2.asp?ID=82 Hansen, M.T., Nohria, N., & Tierney, T. (1999). What’s your strategy for managing knowledge? Harvard Business Review, 7(2), March-April, 106-116. Harris, J. & Jacobs, J. (2000). Knowledge management vs. information management. Gartner Group Research Commentary, September. Stamford, CA: Gartner, Inc. Hoyt, B.(2001). Knowledge Management News, a service of Hoyt consulting. Retrieved August 31, 2003 from http://www.kmnews.com/Editorial/km.htm Jurisica, I., Mylopoulos, J., & Yu, E. (2004). Ontologies for knowledge management: An information systems perspective. Jul, 6(4), 380-392. Malhotra, Y. (1999). What is really knowledge management? Inc. Technology, 3, September 20. Retrieved September 27, 2003 from http:// www.brint.com/advisor/a092099.htm Malhotra, Y. (2000a). KM and new organization forms: A framework for business model innovation. Information Resources Management Journal, 13(1), January-March, 5-14. Malhotra, Y. (2000b). Knowledge management for e-business performance: Advancing information strategy to “Internet time.” Information Strategy, The Executive’s Journal, 16(4), 5-16. Malhotra, Y. (2001). It’s time to cultivate growth: You can. March. Retrieved September 29, 2003 from http://www.youcan.bt.com/youcan/flash/ lw/mar2001/cultivate_growth.html Nissen, M., Kamel, M., & Kishore, S. (2000). Integrated analysis and design of knowledge systems and processes. Information Resources Management Journal, 13(1), January-March, 24-43. Orr, K. & Higgins, D. (2000). Knowledge exchange: Real-time collaboration in the 21st century. Cutter Consortium, March 28. Retrieved August 28, 2003 from http://cutter.com/consortium/research/2000/ crb000328.html Pelz_Sharpe, A. (2004). KM, IT and the future. April, 13(4)1-2. Santosus, M. & Surmacz, J. (2003). The ABCs of knowledge management/ KM Research Center. Retrieved December 31, 2003 from http:// www.cio.com/research/knowledge/edit/kmabcs.html Stake, R (1995). The art of case study research. London: Sage.



143

Stewart, K. A., Baskerville, R., Storey, V., Senn, J., Raven, A., & Long, C. (2000). Confronting the assumptions underlying the management of knowledge: An agenda for understanding and investigating knowledge management, 31(4), 41-53. Usoro, A. (2001). Can information technology help managers globally? Journal of Global Information Management, 9(1), January-March, 17-24. Yin, R. K. (1984). Case study research: Design and methods. London: Sage.


144 Kalling

Chapter VII

ERP Systems and Competitive Advantage:

A Case Study of Key Success Factors and Strategic Processes Thomas Kalling Lund University, Sweden

ABSTRACT

This chapter describes the processes that firms and managers go through in their quests to create and sustain competitive advantages based on socalled Enterprise Resource Planning (ERP) systems. It is based on resourcebased theory, combined with the strategy process perspective and with existing literature on information technology and ERP. The theoretic framework is extended through a detailed case study of a specific in-house ERP venture in a European multinational manufacturing company in the paper packaging industry. The emergent resource management framework describes cognitive and cultural factors that support or hamper progress, including uncertainty, knowledge gaps, knowledge transfer issue, and the problems of ensuring that ERP usage is converted into competitive advantage. The framework also addresses managerial implications and potential solutions to such obstacles throughout the process.


ERP Systems and Competitive Advantage 145

INTRODUCTION

The demand for so-called Enterprise Resource Planning (ERP) systems1 has soared. Triggered by Y2K-compliance problems and the popularity of systems such as SAP’s R/3, corporate investments in ERP have been significant over the last years. Research into ERP has focused on how these systems add value (Davenport, 1998; Markus & Tanis, 1999; Robey, Ross, & Boudreau, 2002; Ross & Vitale, 2000; Somers & Nelson, 2001), implementation issues (Markus, Axline, Petrie, & Tanis, 2000; Markus, Petrie, & Axline, 2000; Parr, Shanks, & Darke, 1999; Robey et al., 2002; Scott & Vessey, 2001), and how they should be combined with other information technology (IT) resources (Hayman, 2000; Hong & Kim, 2002). Being a relatively novel phenomenon, there are aspects of ERP that have not been covered well in research—yet. Two such interrelated issues are (1) the relation between ERP and competitive advantage, and (2) the managerial and organisational processes that lead to ERP-based competitive advantage. Relating to first issue, it is still questionable whether investments in ERP systems have produced competitive advantages for investing companies, a question that is valid for IT in general as well. There is a shortage of empirical research on the specific matter, and the few references that do exist treat the issue of gaining competitive advantage in a relatively simplistic fashion (Kirchmer, 1998) or simply overlook it. The so-called Resource-Based View (RBV) provides a broader perspective because it focuses the sustainability of competitive advantage (Barney, 1991; Dierickx & Cool, 1989). Within IT, this need has been addressed by Clemons and Row (1991) and Powell and DentMicallef (1997) in the application of the so-called competitive necessity concept, and also by Ciborra (1994) and Bharadwaj (2000). However, RBV too has limitations, for which it has been criticised (cf. Eisenhardt & Martin, 2000; Priem & Butler, 2001; Williamson, 1999). One such limitation is the relative focus on the strategy content (e.g., strategic resource attributes) rather than the strategy process (e.g., how resources become valuable and unique). In relation to IT, this stream of criticism corresponds to the second issue described above. Not only is there lacking insight into the attributes of ERP resources that enable competitive advantage, there is also lacking insight into the processes that lead to ERP-based competitive advantage. Within the field of IT, only Ciborra (1994) and Andreu and Ciborra (1996) have addressed the importance of combining RBV with a process perspective. There is a relative focus on IT content or conditions (Mata, Fuerst, & Barnet, 1995; Powell & Dent-Micallef, 1997). The processes by which such advantages evolve and how managers and users manage Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

146 Kalling

the IT resource to become a source of competitive advantage are still relatively obscure. In line with Robey and Boudreau (1999), it is assumed that the link between ERP and improved performance are not deterministic, but that organisational and management efforts are required. The aim of this chapter is to develop a framework that improves our understanding of the processes organisations go through as they try to gain competitive advantage based on ERP applications. This is done by addressing RBV and process theories, extended with theory on ERP. A discussion of the method applied follows. In the next section, an emergent framework is presented, based on an analysis of how the empirical findings assist in developing the theory. The concluding section discusses the validity of the emergent framework and summarises managerial implications.

THEORY ON RESOURCE MANAGEMENT PROCESSES

The core of RBV is the assumption that industries are heterogeneous and that resources are imperfectly mobile across firms within industries. This juxtaposes RBV from the Industrial Organisation perspective (Bain, 1968; Porter, 1980), which uses firm-external factors, such as the “five forces,” to explain competitive advantage. According to RBV, firms have competitive advantage when they have one or more resources that are idiosyncratically fit, valuable, leveraged, unique, and costly to copy or substitute (cf. Barney, 1986, 1991). Consequently, one preliminary assumption is that the overarching process of creating competitive advantage involves attempts to meet these resource attributes. For the sake of simplicity, the outline of the discussion about such processes can be structured in accordance with these tasks or sub-processes: Idiosyncratic fit has to do with resource identification processes. Value, in turn, refers to resource development processes, whereas resource leverage requires (internal) resource distribution. Uniqueness and costly imitation/substitution, finally, require resource protection. By this simple transformation of attributes into verbs, we have a structure for the review below, which is based on a combination of process-orientated RBV and strategy process literature and on theory on IT and ERP. Hence, the following discussion addresses how resources (e.g., IT) can be managed in different stages, according to theory.



Resource Identification

The ability to identify ex ante in which resources to invest and how much to pay is crucial in any procurement situation. It affects the price the resource obtains on the factor market and, if successful, it allows for a quicker payback, ceteris paribus (Barney, 1986; Peteraf, 1993). Literature on identification processes implies that the task is complex and related to the management of different constraints on “rationality.” Resource investment decisions are difficult because of uncertainty about technology, markets, and firm capabilities (Amit & Schoemaker, 1993). The consequence might be over-emphasis on past strategic actions and, ultimately, a lack of creativity. For competitors that approach the decision more “imaginatively,” there might be opportunities for resource investments with firstmover advantages. The decision context is often multivariate, creating problems for decision makers working under bounded rationality (March & Simon, 1958). According to Schoemaker and Amit (1994), there are two ways, ex ante, to assess how a resource will affect competitiveness: correlational and causal reasoning. Correlational reasoning means learning through empirical association between variables and relies on the notion of correlation. Causal reasoning is deductive in nature and based on theory. Correlational reasoning is difficult due to the tendency to disregard minor correlations and non-linearity if there is no guiding theory or statistical analysis at hand. Conversely, when a priori theory exists, humans tend to overestimate the relation. Thus, resource decisions can turn out as either “unrealistic” or too conventional (Schoemaker & Amit, 1994). Parallel to knowledge, decision makers have to manage social constraints, such as norms and values, and reach a workable level of consensus. They need to desire common resources, under the constraints provided by the parallel demands on knowledge. Social problems can arise when the resource decision challenges the identity of the organisation and the legitimacy of its norms and values. However, the more homogeneous the values of the group of decision makers, the more difficult it is to make radical decisions (Ginsberg, 1994). Although consensus is important, uniqueness often requires a radical approach; politically incorrect decisions may thus actually be a factor behind resource uniqueness (Oliver, 1997). In sum, identification is about managing knowledge and culture to ensure that resource ventures are related to strategy and fit with the knowledge and culture of the organisation.


148 Kalling

Resource Development

A resource is valuable if it helps the firm implement strategies that reduce costs or increase sales turnover (Barney, 1991). This implies that as the resource has been acquired and internalised, firms should develop it in order to enhance the effects it has on cost and quality features of the end product/ service. The logic is based on the assumption that resources affect processes (e.g., the value chain), which in turn affect product/service features. This is fundamentally a knowledge issue and hence related to learning (McGrath, MacMillan, & Venkataraman, 1995) about resources and their fit with operations and strategy. From a managerial perspective, this involves the allocation and balancing of slack resources to projects. Knowledge infusion, experimentation, continuous improvement, and the establishing of dynamic routines facilitate development (Lei, Hitt, & Bettis, 1996). Exploration and discovery are critical. Opportunities to learn from outsiders, such as customers or alliance partners, should be taken. Organisation, particularly the composition of project groups, needs to be dealt with. Different types of knowledge (comprehension) and the ability to work as a team (deftness) are two group characteristics that drive competence (McGrath et al., 1995). Culture and beliefs are also important. Knowledge that has proven itself successful over the years can be difficult to challenge due to unbridgeable perceptions of perfection. Stronger communication channels and internal “marketing” efforts, as well as clear structures, may help organisations overcome such obstacles (Leonard-Barton, 1992). Development of resources, initiated when the resource is internalised, is fundamentally a learning issue requiring both organisation and a coordinative management style.

Resource Protection

Two central RBV criteria for strategic resources are that they are unique and costly to imitate or substitute (Barney, 1991). Thus it is important to protect resources from being acquired or otherwise obtained by competitors. Unique historical conditions, social complexity, and causal ambiguity are factors that hinder imitation and substitution (Barney, 1991). Roughly, there are two ways to protect resources: by legal arrangements or by “isolating” the resource (Collis, 1996). However, legal protection can be costly. Property rights and patent applications require costly administration and still have limited duration; a more undisclosed organisation constrains communication, and so forth (Liebeskind, 1996). Other ways to protect resources



include isolationistic measures, for example, preservative actions such as external resource acquisition and deterrence. However, apart from isolating the resource by means of increasing social complexity and causal ambiguity, organisations can also sustain uniqueness by continuously developing the resource. Flexible, modular resources and the ability to create alternative resources may help firms to “protect by developing” (Rotem & Amit, 1997). In sum, protection is costly and about making sure to balance spending on patenting, deterrence, and so forth, with the benefits of uniqueness. Certain resources are not worth protecting.

Internal Distribution of Resources

Strategic resources need to be organised and leveraged across intraorganisational boundaries and used in as many product applications as relevant, given the costs associated with internal resource transfers (Barney, 1994; Prahalad & Hamel, 1990; Szulanski, 1996). Consequently, a central management task is the internal distribution of resources. Distribution problems are created by the propensity of knowledge to be “stuck” departmentally or individually, due to so-called “knowledge barriers.” This stickiness is caused either by the characteristics of the knowledge transferred, the source of the knowledge, the recipient, or the context in which the transfer takes place (Szulanski, 1996). Empirical evidence indicates that lack of absorptive capacity at recipient, causal ambiguity, and arduous relationships are key knowledge barriers (Szulanski, 1996). Organisational context is another potential constraint. Autonomous organisational units, such as profit centres, may find it uneconomical to cooperate and share resources corporately. As a consequence, synergies are not realised. Some of these problems can be handled by the formation of explicit rules. Another way to deal with it is to simply refrain from trying to distribute resources at all. Artefacts such as, for example, IT tend to impose their own views of the world on businesses and operations and may not suit all local units (cf. Grant, 1996). Resource distribution requires efforts both by the source and the recipient of knowledge. It also requires a facilitating management style, supporting through incentives and structure.

IT, ERP, and Strategy

There is a large body of theory on IT and strategy, but not such a large one on IT and sustained competitive advantage or the processes that lead to competitive advantage. Furthermore, the number of texts that describe proCopyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

150 Kalling

cesses that lead to sustained competitive advantage through ERP systems is yet smaller. This section discusses such theory. A fundamental assumption among “content-orientated” IT and RBV researchers is that IT only produces sustained competitive advantage when it supports (is embedded with) other valuable and unique firm resources (Clemons & Row, 1991; Mata et al., 1995; Powell & Dent-Micallef, 1997). However, others claim that a unique system (possibly created in-house), as such, can be a source of advantage (Bharadwaj, 2000; Ciborra, 1994). Among the relatively few texts on the longitudinal organisational processes that lead to IT-based sustainable competitive advantages, it is assumed that such processes are culturally, politically, and cognitively constrained, and rarely the result of grand plans set by apex decision makers (Ciborra, 1994). Instead, IT processes are bottom-up in nature, incremental rather than radical, local rather than central, ad hoc rather than planned, and so forth. Bricolage, meaning local tinkering and trial-and-error learning, is often the antecedent to larger, leveraged IT projects, which tend to develop in three “learning loops,” as individual routines are improved, capabilities created and strategic advantages generated through the use of IT. These processes are often bottom-up in nature, without a clear strategic intent up front (Andreu & Ciborra, 1996). The role of top management is to empower and create slack for such local ventures. Uniqueness is created through the idiosyncratic embeddedness IT has with operational routines (Ciborra, 1994). The ERP literature is focused on success factors in implementation and project phases, while the preceding strategy decision process and the succeeding ERP deployment are still relatively obscure. Process descriptions focus on alterations of the design – implementation,– stabilisation, continuous improvement, and transformation stages, and imply that problems include the underestimation of requirements on organisation and business changes, failure to set objectives, and technical issues such as data clean-up and bug hunting. Frameworks are relatively close to technology and functional operation—not strategy or sustainability of advantages. Product differentiation (Davenport, 1998), “business results” (Markus & Tanis, 1999), cost reductions, customer responsiveness, and strategic decision making (Ross & Vitale, 2000) are among listed “dependent” variables. In terms of success factors and organisational processes, texts on success factors in relation to ERP systems often list top-management support, project team competence, interdepartmental cooperation, clear goals and objectives, established metrics, project champions, addressing resistance to change, vendor support, and the balancing of business and IT skills. In these apCopyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.


proaches, “success” appears not to be sustained competitive advantage but, rather, to have a functional system up and running (Parr et al., 1999; Somers & Nelson, 2001. For instance, Markus and Tanis (1999) refer to four ERP process stages: chartering, configuration/rollout, shakedown, and onward/ upward, all of which are quite close to the functional implementation. Robey et al. (2002) extend the discussion about factors and refer to knowledge barriers that have to be overcome: the configuration of the system and the assimilation of new business processes. This can be in either of two ways: with a piecemeal approach whereby things are done step-by-step, or in a concerted approach whereby both the configuration and the process changes are done simultaneously. The implementation approach often needs to be incremental rather than radical. Giving time to units to get used to the system, using experienced project teams to assist in the rollout, and appointing “super users” are incremental means to make sure knowledge barriers associated with the assimilation of new business processes are removed. However, as indicated, Robey et al. remain fairly close to the system implementation, and their framework covers activities leading up to the assimilation of new work processes—there is no extended discussion about what it takes to make sure that new processes result in cost reductions or quality improvements. The above literature review is aimed at providing means by which to interpret the process of managing ERP systems to become competitive advantages. The theory is used as a “platform” by which to (1) enquire about matters in the case, and (2) interpret empirical findings.

METHOD

This study is qualitative, partly bearing resemblance so-called Grounded Theory (Glaser & Strauss, 1967), which normally is seen as inductive in nature. The researcher approaches the object of study free from any theory or preconceptions, conducts field studies, retreats to existing theory for comparison, adds more empirical data, and so forth, to emerge theory iteratively until it is “saturated.” A key question which researchers still debate is the extent to which a priori theory should be applied in a Grounded Theory study. Some claim that a clear mindset is important in order to avoid interpreting in accordance with existing theories (Glaser & Strauss, 1967), whereas others (Eisenhardt, 1989; Miles, 1979; Yin, 1994) claim that a priori theory is important for positioning emergent theory and stimulating analysis. This study acknowledges this logic and is based on the theories briefly described above.


152 Kalling

The Case

The reported case describes the development of an integrated ERP system (called “CBS,” see Appendix for short introduction) within SCA Packaging (SCAP), a Swedish MNC supplying paper packaging via more than 200 plants across Europe. The reason for choosing this particular case was primarily the access provided and the aspect richness this allowed. Although this case covers one firm and one system, the sample of units (plants run as profit centres) is broader and taken from different European countries, offering diversity. The disadvantage of only using one case, like when using ten cases, is obvious— lack of generalisation. However, the purpose of this study is exploratory in nature, dealing with phenomena that are relatively novel. In such a setting, statistical generalisation is limitedly relevant.

Data and Analysis

Data was gathered through interviews, archival research, and by observation. One hundred and fifty in-depth structured and semi-structured interviews were made with 120 top managers, representatives for users and operational management, alliance partners, and consultants, and vendors. Written sources included more than 3,500 pages of project documentation (project plans, evaluation reports, audits, specifications, selected sections of contracts, correspondence, etc.), board meeting minutes, annual reports, industry organisation reports, personnel magazines, internal market analyses, and consultants’ reports, ranging from 1991 to 2003. Data gathering aimed to outline the longitudinal, historical sequence of incidents and events (cf. Van de Ven & Poole, 1990) in terms of decisions, actions, and factors that were important in SCAP’s quest to build and use a system that would help it improve its performance and realise its strategic goals. This meant creating a chronological outline ranging from the very conceptualisation of the idea to use ERP until the system was installed and employed. The theoretical constructs of Identification, Development, Protection, and Distribution were used as “sensitising categories” (Glaser & Strauss, 1967). As a consequence, data gathering first centred upon capturing the key events in relation to the overarching question of how organisations act when they attempt to gain ERP-based competitive advantage. All in all, more than thirty such events where identified (with different degrees of importance). Examples include events such as the decision to invest in ERP, the selection of consultants and vendors, the specification of functionality, the feasibility studies, software evaluation, the range of local implementation experiences, local business change programmes, capital applications routines, control



exercises, and other events similar in magnitude. These events were then scrutinised by seeking answers to why, what, how, where, when, and who questions, which in turn required both quantitative and qualitative data. Causal relations between events were, of course, studied, being an important feature of longitudinal research. Oral accounts of incidents were controlled using multiple sources, such as other respondents and documentation. Quantitative data, including a variety of different types of data, such as vendor selection comparison results, contract cost details, labour costs, order frequency, fulltime equivalents (FTEs), stock levels, profit and loss figures were, of course, also used. Figure 1 shows the approach to data gathering. To ensure reliability, all accounts have been cross-checked with multiple sources, and the span of sources has been extended until no more new data or contradictions could be obtained about an event. Inter-rating of accounts has also been used. The goal has been to challenge and develop the framework with the empirical data. The emergent theory is thus the product of an iterative process, including comparison to the initial theory, analysis of the empirical contributions, and proposed extensions/refinements of the initial theory. This relation between data and theory corresponds to Yin’s (1994) concept of “patternmatching” between data and initial propositions. Three aspects of validity have been particularly important (Glaser, 1978): 1. 2.

Integration refers to the coherence of emergent theoretic models, that is, how well theory components are inter-related. Explanatory power refers to the relative ability of the framework to explain the empirical phenomenon and is assessed by comparing it to “competing” theories.

Figure 1. Data gathering: The figure illustrates how one event is studied

Identify

Protect

Develop

Distribute

What Why When Where Who How

Qualitative and Quantitative data: - Oral accounts - Documentation: Project documentation Board meeting minutes Financial information etc

Time Date(s)


154 Kalling

3.

Relevance is determined by the extent to which the results of the study give ideas and constructs that are useful either in the theoretical or empirical context of the study.

EMERGENT THEORY AND DISCUSSION

The case study helped develop theory in different ways. It provided a sequence to the overarching management tasks (or phases) described earlier; it identified particular problems and challenges in the overall and individual phases; and it showed how such problems can be managed. Process-pervading properties were also identified. This section discusses key empirical findings in relation to theory and outlines a model for how ERP resources are managed over time, in order to become sources of sustained competitive advantage.

Overarching Process

The process of building competitive advantage can be seen as holding four major tasks, or phases—identification, development, protection, and internal distribution. In relation to that, the case findings offer two observations that extend theory. The theory should include a fifth task—usage—to clarify managerial efforts post-implementation. Second, ways to interpret relations between the phases are identified. A central interpretation is that the theory needs to be extended with a phase that describes usage, that is, managerial efforts and organisational activities focused on business, not technology, occurring post-implementation. Surprisingly, these matters are not well addressed either by RBV or ERP literature. It appeared after cross sub-case comparisons that more successful units had moved away from focusing on the system as such, and focused instead on changing their businesses, taking into account both the system and other business opportunities, such as labour cost rationalisation, business process reengineering, organisational specialisation and integration, meeting specific supply chain performance targets (response times, delivery performance, stock levels), and so forth. The successful plants put more emphasis on actually changing local strategy and structure, without explicitly attempting to optimise the system. Costs went down, since the work of administrative personnel in related functions was automated, and there was less need for communication through time-consuming meetings. In one plant, the amount of staff in Customer Service and Sales was reduced from 38 to 16, allowing for an annual labour cost reduction of approx. 1 EURM. Response times were reduced from hours or days to minutes due to improvements in communication and information access. Delivery performance was improved, and delivery times were reduced Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.


overall from, on average, two weeks to four working days. These improvements generated a cash-flow that paid back the plant’s investment in less than two years. It is incorrect to state that all payback is caused by the system alone, but the system was enabling. However, few of the studied units had received anything in terms of financial payback, due to reasons discussed in subsequent sections. Nonetheless, including usage is key, since installing a system means nothing economical has happened apart from the creation of a sunk cost that has to be dealt with. With a longitudinal approach, it becomes obvious that, initially, the system is the object of attention, whereas once it is applied. it becomes an independent variable that supports or restrains business performance. It has to be viewed as part of a larger resource-base holding several opportunities for business improvements. Usage is imperative in order to generate value and to enforce uniqueness of the system-organisation match. And because there are different levels of usage, it appears correct to view usage as distinct from internal distribution, and view system employment (distribution, usage) as distinct from resource creation (identification, development, protection). We thus have a distinction in the chronological dimension: a resource phase (the output is a system) and an employment phase (the output is improved business). The distinction is important particularly because the management attention differs. Distinguishing resource processes from employment processes is not interesting if one is only concerned with resource attributes or the strategic status of a system. But for a manager, resource development and employment are distinguished by time and should be separated in a process-based framework. ERP-based competitive advantages stem from interdependent development of the system and of the way it is used. The case also gave some indications as to how the five phases can be interrelated over time. Identification is bound to occur before the other phases, for a given system, even if, naturally, there is often reiteration between phases. This phase includes clarifying a business strategy and identifying action areas among which are systems improvements, feasibility studies, specifying business needs and requirements, selecting vendors, signing contracts, and so forth. Logically, it ends with a binding commitment. Development is initiated with the commitment to continue and includes specification and programming (or selecting functionality if it is an “off-the-shelf” product), meaning that functionality has to be decided upon in great detail. The firm also takes action to secure uniqueness hence Protection efforts occur in parallel. Observations indicate that there is causality between development and protection efforts, for instance in the way functionality is selected and in the way that firms evaluate Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

156 Kalling

Figure 2. A conceptual framework for systems resource management processes Factor market

Product market

Development

Identification

Distribution

Usage

Protection Resource Phase

Employment Phase

Time

uniqueness. Exclusive rights and other protection mechanisms are costly, thus reducing resource value. Internal distribution follows upon having prepared a system that is possible at least to pilot in a business context. As systems are tentatively being used, new learning processes are initiated, regardless of whether users and managers have been involved in previous phases. Problems become different in nature: business is highlighted, as well as initial ambitions and visions. When business concerns start to dominate the attention of staff, firms enter the Usage phase, during which the system is subordinate to business improvements. Managers and users learn new ways to conduct business and identify needs to improve the system. Figure 2 shows the five phases outlined. It highlights the overall process of fusing resources from the factor market through the processes of the firm and materialising it through the offering on the product market. In the CBS case, successful units created and employed a resource that rendered unique cost positions and service levels on the product market. The system was a source of temporary competitive advantage. But what were the obstacles?

Within Phases

This section describes obstacles and means to resolve them throughout the process. Identification During identification, uncertainty, cognitive limitations, and social limitations affect decision making. Processes take place primarily through bottomup processes, that is, “bricolage,” with limited interaction by top management. Uncertainty: Empirical findings imply first, that because there are few opportunities to fully test and try the system prior to starting to develop it, a



“practical uncertainty” leaves decision makers with the option to deduce and hypothesise about the resource in question. A strategic vision, which in the case was formulated as “differentiation of supply chain management” by having highest service levels (response times, delivery performance, etc.) and the most efficient administration (reduced labour cost, reduced stock levels, etc.) in competition, was key to providing a business context to the CBS venture. The strategic vision also needs to be broken down into a resource vision, which is fit with other firm-specific factors (e.g., size, culture, structure). Other factors that reduce uncertainty are the involvement of top management and commitment to the resource vision and its objectives and time frames. In the case, the main driver was the president of the corporation, who led and supported the identification efforts relatively closely. These propositions confirm and extend the view of Amit and Schoemaker (1993) and Schoemaker and Amit (1994). Cognitive limitations: The case gives some examples of “cognitive strategies” during identification. Deduction and causal reasoning are important. Access to knowledge (internal and external skills) within the three key fields of operations (as held by, for example, a functional expert), strategy (as held by a CEO, for example) and technology (as held, for example, by an IT consultant) is equally important due to the practical uncertainty under which projects progress. It requires management of a large and fragmented network of stake-holders and is a potential source of time consumption (cf. Amit & Schoemaker, 1993). In the case, this was managed by aggressive networking, including knowledge from senior managers, users, operational expertise from different national units, and consultants and vendors. Social limitations: ERP resources can challenge the view people have on work processes, organisation, and strategy. Choice of vendor and technology, time frames, work process design are all potential hotspots. The case does indicate that firms can handle such limitations by a broader approach to understanding the different risks/benefits of different choices, including deeper analysis of possible scenarios. “Cognitive variety”, for example, a wide representation of different units and internal and external functional fields may assist. Top management plays an important role, due to its holistic view, business understanding, and as communicators of values and norms, and indirectly as providers of “purpose” to the investment. The communication of new strategic and technical values and visions is important. These propositions stand in contrast to, for example, Ciborra (1994) and Robey et al. (2002).


158 Kalling

Development The case gives some perspectives on how development can be managed and organised. Learning: The case suggests that “bricolage” can be combined with more top-down approaches (cf. Ciborra, 1994). Certain elements of the process, for instance the coupling of the system with the strategy vision, require a strong topdown approach. Decisions about finer details of functionality may be solved by operational and technology experts. Given the ambition to gain competitive advantage, the case implies that a “bricolage” approach could be too costly, limitedly radical and novel, and difficult to distribute. For the radical approach that uniqueness requires, all three knowledge fields of IT, operations, and strategy must be managed and coordinated. Local, detailed knowledge is necessary, but a strategic logic is the fundamental platform for a project with such high ambitions. Organisation: During specification of the CBS, a large sample of experts was involved and had “their say.” This had obvious benefits: broader sets of knowledge were included, people felt they were part of the development of a path-breaking system, and they all got a glimpse of what ERP systems could do to their business. The negative side to this was high costs, time-consuming discussions, and occasional animosity between a diverse range of functional experts from several European countries. In the end, many questions about functionality had to be resolved by democratic vote. This indicates that diversity is double-sided in nature and has to be balanced carefully. It is valuable for group comprehension but might be destructive to deftness. Comprehension and deftness could be negatively correlated, offering some nuance to the models of McGrath et al. (1995). Increased formalisation, centralisation, planning, and budgetary procedures are means to handle questions of this nature. External knowledge partners, such as consultants, are important—but costly. Protection Efforts to protect the resource from imitation are parallel and partly identical to the efforts applied to develop it (such as specifying idiosyncratically fit functionality). Exclusive rights and resource isolation are means to prevent imitation, and the case gives perspective on situations managers can be faced with trying to protect resources.



Legal protection: Concerning ERP resources, there is always a risk that they are bought “off-the-shelf” by competitors. There is also a risk that systems are created that provide the same effects on the product market, for instance, lower costs for service or better delivery performance. In the CBS case, there were no similar business-specific systems that substituted the effects. Hence, SCAP eventually turned to the vendor with the system that was best suited for specific, customised functionality. Alternative solutions were based on interfaced modules for Sales, Production, and Logistics, with limited swiftness and communication. However, in other instances, systems are often duplicated and substituted. Thus, legal protection is the only means to obtain exclusivity of the system. Within SCAP, it was the clear intention of top management to create a customised system that could not be obtained by other competitors. However, the negotiator (a senior manager) came under pressure to cut project costs and, against his instructions, signed a contract that did not grant the company exclusive rights. The software vendor offered SCAP the opportunity to buy restricted sale of select functionality to a select number of competitors for a given time period, which was rejected. Today, the system is available to competitors, but only a few have bought it, and those that did only bought selected modules. Competitors perceive the system as complex and unfit with business processes. This implies that in order to gain exclusivity and uniqueness, managers need to communicate the value of uniqueness, especially to key people such as negotiators. In this case, the price of buying exclusivity should be seen as an “investment” in uniqueness. Isolation: Firms can also use ERP systems in ways that enable sustained advantages. The case offers some examples of how radical changes in all the three knowledge dimensions (technology, strategy, and operations) can enforce causal ambiguity for an outsider. If the changes in the three dimensions are also interrelated, ambiguity increases further. SCAP, who specified the system, knew better than its competitors how to apply it and modify business processes. Thus, in-house development may be a factor in creating ambiguity (cf. Clemons & Row, 1991). Furthermore, resource exposure to outsiders (e.g., consultants, vendors) may be necessary to obtain critical knowledge. The social complexity of a resource depends on who is observing it. For a project member, it is clearer than for a competitor because of superior knowledge about the system and how it is embedded with routines and strategy. Internal Distribution Many theoretically proposed problems were observed in the study, which also indicated how they could be managed. Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

160 Kalling

Observations imply that in ERP cases, the main transfer problems relate to weak motivation and weak absorptive capacity at recipient units and, importantly, the structural context in which the transfer takes place. There was resistance when the system was launched, despite the fact that local staff always had had its say during specification periods. There was a lack of knowledge and of willingness to change. What could be referred to as cognitive and cultural sediments impaired the implementation in some plants. Users and managers had retreated to praising the old systems, claiming that key features of the new system were not needed. Even the strategy the system was meant to support was questioned. An important factor was the time span between “specification” (1994) and implementation (1997). Original suggestions were almost forgotten, business changes had already occurred, and the technology was no longer leading edge. There is a range of arguments why projects should be sped up, including cost escalation and first-mover advantages. The fact that the logic behind an investment may become obsolete prior to implementation is another argument. Learning processes: The system was initially implemented stepwise in 20 plants. Lessons from previous installations were documented. Local learning strategies included continuously improved installation processes and preparations, utilisation of accumulated experience of implementers, customised support, unlearning of old systems, and hands-on user experience. Less successful units were unable to take it further than installation and were happy when their operations were as reliable as they were with the old systems. Structural context: The role of the structural context can not be underestimated. The case shows some examples of how structure affects distribution. SCAP has a decentralised culture and plant units are profit centres. This means that local general managers have significant autonomy and, although installing the system had been directed from top management, it is imperative to ensure that local managers are both knowledgeable and committed to the system. In the CBS case, they were not well informed, since they had never really been involved in development. This meant they also found it difficult to attach a meaning to the system. In that sense, more central efforts could have helped also in the implementation phase, but this was neglected initially by top management, who assumed that local managers would optimise the use of the system due only to the communicated ambition that CBS should give advantages. The resource allocation was based on implementation being driven locally. This supports strongly the concept of the “tyranny of the SBU”



(Prahalad & Hamel, 1990), which stipulates that autonomous (profit) centres might have a conflict of interest with the corporation. Usage The case implies that usage consists of attempts to have a valuable and unique use of the system. In the SCAP case, the superior knowledge of the system and the interrelations between the system, the operations, and strategy served as the platform for advantages. Learning processes: Learning in relation to IT and ERP can take the form of “loops” (Andreu & Ciborra, 1996), but it does not have to be a bottom-up process. A change of strategy may be the starting point, and it may be that “routinisation” learning loops only occur after the system has been created, in the reverse order or in an iterative fashion, which contradicts the learning processes introduced by Andreu and Ciborra (1996). Cognitive obstacles: Knowledge of how the system, the strategy, and the operational aspects are interrelated must be held by users and local managers in order to generate business benefits. Learning can be stimulated by, for example, control incentives such as capital investment responsibility, communication, and support through direct channels or through local champions. The Figure 3. Conceptual framework for systems resource management processes Product market

DEVELOPMENT Learning, Knowledge sharing Organisation

IDENTIFICATION

Radical learning, not ‘bricolage’ Vision dependence Comprehension & deftness Diversity, trade-offs External relations

Uncertainty (incl. practical) Cognitive limitations Institutional limitations Strategic vision, fit with Resource vision Knowledge access Knowledge orchestration Top management involvement Deduction, causal reasoning Cognitive, normative variety Communication, norms/values Radical learning

PROTECTION Trade & imitation Legal protection Isolation Radical change of IT, operations and strategy Competitive culture ‘Value of uniqueness’ Superior knowledge of - the resource – process – strategy link - depth and breadth of system contents - embeddedness links Exposure required for radicality Speed of implementation Continuous development

Resource Phase

DISTRIBUTION

USAGE

Transfer problems - lack of motivation - lack of knowledge - cognitive, cultural sediments - organisational context

Valuable and unique use From technology to business and strategy Learning process, cycles, iterative, probably top-down if strategic resource Cognitive and cultural/political issues

New knowledge Learning processes: - Experience - Incrementalism, iteration - Formalised process - Preparations - Support - Unlearning Structural context, challenge decentralisation

2 reciprocal learning loops (after strategic learning loop): - Resource – work process - Work process – organization/strategy Accumulated knowledge Formal responsibility Support Quality of responsible managers Structural context Competitive culture

Employment Phase

Time


162 Kalling

view that three interrelated streams of knowledge are required, that is, knowledge about operations, strategy, and technology, should be seen as a parallel to the view of Robey et al. (2002) of two kinds of knowledge barriers. Cultural issues: Reaping the business benefits of an ERP system may require making personnel redundant, changing structures, reshuffling hierarchical positions, and changing work processes. Being able to deal with such problems is an everyday issue for many managers, but not for all. In certain settings, these management tasks may be completely new, even to an experienced manager. It could be that the attitude towards the ERP resource declines and stimulates further political problems. In the SCAP case, it turned out that the conversion of the resource into profit was far from automatic. And to decentralised corporations, the success of an ERP is ultimately dependent upon local understanding and commitment— not just to a system, but to the optional changes that follow it. If this is not intact, structure and directives might be the only means at hand. To conclude, Figure 3 shows how the different phases can be viewed. It is based on the initial interrelation of the five phases, yet with the inclusion of the problems and solutions discussed above. This model highlights the questions, challenges and possible solutions that managers have to deal with in relation to ERP systems.

Pervading Properties

The case also indicates that three pervading properties affect processes of this kind: (1) Irreversibility, (2) Cognition, and (3) Top Management Involvement. Irreversibility—Key Premise A prime property is the irreversible nature of ERP ventures. The case implies that ERP ventures are at least imperfectly reversible, due to financial, cognitive, and cultural commitments. First, financial commitments tend to be significant, due to the high costs of both “off-the- -shelf” and in-house solutions. These costs have to be committed to relatively early on in the process, without prior testing and handson experience in the actual settings of business. Having made the commitment by contract, other alternatives, including switching systems, become costly in comparison. Thus, financial commitments create path dependency. Second, from a cognitive perspective, it appears that the “learning curve” firms and users go through is equally difficult to reverse. Moving from one



system to another requires unlearning as well as learning. The commitment that people have to make in unlearning and learning may be an obstacle in its own right. As a consequence, firms might be unwilling to invest in new, cognitively demanding ERP systems too frequently, limiting the abilities to reverse projects and choose alternative solutions. Thus, having initiated learning—which is a requirement—firms are likely to be less tolerant with infusing new, competing knowledge to the process, and consequently less tolerant to changes of solutions. Third, systems and processes are cultural embodiments of norms about how to conduct business. They are political, meaning wide-swept agreement upon them requires “internal marketing” between stakeholders. Once this has been achieved, people tend to “lock in” one way of doing things. Any changes to a system, including replacing it, may cause declining motivation. Thus, one argument against halting ERP projects is that the restart would require too much costly convincing. The saying that a system is never as popular as when it is about to be replaced probably bears some truth. Cognition—Main focus of Managerial Attention Cognition is a factor in all the processes discussed. Access to knowledge about operations technology and strategy is key and affects both the resource and how it is employed. During the resource phase, learning is essentially experimental and explorative. Deduction, scenario-based analysis, and tentative, causal reasoning are the main learning mechanisms. During the employment phase, hands-on experience, trial-and-error, empirical, inductive learning is possible, and it is only then that the visions and ambitions can be realised. It is then that the actual value of the resource becomes apparent. Experience from using the system then feeds back negatively in order to modify the resource to fit better the operations and strategy as they evolve. At some point in time, strategy, operations, or new technology will force the firm to abandon the system definitely to develop a new one. The statement that cognition is important sounds tautological, but the important consequence for managers is that they understand what types of knowledge they need, that they are prepared to search and access them and pay to get it. It must be orchestrated and interrelated in order to generate new knowledge and challenge inherent knowledge and norms and values. Top Management Involvement —Key Organisational Challenge A third property is related to the involvement of top management. If the ambition is to create an ERP that gives competitive advantage, business Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

164 Kalling

strategy is bound to set the direction of the venture. And business strategy is normally shaped by top management. Top management infuses the project with its meaning. Furthermore, strong involvement by top management will ensure practical facilitation such as funding and access to resources. Of course, without the efforts of local staff, technologists, and operational experts little will happen. But if top management does not take the lead and sponsor the venture, others will achieve little. Bottom-up approaches will be costly, the political risks are presumably equally high, the time frame will probably be extended, but, most importantly, it will lack strategic insight, even though it may well be operationally fit. The idea that the centre of firms need to be involved is not new. For organisations where cooperation and knowledge sharing between autonomous units are favoured, this appears inescapable. Despite a relative distance from practical matters, managers do not automatically lack knowledge about IT resources and operation. In a business world where diversified firms “downscope” to focus on core businesses, top managers are often qualified to understand matters close to the operative core. The proposition that strategic ERP ventures require a strong top management involvement, and a top-down approach is in contrast with some propositions about ventures of this kind, such as Ciborra (1994) and Andreu and Ciborra (1996), and supports the view of, for example, Prahalad and Hamel (1990).

Implications for Management

The resource management model describes implications of a decision to implement an ERP system. More specifically, the following implications appear important to management. IT is just a tool. It is a potential resource at best. Sometimes it is an obstacle. Hence, managers should strive to hold knowledge sufficient to understand the business improvement opportunities that ERP can provide. This involves ensuring that managers are surrounded by knowledgeable experts to ensure that ERP ventures have strategic fit and purpose. Managers should be prepared to engage in hefty investments, with a relatively obscure payback and payback period. This does not mean committing to ERP investments without scrutiny. On the contrary, a careful cap app exercise with line managers expressing commitment both to the investment and the payback mechanisms is a valuable tool. Managers should also be prepared to enforce new organisational structure and control mechanisms. This means, potentially, to ease up deep



decentralisation and alter incentive structures. This could have far-reaching consequences on morale. Managers should also consider the value of uniqueness. Uniqueness can come through the system and/or the use of the system, but uniqueness in relation to competitors’ cost, regardless of protection strategy. Managers must understand what system uniqueness is worth to them: is the ERP a strategic resource? Or is it something needed just to stay in the game? Finally, ERP investments challenge not just the finances of the firm, but also existing knowledge bases and culture. Managers must make sure they are prepared to pursue the potential improvements in the face of these challenges.

CONCLUSION

The purpose of this chapter is to shed light on the processes of managing ERP systems in order to gain competitive advantages. The end product is the ERP resource management process framework described and illustrated above. It was stated, initially, that the validity of a framework such as the one presented depends on three attributes: integration, relative explanatory power, and relevance (Glaser, 1978). Integration, that is, the coherence of the model, will not be discussed further as it has been described above. Overall, the presented framework does not primarily contradict previous approaches to ERP and strategy. The contribution, I believe, lies in the longitudinal outline and the detailed discussion about managerial challenges that lie ahead of anyone attempting to utilise ERP to gain competitive advantage. Regarding explanatory power, one distinctive property of the framework is the use of RBV and strategy process theory. These are relatively scarcely used in IT/ERP research, and they are rarely combined (exceptions include Ciborra, 1994, and Andreu & Ciborra, 1996). They are, however, often requested (Powell & Dent-Micallef, 1997). With RBV, the resource uniqueness is put in focus, which is important. The process focus says something about the scope of problems and challenges managers face and have to solve in order to gain sustained ERP advantages. It also allows us to distinguish between resource phases and employment phases, to identify pervading properties, and shows, over time, how difficult it can be to gain advantages based on ERP. In relation to the RBV-based IT and ERP research, the framework gives some indications of what it might be like to “embed” ERP systems with other organisational resources (cf Clemons & Row, 1991, Mata et al., 1995, Powell & Dent-Micallef, 1997). Ciborra’s (1994) and Andreu and Ciborra’s (1996) approaches to IT are possibly the concepts that this chapter is closest to. The Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

166 Kalling

difference here is the focus on ERP, not IT in general. This may be the reason for the different views on, for instance, the role of top managers, the structural context, and the learning cycles that occur in processes of this nature. This chapter has overlaps with other process approaches as well, but it differs with its focus on strategy and advantages—not just improved operations (e.g., Markus & Tanis, 1999; Robey et al., 2002; Ross & Vitale, 2000). In relation to content-orientated research on ERP systems (e.g., Parr et al., 1999; Somers & Nelson, 2001), this study is supportive; the difference lies in the process focus used here, as well as the wider focus on uniqueness. The methodological objective in case research is not to be able to generalise to a larger population, but rather in relation to theory (Yin, 1994). Nonetheless, it is important to discuss the academic and practical relevance of the framework. The CBS case is explicit, and competitive advantage is actively searched for, meaning that for ventures that unintentionally become competitive advantages, selected parts of the model are less interesting. The same goes for cases where firms buy systems “off-the-shelf,” rather than develop them themselves—they probably put less emphasis on identification, development, and protection. Regarding practical relevance, the framework describes managerial processes and should be useful for any manager in any of the stages of ERP implementation. To strengthen practical relevance, managerial advice has been listed too. Given the popularity of ERP, there are plenty of research opportunities. We need to know more about the processes organisations go through when they invest in, nurture, and exploit ERP systems. The RBV with its focus on uniqueness and the strategy process view with its focus on the obstacles to rational change are vital for the future, for example, given the increasing tendency to buy systems “off-the-shelf.” The emergent framework, which is relatively diverse, could also be studied “section-wise.” It is difficult to statistically test the proposed model in a true/false sense. It is a supporting model.

REFERENCES

Amit, R. & Schoemaker, P.J.H. (1993). Strategic assets and organizational rent. Strategic Management Journal, 14, 33-46. Andreu, R. & Ciborra, C. (1996). Core capabilities and information technology: An organizational learning approach. In B. Moingeon & A. Edmondson (Eds.), Organizational learning and competitive advantage. (pp. 139-163). London: Sage Publications. Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.


Bain, J.S. (1968). Industrial organization, 2nd Ed. New York: Wiley. Barney, J. (1986). Strategic factor markets, expectations, luck and business strategy. Management Science, 42, 1231-1241. Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99-120. Barney, J. (1994). Bringing managers back in. In J. Barney, J.C. Spender, & T. Reve (Eds.), Does management matter? Lund, Sweden: Lund University Press. Ciborra, C.U. (1994). The grassroots of IT and strategy. In C.U. Ciborra & J.T. Jelassi (Eds.), Strategic information systems. A European perspective. Chichester, UK: John Wiley. Clemons, E. & Row, M. (1991). Sustaining IT advantage: The role of structural differences. MIS Quarterly, 15(3), September, 275-292. Collis, D.J. (1996). Organizational capability as a source of profit. In B. Moingeon & A. Edmundson (Eds.), Organizational learning and competitive advantage (pp. 139-163). London: Sage Publications. Davenport, T.H. (1998). Putting the enterprise into the enterprise system. Harvard Business Review, 76(4): 121-131. Dierickx, I. & Cool, K. (1989). Asset stock accumulation and sustainability of competitive advantage. Management Science, 35, 1504-1511. Eisenhardt, K.M. (1989). Building theory from case study research. Academy of Management Review, 14, 532-550. Eisenhardt, K.M. & Martin, J.A. (2000). Dynamic capabilities: What are they? Strategic Management Journal, 21, 1105-1121. Ginsberg, A. (1994). Minding the competition: From mapping to mastery. Strategic Management Journal, 15, 153-174. Glaser, B.G. (1978). Theoretical sensitivity: Advances in the methodology of grounded theory. Mill Valley, CA: Sociology Press. Glaser, B.G. & Strauss, A.L. (1967). The discovery of grounded theory: Strategies for qualitative research. Chicago, IL: Aldine. Grant, R.M. (1996). Toward a knowledge-based theory of the firm. Strategic Management Journal, 17(Winter Special Issue), 109-122. Hayman, L. (2000). ERP in the Internet economy. Information Systems Frontiers, 2, 137-139. Hong, K. & Kim, Y. (2002). The critical success factors for ERP implementation: An organizational fit perspective. Information & Management, 40(1), 25-40.


168 Kalling

Kirchmer, M. (1998). Business process oriented implementation of standard software. How to achieve competitive advantage quickly and efficiently. Berlin: Springer. Lei, D., Hitt, M.A., & Bettis, R. (1996). Dynamic core competences through meta-learning and strategic context. Journal of Management, 22, 549569. Leonard-Barton, D. (1992). Core capabilities and core rigidities: A paradox in managing new product development. Strategic Management Journal, 13, 111-125. Liebeskind, J.P. (1996). Knowledge, strategy and the theory of the firm. Strategic Management Journal, 17(Winter Special Issue), 93-107. March, J. & Simon, H. (1958). Organisations. New York: John Wiley. Markus, M.L. & Tanis, C. (1999). The enterprise systems experience – from adoption to success. In R.W. Zmud (Ed.), Framing the domains of IT research: Glimpsing the future through the past. Cincinnati, OH: Pinnaflex Educational Resources, Inc. Markus, ML., Axline, S., Petrie, D. & Tanis, C. (2000). Learning from adopters’ experience with ERP: problems encountered and success achieved. Journal of Information Technology, 15, 245-265. Markus, ML., Petrie, D., & Axline, S. (2000). Bucking the trends: What the future may hold for ERP packages. Information Systems Frontiers, 2, 181-193. Mata, F.J., Fuerst, W.L., & Barney, J.B. (1995). Information technology and sustained competitive advantage: A resource-based analysis. MIS Quarterly, 19, 487-505. McGrath, R.G., MacMillan, I.C., & Venkataraman, S. (1995). Defining and developing competence: A strategic process paradigm. Strategic Management Journal, 16(1), 93-107. Miles, M.B. (1979). Qualitative data as an attractive nuisance: The problem of analysis. Administrative Science Quarterly, 24, 590-601. Oliver, C. (1997). Sustainable competitive advantage: Combining institutional and resource based views. Strategic Management Journal, 18, 697713. Parr, A.N., Shanks, G., & Darke, P. (1999). Identification of necessary factors for successful implementation of ERP systems. In O. Ngwenyama, L.D. Introna, M.D. Myers, & J.I. DeGross (Eds.), New information technologies in organisational processes: Field studies and theoretcal reflections on the future of work. Boston, MA: Kluwer Academic Publishers.



Peteraf, M.A. (1993). The cornerstones of competitive advantage: A resource-based view. Strategic Management Journal, 14, 179-191. Porter, M.E. (1980). Competitive strategy. New York: Free Press. Powell, T.C. & Dent-Micallef, A. (1997). Information technology as competitive advantage: The role of human, business and technology resources. Strategic Management Journal, 18, 375-405. Prahalad, C.K. & Hamel, G. (1990). The core competence of the corporation. Harvard Business Review, May-June, 68, 79-91. Priem, R.L. & Butler, J.E. (2001). Is the resource-based “view” a useful perspective for strategic management research? Academy of Management Review, 26, 22-40. Robey, D. & Boudreau, M.-C. (1999). Accounting for the contradictory organisational consequences of information technology: Theoretical directions and methodological implications. Information Systems Research, 10(2), 167-185. Robey, D., Ross, J., & Boudreau, M.-C. (2002). Learning to implement enterprise systems: An exploratory study of the dialectics of change. Journal of Management Information Systems, 19(1), 17-46. Ross, J.W. & Vitale, M.R. (2000). The ERP revolution: Surviving vs. thriving. Information Systems Frontiers, 2, 233-241. Rotem, Z. & Amit, R. (1997). Strategic defense and competence-based competition. In A. Heene, & R. Sanchez (Eds.), Competence-based strategic management. Chichester, UK: Wiley. Schoemaker, P.J.H. & Amit, R. (1994). Investment in strategic assets: Industry and firm level perspectives. In P. Shrivastava, A. Huff & J. Dutton (Eds.), Advances in strategic management, 10A, 3-33. Greenwich, CT: JAI Press. Scott, J.E. & Vessey, I. (2000). Implementing enterprise resource planning systems: The role of learning from failure. Information Systems Frontiers, 2, 213-232. Somers, T.M. & Nelson, K. (2001). The impact of critical success factors across the stages of enterprise resource planning implementations. In Proceedings of the 34th Annual Hawaii International Conference on Systems Sciences (8) HICSS-34, January 3-6, Maui, Hawaii. Szulanski, G. (1996). Exploring internal stickiness: Impediments to the transfer of best practice within the firm. Strategic Management Journal, 17(Winter Special Issue), 27-43.


170 Kalling

Van de Ven, A.H. & Poole, M.S. (1990). Methods for studying innovation development in the Minnesota Innovation Research Program. Organization Science, 1, 313-335. Williamson, O.E. (1999). Strategy research: Governance and competence perspectives. Strategic Management Journal, 20, 1087-1108. Yin, R.K. (1994). Case study research: Design and methods. 2nd Ed. Thousand Oaks, CA: Sage.

ENDNOTE

1

Enterprise resource planning systems, as defined by Markus and Tanis (1999): Commercial software packages that enable the integration of transaction-orientated data and business processes throughout an organisation.

APPENDIX: AN INTRODUCTION TO SCA PACKAGING AND THE CBS

SCA Packaging (SCAP) is one of the largest European suppliers of corrugated paper packaging, with a sales turnover of roughly 4 BEUR per annum. Having been a relatively small business unit within the SCA Group, it started to grow, by acquisition, during the late 1980s, a strategy that took it from being a business unit with less than 10 plants in a few European countries to a company with more than 200 across Europe and in Southeast Asia and the U.S. The current structure of SCAP is geographical, with each geographic region holding 10-30 production units, each of which is run as a profit centre. The CBS ERP system was initiated in 1990 by the then newly appointed president. CBS was the result of the growth strategy; in order to standardise communication and to link acquired plants, a new system was needed. The system was also intended to help SCAP improve so-called supply-chain management. Previously, the company and the industry had been very focused on production. Machine utilisation and productivity were key variables, and other functions were largely non-prioritised. The goal was to use the system to differentiate and make functions such as customer service, production planning, and logistics more efficient. At the time, it could take several days to give customers a price for a box, and it could take hours to inform customers whether they would receive orders on time. Delivery lead-times occasionally amounted to several weeks. In addition, there were many different systems Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.


used in the group (36 different systems), and none of them were very good. Although it was not addressed in 1990, most of them were not Y2K compliant. In 1991, a strategic vision was set and formulated, and a number of action programmes were initiated (one of which was the CBS) intended to help the company gain competitive advantage through supply-chain management. SCAP cooperated with Digital Equipment, who helped SCAP envision what sort of system and technology it would need, given its operations and strategy. In 1993, a project team of seven SCAP staff (representing all countries) and two consultants, sponsored directly by the president and cooperating with a network of local experts, summarised the business requirements in a comprehensive document detailing all requirements down to individual work tasks in different functions. The team also evaluated all available systems (23, globally) and found that none matched the requirements very well. The choice eventually fell on a German software provider who already had a relatively usable Manufacturing module. The system lacked functionality in Sales and Logistics, and it was decided that SCAP would help develop these and further refine the existing Manufacturing module to fit its own requirements. SCAP—at least the President and the project team—had intended from the start that sales of the system would be restricted, but when the contract was signed in April 1994, it turned out that the main negotiator (not a member of the project team) had turned it down exclusivity rights in order to reduce the programme costs. The system was specified during 1994 and 1999, and the first modules were piloted in 1997. Of the 60 SCAP plants that are going to use it, only 20 have done so as of 2001. The modules were specified sequentially, starting with Sales, then Manufacturing, followed by Logistics. It is based on Windows NT and was programmed with Visual Basic. There were many factors that caused the prolongation of the system: development took longer, mainly due to problems of agreeing upon functionality, technical problems (Visual Basic 4 was severely delayed), poor preparations both in SCAP and by the vendor, and lack of resource allocation. Implementation was led by a corporate team (4 people) and national teams (10-25 people) of business experts and structured in sequential mode, with two pilot plants in the UK and the Netherlands, respectively. As the project lagged, the decision was made in 1997 to install it in plants with Y2K problems, specifically France, Benelux, and the UK. Implementation has been a mixed experience. The piloting of the Sales module (1997) went fine, but when the Production module was installed (1998), things took a turn for the worse. The plant operations were disrupted Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

172 Kalling

for several days. Practical issues such as invoicing, planning, order entry, administration, and work instructions had to be communicated manually. The relationship between the plant and the project teams turned arduous. Eventually, the system started to work, and operations became reliable. Hands-on lessons learned as the implementation evolved were important in improving the rollout process at each plant, and subsequent installations went increasingly smoother. However, many of the plants never took the level of utilisation further then the “reliable level,” corresponding, basically, to the level of performance they had with their old systems (by 2001, less than half of the 20 plants can claim payback streams). Those plants that succeeded in not only stabilising operations but improving business had an active commitment from local managers, drew upon corporate expertise, appointed “champions” and approached the situation as a business project. They asked themselves where they could take their business, given the new system and other resources at hand. Those that succeeded cut personnel costs and capital costs through rationalisation, and increased customer-perceived quality by improving response times to customer enquiries and by improving logistics performance (smaller orders, justin-time delivery, reduced stock, etc.). In terms of advantages, they decided, explicitly, to make sure their level of systems usage was unique now that the system was available on the market. In line with the deeply decentralised nature of SCAP, senior management has done little to enforce a local level of usage that aggressively brings back the investment. Control mechanisms have not been modified. Whether local plants (profit centres) actually embark – and succeed – with change and improvement of supply-chain functions is dependent upon the aspiration levels of local general managers. The cost of the project has been allocated across plants. For successful plants, the cost has been recovered in less than two years by cost reduction enabled. With regard to uniqueness, a handful of smaller competitors have bought certain sub-modules, but the larger competitors have turned it down, arguing that the system is too idiosyncratic, imposing a view of work that is too different from theirs. Consequently, successful SCAP units enjoy advantages, but whether they are sustained remains to be seen. Cost advantages can be gained by other means, such as manufacturing benchmarking, business-process reengineering, and so forth. But since SCAP are equally strong in these areas, it is increasingly difficult to compete on costs.


Towards an Emotionally Intelligent IT Organization 173

Chapter VIII

Towards an Emotionally Intelligent IT Organization Eugene Kaluzniacky University of Winnipeg, Canada

ABSTRACT

Considerable attention has recently been focused on the area of “emotional intelligence” (EI) in business administration circles as well as in IT management. Often, it is being suggested that IT workers need the “soft skills” of emotional literacy, especially when dealing with users and coworkers. However, how can one develop this “emotional intelligence”? What might be its various components? Moreover, to what degree and how might IT management get involved to try to move its IT organization on the EI path? Such issues are discussed in this chapter.

THE CONCEPT OF “EMOTIONAL INTELLIGENCE”

For a long time, the Western World has considered IQ, the ability for cognitive reasoning, as the main (if not only) determinant of a person’s “intelligence.” In IT, it was indeed very often the case that the person whose programs were most efficient and had the fewest errors would be considered the prime candidate for promotion. However, today, in the “post-modern” era, the development of information systems is recognized as a socio-technical field. Nearly a decade ago, an article in Computerworld (Weldon, 1995), called for Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

174 Kaluzniacky

“emotional literacy” among IS developers. Since then, a number of articles have appeared calling for development of “soft skills” and lamenting that IT workers are often emotionally weak. Such articles often call for another type of intelligence in addition to superior cognitive, logical skills. Harvard psychologist and educator Howard Gardner (1983) had, in the 1980s and beyond, promoted his theory of multiple intelligences. He maintained that in addition to logical/ cognitive intelligence (as measured by IQ), there exists linguistic intelligence, and also naturalist, interpersonal, intrapersonal, spatial, musical, and bodily kinesthetic intellegences. Following this type of perspective, Daniel Goleman, a psychology Ph.D. who formerly taught at Harvard, in his 1995 international bestseller Emotional Intelligence (1995), focused widespread attention on the reality that what matters regarding one’s ability to succeed in work and life is often more than IQ. He has, however, stated that Emotional Intelligence (EI) is more than one thing and includes: knowing what you’re feeling and using that knowledge to make decisions, the ability to manage distressing moods, maintaining hope in the face of setbacks, having empathy, and being able to get along with people. In his book, Goleman sets out on a quest “to understand what it means—and how—to bring intelligence to emotion.” He also declares that “the market forces that are reshaping the work life are putting an unprecedented pressure on emotional intelligence for on-the-job success” [italics added]. Using a brain physiology, neurological exposition, Goleman shows that brain circuitry is extraordinarily malleable and “temperament is not destiny.” In fact, he seems to be asserting that inner growth and transformation of personality are indeed possible. In his sequel book, Working With Emotional Intelligence (1998), Daniel Goleman identifies a number of “emotional competencies”; on the personal level, he promotes recognizing one’s emotions, assessing one’s strengths and weaknesses truthfully, a sense of self-worth, self-control, honesty, responsibility, adaptability, motivation, commitment, initiative, and optimism. On the social dimension, he identifies understanding others, assisting others to develop, persuasive ability, conflict management, change management, nurturing of relationships, and the ability to cooperate and create group synergy. Upon deeper reflection, it is not hard to recognize that a high degree of “emotional intelligence” could indeed make a significant difference in the effectiveness and motivation of many of today’s IT professionals, particularly those that interact with other people in the course of their work. Moreover, it is not only emotional intelligence, strictly understood as above, but also a broader spectrum of psychological awareness that would be in order for the “information resource professional” of the 21st century, as opposed to the “DP Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.


professional” of past decades. Such awareness could incorporate at least consciousness of one’s own personality type as well as that of co-workers and users, awareness of one’s cognitive, creativity, and learning styles, and capacity for significant access to one’s deepest inner self. Operating on a daily basis out of such a broadened consciousness would enable an IT worker to possess “enhanced emotional intelligence,” which could be defined as the ability to respond more effectively in given work situations based on an increased awareness of the psychological functionings of self and others on the levels of intellect, emotion, personality and deep inner self. The remainder of this chapter provides an exposure to each of the identified dimensions of enhanced EI, showing how they could positively impact the work of an IT professional. Finally, a growth stage model is presented for the development of Emotional Intelligence within an IT organization. A call to action is issued for all parties involved to make this vision a reality.

PERSONALITY INTELLIGENCE: MYERS-BRIGGS

Personality can be defined as “a complex set of relatively stable behavioral and emotional characteristics” of a person (Hohmann, 1997). It refers to, essentially, how a person functions in life. Most of us, even without any training in this area, will recognize that the world consists of people of different types. We notice that people of different types will often react differently to the same situation. But, is this an issue that is closely connected to IT work? It depends on the factors of which the work consists. Most would agree that personality relates to communication, learning style, and to what one finds stressful. Yet ability to learn, to communicate, to reason, and to maintain one’s health are key competencies for which recruiters of new IS graduates are looking. Thus, it is postulated that the IT area and, in particular, system development (IS) can benefit significantly from awareness of particular characteristics of different personality types. The Myers-Briggs Personality Type approach to classifying personalities has been widely accepted and applied in a diversity of fields such as social work, counseling, career planning, and management. It assesses four different dimensions of a person: 1.

Introversion/extraversion—relates to how a person is oriented, where he/she focuses more easily, within oneself or on other people and the surrounding environment. This dimension is coded I or E respectively.


176 Kaluzniacky

2.

3.

4.

Intuition/sensing—relates to two different ways of perceiving, of taking in information. An intuitive person focuses on new possibilities, hidden meanings, and perceived patterns. A sensing person focuses on the real, tangible, and factual aspects. Thus a sensing person can be described as being more practical, whereas an intuitive is more imaginary. This dimension is coded N for Intuitive and S for Sensing. Thinking/feeling—relates to how a person comes to conclusions, how a person normally prefers to make judgments. A thinking person employs logical analysis, using objective and impersonal criteria to make decisions. A feeling person, on the other hand, uses person-centered values and motives to make decisions. This dimension is coded T for Thinking and F for Feeling. Judging/perceiving—relates to two essential attitudes of dealing with one’s environment. A judging person prefers to make judgments or come to conclusions about what one encounters in one’s outer environment. A perceiving person prefers to notice one’s outer environment while not coming to conclusions or making judgments about it. This dimension is coded J for Judging and P for Perceiving.

Thus, we see that the Myers-Briggs personality classification system identifies personality according to four dimensions. Since there are two possibilities for each dimension, there are sixteen different Myers-Briggs personality types. Elaborating on the four dimensions, extraversion/introversion refers to where a person gets most psychological energy; sensing/intuition points out to what a person pays most attention; thinking/feeling shows how a person prefers to make decisions; and judging/perceiving relates a preferred attitude to life. There is considerable documentation outlining general work characteristics of each Myers-Briggs dimension. Many of these modes of operation can have significant relevance to system development work. Some highlights from this area are now presented.

Myers-Briggs in IT

The Myers-Briggs Type Indicator (MBTI) had made its way into IT over 15 years ago. In “The DP Psyche,”, Michael Lyons (1998) reports on an international survey of personalities of over 1000 professionals employed by over 100 different companies. About one-third of those surveyed were employed as programmers or analysts, and about 20% were in IS management. Table 1 shows the breakdown along the four MBTI dimensions. We notice



Table 1. Breakdown by personality dimension of 1229 system development professionals (Lyons’ Datamation Study, 1998) Introverts:

67%

Intuitives:

54%

Extraverts:

33%

Sensors:

46%

Thinkers:

81%

Judgers:

66%

Feelers:

19%

Perceivers:

34%

twice as many introverts as extraverts, slightly more intuitives than sensing people, a very high percentage (80-90%) of thinking types, and a two-to-one ratio of judging to perceiving types. We now examine the main characteristics of each of the four dimensions as they relate to IT work. Extraversion/Introversion While there clearly is room for both extraverts and introverts in systems development, it is not surprising to see a 2:1 ratio of introverts: extraverts. Tasks such as detailed data modeling, coding, quality assurance testing, and network design can lend themselves quite well to preferred introversion. However, extraverts can feel especially at home in requirements determination, Joint Application Development, presentation to users/senior management, user training, and help desk activities, for example. Sensing/Intuition The clear distinction here is “reality thinking” versus “possibility thinking.” A considerable amount of system development activity definitely fits with and appeals to the practical, details-and-facts-oriented sensing mentality. Much of actual technology is practical, and activities such as system installation, detailed telecommunication design, physical data modeling, as well as programming, testing, activity scheduling, and detailed documentation would appeal to and energize the sensing person. However, there are certainly more conceptual aspects to system development, some more structured and others more open-ended. Activities such as system planning, high-level business and data modeling, object modeling, and political “positioning,” would be much more in the realm of intuitive types. Since there is considerable opportunity for both sensors and intuitives to find IT work appealing, in Lyons’ survey (1998) we find the most balance along sensing/ intuitive lines (46% S to 54% N). Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

178 Kaluzniacky

Thinking/Feeling We recall that while both types certainly think and feel, the thinking types prefer to decide with logical analysis while feelers tend to base decisions on personal values and feelings. Considerable IS development activity, no doubt, involves the thinking function, whether it be practical thinking (as in telecommunication design or testing) or conceptual thinking (object modeling, system planning). Often, the thinking must be structured and yield specific deliverables that can execute on specific machines. But, how can feeling types find a home in IT work? Since they place considerable focus on harmony, feelers can be particularly sought after as group/team leaders, high-level business modelers, or analysts, where considerable effective interaction with non-IT staff is essential. Feelers may become prominent IS “politicians” who can forge effective relationships with others in organizations. They can also contribute innovatively and effectively in development of training materials and in the training process itself. As systems move towards integration of a variety of communication modes through multimedia and Internet access, the contribution of artistically minded feelers will be increasingly desirable. It is worth pointing out that an “F” is a person who prefers to decide from personal values, but he/ she may be more capable or less so in exercising the logical thinking function when it is called for. Most Fs in IT, however, would need to possess a welldeveloped capacity for thinking. Lyons’ study showed an overwhelming proportion (80.9%) of thinking types. Later, we will see evidence that such significant dominance may slowly be changing. Judging/Perceiving This dimension relates to the need for order, structure, and closure in one’s life and work. Computing itself is largely structured with emphasis on precision. Thus procedural language programming, for example, would be ideal for a Judging orientation, as would be detailed telecommunication design. Yet, there certainly are activities in the development and maintenance of systems where too much structure and predictability would not be desirable. System planning and brainstorming, for example, thrive on flexibility and spontaneity. Business and data modeling for a new system also mandate adaptability and flexibility. Maintenance and help-desk work are often unpredictable and varied. Lyons’ study (1998) shows an almost 2:1 ratio of Judging to Perceiving types. This reflects a large reliance on structure but admits open-endedness as a preference in one-third of the sample. We thus see that each part of each Myers-Briggs dimension has a role to play in system development work. In this field, it is beneficial if the individual Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.


is flexible and has developed considerable strength on the sides that are not his/ her preference. Also, it is very desirable to have a variety of personalities in various facets of system development.

Four Temperaments

Psychologist David Keirsey (Keirsey & Bates, 1978) identified four temperaments that can be derived from the 16 MBTI types: Promethean (Rational)-NT; Apollonian (Idealist)- NF; Epimethean (Guardian)-SJ; and Dionysian (Artisan)-SP. Thus, each of the sixteen types belongs to one and only one temperament. There are specific life attitudes particular to each temperament and, of course, these attitudes are carried into the work environment. The Guardian comprises about 38% of the U.S. population. A person of this type longs for duty and exists primarily to be useful to society. The SJ must belong and this belonging has to be earned. He has a belief in and a desire for hierarchy. The SJ is “the foundation, cornerstone, flywheel, and stabilizer of society.” This is the conservative traditionalist. As we have seen earlier, SJs make up the largest fraction of IT professionals. The Rational is found in about 12% of the U.S. population. The NT values competence and loves intelligence. He wants to be able to understand, control, predict, and explore realities. He often seeks to study the sciences, mathematics, and engineering—what is complicated and exacting. NTs tend to live in their work and to focus on the future, having a gift for the abstract. They have the capacity to think strategically and to develop visions of the future. They work on ideas with ingenuity and logic. They can be self-critical, perfectionistic, and can become tense and compulsive when under too much stress. The Artisan is found in about 38% of the U.S. population. She is impulsive, living for the moment, wishing to be free, not tied down or confined. She has a hunger for action in the here and now. SPs are spontaneous, optimistic, and cheerful. They thrive on variety and can be easily bored with the status quo. They also have a remarkable ability to survive setbacks. The Idealist is found in about 12% of the U.S. population. She is the deepest feeling person of all types and values deep meaning in life. The main need of this type is authenticity to one’s deepest self. NFs speak and write fluently, often with poetic flair. They seek interaction and relationships. They enjoy bringing out the best in other people. NFs work towards a vision of perfection and can be unreasonably demanding on themselves and others. In certain situations, sixteen MBTI types may be considered too many. The four derived temperaments, each consisting of four MBTI types, thus offer a more aggregated approach that nonetheless highlights key differences among


180 Kaluzniacky

people. Thus, the Keirsey temperaments can make a valuable contribution to the systems development area. As we consider the key strengths of each temperament—NT-vision, competence, abstraction; SJ-detail, practicality, facts, organization; SP-spontaneity, practicality; and NF- authenticity, relatedness, we see readily that each of these strengths is very welcome in the systems profession. Information systems development comprises a variety of activities and tasks, and the strengths of the different temperaments are instrumental in these different tasks. Once we consider the issue of the task-temperament match in more depth, we begin to appreciate that literacy in this area can indeed have an impact on the workers’ energy and productivity. Rational-NT: The strength of the NTs is competence, abstraction, highlevel vision. Their strengths are particularly desirable in systems planning, process redesign, and high-level modeling. NTs excel at applying logic to new possibilities, often in a creative manner. They can also abstract away and model essential elements of a business process and can identify, with thoroughness, inter-process connections. Thus, NTs have been linked with tasks such as project scoping, system planning, establishing business policy, and data and process modeling. Such types are valuable in business process re-engineering. The introverted NTs will tend to think about business processes and future supporting systems differently from current consideration. Extraverted NTs will actually take the lead in carrying out change. They can be instrumental in planning and initiating systems projects at a high level. With the immediate future of information systems focusing on large-scale enterprise resource planning systems and on innovative Internet-based e-commerce applications, the contribution of NTs will be invaluable and requirements for such strengths will likely increase. To carry out such work without the NT may cause unnecessary risks. The SJ will lack the visionary, abstract orientation and could tend to focus excessively on details. The SP would likely find such long-term planning and modeling work as lacking spontaneity, action, and immediate realism. To the NF, extended hours of abstract logic without a human, relational focus, might be draining and unsatisfying. Guardian-SJ: The SJ temperament undoubtedly has a definite and likely permanent place in the IT profession. The Australian survey (Thomsett, 1990), shows SJ types comprising 73% of the survey sample — three out of every four IT workers in the sample had the Guardian temperament. An SJ is characterized by detailed, linear thinking with an orientation to facts and the status quo. Order, structure, procedures, and belonging rank highly with an SJ. Thus SJs Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.


have traditionally been attracted to and have excelled in procedural computer programming and have often been promoted from programming to other areas of systems work (analysis, design, project management, etc.). SJs have been identified with lower-level modeling of the current processes (when the need for detail supercedes the need for abstract conceptualization of future possibilities), program structure charting, physical data modeling (where the real is emphasized over the conceptual), network and technology design, programming, testing, listing user acceptance criteria, creation of the system procedures manuals, and system installation. We can see that each of these tasks requires detailed, logical thought with practical consideration. Such tasks, therefore, are the natural domain of the SJ; from them, he derives energy and motivation. An important question for the future of the IT profession is whether the sphere of influence of the SJ is shrinking. In days of basic, functional, transaction-oriented reporting systems mostly constructed in COBOL, the SJs predominated in the systems profession; many people of other temperaments may not have found such a profession attractive. However, the times have certainly changed. The systems area encompasses a much broader scope of activity and competencies. Systems are making use of a variety of media and information types. Their influence is expanding significantly and their role in many business organizations has become more central. Thus, while there remains a significant proportion of “SJ activities” in systems work, room for meaningful contribution from NTs and also SPs and NFs has increased. The profession has become much more diverse. Artisan-SP: This temperament was found in 3-9% of the survey samples mentioned. Although not that many SPs appear to be in the IT profession, their contributions cannot be undervalued. They value practically and spontaneity and do not like to work at only one task at a time. Thus, SPs are ideally suited to maintenance (“firefighting”) work, because of the variety and unpredictability. SPs can also be found at help desks. Also, SPs can be valuable working beside SJs on tasks requiring a practical, functional orientation. They may provide valuable balance to SJs because of their open-endedness. Thus, in literature, Artisans are listed alongside Guardians for tasks such as network design, physical data modeling, and, particularly, installation, where unpredictable difficulties will be handled as energizing challenges. With the introduction of visual system development environments and multimedia systems, SPs may indeed be attracted in larger numbers to the systems field, once they can be assured that they will not be drained by routine and boredom. Idealist-NF: NFs are also not numerous among systems professionals; 612% were reported in the surveys. An NF is a person of deep feelings that are Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

182 Kaluzniacky

either dominant or auxiliary and mostly ahead of thinking. They must be authentic to their deep self when they are working and have a strong relational orientation. Usually NFs in systems work, although they prefer feeling, are also quite capable in the thinking function. Thus, they can have a unique and significant role, if they are recognized for their particular talents. Many systems projects, to be successful, need effective human relations at several points: initiating the project and obtaining support from higher management, getting enthusiastic user support during requirements determination, enabling of cohesive teamwork during analysis, design, and development , and production of training materials that would be enthusiastically adopted by the users. NFs are adept at listening, persuading, motivating, and harmonizing. They are the most emotionally insightful of people and very adept at perceiving non-verbal communication. The increasingly socio-technical nature of most systems efforts nearly mandates input from capable NFs. Such people are often sought after as managers and motivators of system professionals. Thus, we see that each temperament is uniquely suited to specific tasks in the system development effort. All temperaments have something to contribute in IT. It is important, however, not to continuously try to fit the “square peg into the round hole.” Applications in IT Practice MBTI has been widely accepted in the area of general management. Thus, many organizations have been bringing in consultants for a half-day or one-day workshop. In some cases, a follow-up workshop may be held some time later. IT professionals have, in many cases, been included in such workshops and have thus been introduced to personality type concepts. However, often there has been little follow up to an initial workshop, and the typical IT worker may have benefited only marginally from initial exposure. However, there are indeed situations in IT where MBTI was accepted more seriously with impactful results. At Corning Inc., MBTI has been used more extensively, particularly in relation to teams. After initial introduction to MB types, the IT staff go through four-hour training sessions that have participants play roles, solve hypothetical problems, and listen to one another. For example, they may gather all NFs in one group and SJs in another and have the two groups solve the same system development problem. Then each group shares with the other how it solved the problem, that is, what steps it took. These steps are then related to MB concepts. This is a prime example of “emotional literacy” education in the IT area. Such heightened awareness has increased trust among Corning’s team members, since they are aware of each other’s perceptual differences and are not as likely to be intimidated by them. Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.


Another significant application of MBTI occurred more recently at IBM, as part of its Team Pac program used to train teams. MBTI was chosen as the personality component of the program because it had (1) acceptable validity studies and documentation, (2) books and conferences where people could learn more about type, (3) a self-scoring version for easy administration, and (4) considerable acceptance in the business world. There were 26 topics selected for Team Pac and, of those, three topics related well with MBTI—the three related to group work stages. Thus, IBM created three separate modules, each about four hours long. The first module introduces type differences and gives participants exercises to understand each of the four dimensions. Then, the members respond to a series of teamwork dilemmas. This module ends with formation of a plan of action as to how this team will work with its differences. The second module looks at the function pairs ST, SF, NT, NF, since these are seen as influencing communication the most. People examine their communication styles, and each person practices communicating with someone of another type. Then the participants are shown how famous business decisions were made and which of the function pairs were used in making them. The third module examines leadership and learning styles based on the four Keirsey temperaments (1978). Team members’ leadership preferences are related to the leader’s temperament. IBM finds that having three modules is effective, since people have time to absorb basic information and only then get into more depth. In just over three years, more than 30,000 booklets of the Team Pac materials for the MBTI modules have been used. Such an extensive and focused application of MBTI is encouraging. The use of MB in the IT area may, at some point, need to be assessed through a maturity stages model. Many organizations have yet to introduce it; some have introduced it, but have left any follow up to the individuals themselves; and a few, like IBM, have taken MBTI involvement to another level of maturity. It is likely, though, that unless type awareness is an ongoing effort in the IT environment, it will not realize its true potential. Yet another noteworthy application has occurred at Hewlett-Packard in California. A team was created to implement SAP enterprise resource software. Considerable time was spent at the start examining communication and personality dynamics on the team. At first, team members were skeptical about investing such a significant amount of time on “touchy, feely stuff,” but as the group gelled, the people realized that they did not lose days but actually gained weeks. One HP manager commented that, for them, Myers-Briggs was a Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

184 Kaluzniacky

turning point! Team members realized that “diversity and differences are what made the team successful in the first place.” The two most highlighted uses of MBTI in systems development relate to teams and tasks. In teamwork, it is important to be conscious of the reality that what energizes one person actually drains another, decreasing the person’s effectiveness, productivity, and motivation. As a concrete example, two analysts at a finance company, one an ISTJ and the other an ISTP, were asked what stresses them most in the course of their daily work. The ISTJ replied that she was really stressed when she had a number of different projects to work on simultaneously. She would have much preferred to complete one item of work, put it away, and then start on another. The ISTP, on the other hand, indicated that she felt very much stressed when she was working on one thing too long. She actually needed to be working on several items at once and liked switching from one to the other spontaneously. The above story is very significant, not only because it is true and agrees with type theory, but it is noteworthy above all because it shows how the work energy of the different types, if not harnessed properly by psychologically aware IT management, will largely be wasted. In teamwork, therefore, assigning tasks to people naturally suited for them is a primary issue. Following this is the need to balance teams such that each member’s energy is utilized as functionally as possible. Such an orientation requires considerable awareness on the part of team members and managers, as well as deepened trust, in order for team members to be open enough to discuss genuinely their strengths, weaknesses, and occasions of drained energy.

PERSONALITY INTELLIGENCE: ENNEAGRAM

We can appreciate the insights provided by the Myers-Briggs system. However, we are equally aware that no one system can hope to address all aspects of personality. A noteworthy personality analysis tool that has achieved a significant presence in both personal growth and management applications is the Enneagram System of Personalities. The essence is said to have descended from the ancient Sufis and modern adaptations have been made by a variety of authors, including Riso and Hudson (1990), Palmer and Brown (1998), Rohr and Ebert (1990), and Goldberg (1996). Whereas MBTI attempts to explain how we function, the Enneagram focuses more on why we function in a particular way— what is our underlying Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.


emotion that guides the way we act? In this way, MBTI and the Enneagram can be viewed as complementary.

Nine Basic Types

The Enneagram proposes nine personality types, with each type being assigned a specific number, one to nine. It is assumed that each type operates under the often subconscious influence of a specific emotion, as pointed out in Table 2. Moreover, each type is said to have a main desire, along with a main fear. Such tendencies are often explained by the notion that no one has had a perfect upbringing environment. The interaction of a person’s innate emotional “slant” and the type of inadequacy in the upbringing environment are said to give rise to the nine ways of viewing and reacting to reality. In short, each of the nine types requires some “condition” to be satisfied before he/she can experience him/herself as being “OK.” Behavior is guided by the underlying emotion so as to satisfy the critical condition. 1. 2. 3. 4. 5. 6. 7. 8. 9.

The Perfectionist-1 can feel OK only if he is performing nearly perfectly—if he is doing the “right” thing. The Helper-2 can feel OK only if she is helping someone else and receiving appreciation from the one being helped. The Status Seeker-3 can feel OK only if his image in front of others is that of a successful, important person. The Artist-4 can feel OK only if she is free to be unique—different from everyone else and to express this uniqueness in her own way. The Knowledge Seeker-5 feels OK only if he has impartially observed, analyzed, and learned as much as possible about his environment. The Loyalist-6 can feel OK if she is obedient to external rules and dictates; she is often hesitant to act out of personal initiative. The Fun Seeker-7 feels OK if he is having fun, even in difficult situations—an external optimist who carefully avoids suffering and may overlook important warning signs of impending danger. The Power Seeker-8 feels OK if she is the “mover and the shaker,” not having to submit to others. The Peace Maker-9 feels OK if there is no conflict—often at all costs.

Having looked at the above overview of the nine types, we can undoubtedly notice people in our personal or work lives who fit some of the above descriptions. Most of us likely know at least a few people who are “classic fits” with some of the Enneagram types. To emphasize this, the following example, Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

186 Kaluzniacky

Table 2. The underlying emotions of the Enneagram types Type

Emotion

One (Perfectionist)

Anger

Two (Helper)

Pride

Three (Status Seeker)

Deceit

Four (Artist)

Envy

Five (Knowledge

Greed

Seeker) Six (Loyalist)

Fear

Seven (Fun Seeker)

Gluttony

Eight (Power Person)

Lust

Nine (Peace Maker)

Sloth

taken from the book Beginning Your Enneagram Journey (Brady, 1994), may prove useful. Ten people are going to an event together. They are walking toward the entrance of the place where the event is to be held. Suddenly, one of them trips on a cracked sidewalk and falls. Each of the others (assuming each is of a different type) will react differently to this experience. One:

“It’s inexcusable to leave a sidewalk in such poor condition”.

Two: "Awwh. You poor thing, let me help you up.” Three: “Here. I’m good at this sort of thing. I’ll do it.” Four: “I fell like this once, and I was in bed for two weeks afterwards”. Five: “Isn’t it interesting how everyone is reacting differently to the same event?” Six:

“Are you ok? Oh gosh, now we are all going to be late. This is awful. What

should we do?” Seven: “Wow! What a fall! Hey, but you’ll be up and dancing in no time.” Eight: “I’m going to get hold of the building manager and demand that this be rectified immediately.” Nine: “Calm down, everyone. Everything is going to be alright. Let’s not get too excited.” Source: Beginning Your Enneagram Journey, (Brady, 1994)



Each type has provided a different response as a result of having viewed and experienced the event from his basic life-view. While each type is associated with a particular “compulsion” and thus a type of dysfunctional energy, the actual diagram of the Enneagram system (Figure 1) offers what are called “directions of integration” (arrows for each type). Conscious progression for each type along the indicated path allows the type to become broader, deeper, and more balanced, thus utilizing psychological energy more effectively and more dynamically. From the Enneagram, we can appreciate much more clearly and directly how different people can be doing the same IT work but from different underlying motivations. Thus, they will recognize different challenges in the same IT work and will exhibit different reactions. For example, in a situation of considering significant reduction of intended project scope, a One may be motivated by meeting the intended original deadlines. A Two, on the other hand, would consider, above all, the effect of the intended reduction on users. In deliberating whether to introduce a new system development methodology or technology, or possibly whether to change to an ERP system, an enthusiastic (possibly overly optimistic) Seven might favor “jumping right in,” while the fearful, cautious Six would likely advocate further, detailed feasibility analysis, possibly hoping for a “no” decision. In a power struggle between IT and an influential user department related to the direction and pace of automation, the Eight IT manager might adopt a “bulldozing” approach and force the user to accept his decision, whereas a Nine could be overly accommodating to the detriment of optimum effectiveness. Within the IT employee himself, the key question is how might his reaction drain his own inner mental and emotional energies, making such energies Figure 1. The Enneagram—showing directions of integration


188 Kaluzniacky

Table 3. Enneagram types in IT—A summary Compulsion to follow the highest principles, to be "perfect”

Emotion Anger

IT Strengths programming, quality assurance, testing, auditing, technical support, telecommunication system requirements determination, prototyping, help desk, user training

IT Weaknesses strategic planning, evaluation of system alternatives, group consensus, dealing with ambiguity isolated work, data modeling, systems programming

Two (Helper)

to help others, with expectation

Pride

Three (Status Seeker)

to promote and maintain one’s image of success

Deceit

team leader, IT manager, CIO, highprofile technical specialist

detailed "grunt work" with a low profile

Four (Artist)

to be always unique and different; to avoid the mundane

Envy

multimedia, Web site design, visual system development, user manual production

Five (Knowledge Seeker)

to seek increasingly more knowledge, mostly for its own sake

Greed

Six (Loyalist)

to seek security in loyalty and obedience to external parties to have fun, in whatever situation

Fear

strategic planning, high-level process and data modeling, high-level telecommunications design, research and development, business process reengineering programming, auditing, data modeling, lowerlevel design, testing

auditing, maintenance programming, prolonged, procedural programming people management, user interaction, routine and detailed work

to be invulnerable, powerful, in control to avoid conflict, to seek harmony

Lust

One (Perfectio -nist)

Seven (Fun Seeker)

Eight (Power Person) Nine (Peace Maker)

Gluttony

Sloth

system initiation, particularly ecommerce systems for competitive advantage, management, embracing change, user interaction, visual design management, CIO, champion of change, ERP consulting team leader, JAD leader, programming,

dealing with ambiguous situations, accepting new paradigms, conflicting goals procedural programming, lower-level modeling, auditing, work with prolonged isolation

procedural programming, lowlevel modeling, auditing technical support, work with tight deadlines

Growth Direction to Seven - relax the need to perform perfectly, have fun to Four- focus on your own emotional needs freeing yourself from need for admiration by those you are helping to Six - focus on working out of genuine loyalty rather than to maintain an image to One - look outside, to high standards rather than mostly within yourself to Eight - step outside your own mind to commit knowledge to powerful action

to Nine - don’t let fear drive you, don’t make goals so absolute-everything is not "a big deal”; seek peace to Five - seriously learn a few things in-depth, even though it may not always be fun

to Two - use power not to be in control but to help others genuinely to Three - instead of compromising results for the sake



unavailable for solving the problem at hand. Between individuals, how might their differing reactions to a situation they face in common initiate caution, mistrust, and lack of synergy instead of the intended effective, synergetic communication? Whether alone or with others, a person who has not integrated the various perspectives of the Enneagram to at least a fair degree will experience a considerable amount of stifling energy blockage, underutilizing his potential and reducing his possible level of fulfillment. Can the IT area of today and tomorrow afford to accommodate passively such a reality? More systematic investigation and research would need to be done to have an initial orientation as to how Enneagram insights relate to system development practice. At this point, therefore, it may be useful to examine a preliminary attempt —a tabular summary of all the types and their strengths and weaknesses, albeit mostly hypothesized, as related to IS work.

COGNITION INTELLIGENCE

While personality relates to one’s behavior as a whole, cognitive function relates more explicitly to mental information processing. Since the majority of system development work and IT work in general involves intellectual functioning, it is not difficult to see that how a person performs “mind work” is a relevant psychological factor in IT work. In fact, it is in the area of cognition in which a majority of psychological research in computing /information systems has been carried out. According to Hayes and Allinson (1998), cognitive style is “a person’s preferred way of gathering, processing, and evaluating information.” Streufert and Nogami (1989) identify cognitive style as a pervasive personality variable. It influences what information in one’s environment a person focuses on and how he/she interprets this information. One main way of dichotomizing cognitive functioning is the analytic, sequential versus intuitive, wholistic functioning. Some psychologists have referred to the former as “left-brain thinking” and the latter “right-brain thinking” (although other scholars may consider this an oversimplification). The former focuses on “trees” and the latter sees the “forest” in solving problems and coming to conclusions. There are suggestions that link MBTI temperaments with the two predominant cognitive styles. Huitt (1992) identifies NTs and SJs as more linear and serial, and NFs and SPs as more wholistic and intuitive. We have all likely seen classic examples of each style, either at work or elsewhere. The analytical person abstracts, analyzes, structures, organizes, and Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

190 Kaluzniacky

plans systematically. He can articulate clearly and may focus on details. However, he can miss “intangible clues” such as facial expressions or other “body language.” He may also be criticized for being bureaucratic with limited imagination. The intuitive person integrates many perspectives, finds problems and discovers opportunities, and generates new visions. She is sensitive to both logical and emotional issues, viewing them as one. However, she may overlook important details, may not communicate precisely enough, and may put off decisions. The analytic is like a tax lawyer, the intuitive, like a criminal lawyer; the analytic like an accountant or chemist, the intuitive like an athlete or artist; the analytic prides himself on intellectual rigor, the intuitive on imagination. As with personalities, most people may not fall exactly into two opposing “boxes”; however, there appears to be a definite preference in one direction.

The Adaptor-Innovator

One of the main theories on cognitive styles, along with an instrument to evaluate the style, is the Kirton Adaptation /Innovation theory (KAI) (Kirton, 1989). This theory of cognitive strategy relates to the amount of structure that a person feels appropriate within which to solve a problem or to embark on creativity. The Adaptor (left-brained) prefers to work within current paradigms; focusing on doing things better, while the Innovator (right-brained) prefers to “color outside the lines,” constructing new paradigms, focusing on doing things differently. According to psychologist/consultant Michael Kirton (1989), the Adaptor favors precision, reliability, efficiency, prudence, discipline, and conformity. He seeks solutions in “tried and true” ways, seeks improvement and efficiency, and rarely challenges rules. He is seen as sound, dependable, safe, and conforming and is an authority within given structure. The Innovator, on the other hand, cuts across and often invents new paradigms. He is more interdisciplinary, approaches tasks from unsuspected angles, and often treats accepted means with little regard. He tends to take control in unstructured situations, but is usually capable of detailed routine work for only short bursts of time. While an Adaptor has higher self-doubt and is vulnerable to social pressure and authority, an Innovator does not need consensus to maintain confidence in face of opposition. To distinguish Adaptors from Innovators, Kirton (1989) developed the Kirton Adaptation-Innovation Inventory (KAI), a questionnaire consisting of 32 items, each scored from 1 to 5. KAI scores range from 32 for a pure



Adaptor to 160 for a pure Innovator. The stability of the KAI has been observed over time and culture; it may be measured adequately even early in a person’s life. KAI distributions for general population samples from six countries conformed almost exactly to the normal curve with a mean of just above 94 (where the theoretical mean would be 96) (Kirton, 1989). KAI scores did not correlate significantly with IQ, achievement, or creativity tests. This emphasizes that KAI is a measure of cognitive/creativity style rather than capacity.

Cognitive Style in IT

It is not difficult to realize that there will be both Adaptors and Innovators in the IT profession. It is also easy to see that each style, if properly harnessed and managed, will provide significant contributions to the development and implementation of information systems, particularly Web-based multimedia applications. The late researcher Dan Couger (1996) applied KAI to a representative sample of IS professionals and found that most were inclined to the Adaptive rather than the Innovative style. This would agree with the preponderance of SJ temperaments in IS. In this situation, however, many IT organizations will develop Adaptor managers who prefer the Adaptor (analytic) style. Valuable contributions from talented Innovators may be ignored or discouraged. This may indeed be dangerous in an area where paradigm changes are paramount. In Kirton’s book (1989), we see a consulting case where an international oil company was experiencing a conflict between two department managers and their senior analyst. The managers required that the analyst’s work tie in directly to the business plan and not deviate from the established “business climate”; he had to establish credibility with other managers. The analyst accused the managers of being short-sighted and not perceiving the future patterns of business nor preparing adequately for them. When the three took the KAI, the managers averaged 86 and the analyst 117. Eventually, the analyst decided to seek employment elsewhere. Anecdotal reports suggest that the difference of more than one standard deviation in KAI scores may cause significant problems in employee communication. Again, for the IT professional, the key is awareness. In IS development, there are tasks that require applying established technologies to new situations (adapting) and others that benefit from entirely new approaches. The latter can usually enhance competitive advantage. However, according to MIS researcher Michael Epstein (1996), “the need to integrate the mechanistic logic of computers with the ambiguous nature of living


192 Kaluzniacky

human systems remain fundamental to the successful design and implementation of computer-based information systems.” Thus, the mature IS developer will increasingly need to combine both views consciously and effectively. Moreover, it is not only a matter of “system” issues requiring an analytic approach and “people” issues requiring the integrative, wholistic perspective. “Rightbrain” contribution can indeed be significant in specific areas of analysis, design, and development. Design of user interface and Web pages and multimedia components, clarifying and improving upon user-identified system requirements, process re-engineering for ERP implementation, and identification of domain objects can all benefit significantly from a thinking process that is intuitive and innovative. It remains for interdisciplinary IT research to identify more specifically how such “right-brained” efforts complement the traditionally accepted analytic approaches to IS development. To gain practical insight into the issue of thinking style in IT, one can consider some significant developments in applied computing and hypothesize which style may have contributed most in each case. For example, the concepts of Computer Aided Software Engineering (CASE) tools or Enterprise Resource Planning (ERP) systems may well have resulted from a more traditional, analytic style. CASE mainly automates and integrates existing approaches to system development; thus, the CASE concept is an extension of an existing paradigm. Similarly, ERP systems are a large-scale adaptation of previously existing smaller integrated business applications. However, the OO paradigm is likely the result of the innovative, intuitive thinking style — it models data and related processes in an entirely new way. Such an intuitive style may also be responsible for innovative ways in assisting system users, for example, the recording by an EIS of which screens an executive uses most often. Also, considering that system development efforts are often initiated by problems and opportunities, it is quite possible that while “left-brain” thinking can address existing problems adequately, it is the “ rightbrain” approach that can capitalize on new opportunities from an IT perspective. With the scope of information systems continually and rapidly expanding, the many problems to be solved and decisions to be made will no doubt benefit from a functional, conscious synergy among workers with differing styles. Huitt (1992) stated a researcher’s opinion that “the problem-solving techniques are most powerful when combined to activate both the logical/rational and intuitive/ creative parts of the brain.” Agor (1991) stated emphatically that “it is of great concern today that organizations often thwart, block, or drive out intuitive talent,” and also “organizations typically know their personnel by formal job Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.


title, responsibility, or years of experience — seldom do they know which brain skills are possessed that can be applied to difficult problems.” Undoubtedly the latter comment applies quite directly to most IT organizations. It is quite probable that the IT profession and system development in particular is ready to begin a concerted, conscious awareness regarding cognitive style. However, an individual system developer needs to be sufficiently motivated and sufficiently supported to achieve this goal.

FOUNDATIONAL INTELLIGENCE— THE DEEPEST INNER SELF

Psychological factors examined until now have dealt largely with how we behave and function and also how we think and learn. But, are we simply “rational animals” with an intellect, feelings, and a body? Is there, from a conceptual as well as experiential point of view, yet another component to the human person? If so, how can explicit awareness of this component contribute to the work effectiveness of an IT worker? This section assumes that, indeed, the deepest inner self, (inner core, center, being) does exist in and can be consciously accessible to a welladjusted, aware human person. Furthermore, this central core can truly provide rejuvenated psychological energy in times of stress and change, and it can also provide stability and impetus to significantly creative efforts. Thus, it is proposed here that conscious awareness of one’s deepest self can indeed add a very important dimension to the work of an IT professional, particularly one whose work involves human interaction. In addition, it is pointed out that connection to one’s inner self provides the theoretical and empirical basis for the notion of “emotional intelligence.”

A Two-Tier Model of Human Consciousness

For a majority of people, at least in today’s Western world, their selfawareness is largely limited to a one-tiered view as shown in Figure 2. Here the mind (intellect), feelings (emotions), and the body (with its senses) are identified. The will is the force that channels one’s consciousness to the various parts in various proportions during the day. A person at this level of awareness has the three components available for use. However, each of these three parts can be at different levels of positivity or negativity at any point in time. For example, the mind can be thinking clearly or be confused; feelings can be elated, peaceful, or angry; the body can be


194 Kaluzniacky

healthy or sick. Indeed, these very “human,” imperfect components cannot be counted on to come through for us “in top form” in situations of definite need (e.g., dealing with a system crash the day before installation). However, a variety of personal growth programs and literature, some of which have received notable acceptance from professional circles, propose the two-tiered model of the human person, shown in Figure 3. Here, the three human dimensions are receiving energy/direction from the deepest self/core energy/inner being, which operates on a separate, deeper level. Moreover, the substance of this core energy is only positive —there is nothing negative and nothing missing (for deep psychological wellness) in the inner being. The difficulty, though, lies in establishing and maintaining a strong enough connection between the human and the being parts. Dr. Bernie Siegel (1989), well-known health counselor and former Yale University surgeon, points out that: Most of us are in touch with the inner self only intermittently, if at all... it’s not located in the conscious mind... this perfect core self seems to fit in with neuropeptide theories... I first got to know this perfect core self through meditation.... however you get there, you’ll know you’ve arrived — it’s like coming home, and home is where the healing can begin... within your true, unique and authentic self (p. 102). Figure 2. One-tier model of the human person

BODY (SENSES)

EMOTION

INTELLECT

Figure 3. Two-tier model of the human person INTELLECT

EMOTION

BODY (SENSES)

HUMAN

EMOTIONAL BLOCKAGES

DEEPEST INNER CORE

BEING



We can usually switch our attention, our concentration, willingly from the mind to the body or to the feelings—the use of will is more direct here. However, it is not possible to will oneself into the deepest self. One can, at best, willfully relinquish control of the mind, body, or feelings and try to focus on one’s “felt truths”; the core energy simply surfaces to consciousness. Also, in the two-tiered model, note the “wedges” between the human parts and the inner core energy. These are the reasons why most of us are not often in touch with our “true, authentic self.” According to a number of personal growth perspectives, there are five basic inner needs that we have when we are developing psychologically: 1. 2. 3. 4. 5.

to be SEEN for what we are experiencing deep within us; to be HEARD attentively when we try to communicate something of deep importance to us; to be TRUSTED in our innate ability to develop “for the good” without “micromanaging”; to be RECOGNIZED and addressed as a unique person who has infinite value much beyond behavior and performance; and to be SAFE to open deeply inner experiences, awareness, struggles and discoveries without being judged.

Significant frustration of the above five needs, by deprivation and/or negative (perhaps, but not necessarily abusive) impact creates emotional blockages, many of which are initially subconscious. These are largely the reasons why many people, IT professionals included, are not sufficiently aware of or connected to their most positive inner asset. Personal growth programs, such as PRH International (1997) and Hoffman’s Quadrinity Process (Hoffman, 1988) aim at recognizing, identifying, and removing these debilitating and limiting blockages. The reality of the pure, deep, inner core energy has shown to have significant potential for psychological empowerment in personal and professional life. Can IT professionals afford to ignore such a potential? It is hypothesized here that, besides personality/cognition factor awareness, an IT professional’s conscious self-development according to a two-tier model would provide significant additional benefits to his workplace. However, this psychological dimension may be, at least initially, the most difficult for the IT worker to assimilate. IT workers, the majority of whom are TJ types in MBTI, are accustomed to structure and precise, logically definable realities. For some, perhaps many, such realities have exclusively formed their life view. In such a view, being in Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

196 Kaluzniacky

control, understanding, and “scientifically predicting” are counted on to provide inner security, self-worth, and motivation. However, the rapid change in technology and in IT paradigms (such as OO) coupled with increased expectation in the Internet era of mega-connectivity are eroding, at times significantly, “security from control.” Consequently, many IT workers may, knowingly or not, be in or heading for a major crisis, not only due to overwork and frustration, but most importantly due to significant experiential threats to their source of inner security and identity on which most (perhaps all) of their life rests. The IT profession seems to be recognizing the threat of impending “mass burnout.” In a recent issue of the Cutter IT Journal, dedicated to IT Burnout, Edward Yourdon (2002) states, “Burnout is still a topic that most senior managers would rather not confront, but it has become so prevalent and severe that some IT organizations have become almost completely dysfunctional.” However, breakdown can lead to breakthrough. To minimize the damage of prolonged stress in IT, a new vision is first of all needed, a wholistic model of a “functional IT worker,” a model that can have its roots in the two-tier perspective outlined earlier. From this vision, effective assistance measures could indeed be provided. A major contribution to such a “new vision” that can apply to IT professionals can be seen in the work of Gary Zukav, author of the bestseller The Seat of the Soul (1990), and Linda Francis. In their collaborative book, The Heart of the Soul (2001), Zukav and Francis declare: Spiritual growth [awareness of the deep self] is now replacing survival as the central objective of the human experience. . .the old species explored the physical world and it created security by manipulating and controlling what it discovered. The new species creates security by looking inward to find the causes of insecurity and healing them…This is the path to authentic power. Authentic power is the alignment of your personality with your soul [i.e., deepest core energy] (p. 159). For these authors, and numerous others, a deep, inner self-awareness is capable of providing a complementary psychological empowerment that awareness of personality factors and cognitive concerns alone cannot offer. With this in mind, the two-tier model can thus form a basis for a strategic vision of a “functional IT professional” of the 21st century. However, strategy must lead to tactics. There must be available prescriptions as to how one can develop a “deep inner connection,” as well as a clarification of the relationship of such



an experienced connection to Goleman’s (1995, 1998) currently popular concept of “emotional intelligence.”

A Structural Foundation for Emotional Intelligence

When one is working, albeit perhaps not explicitly, with a one-tier model of the human (intellect, emotions, body, and its sensations), an intelligence— not of the intellect per se and not specifically bodily kinesthetic—can be easily labeled “emotional.” There is no other component in this model to which to appeal. However, the term “emotional intelligence” may appear vague and confusing. IT professionals in particular (many of whom are thinking and structured, judging types) may be uncomfortable in knowing how to make their emotions “intelligent.” Understandably, considerable confusion and ambiguity could abound in, say, trying to make an IT department “emotionally intelligent” when working from a one-tier model of the human person. However, if we consider the two-tier model introduced in this chapter, where the intellect, emotions, and body serve and receive the all-positive, deep psychological core energy from the deepest inner self/being, then the entire concept of “emotional intelligence” is immediately clarified. The intelligence comes from the gratuitous innermost zone, the second tier. It then illuminates the intellect, the emotions, and the body, which, having access to this reservoir of wisdom, can thus display all the features that Goleman and others identify with “emotional intelligence.” Both the mind and emotions become the servant of the inner being. Thus, in this view, the way to develop emotional intelligence is to work at removing (evacuating) the blockages between the intellect-emotions-body and the deepest inner self, and then to allow one’s thoughts and feelings to be guided by the now accessible inner energy where all the necessary awareness should ultimately be found.

Benefits of Increased Awareness to IT

Increased inner consciousness and the resulting empowerment must be seen to yield important benefits to the IT workers, their employers, and to the user community. The main benefit to IT of growth into and work from the deepest inner self is psychological robustness, capacity for psychological resilience in the face of overwhelming challenges. Change management consultant Diana Larsen, in “Embracing Change” (2003) notes: “Change agents and those involved with change who have the personal and social skills of emotional intelligence will


198 Kaluzniacky

show more resilience in the face of a shifting environment.” Personal growth programs that help one to access one’s deepest self could, thus, be a very impactive resource for IT workers. Ordinarily, when reacting to stressful, unfamiliar circumstances, unfavorable emotions such as anger, frustration, fear of failure, and the like, can take over the psyche and largely disempower the intellect. However, the revitalizing psychological energy of the inner being is present deep within, at the level more foundational than the intellect, emotions, or body. It indeed provides the empowering psychological energies that accrue when one has grown sufficiently to be able to “drop oneself into” one’s deepest core energy in the face of external storms in the course of IT work. Availability of such an empowering inner resource depends on maturity in growth. This significantly affects one’s essential, emotional orientation to the required efforts of one’s daily work. Thus, an IT manager may begin to wonder while GUI design, code testing, or data modeling are going on among her subordinates, what is likely happening for each of them at an inner level? What are they feeling, how are they reacting emotionally to the tasks and challenges at hand? More importantly, she may wish to assess which persons are capable of being very involved yet not attached in dependency (not addicted to their work). This is emotional intelligence in action! With a two-tier consciousness in IT workers, teamwork and user communication will unquestionably become more effective, by a “quantum leap.” With a one-tier consciousness, much communication is hampered by emotional “self-protection”—one does not want to show one’s professional and/or personal insecurity; one may be threatened by approaches or styles different from one’s own. With a growth-induced, two-tier awareness, such defense mechanisms are unnecessary and would not even be considered. With such an awareness, one knows that one can dissipate self-consciousness with consciousness of the pure, all-encompassing energy emanating freely from the deepest inner part. With an awareness of the deepest self and connection to it, it is very easy to admit, fully and truthfully, as appropriate, one’s shortcomings and limitations, because one is simultaneously aware of one’s indisputable value, goodness, and worthiness which come from deep within. With an expanded consciousness and self-concept, and, thus, a transformed identity (from “techie” to a multidimensional “information resource facilitator”), the new IT worker can indeed be effective in the current system development climate. Through his/her now natural capacities for cooperation, respect, listening, flexibility of viewpoints, fairness, optimism, and emotional



resilience, coupled with an awareness of other psychological factors as outlined earlier, such an IT worker would become truly emotionally intelligent. In teamwork, he would gladly listen to and assess opposing viewpoints and would be secure enough at the deepest level to welcome constructive criticism. Out of a profound sense of self-respect—the sense that comes freely from deep within—a developed IT worker could indeed make users feel valued and have their needs and reservations respected and addressed adequately. A project manager with considerable growth in the inner self could be sensitive to the unique talents and psychological needs of subordinates. She could truthfully express firmness or disapproval of a person’s behavior without anger or fear and without having the person feel undesirable. Through her openness and genuine humanity she could invite openness among subordinates, generating considerable trust. Moreover, such growth-based cohesive teamwork need not be restricted to physical teams but can be considered in the virtual team context. Researcher Ruggero Rossi de Mio (2002a) attempts to define “virtual emotional intelligence” and to understand the “group cohesion reaching process”; in this context, it would be instructive to examine the degree of “two-tier consciousness” among the members of a virtual group progressing towards cohesion. In addition, de Mio (2002b) proposes a method for quantitative measure of emotional intelligence in face-to-face and computer-mediated communication. How might such measures relate to a proposed indicator of the degree of intrapersonal, two-tier connectedness? If a manager addresses a subordinate from the intellect (alone), the subordinate’s reaction will also likely come from the intellect. If the manager communicates with emotion (perhaps superficial), the subordinate will respond likewise. However, if the manager connects from her own deepest inner, authentic self, this will prompt a response from the same deep level, especially if the subordinates have been undergoing their own process of inner unblocking and deeper connecting. As an example of such a phenomenon, we can relate the eloquent words of Jim McCarthy, from his book, Dynamics of Software Development (1995): ... a leader’s empathic perception of the psychological state of his or her team is the beginning of what we call vision. If the leader can then resonate with the team’s complex emotional state—identify with it, articulate it, and give the whole constellation of feeling and thought a visible, concrete reality in his or her own personal voice or gesture— the boundaries among individual team members and the leader will Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

200 Kaluzniacky

collapse... Empathy will be established: the leader and the team will feel and know as one, giving voice and identity to what was an incoherent psychological community substrate. And it will feel good to the team to be understood and to understand... Without empathy, vision is hollow, an ersatz vision that might fulfill a requirement that some words appear on a slide, but won’t provide the visceral motivation that inspires a team to greatness. In addition, Kent Beck, the originator of the Extreme Programming (XP) paradigm (2000), dismisses the idea that IT work is “some Vulcanic world of pure rationality” and declares that “To be successful, we must learn and grow our whole selves.” Without doubt, truly “being-centered, ‘whole-self’ IT Teams” of the future will indeed be a sight to behold and a model for work in the post-modern era. Conflicts with a team or with users can be much easier to resolve from an inner- centered consciousness. There will never be attacks on a person or his dignity out of a sense of bruised ego, since inner-centered persons do not rely on ego for security and strength. The deep, freely available inner strength will allow for considerable flexibility in generating new approaches that parties in conflict will be able to accept—people will not need to “defend their turf” so rigidly as if their life, self-worth, and meaning depended on it. Furthermore, such an orientation to conflict management, made possible by a two-tier operational self-awareness, could be developed not only among working IT professionals, but also among IS university students. Hignite, Margavio, and Chin (2002) studied conflict resolution profiles of emerging IS professionals and isolated factors that were shown to influence conflict resolution style. Could a two-tier consciousness significantly influence or perhaps even alter a specific style and could it make the style more effective? In the course of IT work, frustration, anger, and disillusionment, which are humanly natural, will not disappear from people who are considerably integrated. However, the negative effect of these stress-inducing emotions on the thinking capacity, motivation, and physical health will be considerable lessened, since these emotions will not need to be inappropriately expressed or unhealthily repressed but will be offset and largely “melted” by access to a more centered, profound, powerful, peaceful, and energizing inner force. Also, such emotions will not be as likely to perpetrate dysfunctional work decisions among IT workers. For example, in “XP and Emotional Intelligence,” Kay Pentecost (2002) relates an incident where her development team, wishing to please its manager, took on a dubious goal of trying to improve a working demo for an Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.


executive in a very short period of time and failed to have even the basic demo working on time. In hindsight, she acknowledged that the desire to please its manager clouded the team’s judgment as to the feasibility of his request. She pointed out that, “In this group of supposedly logical developers was a lot of negative emotion: blame, fear, anger, frustration, and some amount of despair.” Then, some time later, a similar situation arose, with an inappropriate request for an “express enhancement” to a working demo. The author, tapping into her inner strength and wisdom, truthfully told the supervisor that the team could not do it, in spite of angry reactions. The original demo was promoted to the VP, without desired enhancements, and the VP was impressed. The issue of control is often central for many IT workers. With many system developers having come from a third-generation language programming background, structure was paramount and control over one’s program was very possible. Now with realities such as unrealistic deadlines, ongoing changes in requirements and development approaches, and frequent organizational restructuring, a sense of control over one’s work tasks, one’s competency level, and one’s career path is often eroded. For many structured personalities who may have relied on such control for most of their essential personal security, such an erosion can indeed be traumatic, causing what is termed as “image violation.” Recently, Niederman and Sumner (2003), in a study of turnover among IT professionals, proposed that forward-thinking companies develop “management programs to head-off declining job satisfaction associated with image violation.” In time, such programs may well address the reality of the deepest inner self and present methods of how to access this stabilizing psychological reality. With an active connection to one’s deep inner self, which feeds one’s consciousness with all the deep essential security one needs or wants, one can be emotionally interdependent with work structure and control rather than being emotionally dependent on it. One can be close to structure, work with it, maintain it, yet be simultaneously emotionally free of it. Then, a disruption in structure and loss of control, while they may generate discomfort at one level, will never disrupt one’s inner sense of deep security, one’s conviction of being “OK.” Thus, considerably less energy is being drained, leaving more energy for productive responses to the IT work reality. Related to loss of control are the needs within IT (among both developers and users) for coping with ongoing change and the need for constant, substantial learning. With a two-tier connection, one can be emotionally close and free to one’s work efforts. Considerable distress in change results from needing to let go emotionally of what has become comfortable, fulfilling, and Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

202 Kaluzniacky

even affirming. However, an emotional “letting go” is significantly easier if one is deeply, inwardly connected. In recent research, Shen and Gallivan (2004) showed that negative consequences of the need to deal with change are moderated by the autonomy that IT users experience in their work. Yet in the two-tier model, there is, besides external autonomy (in the workplace environment), an internal autonomy (lack of emotional “clinging” enabled by a connection to the deepest self). The role of the latter will certainly be worth exploring, as IT workers and their managers collectively begin to accept the reality of the psychological inner core. Rootedness in one’s deep authentic self provides positive energy to the emotions and intellect. One then can, by his authentic presence, motivate others genuinely. One can also be inwardly free enough to attempt new, creative approaches to established work tasks. In addition, deeper inner consciousness has positive effects on the planning of one’s IT career. Following one’s deep authentic self, one is motivated basically by truth (as seen by the “inner eyes”) and not by image or external goals. Such an IT worker will seek to know, truthfully, his natural talents and shortcomings; he will be content to work at his current level until genuinely motivated, in all parts of him, to seek another level. He will avoid career management through restlessness, the drive to constant progress, or addiction to “mental highs” in order to drown out a basic inner malaise. Sumner and Yager (2004) identified “managerial competence” as a career anchor of IT personnel. In time, IT workers may look for managerial support of two-tier self-awareness as a component of such competence. A rooted IT worker living mostly with her intellect, emotions, and body at the service of the deepest inner core energy will indeed become emotionally intelligent at work. She will have the courage and ability to access and understand her own feelings and to intuit about the feelings and attitudes of others. Moreover, the inner wisdom of the being will serve as a valuable guide in specific situations. She will “just know” what words to use to diffuse a client’s anger; she will “know” how to handle an apprehensive user; and she will “know” how to correct a subordinate without bruising his ego. Considerable IT literature calls for development of “soft skills.” Such a development is best addressed by comprehensive integration, by connecting an informed intellect, aware feelings, and a healthy body to the deep core energy —by promoting “personal wholeness” within IT work.



AREAS FOR FURTHER RESEARCH

Until now, acceptance of psychological factors in general has been quite sporadic within IT management. Cases where Myers-Briggs application had significant impact have been reported, but they are not apparently widespread. Cognitive style considerations also have not been widely operationalized. Although considerable emphasis is being placed on the “true self,” “inner core,” “authentic inner power,” “spiritual empowerment,” and the like, in proliferating personal development literature, and such perspectives are being introduced in general management training, the deepest inner self, as a separately identifiable psychological reality, has not yet made significant, formal inroads into the management of IT. However, if the reality of the deepest self, which transcends the intellect yet gives tone to it, is seen as the root of “emotional intelligence,” as proposed in this chapter, then this reality will no doubt receive increasing attention in IT research of the near future. After recognizing isolated incidents of apparent two-tier awareness specifically within IT, particular topics related to consciousness of the inner self are proposed for interested and daring IS researchers. Over twenty years ago, U.S. mathematician and computer scientist Orest Bedrij had worked out fundamental mathematical equations for parallel processing of long series of numbers with multiple integers—equations that were then patented by IBM. Bedrij subsequently became IBM’s technical director at the California Institute of Technology Jet Propulsion Laboratory and was responsible for the development and integration of a computer complex that controlled the first soft landing on the moon. To discover the equations, Bedrij prayed and fasted intensely for long periods of time, as was his wont in discovering new formulas. He ceased any attempt at deliberate calculation and sat motionless facing a blank wall where the equations eventually appeared. Bedrij has published a unique, profound, and fascinating book called ONE (1977). The book integrates physics, mathematics, biology, economics, and religion, pointing to the oneness of existence and humanity. Although such an approach may indeed appear extreme for today’s corporate IT culture, researchers Carrington et al. (1980), in “The Use of Meditation-Relaxation Techniques for the Management of Stress in a Working Population,” report that where telephone company employees practiced meditation twice daily for six months, there was an effective reduction in symptoms of stress such as depression, somatization, and anxiety. Also, from participants’ spontaneous comments, the most frequent benefit was an “improvement in cognitive functioning.” Other comments included: “My reasoning process is clearer”; “I think, remember, and organize better”; “… increased Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

204 Kaluzniacky

interpersonal awareness”; and “… do not feel so defensive in my relationships with other people.” These effects may be interpreted as resulting from having the intellect inwardly connected to and at the service of the deepest inner self. This may also be seen as a demonstration of one way to develop higher “emotional intelligence.” This may be of significance in light of a report where a psychologist had administered the Bar-On EQ-i test to gauge the coping abilities and emotional intelligence of 150 IT professionals. The researcher found that the IT workers had a lower score than most other groups of professionals that he had tested. Whereas meditation may lead one to a greater inner awareness that transcends the intellect, there are other paths, among them inspirational music. Recently, music therapy professor Teresa Lesiuk, in her doctoral research (2003), found that music listening contributed significantly to mood change, stress reduction, and increased focus on work for information systems developers. In a 1998 weekend edition of the Boston Globe, an advertisement for IT jobs in an insurance company contains the following: “Sometimes you have to listen carefully, to hear the loudest voice. It’s the voice inside. Stop ignoring that voice—it’s coming from your soul.” At the start of the popular IS text, Introduction to Information Systems—Essentials for the Internetworked Enterprise (1998), author James O’Brien tells his readers “May you love the Light within you, and in everyone you meet, And in everything you experience.” In the book, Using SAP R/3 (Que, 1997), in the chapter on “The Human Side of SAP Implementation.” meditation and religion are identified explicitly as avenues for managing stress. Recently, in his conference presentation on “Transcendent Significance of MIS Students’ Service to the Community”, MIS professor K. Gregory Jin (2004) points out that giving out service learning projects to his MIS students helped them grow “not only intellectually, but also emotionally and morally beyond their technical consciousness and pragmatic concerns.” Thus, the reality of foundational intelligence of the deepest inner self has made inroads into IT. The following are suggestions for possible further research that would more comprehensively relate this central component of emotional intelligence to theoretical and pragmatic IT concerns. First, it would be useful to survey the attitudes of different classes of IT workers towards emotional intelligence and the promoted idea of the deepest inner self. How ready is the IT work world to examine such perspectives? Traditional Emotional Quotient measures, such as the Bar-On EQ-i test, could be applied more widely to IT professionals to assess whether indeed such Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.


a group has an average score lower than many other professions. Would a significant difference be found among classes of workers with different orientations (e.g., programmers vs. systems analysts)? Also, an instrument could be developed that would attempt to measure an IT worker’s conscious connection to his/her deep inner self. The degree of such a connection could then be correlated with one’s score on an accepted Emotional Quotient measure. An attempt could then be made to relate the degree of one’s emotional intelligence to ease of handling what are commonly recognized as difficult “soft issues” and stresses in the course of daily IT work. A list could be formed of specific tasks where IT workers who had actively developed in inner psychological intelligence report a significant impact of their increased self-awareness. The role of personal growth according to the two-tier model on stressful experiences in IT work could certainly be examined. To what degree and under what conditions are employees finding previously stressful situations much easier to handle? What effect does a deeper inner consciousness have on trust and morale on a software development team? How can user relations be ameliorated when working from one’s deeper center? To what degree does a higher emotional quotient mitigate image violation in IT work? Since attempts to relate growth in the deepest self explicitly to IT work are relatively recent and quite sporadic, this psychological dimension ought to attract considerable research focus in the near future. However, the entire issue of increased psychological awareness within IT, in its many dimensions, will be easier to research and to promote with a concerted, integrated effort. To this end, a new academic field may become appropriate, perhaps initially called “Psycho-informatics.” However, such an area of study would mandate consistent interaction of researcher academics with IT practitioners “in the trenches.” A dedicated Web site, such as the one developed for the recent book by Kaluzniacky (2004) (currently at http://itwellness.ncf.ca/) may well serve as a catalyst. In addition, research into effects of greater emotional intelligence on IT need not be carried out only within academe. Recently, the applicability of action research to the field of IT has been promoted (e.g., in Estay-Niculcar and Pastor-Collado, 2000). Action research (AR) involves action and research on that action that is carried out by the same person in parallel. More formally stated, AR is a research method the essence of which is the juxtaposition of action and research, in practice and in theory, through cyclic execution of four characteristic phases: planning, action, observation, and reflection. There should be considerable potential for action research where an IT worker or manager is applying a psychological factor in an IT situation. Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

206 Kaluzniacky

We have now examined how we tend to function, and where we tend to focus, how we tend to think, and how deeply aware we are of our essential human identity. Some groundwork has thus been made for the beginnings of a widespread inner transformation to a more effective, resilient, and empowered person capable of carrying out IT work with “emotional intelligence.”

STAGES TOWARDS EMOTIONAL INTELLIGENT IT

At this point, it may be useful to hypothesize how a typical North American IT organization might evolve in psychological awareness/emotional intelligence. Such a vision may be useful in showing IT managers, in encapsulated form, what may indeed be possible. In 1974, Richard Nolan identified six stages of data processing growth within an organization: initiation, contagion, control, integration, data administration, and maturity. Here, a similar attempt is made to identify and describe growth stages in enhanced emotional intelligence within an IT organization.

A Growth Stage Model

Initially, before the first stage, no formal attempt has been made to introduce psychological factors to the IT organization. A few individuals may have read some books on personality or motivation and may have discussed some of this material privately with receptive co-workers. Stage 1: Orientation Members of the IT department are given a Myers-Briggs personality type seminar. Each person has his/her type assessed. The presenter speaks generally of organizational applications but does not address IT specifically. In the following weeks, some IT staff members discuss their MBTI types with co-workers, a few “pioneers” attempt to address basic issues (e.g., extraversion, intuition) regarding teamwork. Many discussions are, however, light-hearted. Articles on MBTI relevance begin appearing (perhaps twice a year) in professional IT journals and newspapers. Such articles may be posted on the coffee room bulletin boards by astute IT managers. After a while, the occasional project manager (likely an NF temperament) will, mostly informally, consider personality preferences when assigning people



to tasks. Some IT managers, on their own initiative, may purchase a book such as this one and consider at least half-seriously the possibilities presented. This is the stage of orientation. People begin to become aware of their preferences with regard to the four MBTI dimensions. The Myers-Briggs system, because of its structure and adaptability in wide circles, is likely the best starting point for psychological awareness in IT. To move an organization beyond this stage, more relevant articles appearing frequently in professional literature will definitely help. Applied research and development (from “psycho-informatics” researchers collaborating with senior MBTI trainers) may yield literature applying MBTI directly to IT. For example, a booklet parallel to the existing one on “Type in Organizations” (1990), can be produced on “Type in IT Organizations,” outlining main work characteristics, strengths, weaknesses, and areas for development for each of the 16 types. Such an effort would indeed be very valuable to get organizations to progress beyond the first stage. Stage 2: Consideration After reading recurring articles on the value of MBTI in IT, after attending MBTI workshops at professional conferences, and after reading newly developed IT-specific Myers-Briggs material, IT management decides to “get serious.” An IT-specific Myers-Briggs workshop is given. Management circulars encourage personality type consideration in IT work. Team members begin to discuss openly personality issues as related to cooperative efforts. In some organizations, specific applications are described in an internal newsletter. Particularly, applications that imply increase in effectiveness begin to be noticed by management. By this time, research and development efforts (perhaps initiated by the formation of an “Institute of Psycho-Informatics (IPI)” composed of MIS academics and Myers-Briggs trainers/psychologists) will have produced a booklet and workshop on personality type and user training, focusing on users’ learning styles and the development of training efforts to accommodate different styles. Personality/learning styles are considered in user training. Successful efforts are publicized. Until now, nearly all psychological considerations have revolved around the Myers-Briggs system. Other psychological dimensions are discussed here and there, for example, at coffee breaks. The main characteristic of this stage is the serious acceptance of at least one psychological dimension, Myers-Briggs personality, as having a specific relevance to IT work. To achieve this level of involvement, widespread Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

208 Kaluzniacky

communication of specific, impactive efforts is required. In addition, a select group of Myers-Briggs trainers, for example, from the Association for Psychological Type, can recognize significant, concentrated potential for MBTI application and begin to develop workshops and materials oriented specifically to the IT field. In time, a few such people, coupled with several applied academics, may indeed form an “Institute of Psycho-Informatics” that could have a research arm and a development arm and could be dedicated to the systematic introduction of psychological factors leading to enhanced emotional intelligence in the vast IT industry. Organizationally, to move from the first to the second stage, it will be indeed useful to have a “champion,” a person in higher middle management (quite possibly an intuitive feeler). He/she would be willing to publicize existing application in the industry and to specifically promote a more concentrated involvement within his/her IT area. Stage 3: Initial Acceptance By this time, IT people have been using MBTI, at least semi-formally, in task assignments, team cooperation, and user training. Now the use of MBTI expands to system requirements determination with users and to career-path planning. Development of specific, visual materials (e.g., on a CD) to train analysts how to recognize communication trends among different types of users can be very motivating and very useful. At this point, Human Resources personnel dealing with IT become more strongly involved. Policies on using MBTI formally (e.g., in interviewing) are established. Also, cognitive style consideration becomes more widespread. Kirton’s KAI test may be formally administered to IT personnel. Considerations related to creativity may be initiated. Myers-Briggs Personality and Cognitive/Creativity styles are applied to specific IT methodologies, such as Extreme Programming. At this stage, IT personnel are beginning to feel “at home” with such psychological dimensions. They begin to accept them as part of their job consciousness. More time is devoted to such psychological topics at professional conferences, and more print space is devoted in professional publications. Organizationally, a specific “Psych Factors” electronic newsletter may be produced and distributed quarterly. In the industry, a specific IT Psych Factors Web site is established. Specific comments from individual IT workers one how such consciousness has made their work become more effective (and, we hope, more enjoyable) become most noteworthy. Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.


While Myers-Briggs personality, cognitive style, and creativity modes will have become, at least to a fair degree, acknowledged and accepted in the IT organization, issues regarding emotions will not yet receive formal attention. However, the communication sources to which IT workers will now be looking acceptingly for further development on MB and cognitive awareness, may now begin to expand their content into areas such as Enneagram types and emotional intelligence. Some IT organizations may, thus, be ready to add, for example, the Enneagram to their psychological repertoire. The Enneagram is particularly useful in moving a structured, analytic person into initial emotional considerations. First, it is a personality typing system and, with Myers-Briggs already acknowledged in the organization, another system will not be intimidating. Second, it is structured (and numeric), with its own diagram. Third, it postulates an underlying emotion for each type as well as an emotional pattern. Here is the point of greatest progress for an IT worker in this third stage. Persons will begin to see how their emotional patterns have both enhanced and hampered their work. Fourth, the Enneagram contains specific, prescribed growth paths for each type, implying the capacity of each type for emotional development. At this point, IT workers are beginning to recognize and discuss previously hidden emotional needs that have largely motivated their work. They begin to notice dysfunctional emotional reactions while under stress and relate this to established videos and Enneagram-in-IT guides that will have been developed, possibly by the IPI. The topic of emotional literacy begins to surface increasingly at professional conferences and in trade publications. More IT staff take note of significant improvements in effectiveness due to awareness of Myers-Briggs, cognitive style, and Enneagram patterns. Relationships of such awareness to stress management is noted. Some individuals (again, likely intuitive feelers) have read Goleman’s Working with Emotional Intelligence and are beginning to discuss possible applications. At many IT organizations, a “Psych Factors Group” (PFG) meets, voluntarily, every three months; participation is increasing. This stage is characterized by a more formal entrenchment of MyersBriggs as a “soft skill” in IT. Attention is given to cognitive styles. More significantly, though, an explicit open focus on underlying emotions and emotional response patterns is made possible by the Enneagram. Such a direct focus on emotions is a great step forward for the heretofore exclusively analytic IT workers. It will open new doors in the next stage.


210 Kaluzniacky

The key requirement in this stage is recognition, in specific instances, of the noteworthy impact of Myers-Briggs awareness on various aspects of IT work. IT workers will wonder if one type of psychological awareness can indeed make a significantly positive impact, then what about others? Stage 4: Emotional Focus At this point, Enneagram applications receive more notice. It becomes “in vogue” to address emotional considerations in IT work (NF types are rejoicing —they are finally getting their due). The psychological awareness movement within the IT organization has taken hold. Considerable focus is now placed, at least semi-formally, on emotional intelligence. IT workers are becoming more aware of their own feelings and those of their coworkers. Internal IT newsletters refer to specific applications. An industry-wide Web site provides literature, Q&A boards, and discussion groups. Now, a variety of other psychological techniques are examined: neurolinguistic programming, focusing, and meditation. These approaches are related to stress management. Some Psych Factors Groups meet more often, with more fruitful discussion. The Institute of Psycho-Informatics will have produced numerous materials related directly to IT; its staff will be providing a variety of workshops. In addition, higher management has taken note of this undeniable movement to “soften and broaden” IT. In some organizations, higher IT managers are sponsored for the Hoffman Quadrinity Process (Hoffman, 1988) in an attempt to “go all out.” In this stage, the IT organization has, as a whole, said “yes” to psychological awareness/emotional intelligence. Calls for “growing the whole person” (as made by Kent Beck [2000]) and for “empathy... that provides visceral motivation” as promoted by Jim McCarthy (1995) are seen as central to IT’s effectiveness within the organization The role of NF types (intuitive feelers) in ITs arriving at this stage cannot be underestimated. Such psychological awareness is the natural preoccupation of this type. They will truly have the opportunity to “come into their own” at work. However NFs will need to learn, based on applied research, how such awareness can be developed and promoted to types other than their own. This can be a major challenge.



Stage 5: Intended Wholeness At the start of this stage, the organization is actively “working on” emotional intelligence. However, the effort is largely made from an intellectemotion-body perspective of the human person. However, a number of higher IT managers who have completed the Hoffman Quadrinity Process have now realized another, deeper dimension. Such IT Hoffman graduates form their own “fraternity.” In time, the perspective of the deepest inner self is promoted more directly. More IT employees are sponsored for the Hoffman Process and similar being-centered growth efforts. Deep authenticity of IT workers is promoted, in policy and in fact. “Growing the whole person” now becomes an IT strategy. Psych-Factor Groups now become Inner-Growth Groups, where not only valuable ideas are shared, but feelings are expressed, and deeper inner energies are reached. The multi-dimensional welfare of the IT worker becomes of paramount importance; stress issues are addressed head-on. Retention of employees is increased as they feel respected and addressed as “whole persons.” Conflicts are handled more fruitfully. Creativity is increasing, as is motivation and morale. IT professionals are forming an integral part of international “Spirit at Work” movements. Many employees at this stage have appropriated, to a fair degree, the psychological factors promoted in this chapter, as well as valuable others. The days of the “techie-nerd” are long gone! The IT organization, at this point, is wholistic and emotionally intelligent (Kaluzniacky, 2004).

CONCLUSION

With recognition of Information Systems as a socio-technical field, greater awareness of specific psychological dynamisms within and among IT professionals is a worthy goal at this point in the profession’s evolution. Properly harnessing such awareness can result in more efficient and effective IT work effort and in significantly decreased stress for IT workers. While the concept of “emotional intelligence” has gained considerable attention is management circles and is making inroads into IT, this chapter has offered the concept as a structural foundation in the form of “two-tier consciousness” in an IT worker. It has also been proposed that such enhanced foundational intelligence goes along with increased insight in perhaps more widely accepted areas of personality and cognition intelligence, forming what might be termed “enhanced emotional intelligence.” Such a focus could extend


212 Kaluzniacky

current IS research in novel and useful directions, and it could offer new perspectives for IT work practice. However, the psychological, emotional maturing of the IT profession will not happen overnight. The hypothesized, five growth stages could well take over 15 years to implement, but at this point, the stage appears set for starting. With individual IT workers, employing IT departments, professional associations, university academics, and the user community each doing their parts, the IT work world of the future will respond to its current challenges with wisdom and fruitful innovation.

REFERENCES

Agor, W.H. (1991). The logic of intuition: How top executives make important decisions. In J. Henry (Ed)., Creative management, (pp. 163-77). London: Sage. ASAP World Consultancy et al. (1997). Using SAP R/3 (2nd ed.). Que Corporation. Beck, K. (2000). Extreme programming explained: Embrace change. Reading, MA: Addison-Wesley. Bedrij, O. (1977). ONE. London: Strawberry Hill Press. Brady, L. (1994), Beginning your Enneagram journey. Valencia, CA: Tabor Publishing. Carrington, P., Collings, G.H. Jr., Benson, H., Robinson, H., Wood, L.W., Lehrer, P.M., Woolfolk, R.L., & Cole, J.W. (1980). The use of meditation/relaxation techniques for the management of stress in a working population, Journal of Occupational Medicine, 22(4), 221-31. Couger, J. D. (1996). Creativity and innovation in information systems organizations. Danvers, MA: Boyd & Fraser. Epstein, M. (1996). The role and worldview of systems designers: A multimethod study of information systems practitioners in the public sector. Working paper No. 289, Center for Information Systems Research, Sloan School of Management, MIT. Estay-Niculcar, C. & Pastor-Collado, J. (2001). The realm of action-research in information systems. Information, Technology and People, 14(1). Gardner, H. (1983). Frames of mind: The theory of multiple intelligences (2nd ed.). New York: Basic Books. Goldberg, M.J. (1996). Getting your boss’s number. New York: HarperBusiness. Goleman, D. (1995). Emotional intelligence. London: Bloomsbury. Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.


Goleman, D. (1998). Working with emotional intelligence. London: Bloomsbury. Hayes, J. & Allinson, C.W. (1998). Cognitive style and the theory and practice of individual and collective learning in organizations. Human Relations, 51, 847-871. Hignite, M., Margavio, T., & Chin, J. (2002). Assessing conflict resolution profiles of emerging information systems professionals. Journal of Information Systems Education, 13(4), 315-324. Hoffman, B. (1988). No one is to blame. Oakland, CA: Recycling Books. Hohmann, L. (1997). Journey of the software professional. Englewood Cliffs, NJ: Prentice-Hall. Huitt, W. (1992). Problem solving and decision making: Consideration of individual differences using the Myers-Briggs Type Indicator. Journal of Psychological Type, 24, 33-44. Jin, K. G. (2004), Transcendent significance of MIS students’ service to the community. Presented at the Fourth International Conference on Knowledge, Culture, and Change in Organisations. University of Greenwich, London, August 3-6. Kaluzniacky, E. (2004). Managing psychological aspects of information systems work: An orientation to emotional intelligence. Hershey, PA: Information Science Publishing. Keirsey, D. & Bates, M. (1978). Please understand me. Del Mar, CA: Prometheus Nemesis. Kirton, M. J. (1989) (ed.). Adaptors and innovators: Styles of creativity and problem solving. London: Routledge. Larsen, D. (2003). Embracing change: A retrospective. Cutter IT Journal, 16(2), 39-46. Lesiuk, T. L. (2003), The effect of music listening on the quality-of-work of computer information systems developers. Ph.D. Dissertation, Faculty of Graduate Studies, University of Western Ontario, Canada. Lyons, M. (1985). The DP psyche. Datmation, August 15, 31(16), 103-110. McCarthy, J. (1995), Dynamics of software development. New York: Microsoft Press. Niederman, F. & Sumner, M. (2003). Decision paths affecting turnover among information technology professionals. In Proceedings of the ACM SIGMIS Conference –Special Interest Group on Computer Personnel Research, Annual Conference, Philadelphia, (pp. 133-143). Nolan, R.L. (1982). Managing the data resource function. St.Paul, MN: West Publishing Co. Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

214 Kaluzniacky

O’Brien, J. (1998). Introduction to information systems – Essentials for the Internetworked Enterprise. New York: McGraw-Hill. Palmer, H. & Brown, P. (1998). The Enneagram advantage: Using the nine personality types at work. Nevada City, CA: Harmony Books. Pentecost, K. (2003). XP and emotional intelligence, Cutter IT Journal, 16(2), 5-11. PRH International (1997). Persons and their growth. Paris. Riso, D.R. & Hudson, R. (1990). The wisdom of the Enneagram. New York: Bantam Books. Rohr, R. & Ebert, A. (1990). Discovering the Enneagram. New York: Crossroad Publishing. Rossi de Mio, R. (2002a). On defining virtual emotional intelligence. In Proceedings of the 10th European Conference on Information Systems (ECIS2002), Gdansk, Poland, (pp. 1124-1133). Rossi de Mio, R. (2002b). Emotional intelligence in virtual and face-to-face communication: A pilot laboratory experiment. In Proceeding of European Conference on Information and Communication Technology Advances and Innovation in the Knowledge Society (eSMART2002), Manchester, UK. Shen, Y. & Gallivan, M. (2004). An empirical test of the job demand/control model among IT Users. In Proceedings of the 2004 SIGMIS Conference on Computer Personnel Research: Careers, Culture, and Ethics in a Networked Environment, Tucson, AZ, USA, April 22-24. Siegel, B. (1989). Peace, love and healing. New York: Harper & Row. Streufert, S. & Nogami, G.Y. (1989). Cognitive style and complexity: Implications for I/O psychology. In C.L. Cooper & I. Robertson (Eds.), International Review of Industrial and Organizational Psychology, Chichester, UK: Wiley. Sumner, M. & Yager, S. (2004). Career orientation of IT personnel. In Proceedings of the 2004 SIGMIS Conference on Computer Personnel Research: Careers, Culture, and Ethics in a Networked Environment, Tucson, AZ, USA, April 22-24. Thomsett, R. (1990). Effective project teams: A dilemma, a model, a solution. American Programmer, July-August, 25-35. Yourdon, E. (2002). Opening statement. Cutter IT Journal, 15(12), December, 2. Zukav, G. (1990). The Seat of the Soul. West Albany, NY: Fireside Press. Zukav, G. & Francis, L. (2001). The Heart of the soul. New York: Simon & Schuster. Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

Identification and Measurement of the Knowledge-Sharing Requirements

215

Chapter IX

Identification and Measurement of the Knowledge-Sharing Requirements in Collaborative Business Processes Farhad Daneshgar University of New South Wales, Australia

ABSTRACT

This chapter introduces a modelling language called Awareness Net for both representation as well as measuring the knowledge-sharing requirements in collaborative business processes. It is a conceptual model that facilitates representation and analysis of knowledge-sharing requirements of the actors in collaborative business processes. The representation and measurement are handled by a set of collaborative semantic concepts and their relationships. The proposed language enforces overall specification of what matters to the actors in collaborative processes when collaborating in business process to keep them aware of the collaboration context. Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

216

Daneshgar

INTRODUCTION

Once knowledge is acquired, it must be organised in an applications knowledge base for later use. A knowledge base can be organised in several different configurations to facilitate fast inferencing (or reasoning) from the knowledge (Turban, 2005). Knowledge and database applications in recent years have progressively converged towards integrated technologies that try to overcome the limits of each single discipline in terms of knowledge and data representations. Research in Knowledge Representation (KR) originally concentrated on logic-based formalisms that are typically tuned to deal with relatively small knowledge bases but provide powerful deduction services, and the language to structure information is highly expressive. In contrast, Information Systems and Database (DB) research mainly dealt with efficient storage and retrieval of powerful query languages, and with sharing and displaying large amounts of multimedia documents. However, data representations were relatively simple and flat, and reasoning over the structure and the content of the documents played only a minor role. By increasing the rate of growth in changing character of data bases into knowledge bases, this distinction between the requirements in Knowledge Representation and Databases is vanishing rapidly. According to Artale, Dixon, Fisher, and Franconi (2004), to be useful in realistic applications, a modern KR system must be able to handle large data sets and provide expressive query languages. This suggests that techniques developed in the DB area could be useful for KR systems. On the other hand, the information stored on the Web, in digital libraries, and in data warehouses is now very complex and has deep semantic structures, thus requiring more intelligent modelling languages and methodologies, and reasoning services on those complex representations to support design, management, flexible access, and integration. Therefore, a great call for an integrated logic-based view of Knowledge Representation and Database technologies is emerging (Artale et al.). This chapter presents a unified modelling language for both representation of the collaborative business processes and for measurement and identification of the knowledge-sharing requirements of the actors involved in collaborative business processes. Collaborative business processes (or collaborative processes, for short) is defined here as organizational processes that requires collaboration of multiple human entities in order to achieve their expected organizational goals. The type of the proposed language is a variation of Petri-net. However, contrary to many available Petri-net-based role-interaction models that mainly



217

aid the representation and execution of structured tasks in some way, the proposed language goes a few steps further to identify the knowledge-sharing requirements of collaborative business processes. In a sense, it provides a highlevel and conceptually unified view of the collaborative process, integrating the communication, cooperation, and coordination (3Cs) perspectives. The framework has already been applied to a Network management environment and resulted in valid requirements (Daneshgar, 2000). It is also currently being used in both inference engine as well as knowledge-base component of an Expert System for providing human capital expert advice to the financial consultants (Royal, Daneshgar, & O’Donnel, 2004).

BACKGROUND

The knowledge sharing discussed in this chapter refers specifically to a special kind of contextual knowledge about the collaborative process; that is, who is doing what, how they do it, and what artefacts they use to do it. In defining the knowledge- sharing requirements, the view taken in this chapter is an extension of the interactionist’s view in the field of social psychology. According to this approach, objects in a given medium manipulate each others’ understanding and awareness via focus and nimbus, which are subspaces within which an object chooses to direct either its presence (nimbus) or its attention (focus) (Sumi & Mase, 2002). The more an object is within one’s focus, the more one is of that object; and the more an object is within one’s nimbus, the more aware it is of the person. Such definitions are used in this chapter for defining awareness levels of the actors in collaborative business processes. Such a level is a combination of nimbi and foci exposed/possessed by the actors. In other words, the level of awareness that actor A has of object B is some function of A’s foci and B’s nimbi. In order to operationalise the above concept of awareness and knowledge—sharing capabilities in collaborative business processes, a process awareness framework was initially developed by the author followed by a groupware for maintaining actors’ levels of process awareness at required levels (Daneshgar, 2000). This chapter extends this previous work by applying the primitives used in the existing awareness framework in order to introduce a new modelling language called the awareness net, which can be used for identifying knowledge-sharing requirements of the actors in collaborative business processes.


218

Daneshgar

THE OBJECTIVES OF THE MODEL

The proposed model called awareness net is a representation of a collaborative business process and consists of a collection of collaborative semantic concepts and their relationships for the purpose of defining and measuring the awareness requirements of the actors involved in collaborative processes. In setting objectives for the proposed modelling language, it was noted that one distinguishing factor that separates process models from other types of models in computer science is that humans rather than machines must enact many of the phenomena modelled. As a result, a good collaborative process model must not focus solely on the actors’ behaviour at the interface or the flow and transformation of data within the system but must also focus on the communication, cooperation, and coordination (3Cs) among the actors. This is regardless of whether a computer is involved in the transaction or not. Many collaborative process models have already been developed that provide a common representation format that facilitates human understanding and communication and, at the same time, supports and automates collaborative process management (Baker, Georgakopoulos, Schuster, & Cichocki, 2002; Farquhar, Fikes, & Rice, 1997; Lee, Hickey, Zhang, Santanen, & Zhou, 2000; Nabuco, Drira, & Dantas, 2001) with each following different objectives. In the following paragraphs, some of the objectives and unique attributes of the proposed language are discussed: Providing a combined and integrated 3C (cooperation, communication, and coordination) perspective and functional, behavioural and organisational perspectives, for analysis of knowledge-sharing requirements of the actors in collaborative business processes: Generally speaking, the perspectives that a process model is able to present are bounded by the constructs of the language (textual, graphic, objects, etc.) used for modelling (Curtis, Kellner, & Over, 1992). The object-orientation of the constructs of the proposed language facilitates interleaving of all these perspectives, resulting in a comprehensive analysis of the knowledge-sharing requirements of the actors in collaborative business processes. Providing a unified analysis of both the knowledge-sharing requirements as well as the collaborative business process: Generally speaking, this ideal situation is arrived at if the same analytical tools are used for representation of both the knowledge-sharing (or awareness) requirements of the actors within the collaborative process and the collaborative process itself. This means that there should be no need to have separate models—one for the collaborative process and one for its actors’ knowledge-sharing requirements. Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.


219

A special type of connected graph is used for representation of the collaborative business process by which the knowledge-sharing requirements of the actors can be identified in terms of the collaborative semantic concepts used to represent the process. This will result in a unified analysis of the knowledgesharing requirements of the actors in collaborative business processes. In order to provide such a unified analytical approach, a rule-based model was developed by the author (Daneshgar, 2000) that guides the representation of both the process structure and the relationships among the language constructs in a way that knowledge-sharing requirements of the actors can be defined in term of the process elements.

INTRODUCING THE AWARENESS NET

A list of collaborative semantic concepts used in the awareness net is described in the next section, followed by an in-depth analysis of awareness requirements and awareness levels. In the section after that, a methodology by which the knowledge-sharing requirements of the actors can be identified. To simplify the explanation of the concepts, a real-life example of awareness net is shown in Figure 1 that represents the insurance claim process within the Australian Health Insurance Sector (AHIS) involving multiple collaborating roles (Daneshgar & Mawson-Lee, 2003). According to this awareness net, Patients receive treatments from Medical Practitioners, pay a fee, and can claim it from a Health Insurance Fund. This example will be used throughout the chapter. The following is a list of the semantic concepts used in the awareness net. Each concept has a set of attributes and performs certain functions. These attributes and functions are related to one or more aspects of the 3Cs. ACTORS: These are human agents that enact a set of tasks by assuming one or more roles within the process. In the awareness net, there is no graphical representation for the “actors”; instead, they are represented indirectly by the relevant role(s) that they play within the process. ROLE: A set of norms expressed in terms of obligations, privileges, and rights enabling actors to perform certain tasks within the process. In Figure 1, the filled circles represent roles. These roles include “Health Insurance Fund,” “Patient,” and “Medical Provider.” STRUCTURED TASK (or task for short): An object made of a sequence of actions or execution steps that can be planned from the known dependencies in order to achieve a specific process goal. In Figure 1, labelled


220

Daneshgar

unfilled circles represent tasks. For example, tasks performed by the role “Health Insurance Fund” include “process claim” and “supply claim payments.” ACTION:- A sequence of goal-directed microscopic execution steps that utilise certain resources and/or artefacts for their execution. There is no graphical representation for the actors, however, they are represented within the process script as embedded attributes of the task object. COLLABORATIVE TASK: Is composed of two or more tasks that have a common goal, and must share a task artefact. A collaborative task is always associated with a unique task artefact and two or more simple tasks. They are graphically represented by a subset of the awareness net consisting of a pair of related tasks and the common task artefact. In Figure 1, the sub-graph consisting of the objects “Lodge Claim,” “Claim Form,” and “Supply Claim Payment” represents a collaborative task. ROLE ARTEFACT: This object carries knowledge/resources about how to perform the actions within a task. The role artefacts are personal and are either possessed by the actors, or they know how to obtain them when required. For this reason, it is assumed in this chapter that role artefacts can be stored either within the actor’s mind in a way that others cannot formally access and use this knowledge, or are stored explicitly in personal knowledge bases in a way that can be fully understood by anybody who has access to it. Within the awareness net, the arcs that connect a role vertex to its task vertices are graphical representations of the role artefacts. In Figure 1, the “Treatment Knowledge” is a role artefact for the role “Medical Provider.” TASK ARTEFACT: This object carries knowledge about how various actions associated with a collaborative task are executed. Contrary to the role artefacts which may or may not exist explicitly within the organised knowledge bases, it is assumed here that task artefacts are always kept within the organised knowledge bases in order to be accessible and be shared by multiple actors when performing collaborative tasks. Arcs that connect a pair of task vertices together graphically represent task artefacts. In Figure 1, the “Patient Record” is a task artefact that is shared by both the Medical Provider and the Patient in order to collaborate in “Treatment.” COLLABORATIVE BUSINESS PROCESS (or, Process, for short): Is a set of roles, role artefacts, tasks, and task artefacts that are linked together to achieve certain process goals. A process is represented by a connected awareness net. It is formed when at least one collaborative task exists within that process. A collaborative task is created when some of its actions compete with each other in using certain process resources used by other tasks



221

within the process at the same time; hence, the concept of task dependency and collaboration. AWARENESS: Is knowledge about the objects that lead an actor to an understanding of various aspects of the collaborative process. It is defined by and measured in terms of the collaborative semantic concepts used in the awareness net, that is, roles, role artefacts, tasks, and task artefacts. See the next section for graphical representations of various levels of awareness. ACTUAL AWARENESS: Represents the focus of the actor with regards to the collaborative process. Actual awareness is represented by an integer number, ranging from zero to four, representing various levels of awareness (see the next section). Actual awareness is an attribute of the role object. REQUIRED AWARENESS: Represents the nimbus of the tasks. Required awareness is awareness that is attached to a task and is a property of the task object. It represents the awareness level that is expected from the actor who performs that task. It is also represented by an integer ranging from zero to four. When the require level of awareness of a task is higher than the actual level of awareness of a role, there is an “awareness gap,” meaning that the role is lacking the appropriate knowledge-sharing capabilities and therefore may not perform the task successfully.

Definition of Awareness and Awareness Levels

In order to operationalise the concept of awareness levels within the context of collaborative business processes, a process awareness framework was initially developed by the author followed by development of a groupware for maintaining awareness levels of the actors at required levels (Daneshgar, 2000). This awareness framework has already been applied to many real-life situations, and some interesting collaboration patterns were identified (see Daneshgar & Mawson-Lee, 2003, for the latest application). The framework has also been applied to Enterprise Resource Planning (ERP) processes (Daneshgar, 2001a; Daneshgar, 2003) as well as the community of Knowledge Management (Daneshgar, 2001b; Daneshgar & Amaravati, 2004). The role of the framework in identifying knowledge-sharing requirements of actors in virtual communities has been identified through its capability of providing contextual knowledge in virtual communities (Daneshgar et al., 2004), as well as being used as a design directive for implementation of groupware systems (Daneshgar, 2004). This chapter combines and extends all of this previous work by the writer with the aim of introducing a combined, multiple-perspective modelling language for the collaborative business processes.


222

Daneshgar

Figure 1: An awareness net representation of the Insurance Claim Processing in the AHIS Health Insurance Fund

Claims DB

Process

Claim Procedures

Supply Claim

Claim Update Patient

T K n rea o w tme l e nt dg e

ea tm en t

Spreadsheet

Provider Account

Treatment Cost

Request Treatment

Money

Pay Treament

Patient

A

Medical Provider

Lodge

Request for Treatment Tr

Patient Record DB

Patient

Provide Treatment

cc ou nt

Provider Account

Provide Account

Produce Patient

Claim Requirements Request Paid

Complete Claim

In the following paragraphs, various levels of awareness are discussed in their original form using the simplified awareness net shown in Figure 2. In the next section, these levels are used to describe the proposed modelling language. Level-0 Awareness (Failed Level): An actor is at level-0 if s/he possesses contextual knowledge about the objects that lead the actor to an understanding of the tasks that the actor performs within the collaborative process. According to the Figure 2, level-0 awareness for the role X is a subgraph that contains the following set of objects: Figure 2. An awareness net with four roles and 14 tasks X

1 V f

4

2 d

3

5 6

c

e T

b a

Y

7 8



223

A0 (‘X’) = {(X, 1), 1, (X, 2), 2, (X, 3), 3, (X, 4), 4} Therefore, awareness level-0 for the role “X,” shown by A0 (“X”), is the sum of the four role artefacts shown by the lines (X,1), (X,2), (X,3) and (X,4), and four task vertices 1, 2, 3, and 4. Level-0 awareness does not provide the actors with adequate awareness to get them involved in any kind of knowledgesharing transactions with others. The reason is that it does not include objects beyond the actor’s perception of his/her own personal “tasks” within the process. Level-1 Awareness (Direct Cooperation and Communication): Level0 awareness is a prerequisite for this level. An actor who reaches level-1 awareness will possess level-0 awareness, plus knowledge about all the objects that leads the actor to awareness about some of the actors within the process. These are actors with whom the actor has a direct task dependency. In Figure 2, level-1 awareness for the actor V is the path that links vertex “V” to all other related role vertices. In this example, role “V” happens to have task dependency with one other role, that is, role “X.” In this particular case, there are two alternatives/paths for the V’s level-1 awareness, because there are two separate relationships between V and X. The mathematical set presentations for these alternatives are: Alternative_1_A1 (‘V’) = {A0 (‘V’), (d, 1), 1, (1, X), X} Alternative_2_A1 (‘V’) = {A0 (‘V’), (d, 2), 2, (2, X), X} Level-2 Awareness (Extended Cooperation): An actor at level-2 awareness will have knowledge about the objects that lead the actor towards an understanding of all other roles within the process. Level-2 awareness for the role “V” is its level-1 awareness, plus the path that links V to all other role vertices within the process. There are many alternatives for the V’s level-2. The mathematical set representation for one of these alternatives follow: Alternative_1_A2 (‘V’) = {A1 (‘V’), (X,4) , 4 , (4 , 5), 5 , (5, Y), Y, (Y , 6), 6 , (6 , b), b , (b , T), T} Level-3 Awareness (Extended Communication): An actor at level-3 awareness has the knowledge about the objects that lead that actor towards an understanding of all the interactions that occur between any pair of roles within the process. Attaining level-3 awareness enables an actor to initiate level-3 context-sharing transactions within the VC. The mathematical representation of this level for the alternative 1 of the level-2 awareness for the role V is: Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

224

Daneshgar

A3 (‘V’) = {alternative_1_A2 (‘V’), (4 ,6), (7 , 2)} Notice that (4, 6) and (7, 2) are the only two other task artefacts that were not included in the alternative_1_A2(“V”). Level-4 Awareness (Coordination): An actor at level-4 awareness has a specialised knowledge about the objects that lead that actor to an understanding of the objects within the VC as well as their relationships. Graphically, this level can be represented by the whole of the awareness net. At this level, the actor has adequate contextual knowledge about who does what, how, with whom, etc. In other words, this level provides awareness about how people within the VC perform their tasks (that is, the sum of all the actors’ level-0 awareness), who directly collaborates with whom and how (sum of all the level1 awareness), who directly or indirectly collaborates with whom and how (sum of all the level-2 awareness), and, finally, how other actors collaborate with one another (sum of all the level-3 awareness). The mathematical representation of this level can be shown by the following sets of equations: A4 (X) = A4 (Y) = A4 (T) = A4 (V) A4(X) = {A3(X), {V, e}, {V, f}, e, f, {T, c}, {T, a}, c, a, {Y, 8}, 8} A4(Y) = {A3 (Y), {V, e}, e, {V, f}, f, {X, 3}, 3, {T, c}, c, {T, a}, a} A4(T) = {A3 (T), {V, e}, {V, f}, e, f, {Y, 8}, 8, {X, 3}, 3} A4 (V) = {A3 (V), {X,3}, 3, {T, c}, c, {T, a}, a, {Y, 8}, 8, {X, 3}, 3} In short, the level-4 awareness is the sum of all the role’s level-3 awareness, plus the sum of all the other roles’ tasks and corresponding role artefacts that obviously were not included in the role’s level-3 awareness. Awareness at this level is highest within the context of the collaborative business process, as the actor will know not only how everybody interacts with others, but also how each role performs its own very personal and non-collaborative task(s).

A MODELLING LANGUAGE FOR COLLABORATIVE BUSINESS PROCESSES

Many forms of information must be integrated to adequately describe a collaborative business process. Generally speaking, process-modelling language can represent and reason about various aspects of collaborative processes. These languages can be evaluated by the extent to which they provide



225

constructs useful for representing and reasoning about the various aspects of a collaborative process. The proposed awareness net represents three perspectives in order to identify awareness requirements of the actors in collaborative business processes. These perspectives are functional, behavioural, and organisational perspectives (Curtis et al., 1992); and the requirements are communicational, cooperational, and coordination requirements. It is believed in this chapter that when combined, these perspectives will produce an integrated, consistent, and complete model of the collaborative business processes. The definitions for these perspectives are: Functional Perspective: This represents what process elements are being performed, and what flows of informational entities (e.g., data, artefacts, products) are relevant to these process elements. As demonstrated before, the awareness net clearly specifies what task objects are performed, what artefact objects are used, and what features (e.g., attributes, methods, constraints, flow, etc.) these elements/objects have. Behavioural Perspective: Represents when process elements are performed (e.g., sequencing), as well as aspects of how they are performed through feedback loops, iteration, complex decision-making conditions, entry and exit criteria, and so forth. While providing information about this perspective was not the main thrust of the awareness net, it is capable of encapsulating the above behavioural variables within various features of the process elements. Alternatively, the awareness net can easily be transformed into an interaction sequence diagram or a collaboration diagram (Law & Hassard, 1999), both demonstrating behavioural aspects of the collaborative semantic concepts within the process. Due to limited space, no attempt was made in this chapter to demonstrate the latter potential for the awareness net. Organizational Perspective: Represents where and by whom in the organization process elements are performed, the physical communication mechanisms used for transfer of entities, and the physical media and locations used for storing entities. Again, the strong role-relationship attribute of the awareness net, coupled with its object-orientation nature, is potentially capable of providing information regarding this aspect of the collaborative process. The following paragraphs demonstrate additional capabilities of the awareness net in representing the above perspectives. Awareness net, like many other petri nets, depicts role interactions. Generally, the role interaction nets are designed to aid the representation and execution of structured tasks (as defined earlier). Historically, role interaction Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

226

Daneshgar

nets represent roles, dependencies, and process elements. The awareness net goes one step further; it highlights the 3C (communication, collaboration, and coordination) requirements of the actors in collaborative business processes. Awareness net also introduces a new and de facto notion of team. This de facto notion is built on dependencies among roles on the basis of the collaborative tasks that the actors perform, as well as the task artefacts that they share for their collaboration. This is different from the common notion of team, which is based on the reporting relationships. With awareness net, a process plan can be designed as a decomposition of tasks, roles, task artefacts, and role artefacts. A project plan, on the other hand, is established when roles are assigned to actors. One actor may hold many roles, and a type of role may be assigned to several actors. Awareness net can then be used as a method of coordinating the flow of artefacts among collaborating roles and as a method of tracking progress by the completion of interactions among roles. This formalism can be used for coordinating activities in process-driven environments. Equipped with a rule-based awareness model/levels, the awareness net also provides communication and collaboration support as previously discussed.

A METHODOLOGY FOR IDENTIFYING THE AWARENESS REQUIREMENTS

The main objective of this methodology is to identify potential areas for enhancing collaboration in collaborative business processes, starting with identifying the awareness requirements of the actors. The methodology is based on elimination of the awareness gap. The awareness gap for an actor performing a task consists of those objects that do not exist on the actor’s actual awareness level/space, but exist on his/her task’s required awareness level/ space. These objects need to be identified and be put within the focus of the actor in order to raise his/her actual level of awareness to its task’s required level of awareness. This methodology is explained in the following four steps: Step One: Construct an awareness net to represent the collaborative process. Step Two: Determine the actual levels of awareness for each actor. Several methods can be used to determine these actual levels. One method is to use software developed by the writer and is called “Aware-Ware Template” or AWT (Daneshgar, 2000). Actors interact with this software and express their awareness (Yes/No) with regards to the objects that



227

exist on the awareness net. The algorithm of this software is capable of parsing the awareness net, which has already been mapped into a database, in order to identify various objects that make up various awareness levels for each actor, based on their responses. Another method for determining the actual level of awareness in smaller processes is the “interview” method. Both of these methods have already been used and significant results were produced. Step three: Define a required level of awareness for each task that an actor performs within the process. It is assumed in this chapter that such level of awareness is directly related to both the nature of the task and the organizational culture. Although no attempt is made in this chapter to tackle these issues, these required awareness levels are treated as parameters to the model and therefore are determined externally. Again, the AWT software can be used to identify objects that constitute various levels of awareness that are required from the actors within the community. In the absence of the AWT software, this can be done either by interviewing the actors or by manually tracing the awareness net and recording the objects (that is, nodes and vertices) that constitute various levels of awareness for each actor. Step Four: For each actor, if the highest value of his/her required level of awareness is higher than the actual level of the actor’s awareness, that is, if there is an awareness gap, then there is potential for enhancing collaboration. This can be done by exposing the actor to the relevant objects that constitute the awareness gap. Alternatively, another actor can be assigned to this role who possesses a higher actual level of awareness.

SOME ISSUES IN AWARENESS NET

In this section, the three common process modelling issues are addressed. These issues have initially been raised by Curtis et al. (1992) and are frequently addressed in process modelling literature. These are formality, granularity, and scriptiveness/fitness.

Formality

Due to its role-interaction nature, the awareness net is based on precise definitions of the language elements and their relationships. Tasks, for example, are of the type structured in a sense that their actions as well as the resources


228

Daneshgar

used by these actions can be determined and/or planned beforehand. Any level of ambiguity or imprecision that may be introduced by mathematical formalism will adversely affect the quality of this language, and therefore is avoided. For this reason, the level of mathematical formality used to describe tasks needs to clearly identify actions and resources used, but does not need to be high enough to make the awareness net enactable on a computer, as this has not been a main objective of the awareness net. Also, the multi-perspective nature of the awareness net imposes further requirements to the level of mathematical formality used to describe it. Generally speaking, process elements need to be formalised to a degree that flow of information, their timing, and various simultaneous links among them are not disregarded by such formalism. For these reasons, the author recommends a standard object-oriented modelling formalism such as UML, and higher level of formality is discouraged if the multiple perspective nature of the awareness net is to be maintained.

Granularity

This involves the size of the process elements represented in the model. Greater granularity ensures process precision, that is, the degree to which a defined process specifies all the process steps needed to produce accurate results. In the case of awareness net, granularity will depend on the purpose of the model, as well as the attributes of the actors who execute the process. As far as the process task structure is concerned, an action in the awareness net is the smallest unit of mathematical and/or descriptive representation, whereas task is the smallest unit of graphical representation. This means that those actors who are directly involved in the business of executing the process in its utmost detail would be interested in accessing the process description that carries knowledge about the individual actions and resources they utilise, whereas a graphical representation would satisfy needs of other actors who may not have such needs. In practice, it is possible that descriptions for tasks, actions, roles, and artefacts may be too large-grained for some actors, that is, having higher level of abstraction. This will provide insufficient details for guiding those actors who actually execute the process. In situations like these, actors are expected to have sufficient knowledge to translate these imprecise and perhaps unstructured scripts into actions by filling in detailed process steps that are appropriate to the current situation. This also means that if these actors already know many relevant potential scripts, a large-grained process model may be desirable in order to allow these actors to tailor the final detailed process script enacted.



229

This kind of flexibility may be especially desirable when there are complicated decision rules for selecting and integrating the processes to be performed.

Scriptiveness and Fitness

As a modelling language, the awareness net possesses attributes that make it both a prescriptive model (to lesser degree) and a descriptive model (to a higher degree). When developing the proposed modelling language, the only prescription in the mind of the writer of this chapter was certain relational rules for the awareness net’s semantic concepts that generally apply to all collaborative processes. Some of these relational rules include: 1. 2. 3.

At any given time a role cannot be played by more than one actor, but an actor can play multiple roles. For execution of a task a role artefact is needed. There is no task that can be executed without having a need for some kind of explicit/implicit knowledge/resources. Similarly, execution of a collaborative task would require sharing of a common task artefact.

Considering the above rules as prescription, then the awareness net would be a prescriptive language; whereas if considering them as common sense, then the awareness net would be a descriptive language. As a prescriptive model, the awareness net needs to be analysed for its fitness. Fitness is defined here as the degree to which the actors can faithfully follow the process steps it specifies (Humphrey & Feiler, 1992).

CONCLUDING REMARKS AND FUTURE WORK

The work on modelling of collaborative business processes is fairly young. This chapter introduced a new modelling language for collaborative processes that provides an integrated view of multiple perspectives in two dimensions: the traditional functional, behavioural and organizational perspectives, and the traditional groupware-oriented 3Cs perspectives. The awareness net also facilitates human understanding and communication that the group needs in order to be able to share a common representation format. It can also be used to enhance collaboration among actors. Work is in progress for using the awareness net as a medium for analysis and design of groupware systems that specifically support collaborative process awareness. Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

230

Daneshgar

In conclusion, it must be noted that despite the strength of the awareness net in achieving its objectives, technology transfer experience suggests that this process model may not be sufficiently effective in an organization where a basic description of its process has not been established yet.

REFERENCES

Artale, A., Dixon, C., Fisher, M., & Franconi, E. (Eds.) (2004). Temporal representation and reasoning. Journal of Logic and Computation (Special issue), 14(1), February. Oxford, UK: Oxford University Press. Baker, D., Georgakopoulos, D., Schuster, H., & Cichocki, A. (2002). Awareness provisioning in collaboration management. International Journal of Cooperative Information Systems, 11(1-2), 145-173. Bennett, S., McRobb, S., & Farmer, R. (2002). Object-oriented systems analysis and design using UML. Berkshire, UK: McGraw Hill. Curtis, B., Kellner, M. I., & Over, J. (1992). Process modelling. Communication of the ACM, 33(9), 75-90. Daneshgar, F. (2000). An awareness framework for business processes. Ph.D. Thesis, Faculty of Information Technology, University of Technology. Sydney, Australia. Daneshgar, F. (2001a). Enterprise resource planning based on collaborative awareness framework. In L. Hossain & J. Patrick (Eds.), Enterprise resource planning: Opportunities and Challenges. Hershey, PA: Idea Group Publications. Daneshgar, F. (2001b). Maintaining collaborative process awareness as a mechanism for knowledge sharing. In Proceedings of 2nd European Conference in Knowledge Management, (pp. 121-132). November 8-9. Bled, Slovenia. Daneshgar, F. (2003). Context management of ERP processes in virtual communities. In G. Grant, ERP & data warehousing in organizations: Issues and challenges. Carleton University, Canada: IRM Press. Daneshgar, F. (2004). Awareness matters in virtual communities: An awareness ontology. In B. Montano (Ed.), Innovations of Knowledge Management. Hershey, PA: Idea Group Inc. Daneshgar, F. & Amaravati, C. (2004). Sharing contextual knowledge in today’s workplace environments. Electronic Journal of Knowledge Management, 2(2). Retrieved from http://www.ejkm.com/volume-2/ v2-i1-art1.htm



231

Daneshgar, F. & Mawson-Lee, K. (2003). Enhancing collaboration in the Australian Health Insurance Sector. In Proceedings of KMAC’2003, Aston University, UK, July, (pp. 96-104). Daneshgar, F., Ray, P., Rahbi, F., Molli, H. S., Molli, P., & Godart, C. (2004). Knowledge sharing infrastructures for teams within virtual communities. In M. Fong (Ed.), e-Collaborations and virtual organizations. Hershey, PA: IGP/Infosci/IRM Press. Farquhar, A., Fikes, R., & Rice, J. (1997). The Ontolingua server: A tool for collaborative ontology construction. Stanford’s Knowledge Systems Laboratory, Stanford University, USA., http://ontolingua.stanford.edu Humphrey, W. S. & Feiler, P. H. (1992). Software process development and enactment: Concepts and definitions. Technical Report SEI-92-TR-4, Pittsburgh, PA: Software Engineering Institute, Carnegie Mellon University. Law, J. & Hassard, J. (Eds.) (1999). Actor network theory and after. Malden, MA: Blackwell. Lee, J. D., Hickey, A. M., Zhang, D., Santanen, E. & Zhou, L. (2000). CoID SPA: A tool for collaborative process model development. Presented at the 33rd Hawaii International Conference on System Sciences, Hawaii, USA. Nabuco, O., Drira, K., & Dantas, E. (2001). A layered design model for knowledge and information sharing cooperative systems. IEEE 10th International Workshop on Enabling Technologies, Cambridge, MA, USA. Royal, C., Daneshgar, F., & O’Donnel, L. (2004). Facilitating organisational sustainability through expert investment systems. Electronic Journal of Knowledge Management, 2(2). Retrieved from http://www.ejkm.com/ volume-1/volume1-issue2/issue2-art15.htm Sumi, Y. & Mase, K. (2002). Supporting the awareness of shared interests and experiences in communities. International Journal of HumanComputer Studies, 56, 127-146. Turban, E., Aronson, J.E., & Liang, T.P. (2005). Decision support systems and intelligent systems (7th ed.) (pp. 555-557). Upper Saddle River, NJ: Pearson Education Inc.

ENDNOTE

1

A previous version of this chapter have been published in the Journal of Conceptual Modeling, Issue 32, May 2004.


232 Zhang & Zhou

Chapter X

The Role of Interactive and Synchronized Multimedia Content in E-Learning Dongsong Zhang University of Maryland, Baltimore County, USA Lina Zhou University of Maryland, Baltimore County, USA

ABSTRACT

Multimedia-based e-learning systems have become increasingly available. Many of them, however, do not provide sufficient interactivity to learners. E-learners have little control over learning content and process to meet their individual needs. Therefore, the challenges include how to integrate instructional material in different media, and how to provide flexible process control in an e-learning environment to enable personalized knowledge construction and improve learning effectiveness. We propose an e-learning system with interactive multimedia that can help learners better understand learning content and achieve comparable learning performance to that of classroom learning. The results from an empirical study provide significant evidence to support our proposition. The chapter also discusses several important issues towards building effective and sharable multimedia-based e-learning systems.


The Role of Interactive and Synchronized Multimedia Content in E-Learning 233

INTRODUCTION

Learning is a lifetime endeavor, especially in the current knowledge-based economy. Globalization requires new methods of delivering education and training, partly to enhance traditional methods of knowledge acquisition and to impart new skills and tools (Adam, Awerbuch, Slonim, Wegner, & Yesha, 1997). Traditional learning processes are characterized by centralized authority, lack of personalization, and linear/static learning process, which doesn’t seem to fit well with the notions of lifelong and real-time learning. It is instructorcentric because instructors control the class content (e.g., topic, course material, and discussion) and pace (Baloian, Pino, & Hoppe, 2000). With the increasing use of networked computers and advance in telecommunication technology, learning methods and infrastructures are becoming more portable and flexible in order to enable anywhere, just-in-time, and self-centered learning. According to the IEEE Learning Technology Standards Committee (LTSC), e-learning has become widely adopted, with solutions by individual institutions and standardizing initiatives for learning technologies. In this chapter, the term e-learning refers to the use of computers and network technology to create, deliver, manage, and support learning at anytime, anywhere. Moreover, dynamically changing business environment requires e-learning systems to be flexible and adaptive, and supports non-linear and personalized learning processes. With the latest advancement in multimedia technology, more and more e-learning systems use multimedia content to take advantage of its rich information cues. In many systems, however, multimedia content is presented in a static, passive, and unstructured manner without close association among material in various media. Learners have little flexible control over learning content and process to meet their individual needs. As a result, it is less likely to engage e-learners (Hiltz & Wellman, 1997; Piccoli, Ahmad, & Ives, 2001). Therefore, we face the challenges of how to integrate multimedia instructions and how to increase interactivity and flexibility in an e-learning environment. In addition, multimedia learning material created by different providers is usually not in a ready-to-share and interoperable format, preventing people from taking one of the greatest advantages of e-learning, namely, exchanging learning resources (Nilsson, Palmér, & Naeve, 2002). In this chapter, we introduce an interactive multimedia-based e-learning system called Learning By Asking (LBA). It features synchronized multimedia instructions and a high level of learner-content interactivity. The difference in learning performance and learner satisfaction between a LBA group and a


234 Zhang & Zhou

traditional classroom group has been examined through an empirical study. The results show that students using the LBA system achieved significantly higher learning performance than those in the traditional classroom, while levels of learner satisfaction of the two groups were equivalent. The chapter is organized as follows. We first describe features and benefits of e-learning and review multimedia use in distance learning. Then, we introduce the prototype e-learning system (LBA) used in this study. Next, we present the design and results of the empirical study, respectively. Finally, we discuss the implications of the findings from this research and metadata description standards and the Semantic Web for enhancing interoperability of e-learning content.

E-LEARNING

A considerable amount of research has been conducted on e-learning (Coppola, Hiltz, & Rotter, 2002; Hiltz & Turoff, 2002; Lu, Yu, & Liu, 2003; Piccoli, Ahmad, & Ives, 2001). In contrast with traditional classroom learning, e-learning brings distinct benefits to learners: • •

• •

•

Time and location flexibility: E-learning eliminates the barriers of time and distance by offering just-in-time, on-the-job learning. It has potential to reach a global audience. Cost and time savings: In e-learning, learners do not have to travel to a specific location. It is reported that the companies using online training can expect an average of 50% in time savings and 40% to 60% in cost savings compared with conventional training (Khirallah, 2000).. Self-paced learning: E-learning fosters self-directed and self-paced learning by enabling learner-centric activities. Collaborative learning environment: E-learning links each learner with physically dispersed experts and other learners together to form an online collaborative learning community (Alavi & Leidner, 2001). By electronic means, an e-learning environment encourages learners to ask questions that they may not be able to ask in a conventional classroom and to share different ideas with others more easily through online discussion forums. Unlimited use of learning material: E-learning allows unlimited access and retrieval of electronic learning material. People can review information/knowledge stored in knowledge repositories over and over again. The learning material can be efficiently maintained and updated.



E-learning has become an inescapable element of business in the new economy. Effective and efficient training methods are greatly required by companies to ensure employees and channel partners are timely trained with the latest information and advanced skills. In 1999, companies in the United States spent $62.5 billion on training or educating their employees, with more than $3 billion spent on technology-delivered training (Khirallah, 2000). In the meanwhile, thousands of online courses, including degree and certificate programs, are now being offered by educational institutions worldwide. Among the biggest of those are the University of Maryland’s University College in Adelphi and the University of Phoenix. In 2002, enrollment in the baccalaureate and graduate-degree programs at the University of Phoenix Online neared the 50,000 mark, a “whopping 70% increase” from the previous year. Today, there are a number of commercial e-learning systems available for both on- and off-campus learners, such as BlackBoard, WebCT, TopClass, LearningSpace, Learning Landscapes, CoSE, and Web Course.

MULTIMEDIA IN DISTANCE LEARNING

Multimedia involves technologies that combine several forms of communication such as text, graphics, video, animation, and sound. Simply defined, multimedia is the delivery of information in a computer-based presentation that integrates two or more media (Beckman, 1996). Multimedia courseware can entice learners to give full attention to a task and help maximize learners’ ability to retain information through the vividness of presentation (Agius & Angelides, 1999; Syed, 2001). There has been extensive research on the use of multimedia material in distance education or training. Some research shows that multimedia instructions can enhance individuals’ problem-solving skills and improve learning effectiveness (Carville & Mitchell, 2000; Gross, 1998). A large number of studies have reported that learning performance of students who are taught by instructional videos is comparable to that of students in traditional classrooms. It is appealing to combine lectures and dialogue with visual presentation, animation, and other multimedia effects (Kelsey, 2000; Wetzel, Radtke, & Stern, 1994). It is believed that high-level interaction is desirable and can positively affect the effectiveness of education (Berge, 2002). Recently, interactive multimedia technology has been widely adopted in e-learning to enhance learners’ perception of live interaction with virtual instructors (Bargeron,


236 Zhang & Zhou

Grudin, Gupta, Sanocki, Li, & Leetiernan, 2002; Morales, Cory, & Bozell, 2001; Piotrow, Khan, Lozare, & Khan, 2000). Interactive multimedia is defined as the use of a computer to present and combine text, graphics, audio, and video, with links and tools that let users navigate, interact, create, and communicate (Hofstetter, 1995). Interactive multimedia permits learners to interact with it and to be able to define and change the nature of verbal, numerical, visual, and audible display systems. It offers more flexibility and increases learner engagement. Many multimedia-based e-learning systems, however, lack sufficient interactivity crucial for effective online learning (Parikh & Verma, 2002). Hiltz (2001) completed a Virtual Classroom project that used asynchronous learning networks plus videotaped lectures to evaluate the effectiveness of online courses needed for bachelor’s degrees in information systems and computer science. Throughout a semester, students in the online program could access learning material via a Web interface. Evaluation results revealed that students who took online courses tended to do as well as those in traditional classroom settings. At a given time, a learner could only see one of them on a computer screen: the image of an instructor, course notes, or PowerPoint slides, but not all of them simultaneously. In addition, learners had to use a scroll bar on the RealPlayer to skip or locate a portion of a lecture, which could be inaccurate and time-consuming. Morales, Cory, and Bozell (2001) probed students’ learning effectiveness in a Web environment by comparing learning performance between traditional face-to-face delivered instruction and instruction delivered by an asynchronous live-switched video and an accompanying PowerPoint presentation stream via the Web. The learning effectiveness measured by students’ exam grades showed no significant difference between a Web-learning group and a classroom group. A study conducted at Microsoft Research (Bargeron et al., 2002) used a Web-based system for on-demand education. The system interface displayed synchronized instructional video, presentation slides, and a shared question-and-answer set altogether. It was observed that students liked to skip video instructions that they did not want to watch. Multimedia-based e-learning technology is also widely used in many companies, such as CISCO e-learning (http://www.cisco.com/warp/public/ 10/wwtraining/elearning/), Microsoft Learning Resource iNterchange (LRN) (http://www.microsoft.com/elearn/), and IBM e-learning (http://www3.ibm.com/services/learning/us/elearning/). For example, in CISCO e-learning, a video of a lecturer (a talking head) is synchronized with his/her PowerPoint slides †when the lecturer in the video finishes talking about one Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.


slide and switches to the next, the current PowerPoint slide will automatically flip to the next corresponding slide (Figure 1). The major limitation of this system is that it provides little interactivity and flexibility to online learners. If a person wants to relisten to the explanation for one of the previous slides, s/he has to stop the video and re-start it from the very beginning of that lecture. It inevitably results in a linear learning process. Although e-learning research has consistently suggested that interaction exerts a positive influence on student engagement, satisfaction, and academic achievement (Chapman, Selvarajah & Webster, 1999; Piccoli, Ahmad, & Ives, 2001), researchers have primarily focused on learner-instructor and learner-learner interaction. The performance comparison between e-learning and conventional classroom learning has been reported as equivalent in many studies. However, a lot of e-learning systems provide limited flexibility and interactivity to learners. They simply post learning material without offering content-based structural support to increase learner engagement and interactivity. For example, a learner may not be able to directly jump to a particular point of an instructional video in which s/he is interested. Therefore, it is critical to provide structural support in a multimedia-based e-learning environment, especially when instructional videos are used. In this research, we primarily investigate e-learning effectiveness with rich learner-content interactivity. We have developed an interactive e-learning system called LBA (Learning By Asking) that presents synchronized multimedia material with structural content support. The basic proposition is that in order to improve learning effectiveness, an e-learning environment should Figure 1. A CISCO e-learning system Video of the lecturer

A list of online lectures

Slides synchronized with video slides


238 Zhang & Zhou

provide structural support to multimedia instructions to allow efficient random content access, and should present them in a synchronized and integrated manner. So far, there has been relatively little research on this aspect. We validate this proposition by conducting an empirical study using the LBA system.

THE LBA SYSTEM

The LBA system mainly consists of three components: a thin-client, a Web server, and a video streaming server (Zhang, 2004). First, we videotape domain experts during their lectures or interviews and store them on a videostreaming server that can be accessed via the Internet. The content of each video may likely consist of many sub-topics. Then, these digital videos are logically segmented into individual clips based on their content. Each clip focuses on a specific topic. The time boundaries of each video clip are identified and recorded in order to provide content-based structural support. On the client side, a learner only needs a Web browser, a RealPlayer, and a sound card installed on his computer to access online learning material. On the Web server, a metadata library is created to contain various metadata of video clips, including titles, file size, speaker, keywords, starting/ending time, and so on. This library and other associated instructional material, such as PowerPoint slides and lecture notes, are stored in a relational database. When a learner requests an online lecture, LBA retrieves corresponding content from the database and delivers it to learners. We use an interactive e-classroom in LBA to validate our proposition in this study. The e-Classroom creates an online learning environment that presents synchronized video/audio of instructors, PowerPoint slides, and instructors’ lecture notes on a single interface (Figure 2). While an instructional video is being played, the e-classroom is always able to automatically display corresponding slides and notes about the topic that the instructor is introducing in the video. If a student does not do anything during a learning session, the entire lecture will flow from beginning to end automatically. However, she can interact with the system at any time to control the learning pace and content by pressing control buttons located on top of the interface. For example, she can click the “Next” button to skip the current clip/ slide/note presentation if she already knows it, or press the “Prev” button to go back to the previous part. When a student moves the mouse over the “Content” button, a content index of this lecture is displayed. She can jump to a particular



Figure 2. The interface of the interactive e-classroom in LBA Control Buttons

Instructional Video Slides

Synchronization Lecture Notes Description

clip/slide/note by clicking on its associated sub-topic. In general, the eclassroom provides an online learning environment with interactive multimedia. Learning proceeds via continuous interaction between the learner and content.

Hypotheses

EMPIRICAL STUDY

In this research, we were interested in investigating the learning effectiveness of the LBA system as measured by students’ exam grades and levels of satisfaction. We proposed that given the same amount of lecture time and the same instructional material, an interactive e-learning system like LBA that provides high interactivity and content synchronization will give learners more flexibility and help them better understand learning material than a traditional classroom environment. Therefore, our hypotheses are: H1: Given the same amount of lecture time, students in an interactive multimedia-based e-learning environment (LBA) will achieve higher learning performance than those in a traditional classroom. H2: Students in an interactive multimedia-based e-learning environment (LBA) will have higher levels of satisfaction than those in a traditional classroom.


240 Zhang & Zhou

We tested the above two hypotheses via a controlled lab experiment described as follows:

Subjects

The subjects participated in the experiment were 39 undergraduate students recruited from an undergraduate Management Information Systems course at a large public university in the southern United States. About 56% of them were male. The average age was 19.6. They did not have any prior elearning experience. The subjects were randomly divided into two groups. Each group was then randomly assigned to one of two treatments: an online lecture session using LBA, or a traditional classroom session (Table 1). Both groups were given the same lecture about Internet search engines. While the traditional classroom group had the lecture in a regular classroom, the online group took the lecture in a research laboratory at the same time. The lab was equipped with thirty desktop computers with all the necessary software installed. Each subject in the online session had a computer with a headphone set so that she/he could listen to the soundtrack of the instructional video without disturbing others. In the experiment, we applied the following controls: 1. 2. 3. 4.

Lecture time was the same in both sessions; Learning content was consistent in both sessions. The instructor who prepared online material in advance also gave the same lecture to the classroom group to ensure the consistency in terms of content; Both sessions were given exactly same exams; Subjects were unaware of the lecture content before the experiment.

Experimental Procedure

All of the participants were informed that they would be given up to five extra course credits for participating in this study (depending on their individual learning performance in the experiment). The online group went through the following step-by-step procedure:

Table 1. Two experimental groups Groups Sample Size

Online Group (LBA) 20 (Male: 12)

Classroom Group 19 (Male: 10)



1. 2.

3. 4.

5.

Brief description of experiment’s objective and procedure Pre-test: Participants were required to answer a few questions in a written exam. Those questions covered some basic concepts about the subject matter that the lecture would introduce. The purpose of the pre-test was to examine how much a participant already knew about the topic before taking the lecture. The LBA system training: Subjects were given a live demonstration on how to take an online lecture using the e-classroom of the LBA system (with the interface shown in Figure 2). Online lecture session: After the training session, participants were given 45 minutes to watch the online lecture. The instructional video prepared in advance lasted about 29 minutes, so they had some time to review the material. Post-test: At the end of the study, subjects were given another written exam, consisting of true/false, multiple choice, and two open-ended questions based on the lecture. The questions in the post-test were similar but different from those in the pre-test – they were more specific and more difficult. Both pre- and post-tests were closed-book, closed-notes exams. The potential scores ranged from 0 to 50. Finally, each subject was required to fill out a questionnaire to report his/her personal demographic information and perceived satisfaction. Learner satisfaction was measured on a 7-point Likert scale ranging from “extremely dissatisfied” at one end (1) to “extremely satisfied” at the other end (7).

Subjects in the classroom session went through a similar procedure as those in the online session except replacing steps 3 and 4 with a 45-minute regular lecture and review. They were allowed to ask questions in the class and take notes. Participants in the online group were not allowed to discuss with others in order to eliminate the possible influence of interaction on subjects’ individual performance.

Dependent and Independent Variables

The dependent variables were individual learning performance, which was measured by margins between post-test scores and pre-test scores (learning gain), and learner satisfaction. The independent variable was group (online group vs. traditional classroom group).


242 Zhang & Zhou

EXPERIMENTAL RESULTS

The study was a between-group design varying group. Table 2 demonstrates means and standard deviations of learning gains. In order to compare learning performance between two groups, we conducted a one-way ANOVA. The result revealed that the learning performance of the online group was significantly better than that of the classroom group ( F(1, 37) = 10.508, p < .005 ) at = 0.01. It supported our first hypothesis that students using the LBA system can achieve better learning performance than those in a traditional classroom. The distributions of learner satisfaction of the online group and classroom group are shown in Figure 3, where horizontal and vertical axes indicate satisfaction levels and the number of subjects, respectively. We ran a one-way ANOVA test to compare the satisfaction levels between two groups. The means and standard deviations of learner satisfactions are described in Figure 3. The result of analysis indicated that the levels of learner satisfaction were equivalent ( F(1, 37) = 0.119, P > 0.05 ) between two groups. The difference was not significant. Therefore, hypothesis 2 was not supported.

Table 2. Means and standard deviations of learning gain Groups

Online Group (LBA)

Sample Size

Classroom Group

20 (Male: 12)

19 (Male: 10)

Figure 3. Learner satisfaction 9

10

8

8 7 6

6

5

4

4 3

Count

Count

2

0 4

5

6

7

SATISFAC

Satisfaction of Online Group

2 1 4

5

6

7

SATISFAC

Satisfaction of Classroom Group



The online group also provided a lot of feedback about the LBA system. Some of them are listed as follows: “Overall, this is a great system for those unable to attend a traditional class.” “I think this is a very effective and neat way to present knowledge to people.” “I hope we can use this system in the future. It will make it much more convenient for us.” “The system was really good. It would be very beneficial to make up for a missed lecture.” “I still prefer to face-to-face learning if I have a choice.”

DISCUSSION

Implications of the Empirical Study

The experimental results show that an e-learning environment like LBA, which provides content-based structural support to multimedia instructions and interactivity, can improve learning effectiveness. First, LBA enables learnercentered activities. If learners do not understand a particular piece of material, they can always review it again and again until they understand it, or they can go back and forth or jump directly to a particular point of a lecture at any time. In classrooms, learning is instructor-centered and is a sequential process. Although students are encouraged to ask questions, many of them do not question or ask for repetition in the class for many reasons, even if they do not understand what instructors have said. Also, they do not have an opportunity to re-listen to the lecture. Another possible reason for students in the online group outperforming those in the classroom group might be partially attributable to learning in a new environment. Online students may be more focused in the experiment than classroom students due to the excitement, novelty, or interest in multimedia-based e-learning. We also noticed that although the performance of the online group was significantly higher than the classroom group, levels of learner satisfaction of two groups were equivalent. There are two major limitations of this study. First, the size of subjects was relatively small. It would be better if we could have had more subjects participating in the experiment. Second, because our focus in this study was to examine if an interactive online learning environment can be as effective as traditional classroom learning, we did not investigate the influence of different


244 Zhang & Zhou

presentation formats of e-learning content and different media on learning outcome. Despite the interesting findings in this study, we are not in a position to claim that e-learning will replace traditional classroom learning. We consider elearning a complementary solution to classroom learning that is especially beneficial for remote and life-long learning and training situations. We have also identified some disadvantages of e-learning and their potential solutions. First, preparation time for an online course, including video editing and processing, metadata creation, and database maintenance, is dramatically increased compared to preparation time for a classroom lecture. However, we believe that, in the long run, e-learning can be more cost-effective because the content can be shared and reused. Semantic Web and metadata technologies provide promising solutions to the above problems, which will be discussed later. Second, since multimedia instructions such as videos are delivered via the Internet, high bandwidth and fast data transmission speed (such as T1 or DSL) of computer networks are needed. As a result, facilities without high-speed data lines and modern computer equipments cannot deliver e-learning effectively. This issue will be addressed by the advances of technologies in communication, data compression, and information summarization. Third, there are some challenges in content management. For example, an interesting research question that has not been fully investigated is: What types of material are suitable to be effectively taught online? In addition, if learning content frequently changes, the cost of updating e-learning material can be prohibitive. Ontology can facilitate sharing and reuse of learning material, which bodes well for content organization, retrieval, and update.

Semantic Web and Metadata Specification Standards

Educational technologies are advancing towards enabling interoperability, extensibility, and reuse of learning resources. As mentioned earlier, due to the heterogeneity of knowledge representations in different e-learning systems, how to form a common understanding of multimedia instructional content to enable its sharing, reuse, and composition has been a critical challenge. A common approach to addressing this challenge is to represent semantics of learning objects and relationships involved in e-learning in a standard format. The underlying techniques rely heavily on metadata representation standards, which are primarily based on eXtensible Markup Language (XML) technology, especially XML Schema. The new generation of the Web, the so-called Semantic Web, appears to be a promising technology for implementing elearning (Stojanovic, Staab, & Studer, 2001).



Metadata is data about data. In the context of e-learning, metadata is descriptive information about learning material such as title, authors/provider, keywords, date, size, required conditions of use (if any), and so forth. Metadata must have a logically defined semantics. It is indispensable to adopting interoperable metadata standards and developing specialized metadata vocabularies for resource description, which enables intelligent information discovery and interoperability among various learning resources or applications. One of the most common metadata schemes on the Web is the Dublin Core Schema by the DCMI (Dublin Core Metadata Initiative, http:// dublincore.org/). The e-learning industry is developing metadata standards for describing the semantics of learning objects, such as the Learning Objects Metadata (LOM) specification from the LTSC of the IEEE, Instructional Management Systems (IMS) initiated by National Learning Infrastructure Initiative of EDUCAUSE, and the Shared Content Object Reference Model (SCORM) specification from the Advanced Distributed Learning (ADL) Lab (http://www.adlnet.org/). The LOM standard initiated in 1998, for example, specifies a base schema that defines a hierarchy of more than 70 data elements for describing metadata of learning objects, which are divided into nine categories: General, Lifecycle, Meta-Metadata, Technical, Educational, Rights, Relation, Annotation, and Classification. The Semantic Web is a W3C initiative that attempts to build a new WWW architecture, in support of not only Web content, but also associated formal semantics (Berners-Lee, 1998). It constitutes an environment in which human and machine agents will communicate on a semantic basis, allowing these agents to reason about the content and produce intelligent answers to users’ queries. One of its primary characteristics, supporting shared understanding, relies on ontologies as its key backbone. The Semantic Web mainly consists of a layered framework (Figure 4): an XML layer for representing the Web content; a RDF layer for expressing the semantics of the content; an ontology layer for representing the vocabulary of a domain; and a logic layer to enable intelligent reasoning with meaningful data. XML and Resource Description Framework (RDF) formalisms are two common approaches to binding metadata with a learning resource. XML/XML Schema is a data-modeling language, and designing an XML metadata instance is purely a syntactical activity. RDF was developed explicitly for annotating resources referenced by URIs, which is an infrastructure that enables encoding, exchange, and reuse of structured metadata. It provides the syntax, not the actual meaning, of the properties of data. Each RDF statement can be independently distributed. Therefore, XML is significantly less flexible for Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

246 Zhang & Zhou

Figure 4. Basic layers of the Semantic Web Logic Layer Ontology Layer RDF Layer XML Layer

expressing metadata than RDF. RDF descriptions, while simpler, are flexible enough to support these principles. Unlike an XML document, which is essentially a labeled tree containing text, RDF statements consist of a subject, a predicate, and an object, where the subject is referenced by a URL/URI. The semantics of pure RDF, however, are very limited. It suffers from the lack of formal semantics for its modeling primitives, making it difficult for interpretation of how to use them properly. Ontologies are specifications of the conceptualization and corresponding vocabularies used to describe a domain. In an e-learning system, ontologies can serve as the backbone for managing resources to facilitate knowledge sharing and reuse. The standards for ontology representation have been evolving, such as DARPA Agent Markup Language (DAML), Ontology Interchange Language (OIL), and Ontology Web Language (OWL). For example, Saini and Ronchetti (2003) used both an XML and a DAML+OIL representation of ontology for the computer science domain. Ontologies enable not only the organization of learning material distributed on the Web around semantically annotated learning objects, but also common understanding and integration of them. From the viewpoint of information retrieval, the key to finding the right content and people from multiple, distributed learning resources is an ontology containing a metadata representation of the concepts, relationships, and processes of the enterprise. Ontology can improve search results by identifying both sub- and super-topics of query keywords in a domain. Ontologies cannot only significantly increase the scalability of an e-learning system, but also enable different e-learning systems to interoperate with each other. Furthermore, they may promote standardization of e-learning systems. The logic layer of the Semantic Web is not fully developed yet. It aims to allow dynamic knowledge reasoning by applying logical principles. Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.


Many issues and challenges in this area need to be further investigated. For example, in any given domain, different experts may disagree on what the correct ontology should be. In some domains, ontologies change quickly over time as the fields develop. Therefore, the cost of development and maintenance of ontologies can be prohibitive. Such limitations also exist in the context of the Semantic Web (Cherry, 2002). This problem drives research on automatic and dynamic ontology development.

CONCLUSION

E-learning is complementary to traditional classroom learning. It is especially a promising solution to remote and lifelong learning. Nowadays, multimedia-based e-learning systems have become widely available. Many of them, however, present instructional material in a static and unstructured manner, providing insufficient interactivity and content control to learners. In this study, we develop an interactive online learning environment that aims at providing structural support for multimedia instructions to improve e-learning effectiveness. It is proposed that students in this interactive e-learning environment achieve higher learning performance than those in a traditional classroom due to the process control flexibility and increased learner-content interactivity. The results from an empirical study showed significant evidence in support of this proposition. We also found that the satisfaction levels of students in e-learning were equivalent to those of students in traditional classroom learning. This study explored an interesting approach to creating an effective e-learning environment by presenting multimedia content in an interactive and cohesive manner. We have also discussed the importance of adopting metadata standards and the Semantic Web for e-learning. We believe that interactive multimedia-based e-learning can be applied to a large variety of structured applications, especially those requiring both visual and auditory information, such as knowledge management, distance education, remote software technical support, online workforce training, and healthcare consultation.

ACKNOWLEDGMENTS

The development of the LBA system was partially supported by the Ford Foundation under Grant 10001097. We thank Jay F. Nunamaker, Jr. and


248 Zhang & Zhou

Queen E. Booker for their support throughout the project. We are also grateful to many colleagues and students who made this research possible.

REFERENCES

Adam, N., Awerbuch, B., Slonim, J., Wegner, P., & Yesha, Y. (1997). Globalizing business, education, culture through the Internet. Communications of the ACM, 40(2), 115-121. Agius, H.W. & Angelides, M.C. (1999). Developing knowledge-based intelligent multimedia tutoring systems using semantic content-based modeling. Artificial Intelligence Review, 13, 55-83. Alavi, M. & Leidner, D. (2001). Technology-mediated learning: A call for greater depth and breadth of research. Information Systems Research, 12(1), 1-10. Baloian, N.A., Pino, J.A., & Hoppe, H.U. (2000). A teaching/learning approach to CSCL. In Proceedings of the 33rd Hawaii International Conference on Systems Sciences, Maui, Hawaii, USA, January 4-7, (pp. 447-456). Bargeron, D., Grudin, J., Gupta, A., Sanocki, E., Li, F., & Leetiernan, S. (2002). Asynchronous collaboration around multimedia applied to ondemand education. Journal of Management Information Systems, 18(4), 117-145. Beckman, M. (1996). The Web goes interactive. Macworld, 13(7): 92-99. Berge, Z.L. (2002). Active, interactive, and reflective e-learning. The Quarterly Review of Distance Education, 3(2), 181-190. Berners-Lee, T. (1998). What the Semantic Web can represent? Retrieved on February 16, 2005 from http://www.w3.org/DesignIssues/RDFnot.html Carville, S. & Mitchell, D. (2000). It’s a bit like Star Trek: The effectiveness of video conferencing. Innovations in Education and Training International, 37(1), 42-49. Chapman, P., Selvarajah, S., & Webster, J. (1999). Engagement in multimedia training systems. In Proceedings of the 32nd Hawaii International Conference on System Sciences, Maui, HI, USA, (January 5-8). Cherry, S.(2002). Weaving a web of ideas. IEEE Spectrum, 39(9), 65-69. Coppola, N., Hiltz, S. R., & Rotter, N. G. (2002). Becoming a virtual professor: Pedagogical roles and asynchronous learning networks. Journal of Management Information Systems, 18(4), 169-189.



Gross, M. (1998). Analysis of human movement using digital video. Journal of Educational Multimedia and Hypermedia, 7(4), 375-395. Hiltz, R. (2001) The Virtual Classroom® and the Virtual University at New Jersey Institute of Technology. Technical Report, New Jersey Institute of Technology, Newark, NJ. Hiltz, E.S.R. & Wellman, B. (1997). Asynchronous learning networks as a virtual classroom. Communications of the ACM, 40(9), 44-49. Hiltz, S.R. & Turoff, M. (2002). What makes learning networks effective? Communications of the ACM, 45(4), 56-59. Hofstetter, F. (1995). Multimedia literacy. New York: McGraw-Hill. Kelsey, K.D. (2000). Participant interaction in a course delivered by interactive compressed video technology. American Journal of Distance Education, 14(1), 63-74. Khirallah, D.R. (2000). A new way to learn. InformationWeek, May 20. Retrieved on February 16, 2005 from http://www.informationweek. com/story/IWK20020517S0003 Lu, J., Yu, C., & Liu, C. (2003). Learning style, learning patterns, and learning performance in a WebCT-based MIS course. Information & Management, 40, 497-507. Morales, C., Cory, C., & Bozell, D. (2001). A comparative efficiency study between a live lecture and a Web-based live-switched multi-camera streaming video distance learning instructional unit. In Proceedings of the 2001 Information Resources Management Association International Conference, Toronto, Canada, (pp. 63-66). Nilsson, M., Palmér, M., & Naeve, A (2002). Semantic Web metadata for elearning - Some architectural guidelines. Eleventh International World Wide Web Conference. May 7-11, 2002, Honolulu, Hawaii, USA. Available at http://www2002.org/CDROM/alternate/744/ Parikh, M. & Verma, S. (2002). Utilizing Internet technologies to support learning: An empirical analysis. International Journal of Information Management, 22, 27-46. Piccoli, G., Ahmad, R., & Ives, B. (2001). Web-based virtual learning environments: A research framework and a preliminary assessment of effectiveness in basic IT skills training. MIS Quarterly, 25(4), 401-426. Piotrow, P., Khan, O., Lozare, B., & Khan, S. (2000). Health communication programs: A distance-education class within the John Hopkins University School of Public Health Distance Education Program. In M. Khosrowpour (Ed.), Web-based learning and teaching technologies: Opportunities and challenges. Hershey, PA: Idea Group Publishing. Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

250 Zhang & Zhou

Saini, P. & Ronchetti, M. (2003). Deriving ontology-based metadata for elearning from the ACM Computing Curricula. In Proceedings of the IADIS e-Society Conference, Lisboa, Portugal, (June 3-6). Stojanovic, L., Staab, S., & Studer, R. (2001). eLearning based on the Semantic Web. In Proceedings of the WebNet - World Conference on the WWW and Internet, Orlando, FL, USA, (October 23-27). Syed, M.R. (2001). Diminishing the distance in distance education. IEEE Multimedia, 8(3), 18-21. Wetzel, C.D., Radtke, R.H., & Stern, H.W. (1994). Instructional effectiveness of video media. Hillsdale, NJ: Lawrence Erlbaum Associates. Zhang, D. (2004). Virtual mentor and the LBA system –Towards building an interactive, personalized, and intelligent e-learning environment. Journal of Computer Information Systems, XLIV, (3), 35-43.


Information and Communication Technology in Supply Chain Management

251

Chapter XI

Information and Communication Technology in Supply Chain Management Vladimír Modrák Technical University of Košice, Slovakia Imrich Kiss Technical University of Košice, Slovakia

ABSTRACT

One of the important fields of application of the modern information and communication technology (ICT) has been the Supply Chain Management (SCM). Despite the fact that ICT is the determining element in SCM automation and rationalization, practical use of ICT in SCM is in its starting rather than progressive phase. The present philosophy of logistics is characterized as coordinated cooperation between companies in supply chains, through which it is possible to achieve higher productivity than in any other way. These cooperation activities represent a typical content of logistical centers, which provide a wide range of services for their clients. This chapter focuses on designing a multi-integral logistical center and analyzing it from the aspect of its effectiveness. Also, other aspects, such


252 Modrák & Kiss

as the impact of ICT on the development of virtual logistical centers and the development stages of SCM are presented. Moreover, the chapter outlines pitfalls of this development trend in an effort to provide practitioners in SCM with a more complex view of this issue.

INTRODUCTION

The application of new technologies at the turn of the millennium is formulating new challenges for providing service for the customer in market supply, this is, resources, as well as on market demand or consumption. This impulse, which was initiated especially by progressive development of information and communication technologies, has also manifested itself strongly in the development of Supply Chain Management (SCM). The definition of SCM that is closest to our view is that it is “the integration of business process from end users through original suppliers that provides products, services, and information that add value for customers” (Moberg, Speh, & Freese, 2003). In reality, we are standing at the threshold of the so-called knowledge economy and of expanding e-technologies, which, among other things, allow virtualization of the manufacturing of products. Relative to that, more and more frequently we come across the term “virtual organization,” which is seen by some as a method of running companies in the future, while others see it as an advertising trick of communication network owners. Along their development, various questions are being posed, such as: Will virtual organizations have a major impact on the lifestyle? Do managers and specialists develop themselves as quickly as the trends that surround them? It is apparent that it is necessary to include a certain period of time for people’s adaptation to new approaches. A substantial change that occurs in the so-called “adhocracy” when it replaces bureaucracy is the non-recognition of traditional management approaches, according to which each individual has a specific role in the company. Companies will probably start to copy the developments in the film industry, where the film director has specialists who are appointed for specific roles or functions. This trend is also beginning in the field of logistical services in the form of emerging multi-integral logistical centers. Is it a fashionable wave or a natural development stage in the development of SCM? Real examples from the practice, as well as theoretical studies (Chandrashekar & Schary, 1999; Lefebvre & Lefebvre, 2002; Motwani, Lawson,& Ahuja, 1998), offer indications in favor of the second possibility. Like the production field, in this field it does not mean the elimination of classic business models—in our specific case,



253

high-capacity logistical warehouses. In this relation, a question arises about the effectiveness of multi-integral logistical centers, which represents the main subject of the research interest of this chapter. In the context of this main issue, the following will focus on the objectives below: 1. 2. 3.

To point out to the development stages and trends in the advancement of SCM, from production flow management to virtual logistic centers; To identify decisive impacts, advantages, and risks of ICT in the development of virtual logistical centers; and To outline the designing of a virtual logistical center.

METHODOLOGY

In the research, a specific theoretical approach was used that—in contrast with an empirical one that requires extensive interaction with people—is based on intensive research of sources. In the first place, an overview of literature and documents on SCM and ICT will be provided to point out parallels in the theoretical research and aspects related with the development of SCM. In the procedure that follows, a deductive approach is used in which substantial properties of objects or phenomena are separated from the non-substantial ones. A precondition for a correct deduction is the analysis of an object in relation with its environment. This condition was applied by the examination of effectiveness factors and by defining a break-even point in the effectiveness of establishing a multi-integral logistical center and that of a classic high-capacity model of a logistical center.

RELATED WORK

Due to the fact that logistics basically relates to all types of companies and organizations (Lambert, Cooper, & Pagh, 1998), in this study we are going to focus our attention on the supply chain management of manufacturing companies. In this environment, SCM based on ICT can be developed only to the extent to which ICT is perceived to be the same as any other company resource in the company. The evaluation of ICT in such a case corresponds with considerations of “where ICT could be more useful for the company.” Those ideas wildly differ from theoretical ones, as confirmed by a number of studies (see, for example, Edwards, Peters, & Sharman, 2001). Many managers introduce IT in their search for its perceived cost savings advantage as a result


254 Modrák & Kiss

of the reduction of a number of employees (Zuboff, 1984). Those expectations are usually not met, as the jobs that were eliminated by automation were often those that required direct contact with the customer. The same author furthermore states that the reason for the introduction of IT should be, besides immediate effects, also self-learning of the staff in the field of IT. According to Crainer (1988), another factor explaining the failure of IT in increasing productivity is the fact that it is often used in wrong places. For example, quality enhancement programs have exacerbated the situation to such an extent that the significance of IT was overlooked. Instead of being used as a key tool for securing quality and higher productivity, IT was used as a means for collecting data and securing support for quality control programs through precise statistical data. ICT represents a highly efficient tool for data collection, but its use is much wider. It offers companies a wide range of possibilities for increasing competitiveness. For example, it allows organizations to create closer partnerships with their customers, suppliers, and business partners. It means that organizations are capable of using the potential of ICT for the modernization of a number of managerial processes, which also include SCM. What prevents a wider use of ICT, specifically in SCM, are the social obstacles. Those aspects were analyzed within “The Supply Chain Partnership Project” (Fulantelli & Allegra, 2003). The result of the survey is a statement: The lack of trust in other SMEs’ capabilities is a serious obstacle to cooperation and, therefore, to the adoption of ICT-based solutions; the social factors underpinning the relational and communication interfaces between SMEs’ are the main obstacle to the boosting of SCM strategies (p. 47). Beamon (1988) searched whether those social obstacles depend mainly on the insufficient use of the potential of ICT in SME or whether there are other serious obstacles in the implementation of ICT in SME. Besides the basic area of securing the transfer of information between companies in a supply chain (SC), the potential of ICT has recently been used significantly for the integration of information and material flows and for a higher degree of cooperation between companies. One of the substantial reasons why companies have not used the potential of ICT fully in this field is the previous, quite high investment into ERP systems. Despite that investment into Internet information systems, problems with the information compatibility between companies prevent an effective deployment of ICT systems within an integrated supply chain (Hertz, 2001). Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.


255

The reason for the creation of integrated SC is the establishment of close relationships and the creation of unified procedures aimed at increasing the effectiveness of the whole logistical chain. In these terms, SC is characterized as a network of mutually interconnected companies that share the fulfilling of promises to the final customers (Christopher, 1998; Mentzer et al., 2001). The interest in the implementation of ICT in SCM has grown recently along with the change in the orientation of logistical management from internal attention to an overall company strategy focus on integrating relations with suppliers and distributors (Meade & Sarkis, 1998). It was caused by the realization of the need of integrated information flow management in individual SC by production companies, as well as by logistical companies. An effort to react to this new situation has manifested itself in the development and implementation of integrating information systems in a supply chain. Like other IS, they also failed to avoid many system shortcomings, identified in more detail by Rakotobe-Joel, Zbib, and Bakhtiari (2002). The results of their analyses suggest that: the efficient and best performing supply chains are not those that can deliver good results in a short term, but rather those that can sustain such performance and show resilient characteristic that would allow them to withstand information systems failure due to either outside attack or system accident inside their operations (p. 473). Another important fact is that companies with lower performance and information integration capability are often kept out of the ICT integration of the supply chain (Bask & Juga, 2001). In relation to the management of complete supply chains, a holistic approach to the logistic management is often highlighted, which is understood as a closed circuit that starts and ends at the customer. In relation to that, Helper (1991) stresses that the sustainable supply chain strategy should be given the same attention as downstream and upstream activities. Lu and Su (2003) observed that since the outbound operations have been streamlined and extracting extra benefit has became increasingly difficult, companies are turning their attention to inbound logistics. According to Olin, Greis, and Kasarda (1999), the trailing behind of the development of inbound logistics is caused by horizontal fusions of producers into large portfolio-oriented companies, focusing on assembly and marketing while reducing their in-house development and manufacturing depth in favor of multi-tier supplier base.


256 Modrák & Kiss

Communication technologies are currently increasingly used in e-commerce. Those applications include, for example, e-mail, the Internet, Electronic Data Interchange (EDI), and Extranet. It practically places greater demands on logistics from a physical point of view and with regard to its ability to coordinate physical flows and flows of information (Carvalho, 2000). Thanks to the onset of advanced ICT in SCM, the development of virtual companies dominated by theoretical approaches is expanding. According to Davidov and Malone (1992), the virtual company of the future will appear—in the eyes of an observer—almost limitless, with ever-changing contact surfaces between the company, the supplier, and the customers. Even though skeptics are already gathering counter-arguments against such visions, Birchall and Lyons (1995) claim that, from the 1990s onwards, only intelligent organizations that will not try to avoid new organization forms will survive. In this sense, Kalakota and Robinson (2001) point out that the design of a new model of business should be able to create alliances that emerge whenever there is a need of a new type of response to the customer’s growing requirements. This cross-section of direct and indirect relations of ICT and SCM, despite an effort to narrow the issue to the production field, suggests a considerable diversity of this issue. In the context of the main goal of this chapter, a company, Jeroen van den Berg Consulting (Van den Berg, 2001), deals with this issue, and old versus new supply chain structures are an object of its interest.

FROM PRODUCTION FLOW MANAGEMENT TO VIRTUAL LOGISTIC CENTERS

The material flow is a controlled movement of materials in a logistical network, so that they are available undamaged at a specific place in a required quantity, in the required time, and with a predefined reliability. The logistical network is usually understood as a chain of material relations, as it includes individual material flows, but the non-material side cannot be separated from this understanding since the chain contains specific information flows. Production flow management also incorporates material handling, which is “virtually all aspects of all movements of raw materials, work in process, or finished goods within a plant or warehouse” (Lambert et al., 1998). Material flows are implemented as: 1.

Discontinuous flows, working according to the pressure principle, by which the supplier supplies the customer with an agreed batch of material



2.

257

at a time and in a quantity that suits the supplier’s needs. As a result, excessive stock and delays occur at elements of the logistical chain. Continual material flows in a logistical chain work according to the strain principle, by which the supplier supplies a batch to the customer at a time and in a quantity according to his own needs, in line with the Just-in-Time (JIT) concept. There is no need for stock between the supplier of materials and the production, and the stock of finished products can be reduced to an essential capacity, which buffers the flow from the production to the customer. The frequency of the flow increases, chains pass on smaller batches, the flow is smooth. To avoid transport problems due to an increased flow frequency, a completion element and the aggregation of deliveries for customers are introduced. Customers’ regular requests are directed right into the production, which should be capable of reacting quickly and individually to changes in orders that occur in the course of the fulfillment of framework contracts.

A logistical chain with a synchronous material flow is an ideal target type of supply chain, where the structural and process aspects are completely adapted to flexible reactions to any change in a requirement. The material flow is balanced, smooth, without maintaining stock (with the exception of a minimal back-up stock). Inside any element and on the way between chains, there is only a minimal quantity of raw materials or finished product that is precisely defined at a specific moment. That is possible with parallel information flow, where the control system of the whole logistical chain secures the processing of customers’ orders and simultaneously coordinates, synchronizes, and optimizes all processes in the value chain. For that, it has real-time information available from all partial supply chains. Dynamic management of value chains— from the development of a product, through planning, purchase, sale, up to service—requires standardized procedures and a unified communication method. A precondition for effective communication is a consistent and complete information database that contains data about products, components, suppliers, and results of individual activities. Here the interconnection of individual companies through networks, access to a common information database (for example, through Extranet) is gaining in significance (Moore, 1998). Such an approach assists mutual perfection of the course of internal processes and thereby of the whole value chain. A precondition for a successful SCM is the trust between the parties involved. Spekman, Kamauff, and Myhr (1988) point out that, in the recent past, parties have kept a distance from each other due to the lack of trust, which was demonstrated in their reluctance to share internal Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

258 Modrák & Kiss

information about their companies. Saunders (1994), for example, analyzes such supply-partner relationships in more detail and considers them to be the decisive factor in the success of SCM. Material and information inputs into logistic chains of a company are connected with the development of supplier-customer relationships in the form of strategic partnership. This tendency reflects the new approach to procurement management, which can be expressed by an overview outlined in Table 1. Another factor in strengthening this tendency can be the wider application of outsourcing. Activities carried out by specialized external providers for a larger number of customers are usually cheaper, particularly because of fixed costs. Moreover, organizations that provide outsourcing bring their own knowhow from optimization of logistical activities into the partnership. Cooperation in this field helps to eliminate or reduce unexpected idle periods in transport (long transport routes, reloading, customs clearing, and other). A higher form of outsourcing is the inclusion of a logistical center (LC) in a supply chain, which will secure the reception of required supplies from specific customers, carry out stock operations, and stock records, including other logistical services (completion, packaging, marking, etc.). Individual deliveries from stock are taken by the customer in the JIT mode. With the progressing globalization, the significance of individual logistical centers is increasing. Logistical activities related to the output of finished products into the sphere of consumption have to contain all distribution, wholesale, and retail Table 1. Comparison of approaches to procurement management INCOMING APPROACH

CONVENTIONAL APPROACH •

Passive, inertial

•

Active

•

Orientation on a higher number of local

•

Reduction in the number of

suppliers, preferring the cheapest supplier

suppliers, globalization of purchasing markets, orientation on the best supplier

•

Minimum information for the supplier

•

Interconnection of information systems between partners

•

Short-term orders

•

Long-term contract-based partnership

•

Suppliers without obligations.

•

Passing the burden of responsibility for the quality on the supplier



259

elements of the supply chain, which means they should finish at the end customer —the consumer. Logistical activities of producers in the distribution and sale of products and in purchasing and sales activities of wholesale and retail companies are usually not harmonized. Each of those organizations creates a partial supply chain according to its market interests, and the relations between them are decided by their economic strength, not by a common goal. The expanding logistics pushes the concentration of branched stock networks into a minimal number of technically well-equipped logistical centers with regional and territorial coverage, effectively resolving the conflicts between the production and the retail. Conflicts are resolved as follows: • •

•

Product range conflict results from the retail’s requirement to supply a wide product range, while the production supplies a more narrow range. This conflict is resolved by purchasing and completion in warehouses. Quantity conflict and time conflict are produced by the request for frequent supplies in small quantities against producers’ supplies in big quantities at a lower frequency. The conflict is resolved by keeping a stock of goods. Spatial conflict occurs as a result of the misallocation of production and the center of consumption, and it is resolved by placing the warehouse in a place that is identical to the intermodal transport element.

LCs fulfill the primary function—supply customers with goods in the required way and in the required range; therefore, they play the role of completion and expedition. The secondary function is given by keeping the necessary stock of goods. Another tendency is the speeding up of the international trade through ecommerce, which significantly influences the strengthening of the international character of logistic distribution chains. The trend in introducing e-commerce shifts from part ordering, materials scheduling, and delivery into sales, invoicing, and receipts (Pawar & Driva, 2000). It means substantial re-evaluation of the logistical wholesale practice, from ensuring stock operations and the subsequent distribution towards complex logistical processes focused on the satisfaction of needs of individual retail units and the increase of efficiency of the flow of goods in the interest of securing their competitiveness. According to Ross (1997), logistics may be understood as an evolutionary state in a number of areas of management:


260 Modrák & Kiss

• • • •

Storage and transport management; Overall cost management; Integrated logistical management; and Supply management.

In line with this understanding of logistics, the start of SCM as a discipline was caused by the transition from the tactical transport and storage services towards more centralized logistical functions, focused on cost management and on the complexity of customer services. The role of logistical workers has subsequently widened, from cost management to the provision of integrated logistical solutions or fourth-party logistics (4PL) concepts. The development of third party logistics (3PL) and 4 PL concepts is basically based on the extension of services for providers of 3PL and on offering solutions through a single-point-of-contact service (Hoffman, 2000). It can be expected that further development in SCM will take the direction of widening services at the horizontal level of the value chain. Logistical workers will extend their activities against the value flow. Gradually, integration of complex logistical supply chains from semi-finished goods suppliers through producers to consumers will take place. In SCM, the dynamism of the changing business environment has influenced the decisive goals of supply systems. In particular, those goals include the increase in the quality of services for customers and the flexibility of provided services. Those growing requirements can be satisfied especially with the support of ICT and with the use of external services of logistical companies. Even though the outsourcing in SCM brings apparent advantages, it does not mean their extent will always be satisfactory. The method of increasing the effectiveness of logistical services goes mainly through ICT, which have been adapted for this purpose in recent years. Infiltration of progressive information and communication technologies into the management of logistical systems results in intensive development of complex transport services, using tools such as multimedia telebridges, virtual integrated service systems, and the like. For that reason, in the following section, attention will be paid to virtual logistical organizations.



261

INFLUENCE OF ICT ON THE DEVELOPMENT OF VIRTUAL LOGISTIC CENTERS

In the past, in the forefront of logistical process rationalization activities, there was in particular the physical, transport, and handling processes. Today, the attention is increasingly turning to the information flow, by means of which the material flow is planned, organized, managed, and controlled. Innovation of the information and communication system based on the application of the latest information and communication technologies frequently offers larger benefit than the innovation of handling technology. Each material flow can work only if the information comes at the right place, at the right time, and is reliable, precise, and correct.

Importance of Information in SCM

Information has gradually become the decisive factor in the perfection of logistical processes. By obtaining and processing necessary information, it is possible to limit storing materials or goods by better stock management and better coordination of supplier-customer relations, and to limit transport by improved coordination of all elements of the supply chain. Lack of up-to-the-minute information causes uncertainty on the customer side by questioning the meeting of delivery deadlines and uncertainty at the supplier by questioning the sizes of deliveries for individual customers. Those uncertainties often lead to ineffective concentration of material on so-called back-up stocks at both ends of the supplier-customer relationship. Information and communication technologies may significantly assist in providing LC services by building integrated information and communication systems that allow contact with other systems practically anywhere in the world. The contents and structures of databases of individual organizations in a logistical chain must therefore be proposed to respect the need of an integrated information system, which includes international standards for the electronic transmission and exchange of data. Each movement of materials is accompanied by information. Some of it “runs ahead of goods,” informs in advance about the arrival of a consignment, about its technical and economic parameters (type, quantity, supplier, special properties, etc.). On the basis of that information, the receiving party can prepare for the delivery of the goods and issue instructions for its further use. Another group of information has the opposite direction to that of the material


262 Modrák & Kiss

flow, and it includes the confirmation of the acceptance of goods, claims, questions about the terms and conditions of delivery, additional orders, and so forth. In both cases, the information may be linked to a specific deal, related to the purchase or sale of goods. Precisely specified, structured information is essential for the materialization of supplier-customer relations of specific business cases followed by logistical operations. The information is subject of exchange between suppliers and customers in an external information environment or between specialized organization units in the internal environment of a company. The information is usually linked to a specific stationary or mobile object, which is related with its identification. The implementation forms— the method of information exchange in the form of messages or documents between suppliers and customers—have their history. Classic, hand-written or typed documents, delivered by post or by a courier, later delivered by telex or fax, as a result of general e-development, have modernized to the current standardized messages sent on electronic media via couriers or directly by the transmission of documents through computer networks (Figure 1). The unification of documents, in which it is defined precisely as to what information they contain and where in the document it is—with information of the same type in other trade documents in the same place—was one of the first rationalization steps for speeding up and facilitating supplier-customer relations in the international trade. Figure 1. Manners of structured information exchange



263

Position of EDI in SCM

Another substantial factor that made business relations more effective was the transformation of the paper exchange of information to the electronic exchange of structured data between heterogeneous computer systems of business partners without human intervention, called Electronic Data Interchange (EDI). EDI substantially shortens the length of the process of sending and receiving documents through classic mail; it also increases the quality of the process and allows the information sent at the receiving party’s computer to be processed without repeated input of data. The recognized standard for the electronic exchange of structured data is the United Nations Rules for Electronic Data Interchange For Administration, Commerce and Transport (UN/EDIFACT). The standard defines syntactic rules for the transmission of messages, and it can be used in various fields of human activities. Nowadays it is used, for example, in the healthcare, tourism, and other industries. UN/EDIFACT covers the following main activities: Syntactic rules; Data elements; Segments, Messages; and Numerical code lists. The higher form of EDI communication, so-called Value Added Networks (VAN) through intermediaries (electronic postmen) in the chain, is provided (Figure 2). It implies that EDI application users do not need to have a connection with each of their partners; it is enough for them to communicate with a VAN, which will ensure connections required by the users. In addition, Figure 2. Intermediation of EDI communication among business partners


264 Modrák & Kiss

VANs can eliminate some issues of incompatibility of systems as they support almost all types of computer systems. Characteristics of a VAN include: • • • • • • • •

It works as a clearing house. It plays the role of a post-box and network management. It offers functions for the transformation from one EDI format to another. It secures records of the movement of messages and their long-term archiving. It secures certification of keys and their distribution. It also provides other supplementary services, such as electronic mail, access to various databases, and so forth. It provides services 24 hours a day, 7 days a week. It provides consultations and support for EDI applications.

Besides the implementation of the technical system, EDI poses a range of organizational issues to be solved. The use of EDI brings a change in the traditional style of work, which can substantially influence the organizational structure of the company and the organization of its work processes. And it is the area of the influence of EDI on individual activities that should not be underestimated. Maximum attention should be paid to it, and it should be analyzed carefully, so that a detailed picture of the new work activities, their links, and, in relation to that, the idea of a new organizational structure of the company during its transition to EDI are created. The benefits of EDI can be summarized in the following points: •

• • • •

Work-time savings: Data,without paper documents, prepared in a single computer system, can be transferred to a computer system of the business partner. It is an instant transmission from the source of information to the destination with minimum human intervention. Time savings: EDI transaction are immediate; they improve production planning; they increase productivity, decrease stock, and thus decrease overall costs. Reduction of errors resulting from the preparation of data: Simultaneously, the level of professionalism in business relations, based on competent information, is increased. Overall increase in data precision and clarity. Improvement of customer service: EDI allows the implementation of non-traditional forms of services, such as electronic contact with a bank



•

•

265

(money transfer, account statements, etc.). The company becomes more flexible with regard to the customer’s needs. By increasing its communication readiness with business partners, it improves its image over that of its competitor(s) working with classic methods (Gottardi & Bolissan, 1996). Widening of business opportunities: EDI offers organizations an opportunity to widen their business activities without prolonging the response time through the communication within an electronic network and between networks. The preparation and implementation of cooperation between supplier and customer companies is quicker. Widening of functional characteristics of information systems: EDI within the integration of information logistical systems allows its direct connection with the whole internal information and communication system, including a system based on barcodes.

In a review of the literature on adoption of EDI, the following risks and weakness were mentioned: • • • • •

The more sophisticated a communication system is, the more vulnerable the company is in the event of a technical fault (Lambert, Stock, & Ellram, 1998); Incompatibility with the internal systems already in operation (McGrowan & Madey, 1998); High initial investment into hardware and software (Marcussen, 1996); As a result of decreased stock, a risk arises for customers in the event of an unexpected increase in demand (Lambert, Stock, & Ellram,1998); Resistance to change inside supplier companies (Nierderman, 1998).

Experience shows that, despite the achieved current advantages, EDI systems have succeeded especially in companies with a large volume of business transitions (hypermarket chains, automobile industry, etc.), where the favorable period of return of investment on an EDI application is achieved as a result of cost savings compared to the previous technologies, in line with the above specified advantages. In the case of medium-size and small businesses, an obstacle in the application of EDI is the particularly high investment needed. This business environment expects a decrease in price of EDI by applying the XML meta-language, which will simplify the current system of exchange of information about components of trading documents and ensure full compatibility of information systems of two partners. Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

266 Modrák & Kiss

PRODUCT AND OBJECT IDENTIFICATION TECHNOLOGY

The basic significance for the modernization of physical flows is in the precise identification of goods and objects and their movement between various elements in any logistical chain. Optoelectronic, radio frequency, inductive, magnetic, biometric, and satellite technologies are currently used for identification.

Optoelectronic Technology

The optoelectronic technology of bar coding, using the European Article Numbering (EAN) system, allows unequivocal identification of consumer goods, a specific pallet with goods, or even a service provided, which means that the code is understood as a means of identification, not as a means of classification of goods. The EANCOM system allows communication and exchange of trading information through EDI. Bar codes in an automated control system of trading companies give a perfect overview of the goods sold in real time. It allows ordering and adding to the stock, and introduces an automated goods acceptance system that includes complete stock management, monitoring of production, and expiry dates, including production numbers, types of products, product price updates, and so forth. The benefits of using bar codes can be summarized into the following points: •

• •

Precision: Application of bar codes is one of the most precise and fastest systems of registration of a large amount of data. In the case of manual entry of data, a mistake is made on average in every three hundredth entry. In the case of bar codes, the number of mistakes is decreased to one in every millionth entry, while most errors can be eliminated by the extension of the code with a check-sum, which verifies the correctness of the sum of all other numbers. Speed: The comparison of the speed of making a data record from a bar code with the speed of its entry through the keyboard shows that even the best operator is at least three times slower than any bar-code reader. Flexibility: The bar code technology is multi-purpose, reliable, and finds wide possibilities of use. It can be used in various extreme environments and climatic conditions. Bar codes can be printed on materials that are resistant to very high or low temperatures, on materials resistant to acids,



267

abrasive wear, excessive humidity, and the like. The dimensions of the code can be adapted for the use even on a miniature electronic component. Productivity and effectiveness: Reflects particularly in the decrease of costs in packaging management, optimal use of storage areas, improvement of company internal material handling systems, use of “just-time” supply method, rationalization of administration and records of data, including cash flow management. Support of EANCOM and JIT: Results from the structure of system messages, which are linked in the following order:

•

• • • • •

Identification data: The first bits of information exchanged between trading partners at the start of a business relation. Trading transactions: All information related to the purchase or sale of goods. They start with the purchasing order and they follow the whole business cycle. Announcement and planning messages: They are used for informing trading partners about business activities and plans. General messages: They can be used for sending the required data, for which no standard messages are specified. They are used for the initial testing of transmissions between new partners or as supplementary text information.

Radio Frequency Technology

An alternative to the use of the bar code in applications in which its deployment is impossible or difficult on principle has become the Radio Frequency Identification (RFID). Compared to the bar code, RFID offers higher reading speed and a substantially simplified application in automated systems, as it does not put any demands on its operators. There is a wide range of RFID systems and elements, which can be classified according to a number of features. For this purpose, the most frequently used are: • • •

Frequency range; Type of identification element; and RFID application.

The radio frequency (RF) technology uses a radio signal that causes a response by a specially developed label in the form of a radio message. The system consists of three components: an identification label (passive or active), Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

268 Modrák & Kiss

a detector, and an antenna. The identification label consists of a reception and transmission antenna, discrete components, and an integrated chip. The passive label is activated by the detector, which, through the antenna, transmits a pulse or unmodulated RF signal. The label responds by using a small amount of energy from the received signal, by which it feeds the chip, which then transmits a code back to the detector through a modulated RF signal. An active label can receive, store, and transmit data. RF systems do not have application limitations typical of other systems of automatic identification, as they do not require direct visibility of the label from the detector’s antenna. The application of the RF technology allows immediate communication of the terminal with the program that controls stock management. Part of this technology is a wireless network, through which the user can fully use network resources without cable connection to a communication network directly from the workplace (Figure 3), equipped with a wireless adapter. The coverage of the workspace by the RF signal is ensured by Access Points (APs) and Extension Points (EPs), which materialize the interconnection of the two networks. When a number of APs are used to cover a required area by a signal, it is possible to use the so-called roaming, which ensures constant connection of a mobile station, like in the case of GSM mobile phones.

Inductive Technology

The inductive technology works on a principle similar to that of RF; the difference is that electromagnetic induction at a substantially shorter reading distance (up to 50 cm.) is used for the transmission of coded data between the detector and the identification label. Labels with different patterns are mostly Figure 3. Application of a wireless network



269

made only for reading. The first two types of patterns are designed for the protection of goods against theft, another two types for the identification of objects in an industry, and the last type for the identification of people. A routine application area for inductive technology is the work process monitoring and control systems that are used for the identification of tools in robotized production lines and logistical systems for the identification of pallets, containers, and their contents. To some extent, programmable inductive labels can, for example, replace the interconnection of individual workplaces by a computer network, as a manual portable terminal can sense the data recorded on a previous workplace and can write the updated state on the inductive label according to the carried out technological operation of the workplace. The inductive technology provides a wide range of possibilities for the automatic control of the movement of transport carts in production operation and in warehouses.

Telematic Technology

The current telematics used in logistics allow terrestrial and satellite systems to monitor and identify transport elements and whole transportation units in real time. In the terrestrial systems, reading equipment installed in a fixed way along a transport route is used for identification purposes. The precision of localization of a detected object at the place of the detector is in the range of a few centimeters. Otherwise the localization is possible only according to sections between detectors. Terrestrial systems can find out the order of elements, direction of drive, and, in the case of a railway car, a railway line on which the transport element or the whole train is. Satellite identification systems known as Global Positioning System (GPS) are used for the continual monitoring and specification of position of railway cars and trains by means of geographical coordinates and for the communication of mobile units according to the connection scheme: mobile unit—server—client. The precision of a satellite system is about 25 m. due to problems caused by rugged terrain and tunnels.

DESIGNING OF VIRTUAL LOGISTIC CENTERS

A logistical center (LC) is considered to be a supply-distribution node that provides a wide range of logistical services for customers. Along with transport and handling processes, it carries out activities that are connected with the Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

270 Modrák & Kiss

complex support of production and with the sale of the product. LCs are set up as complex services based on sharing work of specialized companies that provide logistical and other services connected with the implementation of supply chains in line with the needs of individual customer services. They are usually well placed in a region and generally have a high- capacity warehouse and accessibility for transport, depending on the concentration of the necessary infrastructure. LCs are usually built up at nodes of combined transport, local and long haul transport, and physical and information flows. The main roles of an LC include: • • • • •

Connection of different types of transport (ground, water, air) into transport chains; Design and implementation of complex logistical networks between suppliers and customers; Various logistical tasks for customers (internal company transport, storage, commissioning, packaging, distribution, etc.); Preparation, implementation, and maintenance of the needed infrastructure for cooperating companies; and Preparation, implementation, and maintenance of a needed information, control and communication system.

The integration of tasks into an LC envisages effective cooperation between the production, sales, service, and transport companies and all consumers. From the producer’s perspective, it means, for example, that tasks related to the procurement of materials and the sale of products are dislocated from the company. Those tasks are considered to be not characteristic or natural to the production process. The dislocation of tasks and the application of the JIT concept to the production, supply, and distribution decreases storage costs and the implementation of physical flows, and it increases the competitiveness of products. The application of a program—combined transport organized by a plan—rationalizes and ecologizes transport processes. LCs solve extensive, multilevel tasks. The result of the solution is usually an optimized system of logistical chains of material and non-material flows. In wider understanding, it is the case of material flows (raw materials, semifinished products, products, and waste), information, money, and people. The design, solution, implementation, organization, management, and control of logistical networks take into account the current conditions for process optimization.



271

Portfolio of Logistic Center Services

Functional properties of LCs depend on the portfolio of provided logistical services and the links between them. According to the significance of services in the creation of added value for the customer, logistical services can be classified, in line with Figure 4, into three groups: 1. 2. 3.

Basic logistical services; Additional logistical services; and Other services.

Basic Logistical Services The basic logistical services have the biggest share of the added value, which results from the assessment of the whole quality of preparation and implementation of an ordered integrated supply chain. Basic logistical services solve the arrangement of transport, physical transport, and handing of material, including storage, dispatching and distribution. The arrangement of transport cannot be imagined without marketing of road, railroad, water, or air transport services. The knowledge of their existence and of references, transport terms, and conditions, and a flexible reaction to changes in the type of transport are significant bits of information for planning, implementation, and operative control of the physical flow, from the production point to the point of consumption, so that they meet the customer’s requirements and generate profit. Figure 4. Structure of logistical services of an LC LOGISTIC CENTER

INTEGRATED LOGISTIC SERVICES BASIC • • • • • •

•

traffic acquisition material handling transportation warehousing consolidation distribution information and communication

ADDITIONAL • • • • • •

leasing of machines and mechanisms

repair and servicing custom declaration insurance consulting requalification

OTHER •

• • • • • • • •

bank

post hotel restaurant ambulance security agencies publicity exhibitions agencies other


272 Modrák & Kiss

In the integration of supply chains, handling of material involves the creation of handling or transport units, loading, unloading and reloading, weighing, measuring, counting, and other non-technological operations by which a controlled horizontal or vertical change of position, including the change of the handled product’s orientation in the space, takes place. Transport systems have the key role in the transport of materials, as without them it is not possible to secure a reliable integrated physical flow by a supply, production, or distribution processes. Transport has to adapt flexibly to the conditions of the international, national, and internal company transport, including multimode transport. The application of JIT in the planning of supply deadlines and in the control of transport chains is a logical precondition for economic effectiveness of transport, as supply chain processes are becoming more transparent, while more progressive minimization of stock occurs. For storage and stock management, the LC currently uses the latest technology in its building as well as operation. High-rise warehouses are being built that are equipped with shelf systems with the capacity of tens of thousands of paletted units and operated by automatic shelf loaders, tens of meters high. The horizontal transport is solved by automated conveyor or car systems. Robotic systems are applied in the depalleting as well as palleting and packaging of consignments. In separate zones, besides customs or consignment storage, technological operations related to precise division of input materials or with the final assembly of products can be performed. The structure of elements of information and communication systems is designed to be able to fulfill the roles of electronic commerce and electronic management, identification and monitoring of moving and stable active, passive, and supplementary logistical elements. The application of the intranet and extranet in the information and control system of an LC is taken for granted. The type of finishing operations and steps in them are specified precisely by a concrete order from the customer. The assembly of products according to the customer’s specifications, packaging of products into retail and transport packaging, marking of products and packaging, and the like, are usually included in the finishing operations. Additional Logistical Services Additional logistical services increase the feeling of satisfying the customer’s request and the added value of the value-creating chain of implemented logistical services. In particularly, they contain the following groups of services: Renting out premises for the provision of additional logistical and other services is a way to extend the competitiveness of an LC, as it is the case of the Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.


273

development of the portfolio of provided services. Hiring machines and equipment allows entry by new players into the transport market, which results in a possible decrease in transport prices. Besides that, it also secures flexible reaction of an external transport capacity to more significant fluctuations on the market. An additional service, now taken for granted, is the repair and servicing of transport and handling equipment. Preventive maintenance and repair systems are preferred. Diagnostic examinations of the technical condition of machines are carried out on a regular basis. If necessary, it is possible to pump fuel and clean vehicles at petrol pumps inside the LC’s compound. For the needs of international transport, customs declarations of the transported material according to international regulations on customs clearance are compiled. This service uses the EDI information and communication technology and the identification and object-tracking means, which, on the basis of updated information, allows customs to be notified in advance about the expected arrival of a specific consignment and thus help ensure the smooth succession of work processes related to the customs clearance of a consignment. The insurance of deliveries is included in primary financial services. This service shifts the burden of responsibility for the complete and intact condition of the transported material from the transport agent to the insurance company and lifts the burden of the claims for damages incurred by events specified in the insurance contract from transport agents. Consulting services concentrate particularly on the provision of marketing, investment, and financial consulting. Topics of strategic marketing are used for the orientation of research and development intentions of ordering parties. Capital and the linked financial consultancy can successfully navigate financial flows of investors into new business activities of the global market. Requalification provides opportunities for flexible adaptation of the players on the job market to changed conditions. It provides teaching and training programs for mastering required professions and for maintaining competence in the profession by prescribed certificates. Other Services Other services complement the synergic effect of complex services of the most advanced logistical center. The customer usually uses the highest added value of implemented supply chain. Those services do not need to be used in all supply chains, but their presence increases the competitive advantage due


274 Modrák & Kiss

to the fact that they are located at the places of concentration of logistical services and of their effective integration into supply chains. This is the case of postal and banking services, hotel, restaurant, and healthcare services, property security services, and marketing communication support services through advertising, promotional materials, and exhibitions. The providers of logistical services concentrated into a portfolio of services of an LC are companies and institutions whose core business corresponds with the specifics of the required services necessary for the implementation of supply chains of various development stages, up to complex supply chains. In particularly, it is the case of the following types of businesses: •

•

•

Organizations providing basic logistical services: • Transport companies, private transport agents; • Forwarding agents; • Wholesale warehouses, storage areas; • Packaging factories; • Installation companies; • Division workshops; and • Information and communication technology operators. Organizations providing supplementary logistical services: • Repair, maintenance, and service companies and businesses in volved in repairing and servicing transport and handling machines and equipment; • Leasing companies renting out transport and handling machines and equipment; • Petrol pumps; • Customs; • Consulting offices; • Insurance offices; and • Training equipment (driving schools, schools for operators of handling equipment, etc.). Organizations providing other services: • Post offices; • Banks and their affiliate offices; • Hotels and restaurants; • Outpatient clinics and other.



275

Steps in Designing a Virtual Logistical Center

The application of business process re-engineering in production and trading companies speeds up the trends of the application of core business in practice. Production companies can transfer to an LC stocks of materials, semi-finished products as well as finished products, and capacities of final completion processes (assembly, packaging, etc.). The transfer of all these activities of a manufacturing company changes the character of its business mission into a mailing store. The building of the portfolio of services of an LC is a gradual process, which has four development stages. Only in unique cases are all services included in the design and implementation of an LC. In the first development stage, the portfolio of services consists only of services in which work operations of non-technological character are done, but they should be able to meet transport needs of supply and distribution processes. In the second development stage, services carried out by technological operations are added. The portfolio of services in the third development stage is extended, specifically by leasing, repair and maintenance of machinery and equipment, including the provision of requalification services. The LC provides complex services in the fourth development stage. It should be pointed out, however, that the structure of the portfolio of services of a certain development stage may contain selected services from all groups, and their selection may be influenced by local conditions at the place of implementation of the LC.

EFFECTIVENESS OF VIRTUAL LOGISTIC CENTERS

In the concept of a multi-integral architecture of a logistical center reflecting progressive trends in SCM, coordinated mutual cooperation and strategic partnership of dispersed logistical capacities along the vertical and horizontal lines are considered as economically justified procedures. In regard to the implementation of the model, it is necessary to take into account the following obstacles: •

The current competitors providing services of the same character may naturally l fear that they could lose their independence when contemplating an idea that they should start cooperating in the interest of providing complex logistical services;


276 Modrák & Kiss

• •

Mistrust of possible synergic effects that would be capable of effectively supporting the development of logistical activities of the participating partners; and Incompatibility of logistical information systems.

In overcoming these obstacles, one may start with the following attributes of those centers. The substance of the multi-integral LC architecture is that the scale of such offered logistical services does not depend on the building of new, highly demanding logistical capacities in terms of investment, but rather on effectively managed cooperation of available vital capacities of logistical resources that already exist. Available capacities are considered to be those resources that— with their functional properties, technical condition, technical and economic parameters, operational readiness and innovation potential—can be integrated into a virtual logistical system. The spatial integration of the Virtual Logistic Center (VLC) is limited by multimodal transport availability, and it also is necessary to take into account: • • • • • •

envisaged transport intensity between locations; envisaged transport volumes between locations; throughput of roads between locations; throughput of roads in the locations; time necessary for integration; and costs of integration.

The provision of integrated logistical services requires the use of capacities of diverse resources, including buildings, machinery, and equipment, as well as the workforce. Individual or group use of available capacities depends on the customer’s specific requirement and on the most effective way of meeting it. In designing a multi-integral concept of a logistical center, a modular and hierarchical architecture is used as a starting point (Figure 5). In general, we can use the following vertical sorting of resources: • • •

Stable resources; Organizational and management resources; and Mobile resources.

Stable resources are considered to be immovable and movable property, like lands, buildings, and machines placed in individual locations. Such reCopyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.


277

Figure 5. A scheme of the multi-integral architecture of a logistical center

sources are, for example, acceptable roads, warehouses, reloading points, stations, container terminals, ports, airports, heavy lifting machines, and so forth. Mobile resources are all machines and equipment, human resources, and financial capital of companies that can be considered realistically in the structure of a logistical center being created. It is possible to have the above resources available without local limitations, in line with planned logistical services. We consider information systems of logistical companies and the whole communication infrastructure of individual locations, including the management and servicing potential, to be organizational and management resources, which are coordinated by a multi-integral management system. Stable resources even further significantly influence the structure and architecture of the model. With their technical and economic parameters, stable resources limit the extent and territorial coverage of the provided basic and supplementary logistical services. The designed spectrum of logistical services should accept the possibilities of the creation of integrated services by allocating supplementary services to the basic ones. By an analysis of links between locations and characteristics of provided logistical services through Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

278 Modrák & Kiss

stable resources, we can learn that the concentration of services in various decentralized locations may result in the growth of transport volumes. The decentralization of locations of a virtual logistical center will also show positively in the decrease of the capacity load of the transport routes by the dissipation of transport routes between individual locations and by the optimization of transport chains. Economic influences of decentralization may be evaluated on the basis of real configuration of the deployment of individual resources of the logistical center and specific requirements on the provision of complex logistical services. The economy of transport between locations in terms of the provision of logistical services does not depend only on technological conditions, but also on transport parameters that are related to the services. The components of those parameters can be divided into the following two groups: •

•

Internal parameters: • Transported volume (daily, monthly, yearly); • Transport intensity (number of handling units); • Transport distance (distances between locations); • Transport costs (sum of costs); and • Transport time (sum of times). External parameters: • Increase in the load of traffic along transport routes; • Worsening of the characteristics of residential areas, recreational areas, and protected areas along the transport routes between locations; • Increase in the noise levels along the transport routes between locations; • Increase in the level of air pollution along transport routes between locations; and • Worsening of road transport safety indicators.

The above parameters influence the extent of designed complex logistical services. Estimated negative influences can be decreased or completely eliminated when adequate infrastructure exists between locations, or if it is going to be completed in the near future. In the application of a multi-integral model of a logistical center, a justified dilemma emerges—the choice between the realization of a multi-integral model and a classic high-capacity model of a logistical center. Knowing about the following dependencies should substantially influence the decision-making: Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.


• •

•

279

Internal transport costs realized at a specific technical level will proportionally correspond with the changes in the transport volume. External transport costs will grow more progressively with the transport volume, as a consequence of special factors. The degree of progressiveness will depend on the use of the transport agents’ capacity. The costs grow moderately up to the planned use, but beyond the critical point the costs grow more progressively. As a result of permanent negative influencing of the surrounding environment, forces—so-called compensation costs—will arise in investment activities intended to reduce negative impacts. Those costs have to be born by the involved businesses that form a multiregional model.

By analyzing the relationships, one can come to the conclusion that investment costs of the realization of missing capacities are relatively high, but after the implementation stage, in the utilization phase, further growth is not as progressive as in the case of other costs (Figure 6). The point at which the total transport costs curve crosses the capacity development costs curve is considered to be the limit point of effectiveness of a multi-integral concept of the creation of logistical centers. Beyond that limit of transport costs, it is more effective to implement logistical capacity in a classic way, by building up a centralized high capacity logistical center. If the economic assumption of the multiregional concept of LC favorable, it is possible to move to the implementation of framework tasks in its building in the following order: Figure 6. Shapes of the cost curves


280 Modrák & Kiss

• • •

Physically isolated, horizontal-structured VLC resources should be integrated into a central management and information system. The information system between individual levels and locations has to be equipped with modern information and communication technology. It is necessary to create conditions for effective work of the management of business processes that solve the provision of the ordered logistical services by the application of supply chains.

DISCUSSION AND CONCLUSION

Despite the fact that the dynamics of the development of the material world —the production world—is slower than the dynamics of the world of information, substantial progress has been achieved in the area of production and nonproduction technologies that has also created space for the start of new nontraditional forms of organization and management of production and service processes that meet customers’ requirements to the maximum extent. If, in the presentation of new approaches, we get close to the perspective of the implementation of material flows in a logistical network, we find out a positive shift in the organization of less effective continual material flows into the area of economically effective continual and synchronized material flows. Another current tendency is to speed up international trade, which significantly influences the strengthening of the international character of logistical distribution chain and the extension of the distances its overcomes. It means a substantial re-evaluation of the logistical wholesale practice, from securing storage operations and the subsequent distribution to complex logistical processes focused on the satisfaction of needs of individual retail units. The competitive advantage is manifested by the integration of logistical services and by the increase in the efficiency of material flows through virtual LCs. In relation to the virtuality in business, we encounter optimistic as well as pessimistic characteristics of that concept. If we start from the visions of companies of the future, they are described as dynamically stable— “dynamically” in the sense that they are able to serve the widest range of customers and meet variable requirements for products, and “stable” in terms of their use of long-term process capabilities and collective knowledge. The practice and theory of management offer a number of possibilities for the fulfillment of those attributes. They include cross-board organizational structures of companies and structures based on partnerships in business with the related character of activities. According to the optimistic view, it is exactly those smaller forms that will correspond with organizational structures that will be the most frequent Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.


281

ones in the future. From that point of view, virtual companies meet the requirement of a dynamic capability to meet variable requirements of the market. The need to create a larger team in the past can be explained by an effort to overcome the handicap of narrow specialization of individuals who have not been able to solve more complex tasks individually. Modern information and communication technologies currently provide the individual with much wider opportunities, which is significantly and positively reflected in the development of the theory and practice of management. Given the character of virtual companies as smaller organization forms, a new organization element is the creation of virtual teams that will eliminate the need to travel long distances. Other advantages resulting from that include: smaller demand for office space, reduced paper documentation, and faster exchange of information. Virtuality also has some inherent limitations, which are related with a key area of each company—human resources. For example, in the case of a manager needing to fine-tune sensitive personnel issues of his subordinate the disadvantage of the computer communication is that it precludes the use of elements of non-verbal communication. Similarly, computer communication introduces elements of business identity only marginally. Virtual teams are not allowed as creative a discussion as in the case of immediate communication, when inspiration for new ideas occurs on the principles of brainstorming. On the other hand, we can count an increasing number of contacts, but a decrease in the quality of the communication level. As a potential risk factor for the architectures of network organizations, it is also necessary to consider computer terrorism. This problem is seriously being dealt with by software engineers, but it is not possible to eliminate it with an absolute certainty. Despite those disputable aspects of virtual teams, it is clear that intellectual capabilities are becoming the basis of the telematic or virtual company. Other activities can be specified by an external supplier.

ACKNOWLEDGEMENT

This work was compiled with financial support of the European Commission’s INTERREG IIIC programme within the framework of the ECO4LOG project.


282 Modrák & Kiss

REFERENCES

Bask, A.H. & Juga, J. (2001). Semi-integrated supply chains. Towards the new area of supply chain management. International Journal of Logistics, 4(2), 137-152. Beamon, B.M. (1988). Supply chain design and analysis: Models and methods. International Journal of Production Economics, 55(3), 281294. Birchall, D. & Lyons, L. (1995). Creating tomorrow’s organization Unlocking the benefits of future work. London: Pitman Publishing. Carvalho, J.M.C. (2000). E-logistics: When the virtual meets the road. International Logistic Congress, Versailles, October. Available online at http://www.logistics-2000-versailles.net/site/txtvar/ml-en/ anhcarvalho.htm Chandrashekar, A. & Schary, P.B. (1999). Toward the virtual supply chain: The convergence of IT and organization. International Journal of Logistic Management, 10(2), 27-39. Christopher, M. (1998). Logistic and supply chain management- Strategies for reducing costs and improving services (2 nd Ed.) London: Prentice Hall. Crainer, S. (1988). Key management ideas (3rd ed.). London: Financial Times Professionals Limited. Davidov, W.H. & Malone, M. S. (1992). The virtual corporation. New York: Harper Business. Edwards, P., Peters, M., & Sharman, G. (2001). The effectiveness of information systems in supporting the extended supply chain. Journal of Business Logistics, 22(1), 1-27. Fulantelli, G., & Allegra, M. (2003). Small company attitude towards ICT based solutions: Some key-elements to improve it. Educational Technology & Society, 6(1), 45-49. Gottardi, G. & Bolisani, E. (1996). A critical perspective on information technology management: The case of electronic data interchange. International Journal of Technology Management, 12(4), 369-390. Helper, S. (1991). How much has really changed between U.S. auto markers and their suppliers? Sloan Management Review, Summer, 15(3), 1528. Hertz, S. (2001). Dynamics of alliances in highly integrated supply chain networks. International Journal of Logistics Research and Applications, 4(2), 237-256.



283

Hoffman, K.C. (2000). Just what is a 4PL anyway? Global Logistics & Supply Chain Strategies, August. Retrieved from http://www.glscs.com/ archives/8.00.4pl.htm?adcode75 Kalakota, R. & Robinson, M. (2001). eBusiness 2.0, Roadmap for success. Reading, MA: Addison-Wesley. Lambert, D.M., Cooper, M.C., & Pagh, J.D. (1998). Supply chain management: Implementation issues and research opportunities. The International Journal of Logistics Management, 9(2), 1-19. Lambert, D.M., Stock, J., Ellram, L.(1998). Fundamentals of logistics management. Burr Ridge, IL: Irvin-McGraw Hill. Lefebvre, L.A. & Lefebvre, É. (2002). E-commerce and virtual enterprises: Issues and challenges for transition economies. Technovation, The International Journal of Technological Innovation and Entrepreneurship, 22(5), 313-323. Lu, H. & Su, Y. (2003). An approach towards overall supply chain efficiency. Master’s Thesis. Göteborg University, Graduate Business School, Göteborg, Sweden. Available online at http://www.handels.gu.se/epc/ archive/00002736/ Marcussen, C. (1996). The effects of EDI on industrial buyer-seller relationships: A network perspective. International Journal of Purchasing and Materials Management, Summer, 32, 20-26. McGrowan, M.K. & Madey, G.R. (1998). Adoption and implementation of electronic data interchange. In T. Larsen & E. McGuire, Information systems innovation and diffusion (pp. 116-140). Hershey, PA: Idea Group Publishing. Meade, L. & Sarkis, J. (1998). Strategic analysis of logistics and supply chain management systems using the analytical network process. Transportation Research Part E. Logistic and Transportation Review, 34(3), 201215. Mentzer, J.T., DeWitt, W., Keebler, J.S., Min, S., Nix, N.W., Smith, C.D., & Zacharia, Z.G. (2001). What is supply chain management? In J. T. Mentzer (Ed.), Supply chain management (pp.1-25). Thousand Oaks,CA: Sage. Moberg, C.R., Speh, T.W., &. Freese, T.L. (2003). SCM: Making the vision a reality. Supply Chain Management Review, September-October, 7(5), 34-39. Moore, N. (1998). Supply chain management. Work Study, 47(5),172-174. Motwani, J., Larson, L., & Ahuja, S. (1998). Managing a global supply chain partnership. Logistics Information Management, 11(6), 349-354. Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

284 Modrák & Kiss

Niederman, F. (1998). The diffusion of electronic data interchange technology. In T. Larsen & E. McGuire, Information systems innovation and diffusion (pp. 141-160). Hershey, PA: Idea Group Publishing. Olin, J.G, Greis, N.P., & Kasarda, J.D. (1999). Knowledge management across multi-tier enterprises. European Management Journal, 17(4), 335-347. Pawar, K.S. & Driva, H. (2000). Electronic training in the supply chain: A holistic implementation framework. Logistics Information M management, 13(1), 21-32. Rakotobe-Joel, T., Zbib, I., & Bakhtiari, C. (2002). Information systems failure and its impact on the supply chain decision process, In Proceedings of the Annual Meeting of Decision Sciences Institute (pp. 340347). Ross, D.F. (1997). Competing through supply chain management – Creating market winning strategies through supply chain partnerships. Materials Management / Logistics Series. New York: Chapman & Hall. Saunders, A.G. (1994). Suppliers audits as part of a supplier partnership. The TQM Magazine, 6(2), 41-42. Spekman, R.E., Kamauff, J.W., & Myhr, N. (1988). An empirical investigation into supply chain management: A perspective on partnerships. Supply Chain Management, 3(2), 53-67. Van den Berg, J. (2001). Management outlook: Virtual warehousing. (White paper). Jeroen van den Berg Consulting. Available online at http:// www.idii.com/wp/jvd-virtual-warehousing.pdf Zuboff, S. (1984). In the age of the smart machine. New York: Basic Books.


The Political Economy of Information Management 285

Chapter XII

The Political Economy of Information Management Vincent Homburg Erasmus University Rotterdam, The Netherlands

ABSTRACT

Information system development is often seen as a rational process of consecutive design activities aimed at integrated information systems. Especially in settings where actors with varying interests operate, like in the development and use of so-called interorganizational information systems, these rational approaches rarely result in satisfying outcomes. In this chapter, the development of a Research Information System is analyzed in terms of alternative, political views on information management. It is concluded that integration of data schemes should not be an aim for information system development, especially for situations in which interests and objectives vary considerably. Furthermore, in such situations, information system development should be managed as a process in which various stakeholders enter and leave arenas, rather than as a project.

INTRODUCTION

In general, development of information systems is seen as a rational process of consecutive design activities that, through an orderly process, Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

286

Homburg

results in an information system that can be put to use in organizations (Lyytinen, 1987). Several authors have contributed to various design methodologies and management approaches in which they try to tailor or adjust the original (often waterfall-line design) methodologies to more complex organizational settings, for example by adding feedback loops, learning cycles, and so forth. In a way, this has enabled the design and/or development of information systems (in short, information management) to cope with more complex organizational situations and to model and implement more complex data models as essential backbones of information system development projects. It has been reported, however, that especially in environments where various actors with various interests are involved in the design process, requirements change rapidly, and goals are not fixed, rational models of information system design do not result in satisfying designs (Davenport, Eccles, & Prusak, 1992; Homburg, 2001; Knights & Murray, 1992; Kraemer, Dickhoven, Tiernet, & King, 1987; Markus, 1983). The development of interorganizational information systems, which are by definition almost always characterized by variety in interests among the participants (Allen, Colligan, Finnie, & Kern, 2000), is particularly prone to endless postponements of project results and power struggles (Homburg, 1999, 2001), which results in information systems that do not meet expectations. Rational views on information management and rational views on organizational processes, in general, have severe difficulties explaining the power struggles and dissatisfying results that emerge from the development of especially complex, interorganizational information systems. Customarily, failure is traced back in terms of not sticking to the steps outline in specific methodologies (“shortcuts to failure,” meaning skipping of stages in specific methodologies) (Pardo & Scholl, 2002). However, this explanation does not address the existence of variety in goals and interests in complex information system development projects, nor does it explain how one should deal with the existence of such a variety. In this chapter, the principal objective is to demonstrate by means of theoretical and empirical evidence that development and use of information systems is often characterized by political struggle. We focus on the development and use of interorganizational information systems, as the political struggle and variety of interests is most visible there. The theoretical inspiration for this chapter stems from a confrontation of more or less rational information management theories on the one hand, and political and economic organization theories (more specifically, property rights theory) on the other hand.



This chapter is structured as follows. The next section consists of a reflection on development and use of information systems from a political point of view. That is, followed by analysis of an “adversarial” decision-making process that uses the theoretical concepts presented in the preceding section. A reflection on theory and cases follows, and, finally, our conclusions are presented.

AN ALTERNATIVE VIEW ON INFORMATION MANAGEMENT

Introduction

Traditional information systems development concepts, which, at this moment in time—seem to prevail in theory and practice, predominantly emphasize the step-by-step, administrative side of the development of information systems. In general, “traditional” information system development approaches emphasize integration of various data sources and coding schemes as the backbone of any information system. One of the more popular models proposed in the literature is Boehm’s original waterfall and later more resilient spiral models, which are in fact aimed at creating integrated information systems. According to these models, system development has to follow consecutive steps from early system conceptualization to operations and maintenance of the final system. In general, integration of information systems has intuitive appeal from a technical point of view, as inconsistent data semantics (e.g., different definitions of performance criteria, product-coding schemes and vendor-purchase data) may seriously obstruct workflows and day-to-day business operations in networks of cooperating organizations. However, even in relatively unitary organizations that were aware of the problems associated with inconsistent data semantics and had attempted data standardization, integration failed or the organization experienced major difficulties (Gazendam, 1993; Goodhue, Wybo, & Kirsch, 1992; Homburg & Bekkers, 2002), for example, because “unwilling” local managers refused to give up control over information systems. In order to understand why so many projects have failed, and why, despite the intuitive logic of “traditional” approaches, so few satisfying results have been achieved, the following subsections focus on two “alternative” views of information management: first, a political view in which the effects of integration on organizational interdependence are highlighted; and second, property rights


288

Homburg

theory in which the incentive intensity of actors in cooperative arrangements is studied intensively.

A Political View on Information Management

A political view (Davenport, Eccles, & Prusak, 1992; Elg & Johansson, 1997) sheds some light on the background of the struggle surrounding the development of information systems (Bensaou, 1997; Holland & Lockett, 1995; Klein, 1996; Kumar & van Dissel, 1996; Webster, 1995). The mechanisms of the theory are most visible in highly divisionalized organizations or in networks of relatively autonomous organizations. In political organization theory, for example, resource dependence theory (Aldrich, 1979; Pfeffer & Salancik, 1978; see also Levine & White, 1961), organizations inhabit a complex world in which many of the resources needed to attain their goals (including information and knowledge, client referrals, money, legal authority, political legitimacy, people, and equipment) are controlled by others. This means that, in practice, focal organizations enter into relationships with partner organizations (for instance, by using information systems) in order to gain access to external resources. However, in doing this, they may have to comply with arrangements that may not be designed to suit them. Information-handling procedures, terms of use, and also data models may not always be geared to their requirements. In such a context, standardization of data models is certainly not a zero-sum game. According to political organization theory, each organization strives to optimize its self-interest by (1) minimizing its dependence on other organizations, and (2) maximizing the dependence of other organizations on itself (Reekers & Smithson, 1996). Standardization can be used as a strategy by powerful organizations to deliberately affect the dependence between organizations in a way that is favorable to them (Elg & Johanson, 1997). As Webster (1995) notes, standardization is an intensely political and adversarial process, because only the large and powerful parties can afford to get heavily involved in the standards development process. Truly joint design, therefore, is possibly a utopian ideal. As the less powerful parties are assumed to avoid further resource dependence, it is clear why standardization of data models is often forcefully resisted; if not, the interorganizational information systems are, in practice, sabotaged. An example of this kind of behavior is provided by Beynon-Davies (1994). This author describes an attempt to develop a generalized model of healthcare data to be used in the British National Health Service (NHS), which can be characterized as a network of semi-autonomous organizations. How-



ever, despite large efforts, the data model was never actually implemented. Although the development of the data model was originally portrayed as a neutral and technocratic exercise, the participating organizations very actively opposed the data model because they felt that the data model and especially the operational and financial data encompassed in the model, once implemented, could be used as a basis of comparison between NHS bodies. According to the semi-autonomous NHS bodies, the data model to be used to facilitate the exchange of information within the network thus raised unforeseen, partly unintended, and very fundamental questions about accountability within the network of cooperating organizations. Other studies have shown comparable results. In a case study of a large, diversified organization, Markus (1983) reported that there was a suspicion that standardization of data models was used to enhance control over relatively autonomous divisions for the reason of “ferreting out how the knaves were doing in the trenches” (p. 437). In a study of the diffusion of electronic data interchange technologies, Webster (1995) identified situations in which powerful organizations …unilaterally imposed their in-house computer systems or information-handling procedures upon their trading partners, extending their own hardware systems into their supplier’s premises, dictating product and inventory coding according to their own established in-house information systems, and dictating the type and frequency of data to be exchanged (p. 37). Although political organization theory provides an explanation for the organization-political struggle surrounding the development and use of information systems, actors are usually less realistically depicted as aberrant managers or deviant technologists, focusing on political aspects, nurturing organizational autonomy, and ignoring effectiveness and efficiency. The politicking in relation to interorganizational information systems, however, is capable of being understood in other ways, among other things, in ways that also include aspects of efficiency. In order to show how a more sophisticated understanding could throw more light on the topics under investigation here, we discuss a body of knowledge complementary to political organization theory, namely, the economists’ property rights theory.


290

Homburg

A Property Rights Theory View on Information Management

Property rights theory is an extension to standard neoclassical analysis. It provides an analysis of behavior of individuals with respect to assets (Bakos & Nault, 1997), under the assumption of bounded rationality. Bounded rationality refers to the impossibility of formalizing all kinds of behavior in contracts that encompass all future contingencies. Hence, property rights theory is also referred to as incomplete contracts theory. If we regard interorganizational information systems as information assets, it is possible to analyze behavior with respect to these kinds of information systems with property rights theory. Property rights theory defines property rights as the sanctioned behavioral relations among men that arise from the existence of goods that pertain to their use. These relations specify the norms of behavior with respect to goods that each and every person must observe in his daily interaction with other persons or bear the cost of non-observance. Property rights can also be defined as the owner’s ability to exclude others from the use of his or her asset. More specifically, three categories of property rights can be discerned: usus, the right to use an asset, abusus, the right to reconstruct an asset, and usus fructus, the right to appropriate the returns from the asset. If we regard an information system as an information asset, we see that full ownership of this asset involves the right to use an information system, to modify it with quality-enhancing or cost-saving features, and to appropriate the benefits of these adaptations. As an owner may exert the usus fructus property right, it has intensive incentives to perform well. One of the options an owner of an asset possesses is to allow others to use the asset in exchange for compensation, specified in a contract between user and owner. In such a situation, property rights theory states that because of bounded rationality, there will always be “incompleteness” of contracts, implying that there will always be residual rights not covered in a contract. The institution that allocates these residual rights is ownership and hence, the owner is the “residual claimant.” This situation occurs when in a network of organizations, one organization fully owns a central database while other organizations use it (that is, search the database and/or enter information into the database) and contribute in the costs of the system through an agreed-upon lease contract. Such a separation of ownership and actual use has important consequences for the behavior with respect to information assets. Think of an employee who is working with an interorganizational information system that requires some specific investments from him, for example, participation in an on-the-job



quality improvement training program. Such an employee faces intensive incentives to participate in such a program because, in the long run, he can bargain for benefits in the form of a higher wage, promotion, more leisure time, and so forth. If we take the situation in which the system is owned by another organization, the marginal value of the participation of the employee in the program can be expected to be divided among employee, his employer, and the owner of the system (as in the bargaining process, the owner can exert holdup power by threatening to withhold the asset). If the system were largely owned by his own organization, he could expect to receive a larger part of the marginal value in the bargaining process. Here we see that, in the absence of possibilities to formalize complicated reward schemes in contracts (e.g., assuming bounded rationality), a separation of ownership and control mitigates incentives. This situation is different in a number of specific situations, namely, if one of the participants is indispensable or if assets are complementary. Complementary assets are assets that are useless when used separately but represent value when used in conjunction. In these cases, the individual employee working with the asset is better off if property rights are dispersed among fewer participants and the situation is characterized by more incentives to perform well for all employees, managers, and asset owners involved. For the specific situation of interorganizational information systems, it is relevant that the “integration” of information systems mentioned before confronts employees with an attenuation of property rights, and hence, their incentives to perform well are partly mitigated. This mitigation of incentives results in subtle intangible costs of low effort, which will eventually appear as distorted, missing, or unusable data. The line of reasoning can be summarized as follows: the more the sense of “ownership” is diminished, the less intense incentives will be. Consequently, the level of investments in the information system will typically be lower, which in turn affects the functionality, profitability, and eventually the viability of the interorganizational information system (Bakos & Nault, 1997). Of course, this line of reasoning is only valid in the absence of indispensability and complementarity of assets. In these cases, incentives of participants are best served by concentrated ownership, favoring participants’ chances in ex-post bargaining processes. This property rights theory as applied to information assets provides a line of reasoning and a view on human behavior that possibly is a caricature (as political organization theory does), but perhaps not such an unrealistic one. And, combining property rights theory and political organization theory (as discussed in the next section) provides us with a conceptual framework that Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

292

Homburg

allows the understanding of the difficulties and, in particularly, the politicking surrounding the development and use of interorganizational information systems.

Summary of the Line of Reasoning

In the introduction of this chapter, it was mentioned that there is a widely held belief among system developers and information managers that the more integrated information systems are, the larger the chance for success is. After reviewing both political organization theory and economic organization theory, it is clear that integration, defined as the standardization of data definitions and data structures through the use of a common conceptual scheme across a collection of data sources, also has a number of negative consequences. First, according to political organization theory, standardization of data definitions and data standards may be geared to the requirements of some organizations participating in an information system, but not necessarily to the requirements of all organizations. Integration, according to political organization theory, may be used to protect control and surveillance in information technology. Second, according to economic organization theory, standardization of data definitions and data standards can be conceived as a mitigation of property rights with respect to the information system. Participants are less inclined to invest in the system and to enhance the information system with cost-saving or quality-enhancing features, and eventually such a diminishment of incentives results in less profitable, less functional and even less viable interorganizational information systems. A typical symptom of lack of incentives is poor data quality, resulting from underinvestment in human and technical capital. In general, based on the alternative views on information management, it is possible to hypothesize that if organizations want to preserve access to information resources, they should avoid excessive resource dependence, underinvestment by any of the participating organizations’ members, and unintended interorganizational surveillance and control. In order to do this, an appropriate ownership structure and configuration of the interorganizational information system (in terms of economic property rights) must be decided upon. Following the line of reasoning set out in the previous sections, we hypothesize that in the absence of indispensability and complementarity of information assets, organizations will opt for dis-integrated interorganizational information systems where possible, ensuring the exertion of property rights with respect to the interorganizational information systems (or parts of these)



they are using. If we take the archetypes of the centralized database and the decentralized database with, for example, merely a centralized referral index, we expect that cooperating organizations will prefer decentralized systems over centralized databases, which are fully “owned” by one organization in a network of organizations that are using the system. This property theory line of reasoning, as well as a political view on information resources, thus contradicts the intuitive logic indicating that integration is a necessary precondition of the success of an interorganizational information system and warrants other options than integration of these information systems.

ANALYSIS OF ADVERSARIAL DEVELOPMENT PROCESSES

Method of Analysis

In order to investigate the validity of the line of reasoning set out in the previous section, a case study of the development of a Research Information System is analyzed below. Before moving on to the case study, however, a brief note on research methods is appropriate. The case study employs a qualitative and diverse set of methods including interviews with information managers, system developers, administrators and users of information systems, observations, and document analysis. Although this chapter draws principally from the case study presented here, it has also been informed by two other case studies in the Dutch social security and fiscal policy sector that were undertaken in the course of a larger research project (Homburg, 1999). Finally, we would like to remark that statistical generalization is, of course, not applicable here. The case study is presented here to illustrate and analytically generalize novel theoretical ideas (at the cornerstones of information management theory, political organization theory, and property rights theory) that may be applied in varying contexts.

Case Study: Research Information Systems

Actors, Interests, and Objectives In The Netherlands, an organizational network exists that consists of publicly or partially publicly financed research institutes. Traditionally, the Ministry of Education (or, more specifically, the Directorate of Higher Education and Scientific Research) is an important player in the field, that financially supports the research institutes and universities. The universities cooperate and


294

Homburg

participate in an interest association, the Association of Universities in The Netherlands (VSNU). The Royal Dutch Academy of Sciences (KNAW) is the interest association of the other research institutes. For a couple of years, the funding of institutes has taken a course from a hierarchical system in the direction of a market-oriented system, in which institutes have a greater amount of autonomy. In the years before 1985, the information was sometimes used against them in cutback operations and the institutes, especially the universities, feared that these cutback operations would continue, inspired by the information they supplied. In this case, the interest association of the Dutch universities presented its own information policy proposals to be used in the network of universities, research institutes, and government organizations. A specific topic in the exchange of information in the research community is the exchange of information on research activities. Registration of research activities was requested in order to inform businesses, social organizations, international research organizations, and government of the research projects that were being conducted by universities and research institutes. The importance of this kind of exposure of research activities, both nationally as well as internationally, is widely shared among the various participating organizations in the research community. Development of Data Model and Control over the Information System In order to accomplish this kind of exposure of research activities, in 1988, The Netherlands Bureau of Research Information (NBOI) was founded (this organization was renamed Netherlands Institute for Scientific Information [NIWI] in 1997), among other things, to design and develop a National Research Database (NOD), which was also to be owned and maintained by this organization. The Ministry assumed that with the establishment of the NOD, with which the research institutes had agreed in principle, the universities were obliged to submit research information to the NOD. The VSNU, on the other hand, assumed that an obligation existed only if there was not a single trace of doubt as to (1) the method of submission of information, and (2) what organizations should eventually receive the information. In practice, the association wanted to postpone its commitment to the agreement until the results of the expected evaluation of the NOD were available and until its own investigation of the possibility of alternative approaches, in line with its own information policy statements, had been completed. The VSNU demanded complete freedom with respect to technical and organizational aspects, so that it is



possible for them to align completely with their own information and management policies. In the mean time, there was a lot of quarrel over the questions of who should provide the research information and who should contribute to the costs of the NOD. The latter question proved to be especially important because the institutes felt they did not experience any benefits from the NOD. At the same time, it is noted that there are, in practice, problems with the dayto-day use of the NOD. Furthermore, a problem faced in the NOD initiative is that, of the fourteen universities, only eight have a contract with the database owner for electronic data interchange and, therefore, the filling of the database falls short of expectations. In response to these developments, and, according to some stakeholders, out of sheer aggravation, the VSNU developed the CombiFormat data model to be used as a basis for several research information systems that are interconnected and separately owned by research institutes or groups of research institutes. In 1997, the CombiFormat was accepted and implemented by ten of the fourteen universities (Advantage, 1997) that had either developed a research information system (in Dutch: OZIS or OIS) themselves or had bought an existing system that had been developed by another research institute. Although the federation of OIS/OZIS systems technically resembled the NOD database (in terms of design methodology, database technology, etc.), there was one crucial difference—the participating organizations were explicitly granted ownership of their OIS or OZIS systems, which, for instance, allowed them to adapt and modify the underlying data model, and, more importantly, allowed the research institutes (being owners) ultimately to exclude access to their data in case there was a suspicion of use that had not been agreed upon beforehand (e.g., in contingencies that had not been agreed upon in interchange agreements or other contracts with other research institutes, universities, the Ministry, NBOI/NIWI, etc.). In the following period, two competing interorganizational information systems existed. However, nearly all stakeholders agreed that this situation of competing interorganizational information systems was not desirable and two expert opinions were requested. In both reports, the necessity of a central database is questioned. In general, both expert consultations resulted in support for the CombiFormat initiative and the OIS/OZIS systems over the NOD database. After an initial period of polarization, the VSNU, research institutes, and universities, as well as the NBOI/NIWI, supported the conclusions of the experts. Even the Board of the Royal Dutch Academy of Sciences, under whose heading the NBOI/NIWI formally operates, stated that it did not exclude the possibility that, over a certain period of time, an alternative of Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

296

Homburg

decentralized data storage would predominate. They noticed that the core of the report implies a changed role of the NOD, with a more important role for the decentralized input of data by the institutes who are responsible for the research activities. Indeed, the role of the NIWI changed from being a source of data (through the NOD) to an organization that focuses on quality assurance and the active (international) marketing of the research information owned by the research institutes and universities. Furthermore, the NOD itself, as an information system, is transformed from being a “pure” database to an information system with a variety of functions, of which the most important one is the referral to OIS/OZIS system using a thesaurus of search terms and indices. This is in accordance with the participating organizations’ preference for a coordinating and referring function for the NIWI.

Reflection on Research Information Systems Case

In terms of political and economic organization theory, a number of remarks can be made. First of all, the Research Information Systems case study illustrates the potential for conflict and tensions to emerge around the use of information technology. We contest the view that conflict is raised by information systems; the case study illustrates that organizational struggle is intensified when habits, potential for control, and surveillance are protected in technologies. In the light of the political and economic theories explained earlier in this chapter, this is hardly a stunning revelation, but it is a point worth reiterating, as it is not apparent from the information systems literature. In the Research Information Systems case, it turned out that two rival information systems were developed, each tailored to the interests of specific stakeholders. The initiative to develop alternative information systems can not only be interpreted as a sign of “sheer aggravation,” but also as an attempt to develop an information system with more intense incentives to register information. It is noteworthy to emphasize here that the crucial difference between the rival information systems was not so much the technology nor the level of standardization as such (the CombiFormat data model, of course, was a de facto standard). More likely, the difference has to be sought in the dispersion of property rights. In the OIS/OZIS information systems, participating institutes were explicitly granted the right to eventually adapt the data model to local needs and to ultimately be able to exclude others from access to the databases should there be suspicion of power abuse. Given the fact that the participating institutes were granted a high level of autonomy, the OIS/OZIS



information systems provided them with far more intensive incentives to perform well on their maintenance of registration of research projects than the centralized NOD system did. Another striking observation is that the Research Information Systems Case shows a very intriguing process of decision making in which, at various moments in time, specific actors were mobilized to take part in the decision making with respect to specific issues, whereas, at other moments in time, these specific actors seem to leave. This notion opens up avenues for yet another view on information management, namely, that of decision making with respect to information systems as a struggle that takes place in various rounds and in various arenas. In this respect, the emergence of arenas in which issues are discussed is not a feature of project management; these arenas were not identified beforehand, and the solutions to the wicked problems were achieved by coupling issues from various arenas at strategic moments in time (e.g., the coupling of legal issues with issues regarding system and data management can be characterized as making use of windows of opportunity rather than of deliberate, prespecified choices). The management challenges of information systems development as the management of stakeholders in arenas is highlighted in the next section.

ON THE STAKEHOLDERS: ARENAS AND DECISION MAKING IN INFORMATION MANAGEMENT

We have seen that organizational political and economic logic can result in very sensitive decision-making processes regarding the development of interorganizational information systems. In many cases, the development of interorganizational information systems is characterized by complex decisionmaking processes, in which various actors participate in various round and arenas. In the literature on complex decision making, there seems to be an increased appreciation for specific techniques that are expected to be able to better fit the dynamics and nature of networks and interorganizational relationships than traditional information management approaches do, namely, process management techniques or stakeholder management approaches. Whereas traditional methods seems to focus on the step-by-step integration of various data sources and coding schemes as the backbone of any information system, so, in the context of the decision-making process, stakeholder- or processCopyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

298

Homburg

management techniques focus on the processual aspects: what kind of interaction between stakeholders has to be organized, what arenas (in which specific issues are discussed and disputed) can be discerned, and how can blockades and hindrances in these processes be avoided through mediation, generation of trust, and mediation procedures that are designed to deal with conflicts among actors? In short, political behavior is not seen as aberrant or subversive, but as reality. Developing complex information systems is a complex decision-making process that requires interaction between actors with varying objectives and interests. Crucial to such a notion of managing complex decision-making processes is the element of risk in terms of policy windows or windows of opportunities as perceived by the parties involved. In stakeholder management, an explicit role of the information manager is to have a sharp eye for policy windows as random events, as these events provide the opportunity to couple decision making in various arenas. In doing so, it is very likely that solutions can be reached that are impossible to accomplish using regular, traditional systemdevelopment approaches. In the development of the Dutch Vehicle Registrations, the concept of stakeholder management proved to be of vital importance for the eventual success of the system. The registration was initiated in 1981 and eventually put to use in 1995. The goal of the registration was to identify owners of licensed vehicles and vessels. Uses are to be found in the fields of taxation, liability, criminal prosecution, traffic safety projects, and environmental policy. Because of this wide variety of uses, many parties were involved in the development of the register: the Ministries of the Interior, Economic Affairs, Finance, Justice and Transport, Public Works, and Water Management. Furthermore, the Dutch Center for Vehicle Technology and Information and the Central Traffic Police Commission were also involved. And, apart from these institutions, representatives from the automotive industry (for example, auto repair agents) and post office branches were consulted. The development of the register itself was carried out by a Project Organization, and involved not only the development of the system in a technical sense, but also required several changes in legislation. The intended system owner was the Center for Vehicle Technology and Information. As a consequence, this organization was transformed from a relatively technically oriented expertise center to an information-service provider for many governmental organizations, which, in this specific case, also involved the transfer of various tasks to this organization. Many discussions took place in the Project Organization, as a result of which the Project Organization’s composition changed repeatedly. At the same Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.


time, a new piece of legislation (WVW: Wegenverkeerswet, Act on Roads and Traffic) was put into place that affected the functional requirements of the register. In reconstructing the decision-making process, it is striking that three arenas could be discerned: one in which the system was designed, one in which data ownership issues were discussed, and a legislative arena in which changes in legislation were prepared. These arenas did not exactly match with the (sub)project that had been identified beforehand; moreover, issues concerning the system, data ownership, and legal issues evolved at more than one moment in time and in various (sub)projects., Sometimes at specific moments in time, issues were more or less explicitly related to each other, for example, the data ownership issues and legal issues. Eventually, it has been decided to attribute data management issues related to general data (in terms of procedures for gathering, registration, manipulation, and dispersion of data) to the Center for Vehicle Technology and Information, issues related to specific data to various ministries, and system management responsibilities (system development, maintenance, educating personnel, and the like) to the Center for Vehicle Technology and Information. In such a way, a division of tasks could be conceived that was, technologically speaking, intrinsically complex but more or less compatible with the institutional diversity of interests.

CONCLUSION

In this chapter, we have analyzed traditional and alternative views on information management, and, more specifically, their respective ability to deal with complex organizational and interorganizational settings in which actors with varying interests are trying to develop a common interorganizational information system. In practice, it is often assumed that traditional information systems development methodologies emphasizing integration are helpful in designing and implementing interorganizational information systems in these situations. However, by using a political economy point of view on exchanging information in networks of organizations, it is possible to conclude that information system development is a very sensitive subject that is not easily handled by using traditional techniques. In the decision-making processes, the influences of the notions of incentives, underinvestment, and attempts to avoid surveillance and control are clearly observable. The sensitivity of the subject can be explained by the fact that developing and implementing information systems often implies standardization in some Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

300

Homburg

form, and standardization may amplify existing dependencies among organizations or mitigate incentives to perform well. Consequently, participants are less inclined to invest in the system and to enhance the information system with costsaving or quality-enhancing features; eventually, such a diminishment of incentives results in less profitable, less functional and even less viable interorganizational information systems. In practice, data wars have been observed that were associated with the specific nature and dynamics of organizational-political processes. The Research Information Systems case showed how a first attempt to develop an information system failed because its ownership structure did not match organizational and political requirements (in terms of autonomy of the participating institutes, incentives, and the like). An initiative to set up an initially competing information system with a more decentralized structure (CombiFormat), however, eventually replaced the NOD as the interorganizational information system to be used in the research community to record and exchange information on research endeavors. The study illustrates how important power, surveillance and control, incentives, and property rights are in the development of information systems. This supports the idea that ownership structure and the behavioral consequences of ownership are more important in explaining the success of an information system than purely technical variables (like technical performance) are and supports the hypothesis mentioned in our summary of the line of reasoning of economic and political organization theory. All this does not imply that complex information systems are not manageable. Actual information management practices do not necessarily have to surrender to power plays and clashes of interests between actors from diverse organizations. In fact, two solutions seem to emerge from the theoretical and empirical evidence presented in this chapter. First, it seems there is little support for the intuitive logic, indicating that a maximum level of information systems’ integration is preferable from a management point of view. In many cases, complex information systems to which large numbers of organizations contribute do not necessitate an overarching architecture to ensure integration. In the “traditional” information systems literature, the architecture is a more or less fully developed conceptual scheme for an information system or interorganizational information systems in terms of data structures and data definitions. Recent literature in the field of process management and stakeholder management proposes a different connotation of architecture, namely, a set of agreements on how various stakeholders or actors can communicate. It is stated in terms of high-level protocols and conventions, Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.


aimed at the generation of trust and continuation of discussions and debates about specific (but related) issues in terms of legislative topics, information system design topics, and data ownership topics. The organization of a dialogue (in terms of identification and mobilization of actors and stakeholders in arenas, the coupling of arenas whenever appropriate, and the design of procedures that can be used to settle disputes) may be far more fruitful for complex decisionmaking processes regarding information system development than traditional methods that emphasize step-by-step refinement of mere content (development of integrated data models). Of course, it should be stressed that the particular strategies employed by the organizations and actors in the network described in the case study are not suggested to be the most common or important ones. Still, these strategies were encompassed in the framework and may well arise in comparable situations.

REFERENCES

Advantage. (1997). Oplossingsplan voor de VSNU inzake het WTR advise (Solution for the VSNU concerning the WTR report). [Internal Report]. Rozenburg: Advantage/Utrecht:VSNU. Aldrich, H.E. (1979). Organizations and environments. Englewood Cliffs: Prentice-Hall. Allen, D., Colligan, A., Finnie, A., & Kern, T. (2000). Trust, power and interorganizational information systems: The case of the electronic trading community TransLease. Information Systems Journal, 10(1), 21-40. Bakos, J.Y. & Nault, B. (1997). Ownership and investment in electronic networks. Information System Research, 8(4), 321-341. Bensaou, B. (1997). Interorganizational cooperation: The role of information technology: An empirical comparison of US & Japanese supplier relations. Information Systems Research, 8(2), 107-124. Beynon-Davies, P. (1994). Information management in the British National Health Service: The pragmatics of strategic data planning. International Journal of Information Management, 14(2), 84-94. Davenport, T.H., Eccles, R.G., & Prusak, L. (1992). Information politics. Sloan Management Review, 34(1), 53-65. Elg, U. & Johanson, U. (1997). Decision making in inter-firm networks as a political process. Organization Studies, 18(3), 361-384. Gazendam, H.W.M. (1993). Variety controls variety. On the use of organization theories in information management. Groningen, The Netherlands: Wolters-Noordhoff. Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

302

Homburg

Goodhue, D.L., Wybo, M.D., & Kirsch, L.J. (1992). The impact of data integration on the costs and benefits of information systems. MIS Quarterly, 16(3), 293-311. Holland, C.P., & Lockett, G. (1994). Strategic choise and inter-organisational information systems. In J.F. Hunamaker & R. Sprague (Eds.), 27th Annual Hawaii International Conference on System Science (HICSS), Vol. Information Systems: Collaboration Technology, Organizational Systems and Technology (pp. 405-415), Hawaii, USA, January 4-7. IEEE Computer Society Press. Homburg, V.M.F. (1999). The political economy of information management. Groningen, The Netherlands: SOM. Homburg, V.M.F. (2001). The politics and property rights of information exchange. Knowledge, Technology and Policy, 13(3), 49-66. Homburg, V.M.F. & Bekkers, V.J.J.M. (2002). The back-office of egovernment (Managing information domains as political economies). Paper presented at the Hawaii International Conference on System Sciences, Waikoloa Village, Waikoloa, HI, (January 7-10). Klein, S. (1996). The configuration of inter-organizational relations. European Journal of Information Systems, 5(2), 92-102. Knights, D. & Murray, F. (1992). Politics and pain in managing information technology: A case study in insurance. Organization Studies, 13(2), 211-228. Kraemer, K.L., Dickhoven, S., Tiernet, S.F., & King, J.L. (1987). Datawars: The politics of modeling in federal policymaking. New York: Columbia University Press. Kumar, K., & van Dissel, H. (1996). Sustainable collaboration: Managing conflict and collaboration in interorganizational information systems. MIS Quarterly, 20(3), 279-300. Levine, W., & White, P. (1961). Exchange as a conceptual framework for the study of interorganizational relationships. Administrative Science Quarterly, 5(3), 583-601. Lyytinen, K. (1987). Different perspectives on information systems: Problems and solutions. ACM Computer Surveys, 19, 5-46. Markus, M.L. (1983). Politics and MIS implementation. Communications of the ACM, 26(6), 430-440. Pardo, T. & Scholl, H.J. (2002). Walking atop the cliffs: Avoiding failure and reducing risk in large scale e-government projects. Paper presented at the Hawaii International Conference on System Sciences, Waikoloa Village, Waikoloa, Hawaii, (January 7-10). Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.


Pfeffer, J., & Salancik, G.R. (1978). The external control of organizations. New York: Harper & Row. Reekers, N. & Smithson, S. (1996). The role of EDI in inter-organizational coordination in the European automotive industry. European Journal of Information Systems, 5(2), 120-131. Webster, J. (1995). Networks of collaboration of conflict? Electronic data interchange and power in the supply chain. Journal of Strategic Information Systems, 5(1), 31-42.


304 About the Editor

About the Editor

Mehdi Khosrow-Pour, D.B.A., is currently the executive director of the Information Resources Management Association (IRMA) and senior academic technology editor for Idea Group Reference. Previously, he served on the faculty of the Pennsylvania State University as a professor of information systems for 20 years. He has written or edited over 30 books in information technology management, and he is also the editor-in-chief of the Information Resources Management Journal, Journal of Electronic Commerce in Organizations, Journal of Cases on Information Technology, and International Journal of Cases on Electronic Commerce.


About the Authors 305

About the Authors Jonathan Barham is a finance/accounting professional with 10 years of professional experience and is currently employed by Hotels.com. He received his BBA in accounting from the University of Texas at Arlington in 1996 and his MBA in e-commerce from the University of Dallas in 2001. Bendik Bygstad earned a Master of Sociology degree from the University of Oslo. He worked 15 years in the computer industry, mostly as an IT manager. He is currently an Assistant Professor at the Norwegian School of IT (Norway), pursuing a Ph.D. in Information Systems. His main research interest is the relationship between SW development processes and organizational change. Other research interests include actor-network theory, and the implementation of CRM and Knowledge Management systems. Maria Manuela Cunha is currently an assistant professor in the School of Management at the Polytechnic Institute of Cávado and Ave (Portugal). She holds a DiplEng in the field of systems and informatics engineering, an MSc in the field of information society and a DSc in the field of virtual enterprises, all from the University of Minho. She is the director of the Department of Informatics and teaches subjects related to information technologies and systems to undergraduate and post-graduated students. She supervises several Ph.D. projects in the domain of virtual enterprises. Her scientific and engineering interests are electronic business, agile and virtual enterprises, and information systems. Farhad Daneshgar is a senior lecturer in the School of Information Systems, Technology and Management (SISTM) at the University of New South Wales (Australia). Farhad’s research interests include knowledge sharing, collaborative process modeling, awareness modeling, and conceptual modeling. Farhad is the creator of the awareness net modeling language for representation of contextual knowledge in collaborative business processes. He is a member of Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

306 About the Authors

editorial board of four academic/research journals, the leader of the Knowledge Management Research Group at the SISTM, and has numerous publications in this field. Douglas Havelka is an assistant professor of Management Information Systems in the Richard T. Farmer School of Business Administration at Miami University (USA). He earned a Ph.D. in MIS from Texas Tech University. Professor Havelka is a CPA, and prior to joining Miami University’s faculty was a project manager for industry standards at AT&T. He is also a graduate of the prestigious Bellaire High School in Bellaire, Ohio. Vincent Homburg is assistant professor at the Faculty of Social Sciences (Public Administration Group) of Erasmus University Rotterdam (The Netherlands). In 1999, he received his Ph.D. in management and organization science from Groningen University. His thesis dealt with the organizational-political aspects of information management. Currently, his research interests include egovernment, complex decision making regarding information systems and utilization of knowledge by governmental agencies. Homburg publishes regularly in international journals, including Knowledge, Technology & Policy; Information Policy and is co-editor of the book The Information Ecology of E-Government (IOS Press, 2004). Thomas Kalling received his Ph.D. in economics in 2000 and is currently associate professor at the Department of Informatics at Lund University (Sweden). Dr. Kalling has published several theses, books, and journal papers, and his research covers strategy theory, knowledge management and informatics. Apart from doing research, Dr. Kalling is also a teacher and consultant. Eugene Kaluzniacky is an instructor in the Department of Applied Computer Science and Administrative Studies at the University of Winnipeg (Canada). He has a varied academic, professional, and personal interest background that comprises mathematics, statistics, computer science, management science, accounting, information systems, personality psychology, holistic health, spiritual development, and education. He has taught at the undergraduate, graduate, and continuing education university levels and has delivered short courses for government and a community college. A member of the Association for Psychological Type, Eugene has carried out research and consulting on applying the Myers-Briggs Personality Type in IT organizations, on stress in the IT profession, and on IT education. He has also developed a workshop on Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.


“Personal Wellness for the IS Professional.” He was also a co-creator of an “IT Wellness Web site,” currently at http://itwellness.ncf.ca/. Eugene has coauthored a book on Xbase Programming and has also carried out considerable editorial work. Currently, he is interested in stress management and personal growth in the IT field and has lectured internationally on this topic. He can be contacted at [email protected]. After graduation from the Faculty of Mechanical Engineering of the Technical University of Košice (Slovakia), Imrich Kiss started research on progressive metal cutting parameters of machining technology. Later, he designed and implemented automated production systems and the application of robotized cells. He obtained his Ph.D. in the field of robotics. His inaugural habilitation work analyzed the application of logistics in supply and distribution processes. He edited one monograph, three textbooks, and various articles for international journals. At the present time, he works as an associate professor at the Department of Design, Transport, and Logistics of the Technical University of Košice. Michael S. McCurdy currently works as a strategic marketing principal for Sabre Airline Solutions (a Sabre Holdings Company) where he is responsible for maintaining and communicating the new brand launch, the value proposition messaging and preparing the 3-year strategic plan for the organization. Michael has also served in the capacity of a business tools automation in global sales support and business solutions manager in the product marketing area. Prior to Sabre, Michael held positions at Volvo Finance North America as a risk analyst and at TIG Insurance (formerly Transamerica) as a statistical analyst. Michael earned his MBA from the University of Dallas and attended Dallas Baptist University where he earned his BBA with a double major in MIS and Management. Vladimír Modrák is an associate professor of manufacturing engineering and head of the Department of Management and Environmentalism at the Faculty of Manufacturing Technologies, Technical University of Košice (Slovakia). He obtained a Ph.D. in manufacturing technology, and his research interests include business process management, logistics and quality management. Dr. Modrák has also been active as a visiting lecturer in quality management at the University of Applied Science Wildau, Germany, and he discoursed for lessons on business process management and business process reengineering at the University of Perugia, Italy. He has also acted as Vice-Editor-in- Chief of a Slovak journal, Manufacturing Engineering. Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

308 About the Authors

Pegi Proffitt is a veteran technology professional with more than 20 years experience in sales and marketing, business development and process planning at Texas Instruments and Nortel Networks, in addition to two technology ventures. Pegi’s expertise includes incorporating technology into education environments as well as working with large telecommunications customers on eCommerce planning and implementation. Pegi holds a B.S. from Wayland Baptist University and an MBA in e-commerce from the University of Dallas. Goran D. Putnik received his DiplEng, MSc and DSc. from the Belgrade University, both MSc and DSc in the domain of intelligent manufacturing systems. His current position is associate professor in the Department of Production and Systems Engineering, University of Minho (Portugal). He is also the deputy director of the Centre for Production Systems Engineering (CESP), the director of the master and postgraduate course on CIM, and responsible for the Laboratory for Virtual Enterprises (LABVE). His scientific and engineering interests are production systems and enterprises design and control theory and implementations including distributed, agile and virtual enterprises. He is also supervising a number of Ph.D. projects. Mahesh S. Raisinghani, is an associate professor of information systems at Texas Woman’s University’s School of Management (USA). Dr. Raisinghani was the recipient of the 1999 UD Presidential Award and the 2001 King Haggar Award for excellence in teaching, research and service. His previous publications have appeared in Information and Management, Information Resources Management Journal, Journal of Global IT Management, Journal of E-Commerce Research, Information Strategy: An Executive’s Journal, Journal of IT Theory and Applications, Enterprise Systems Journal, Journal of Computer Information Systems, and International Journal of Information Management, among others. He serves as an associate editor and on the editorial review board of leading information systems/e-commerce journals and on the board of directors of Sequoia, Inc. Dr. Raisinghani is included in the millennium edition of Who’s Who in the World, Who’s Who Among America’s Teachers and Who’s Who in Information Technology. Michael Schellenberg is head of consultancy for a multinational telecommunication company in Europe. He holds a BSc in electronics and communications engineering from the Geneva School of Engineering and an MBA from Bradford University (UK). Michael spent his career in IT communication Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.


working for several companies including Alcatel and Equant in U.S., The Netherlands, and Switzerland, where he held various management roles with strong team cross-border requirements of knowledge and information sharing. Michael specialized in Knowledge Management as part of his MBA studies and worked actively on a complete KM readiness assessed for his organization. W. A. Taylor is associate dean of research and full professor of information systems at the Bradford School of Management (UK), where he teaches courses in information and knowledge management. He holds a BSc in electronics and computer systems, an MSc in industrial engineering, and a Ph.D. in knowledge-based systems, all from The Queen’s University of Belfast. Andrew spent several years working in manufacturing, public utilities, and government agencies before returning to academia in 1984. He has published more than 100 articles and books on his research interests in knowledge-based systems, Knowledge Management, organizational information systems and performance improvement. He acts as a consultant to many multinational companies and government departments. He is a chartered engineer, and a Fellow of the Institution of Electrical Engineers and the Institute of Quality Assurance. Dongsong Zhang is an assistant professor in the Department of Information Systems at University of Maryland, Baltimore County (USA). He received his Ph.D. in management information systems from the University of Arizona. His research interests include Web-based learning, mobile computing, computermediated communication, and data mining. His work has been published in Communications of the ACM, IEEE Transactions on Multimedia, IEEE Transactions on Systems, Man, and Cybernetics, Communications of the AIS, Journal of the American Society for Information Science and Technology, among others. Lina Zhou is an assistant professor in the Department of Information Systems at University of Maryland, Baltimore County (USA). She received her Ph.D. in computer science from Peking University. Her research interests center around text mining, deception detection, ontology learning, and Semantic Web. Her work has appeared in the Journal of Management Information Systems, Communications of the ACM, IEEE Transactions on Professional Communication, IEEE Transactions on Systems, Man, and Cybernetics, among others.


310 Index

Index

A

B

a priori theory 147 “A-list” customers 85 A/V E (agile/virtual enterprise) 26, 41 organizational paradigm 30 integration 26 model 26, 27 project 40 reconfigurability 30 requirement 30 access points (APs) 268 actors’ behavior 76 actual awareness 221 adaptor-innovator 190 advanced distributed learning (ADL) 245 adversarial development processes 293 agility forum 29 “authentic inner power” 205 awareness gap 226 levels 221 net 218

Bangemann Commission 63 box-structured methods 4 Bricolage 150 British National Health Service (NHS) 288 broker 36 business administration 173 alignment 26, 28, 43 models 27 process reengineering (BPR) 79 strategy 93 transaction lifecycle 79 Business-to-Business (B2B) 116, 132 Business-to-Consumer (B2C) 116 Business-to-Employee (B2E) 116, 132 C causal reasoning 147, 157 change management 88


Index 311

techniques 76 checks and balances 70 citizen-oriented electronic government 70 classic public administration paradigm 60 client 41 entity 37 referrals 288 cognition intelligence 189 cognitive function 189 mapping 4 perspective 162 Cognitive Style in IT 191 collaboration diagram 225 collaborative business processes 215, 224 learning environment 234 process 221 semantic concepts 215 task 220 communication, cooperation, and coordination (3Cs) 217 competitive advantage iv, 144, 145, 149 in synergy 29 necessity 145 competitiveness 26 computer aided software engineering (CASE) 192 continual flows 256 continual material flows 257 core competence theory 29 “core competencies” 134 “core rigidities” 134 correlational reasoning 147 corruption 56 critical success factors (CSF) 82

CRM project management 88 projects 76 systems 76 cross-case analysis 134 customer 37 information 79 orientation 70 relationship management (CRM) 76, 77, 127 satisfaction 127 system 83 D Danish vision of e-government 64 Danish vision of the position of the citizen 65 DARPA Agent Markup Language (DAML) 246 data analysis 6 procedures 99 modeling 177 quality 76 decision making 115 deduction 157 delivery management 127 demand-pull 96 democratic antecedents 60 dependent variables 241 deregulated government 56 dialogue marketing 76 direct marketing (DM) 85 direction of redesign 60 distance learning 235 “DP professional” 174 drift view 89 Dutch view on electronic government 65


312 Index

E e-business initiatives 115, 116 e-classroom 238 e-commerce initiatives 60 e-government 55 defined 57 implementation 70 initiatives 62 policies 55 e-learners 233 e-learning 232, 234 environment 232 system (LBA) 234 efficiency of government operations 55 electronic data interchange (EDI) 263 electronic marketplaces 33 “Elephant Method” 85 emergent resource management framework 144 emergent theory 154 emerging organizational models 28 emotional intelligence (EI) 173, 197 emotional literacy 173, 174 emotionally intelligent IT organization 173 employee attitudes 93 empowerment 56 Enneagram System of Personalities 184 enterprise information management (EIM) 129 resource planning (ERP) 128, 144, 145, 192, 221 self-service (ESS) 131 systems management (ESM) 129 “entrepreneurial government” 56

ERP Systems 144 European Article Numbering (EAN) system 266 European E-Government Initiatives 63 European Union E-Government policies 63 explanatory power 153 explicit knowledge 116 eXtensible Markup Language (XML) 244 extension points (EPs) 268 extraversion 175, 177 F face-to-face relationships 96 feeling 176, 178 financial commitments 162 firm-external factors 146 flatter organizations 56 flexible government 56 focus groups 4 focused market of resources 40 formality 227 foundational intelligence 193 fourth-party logistics (4PL) 260 frequency range 267 full-time equivalents (FTEs) 153 “fundamental rethinking” 134 G global organizations 115 goal congruence 12 granularity 228 graphical user interfaces (GUIs) 122 grounded theory 4


Index 313

H high-level group on the information society 63 high-touch collaborative technology 97 human consciousness 193 resources strategy 27 response 115 I implementation strategy 27 independent variable 241 inductive technology 268 industrial enterprise 77 rganisation 146 information and communication technologies (ICTs) 27, 55, 57, 251, infrastructure 93, 98, 100 management 285, 287, 290 requirements 1, 4 determination (IRD) 1 determination quality 1 resource professional 174 sources 101 strategy, 27 system(s) 27, 173 development 5, 285 technology (IT) 1 users 1 infrastructure resource planning (IRP) 128 “inner core” 205 Institute of Technology (TI) in Oslo 78 Instructional Management Systems (IMS) 245

instrument development 98 integrated logistical management 260 integration 153 interaction sequence diagram 225 interactive e-classroom 238 multimedia 232 internal distribution 156, 159 of resources 149 knowledge synergies 76 Internal Revenue Services 66 introversion 175, 177 intuition 176, 177 IRD process 2 quality 2 irreversibility 162 IT management 173 professionals 1 researchers 1 J “joined-up government” 66 joint application development (JAD) 5 judging 176, 178 just-in-time (JIT) concept 257 K key success factors 144 Kirton Adaptation-Innovation Inventory (KAI) 190 knowledge barriers 149 construction 232 infusion 148 initiatives 120 landscape 28


314 Index

Knowledge Management 93, 96, 115 representation (KR) 216 sharing 103 sharing culture 98 requirements 215 -based organization 77 -management infrastructure 93 strategy 93 -sharing culture 93, 99 methods 98, 101 requirements 215 L LBA system 238 training 241 learning by asking (LBA) 233 content 233 effectiveness 232 loops 150 material 234 objects metadata (LOM) 245 legal protection 159 lightweight directory access pro (LDAP) 123 line of reasoning 292 logistic center services 271 logistical center (LC) 269 longitudinal organisational processes 150 LTSC 233 M mainframe computers 122

management commitment 11 factors 10 techniques 77 managerial attention 163 freedom 56 implications 144 manifestation of e-government 55 market 37 alignment 44, 45 government 56 opportunities 27 process 76 project 88 Market of Resources 26, 27 Concept 36 Entities and Relationships 41 metadata specification standards 244 metrics 2 multimedia content 232 in distance learning 235 -based e-learning 236 systems 232 technology 236 municipal e-government initiatives 55 Myers-Briggs in IT 176 Personality Type 175 Type Indicator (MBTI) 176 N national and supranational policy levels 55 National Performance Review (NPR) 62 National Research Database (NOD) 294


Index 315

network structures 28 networking 28, 31 “new public management” (NPM) 56 nominal group technique (NGT) 5, 6 Norwegian non-profit organization 78 “not-invented-here” syndrome 96 O object modeling, 177 off-the-shelf portal technology 132 one product integrated manufacturing (OPIM) 29 online lecture session 241 ontology 120 interchange language (OIL) 246 Web language (OWL) 246 operations 42 optoelectronic technology 266 organization configuration manager 36 development 82 factors 11 organizational change 27 dynamics 36 experiment 76 practices 93 readiness 93 structure 29 overall cost management 260 overarching process 154

personnel factors 14 pervading properties 162 petri nets 225 political economy of information management 285 political legitimacy 288 view on information management 288 portal implementation 133 post-merger environment 93 post-test 241 pre-test 241 process factors 12 management techniques 297 structure 37 product/service and operations alignment 44, 47 production flow management 256 products 42 project managers 1 property rights theory 290 protection of privacy 70 psychological robustness 197 public administration 55 sector organizations 69 Q qualitative scenarios 4

P

R

paper packaging industry 144 participatory government 56 “pay for performance” 56 perceiving 176, 178 personality intelligence 175, 184 personalization 233

radio frequency identification (RFID) 267 technology 267 RCA “production” framework 5 “re-engineering,” 56 real-time microactions 77, 88


316 Index

“reality” 55 reconfigurability dynamics 28, 30 recursive construct 30 red tape 55 “reinvention” 56 relationship marketing 79 relevance 154 required awareness 221 requirements capture and analysis (RCA) process 5 research information system 285 setting 97 resource 30 description framework (RDF) 245 development 148 identification 147 managment processes 146 Protection 146, 148 -based view (RBV) 145 providers 42 providers 30 alignment 44, 47 selection process 41 responsiveness 33 revenue cycle management (RCM) 128 “rhetorics” 55 role artefacts 220 S sample selection 97 SCA Packaging (SCAP) 170 scoping 13 scriptiveness and fitness 229 “self-centred close-enterprises” 29 self-paced learning 234

semantic confusion 12 structuring 4 Semantic Web 244 sensing 176, 177 service delivery 55 social setting 76 -technical field 173 system design 4 software engineering 82 “spiritual empowerment,” 203 stakeholder management 69 approaches 297 state administration 56 storage and transport management 260 strategic alignment 26, 27, 109 processes 144 structured task 219, 225 supply chain management (SCM) 251 management 260 systems development 3 T tacit knowledge 116 task artefact 220 dependency 221 technical factors 13 drift iii, 76 technological drift 77 resources 115 Telecom Reform Act of 1996 94


Index 317

telecommunications company (TC) 130 telematic technology 269 “The Supply Chain Partnership Project” 254 thinking 176, 178 third party logistics (3PL) 260 top management involvement 163 traditional classroom learning 234 linkage 27 public administration 56 transaction costs 32 “true self” 205

western public bureaucracies 56 work-time savings 264 World Bank 120 Y Y2K-compliance problems 145

U UK vision of the citizens 64 United Kingdom 63 United States 62 Usage 161 user involvement 5 participation 5 perspective 1 -oriented model 9 V value added networks (VAN) 263 virtual classroom 236 enterprise 29 integration 26, 28, 33 factory 28 logistic centers 256 organizations 56 virtuality 36 W ways of perceiving 176 Web-based applications 33 Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

Instant access to the latest offerings of Idea Group, Inc. in the fields of I NFORMATION SCIENCE , T ECHNOLOGY AND MANAGEMENT!

InfoSci-Online Database BOOK CHAPTERS JOURNAL AR TICLES C ONFERENCE PROCEEDINGS C ASE STUDIES

“

The Bottom Line: With easy to use access to solid, current and in-demand information, InfoSci-Online, reasonably priced, is recommended for academic libraries.

The InfoSci-Online database is the most comprehensive collection of full-text literature published by Idea Group, Inc. in:

”

- Excerpted with permission from Library Journal, July 2003 Issue, Page 140

n n n n n n n n n

Distance Learning Knowledge Management Global Information Technology Data Mining & Warehousing E-Commerce & E-Government IT Engineering & Modeling Human Side of IT Multimedia Networking IT Virtual Organizations

BENEFITS n Instant Access n Full-Text n Affordable n Continuously Updated n Advanced Searching Capabilities

Start exploring at www.infosci-online.com

Recommend to your Library Today! Complimentary 30-Day Trial Access Available! A product of:

Information Science Publishing* Enhancing knowledge through information science

*A company of Idea Group, Inc. www.idea-group.com

New Releases from Idea Group Reference

Idea Group REFERENCE

The Premier Reference Source for Information Science and Technology Research ENCYCLOPEDIA OF

ENCYCLOPEDIA OF

DATA WAREHOUSING AND MINING

INFORMATION SCIENCE AND TECHNOLOGY AVAILABLE NOW!

Edited by: John Wang, Montclair State University, USA Two-Volume Set • April 2005 • 1700 pp ISBN: 1-59140-557-2; US $495.00 h/c Pre-Publication Price: US $425.00* *Pre-pub price is good through one month after the publication date

Provides a comprehensive, critical and descriptive examination of concepts, issues, trends, and challenges in this rapidly expanding field of data warehousing and mining A single source of knowledge and latest discoveries in the field, consisting of more than 350 contributors from 32 countries

Five-Volume Set • January 2005 • 3807 pp ISBN: 1-59140-553-X; US $1125.00 h/c

ENCYCLOPEDIA OF

DATABASE TECHNOLOGIES AND APPLICATIONS

Offers in-depth coverage of evolutions, theories, methodologies, functionalities, and applications of DWM in such interdisciplinary industries as healthcare informatics, artificial intelligence, financial modeling, and applied statistics Supplies over 1,300 terms and definitions, and more than 3,200 references

DISTANCE LEARNING

April 2005 • 650 pp ISBN: 1-59140-560-2; US $275.00 h/c Pre-Publication Price: US $235.00* *Pre-publication price good through one month after publication date

Four-Volume Set • April 2005 • 2500+ pp ISBN: 1-59140-555-6; US $995.00 h/c Pre-Pub Price: US $850.00* *Pre-pub price is good through one month after the publication date

MULTIMEDIA TECHNOLOGY AND NETWORKING

ENCYCLOPEDIA OF

ENCYCLOPEDIA OF

More than 450 international contributors provide extensive coverage of topics such as workforce training, accessing education, digital divide, and the evolution of distance and online education into a multibillion dollar enterprise Offers over 3,000 terms and definitions and more than 6,000 references in the field of distance learning Excellent source of comprehensive knowledge and literature on the topic of distance learning programs Provides the most comprehensive coverage of the issues, concepts, trends, and technologies of distance learning

April 2005 • 650 pp ISBN: 1-59140-561-0; US $275.00 h/c Pre-Publication Price: US $235.00* *Pre-pub price is good through one month after publication date

www.idea-group-ref.com

Idea Group Reference is pleased to offer complimentary access to the electronic version for the life of edition when your library purchases a print copy of an encyclopedia For a complete catalog of our new & upcoming encyclopedias, please contact: 701 E. Chocolate Ave., Suite 200 • Hershey PA 17033, USA • 1-866-342-6657 (toll free) • [email protected]

The series that IT professionals turn to for answers! Advanced Topics in Information Resources Management Edited by Mehdi Khosrow-Pour, DBA Information Resources Management Association, USA

The chapters in this book address the emerging issues in information resources management and its application. Knowledge management, business process change, achieving and maintaining competitive advantage with information technology and systems are topics relevant to business people and academics. Additionally, the chapters provide concrete ways for academics to broaden their research and case study examples, which will enable business people to avoid the pitfalls discussed in the book Advanced Topics in Information Resources Management features the latest research findings dealing with all aspects of information resources management (IRM), managerial and organizational applications, as well as implications of information technology organizations. It aims to be instrumental in the improvement and development of the theory and practice of information resources management, appealing to both practicing managers and academics. In addition, Advanced Topics in Information Resources Management educates organizations on how they can benefit from their information resources and all the tools needed to gather, process, disseminate, and manage this valuable resource.

VOLUME 1 ISBN: eISBN: Copyright: Pages: Price:

1-930708-44-0 h/c 1-59140-030-9 2002 398 (h/c) US $74.95

VOLUME ISBN: eISBN: Copyright: Pages: Price:

2 1-59140-062-7 h/c 1-59140-099-6 2003 384 (h/c) US $79.95

VOLUME 3 ISBN: 1-59140-253-0 h/c ISBN: 1-59140-295-6 s/c eISBN: 1-59140-099-6 Copyright: 2004 Pages: 384 Price: US $79.95 h/c US$59.95 s/c

“The field of information resources management is broad and encompasses many facets of information technology research and practice as well as business and organizational processes.” –Mehdi Khosrowpour, Information Resources Managment Association, USA Its Easy to Order! Order online at www.idea-group.com! Mon-Fri 8:30 am-5:00 pm (est) or fax 24 hours a day 717/533-8661

Idea Group Publishing Hershey • London • Melbourne • Singapore

An excellent addition to your library

Advanced Topics in Information Resources Management ~ Volume 4

Advanced Topics in Information Resources Management, Volume 2 (Advanced Topics in Information Resources Management Series)

Advanced Topics in Information Resources Management