Advanced Topics in Information Resources Management ~ Volume 4

Hershey • London • Melbourne • Singapore��

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Mehdi Khosrow-Pour, D.B.A.Information Resources Management Association, USA

Acquisitions Editor: Renée DaviesDevelopment Editor: Kristin RothSenior Managing Editor: Amanda AppicelloManaging Editor: Jennifer NeidigCopy Editor: Jane ConleyTypesetter: Cindy ConsoneryCover Design: Integrated Book TechnologyPrinted at: Integrated Book Technology

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Advanced Topics in Information Resources Management, Volume 4 is part of the Idea GroupPublishing series named Advanced Topics in Information Resources Management Series (ISSN1537-9329

ISBN 1-59140-465-7Paperback ISBN 1-59140-466-5eISBN 1-59140-467-3

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Preface .................................................................................................. vi

Chapter IA User Perspective of Information RequirementsDetermination Quality ........................................................................... 1

Douglas Havelka, The Richard T. Farmer School of Business, USA

Chapter IIBusiness Alignment in Agile/Virtual Enterprise Integration ............. 26

Maria Manuela Cunha, Polytechnic Institute of Cávado and Ave, PortugalGoran D. Putnik, University of Minho, Portugal

Chapter IIIE-Government: The Future of Red Tape ........................................... 55

Vincent Homburg, Erasmus University Rotterdam, The Netherlands

Chapter IVImplementing CRM Systems: Managing Change or Accepting Technological Drift? ............................................................................ 76

Bendik Bygstad, The Norwegian School of Information Technology, Norway

Chapter VMeasuring Organizational Readiness for KnowledgeManagement ........................................................................................ 93

W. A. Taylor, University of Bradford, UKM. A. Schellenberg, University of Bradford, UK

Chapter VIKnowledge Management of E-Business Initiatives Within TwoGlobal Organizations: A Comparative Case Study Analysis .......... 115

Mahesh S. Raisinghani, Texas Woman’s University, USAPegi Proffitt, University of Dallas, USAJonathan Barham,University of Dallas, USAMichael McCurdy, University of Dallas, USA

Chapter VIIERP Systems and Competitive Advantage: A Case Study of KeySuccess Factors and Strategic Processes ......................................... 144

Thomas Kalling, Lund University, Sweden

Chapter VIIITowards an Emotionally Intelligent IT Organization ....................... 173

Eugene Kaluzniacky, University of Winnipeg, Canada

Chapter IXIdentification and Measurement of the Knowledge-SharingRequirements in Collaborative Business Processes ....................... 215

Farhad Daneshgar, University of New South Wales, Australia

Chapter XThe Role of Interactive and Synchronized Multimedia Content inE-Learning ......................................................................................... 232

Dongsong Zhang, University of Maryland, Baltimore County, USALina Zhou, University of Maryland, Baltimore County, USA

Chapter XIInformation and Communication Technology in Supply ChainManagement ...................................................................................... 251

Vladimír Modrák, Technical University of Košice, SlovakiaImrich Kiss, Technical University of Košice, Slovakia

Chapter XIIThe Political Economy of Information Management ....................... 285

Vincent Homburg, Erasmus University Rotterdam, The Netherlands

About the Editor ................................................................................. 304

About the Authors .............................................................................. 305

Index ................................................................................................... 310

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vi

One of the most pressing needs of organizations today is new, uniqueways to manage their information resources. Researchers and educators alikeare developing improved strategies and technologies in order to better orga-nize information. In addition, access to the successful developments of practi-tioners in the field proves invaluable to businesses and researchers in improv-ing their own systems and information resource management skills. AdvancedTopics in Information Resources Management, Volume 4, provides re-searchers, scholars, professionals, and educators with the most current re-search on managing the technological, organizational, and human aspects ofinformation use and management. This volume presents new concepts in han-dling and sharing information resources with organizations and individualsworldwide.

Chapter I, “A User Perspective of Information Requirements Determi-nation Quality” by Douglas Havelka, The Richard T. Farmer School of Busi-ness (USA), examines a study identifying factors that affect the process qual-ity of the information requirements determination (IRD) process from a userperspective. Identification of factors that impact IRD process quality is de-scribed that may give managers guidance in assessing the risk associated withspecific development projects. This chapter describes the importance of de-termining the value of these factors prior to the commitment of resources andidentifying the concerns of users. Factors are also identified that may be usedto develop metrics for monitoring the IRD process or measure its success orquality. For IT researchers, this contributes both the identification of the criti-cal factors, suggesting that there are many variables that have not received

vii

attention, and an example of an approach to generate potential variables forfurther 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 conceptof essential strategic alignment between business strategy and technology inorder to improve competitiveness. This chapter focuses on a leading organi-zational model, the Agile/Virtual Enterprise model, characterized by a fastadaptability face to the dynamically changing market. It also introduces theconcept of a Market of Resources as an environment able to assure a perma-nent alignment of the networked structure with market. Also proposed arealignment strategies between business opportunities and the creation/reconfiguration of the Agile/Virtual Enterprise that is expected to meet thatopportunity.

Chapter III, “E-Government: The Future of Red Tape” by Vincent Hom-burg, Erasmus University Rotterdam (The Netherlands), discusses how gov-ernments are increasingly using information and communication technologies(ICTs) to communicate internally, with citizens, and with corporations. Thischapter presents e-government as an attempt to increase the efficiency ofgovernment operations and service delivery, and also to increase citizens’ trustin public administration. This chapter explores the normative, managerial andtechnological antecedents of e-governments, and explores the manifestationof e-government. It does so by focusing on goals, visions, and beliefs at na-tional and supranational policy levels and by analyzing the technological andmanagerial problems encountered at the shop floor of municipal e-govern-ment initiatives.

Chapter IV, “Implementing CRM Systems: Managing Change or Ac-cepting Technological Drift?” by Bendik Bygstad, The Norwegian School ofInformation Technology (Norway), presents the expectations of large com-panies in the use of Customer Relationship Management (CRM) systems, thatis, expecting to harvest benefits from dialogue marketing and internal knowl-edge synergies. This chapter questions how these systems should be imple-mented and how easily the benefits actually come. The high failure rate ofCRM projects illustrates the gap between our intentions and outcomes. Inter-preting a longitudinal case study and the research literature, the authors presenttwo options to improve their practice.

Chapter V, “Measuring Organizational Readiness for Knowledge Man-agement” by W. A. Taylor and M. A. Schellenberg, University of Bradford(UK), discusses the need for empirical research into the practical difficultiesencountered as organizations continue to grapple with the implementation of

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knowledge management. This chapter investigates the challenges faced byone multinational telecommunications company in a post-merger environment.The authors develop an instrument to evaluate the knowledge-sharing cultureand information infrastructure. By using qualitative and quantitative data froma survey of five European sites, this chapter illustrates how managers canmeasure gaps between the effectiveness of current practices and their impor-tance, and decide whether to direct resources toward changing employee at-titudes, organizational practices, or knowledge management infrastructure. Theneed for senior managers to be in agreement about the strategic direction oftheir business and the strategic alignment between business strategy and knowl-edge management strategy is also highlighted.

Chapter VI, “Knowledge Management of E-Business Initiatives withinTwo Global Organizations: A Comparative Case Study Analysis” by MaheshS. Raisinghani, Texas Woman’s University (USA), Pegi Proffitt, JonathanBarham, and Michael McCurdy, University of Dallas (USA), addresses knowl-edge management (KM) and e-business initiatives within global organizations.It compares and contrasts the experiences of two global corporations as theyhave conceived and implemented KM initiatives. After in-depth secondaryresearch on the subject, both companies developed their own KM in e-busi-ness strategy. The two case studies discussed in this chapter highlight Busi-ness-to-Business (B2B), Business-to-Consumer (B2C), and Business-to-Employee (B2E) initiatives at these two global organizations. This providesconcepts and viewpoints related to the drivers of KM, the hurdles to KM inan organization, the elements of KM philosophy and process, how KM cancome 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 anorganization.

Chapter VII, “ERP Systems and Competitive Advantage: A Case Studyof Key Success Factors and Strategic Processes” by Thomas Kalling, LundUniversity (Sweden), describes the processes that firms and managers gothrough in their quests to create and sustain competitive advantages based onso-called Enterprise Resource Planning (ERP) systems. The theoretic frame-work is extended through a detailed case study of a specific in-house ERPventure in a European multinational manufacturing company in the paper pack-aging industry. The emergent resource management framework describes cog-nitive and cultural factors that support or hamper progress, including uncer-tainty, knowledge gaps, knowledge-transfer issues, and the problems of en-suring that ERP usage is converted into competitive advantage. The frame-work also addresses managerial implications and potential solutions to suchobstacles.

Chapter VIII, “Towards an Emotionally Intelligent IT Organization” byEugene Kaluzniacky, University of Winnipeg (Canada), discusses the recentfocus on the area of emotional intelligence (EI) in business administrationcircles as well as in IT management. The author presents the suggestion thatIT workers need the “soft skills” of emotional literacy, especially when dealingwith users and co-workers. This chapter questions how one can developemotional intelligence and its components. The author also discusses to whatdegree, and how, IT management might try to move its IT organization on theEI path.

Chapter IX, “Identification and Measurement of the Knowledge-Shar-ing Requirements in Collaborative Business Processes” by Farhad Daneshgar,University of New South Wales (Australia), introduces a modeling languagecalled Awareness Net for both representation and measurement of the knowl-edge-sharing requirements in collaborative business processes. It is a con-ceptual model that facilitates representation and analysis of knowledge-shar-ing requirements of the actors in collaborative business processes. This chap-ter presents how the representation and measurement are handled by a set ofcollaborative semantic concepts and their relationships and how the proposedlanguage enforces overall specification of what matters to the actors in col-laborative processes when collaborating in business process to keep themaware of the collaboration context.

Chapter X, “The Role of Interactive and Synchronized Multimedia Con-tent In E-Learning” by Dongsong Zhang and Lina Zhou, University of Mary-land, Baltimore County (USA), proposes an e-learning system with interac-tive multimedia that can help learners better understand learning content andachieve comparable learning performance to that of classroom learning. Theresults from an empirical study provide significant evidence to support theauthors’ proposition. The chapter also discusses several important issues to-wards building effective and sharable multimedia-based e-learning systems.

Chapter XI, “Information and Communication Technology in Supply ChainManagement” by Vladimír Modrák and Imrich Kiss, Technical University ofKošice (Slovakia), discusses Supply Chain Management (SCM), one of theimportant fields of the application of modern information and communicationtechnology (ICT). This chapter focuses on designing a multi-integral logisticalcenter and analyzing it from the aspect of its effectiveness. The impact of ICTon the development of virtual logistical centers and the development stages ofSCM is also presented. In addition, the chapter outlines pitfalls of this devel-opment trend in an effort to provide practitioners in SCM with a more com-plex view of this issue.

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Chapter XII, “The Political Economy of Information Management” byVincent Homburg, Erasmus University Rotterdam (The Netherlands), discusseshow information system development is often seen as a rational process ofconsecutive design activities aimed at integrated information systems. In thischapter, the development of a Research Information System is analyzed interms of alternative, political views on information management. This chapterconcludes that integration of data schemes should not be a goal for informa-tion system development, especially for situations in which interests and ob-jectives vary considerably, and that information system development shouldbe managed as a process in which various stakeholders enter and leave are-nas, 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 organizinginformation and opening up new opportunities for communication, technologyfacilitates growth and success for both organizations and individuals. Effectivemanagement of information resources becomes a necessary goal for all, andthis may be accomplished by learning from the research and advances of oth-ers within the information resources management and information technologyfield. An outstanding collection of the latest research associated with the ef-fective utilization of information technology, Advanced Topics in Informa-tion Resources Management, Volume 4, provides insight into and assistancein learning how to successfully implement information resources and technol-ogy in the companies, schools, and homes of those who depend upon it.

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

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A User Perspective of Information Requirements Determination Quality 1

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

Chapter I

A User Perspective ofInformation Requirements

Determination QualityDouglas Havelka

The Richard T. Farmer School of Business, USA

ABSTRACTA study was performed to identify factors that affect the process qualityof the information requirements determination (IRD) process from a userperspective. A nominal group process was used with three groups of usersthat have had experience with the IRD process. The results indicate thereis 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 considermanagement commitment the most important individual factor for IRDquality. However, the groups ranked the process category of factorshighest. By using this set of factors as a checklist during the projectplanning stage, a manager may identify potentially problematic projectsor projects with a higher likelihood of success. This study should benefitinformation technology (IT) users, IT professionals, project managers,and IT researchers. The identification of factors that impact IRD processquality may give managers guidance in assessing the risk associated with

2 Havelka


specific development projects. By determining the value of these factorsprior to the commitment of resources, managers may increase the likelihoodof recognizing problematic projects or projects with potentially highreturns, allowing them to take prescriptive action. By identifying theconcerns of users, it may be possible to control and manage the antecedentsto the IRD process that have the most effect on users’ perceptions andexpectations. Lastly, the factors identified may be used to develop metricsto monitor the IRD process or measure its success or quality. For ITresearchers, this study offers two primary contributions: (1) identificationof the critical factors suggests that there are many variables that have notreceived attention, and (2) an example of an approach to generatepotential variables for further study.

INTRODUCTIONCost overruns, missed deadlines, inaccurate features, and out-and-out

failure still plague the software development industry despite advances in thedevelopment process (Adolph, 2000; Bergey, Smith, Tilley, Weiderman, &Woods, 1999; Johnson, 1995; Schmidt, Lyytinen, Keil, & Cule, 2001). Oneof the primary reasons for these problems is the lack of clear identification andvalidation of requirements (Bergey et al., 1999). However, a model of thefactors that impact information requirements determination (IRD) does notexist to help managers improve information requirements determination pro-cess quality. In fact, there is a lack of understanding about what constructs mostsignificantly impact systems development process quality and specifically theIRD process quality. The objective of this study was to identify theseconstructs and propose a model of these factors that may provide guidance formanagers involved with the IRD process and researchers investigating the IRDprocess.

The primary question addressed by this study is: What are the factors thataffect the quality of the IRD process? Several additional aspects of thisquestion are explored, including: How do these factors affect IRD processquality? Which of these factors can be manipulated or controlled prior to theIRD process to improve quality?

In addition, a secondary question is addressed to test the validity of theresults: Do users agree which factors affect the quality of the IRD process? Ifusers from different organizations and with different backgrounds agree on a setof factors, this would provide evidence that these factors are applicable to a



wider range of development projects and not just to one organization, one typeof system, or one type of project.

By addressing these questions, several benefits may accrue. First, if theexistence of a set of factors agreed to be important to the IRD process isestablished, then these factors would be likely candidates for managers orresearchers to emphasize (or de-emphasize, depending on the nature of thefactor) to improve the IRD process. Also, there may be factors that are notconsidered important by users, indicating areas that may allow more flexibilityfor managers or perhaps savings in resources dedicated to these factors.

LITERATURE REVIEWThe 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 newsystem’s potential and concluding with the implementation of the system. Theinformation requirements determination stage has been recognized as criticaldue 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 centralimportance to information systems development” (Browne & Rogich, 2001).The IRD stage has been identified as a principal reason for systems develop-ment project failure for over 20 years (Browne & Rogich, 2001; Davis, 1982;Vessey & Conger, 1994). As the quality of the IRD stage is expected to impactthe quality of the systems development process in later stages (Newman &Noble, 1990) and the quality of the implemented system in terms of thecompleteness, correctness, and consistency (Yadav, 1985), it is reasonable topropose that efforts to improve the IRD should impact the entire developmentprocess and the final system.

Much research has focused on the definition stage of systems developmentand 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 theattention of prior research has been on devising new and improved tools,techniques, and methods to elicit and specify the information requirements fora system; including: more effective prompting techniques (Browne & Rogich,2001), an ontological approach for evaluating tools to specify requirements foroff-the-shelf software (Soffer, Golany, Dori, & Wand, 2001), a framework forintegrating non-functional requirements into specifications (Cysneiros, Leite, &

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Neto, 2001), a distributed prioritization process for gathering requirementsfrom various stakeholders for packaged software (Regnell, Host, Dag,Beremark, & Hjelm, 2001), socio-technical and soft approaches for gatheringrequirements (Atkinson, 2000), an approach to elicit requirements for socio-technical system design (Sutcliffe, 2000), an analytical technique based ongrounded theory for developing qualitative scenarios (Galal & Paul, 1999), thecognitive interview (Moody, Blanton, & Cheney, 1998), an object-orientedspecification method (Sibley & Bailin, 1989), use of semantic structuring duringinterviews (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 requirementscapture (Chatzoglou & Soteriou, 1999), and compared modes of groupcommunication on the quality and creativity of requirements activities (Ocker,Fjermestad, Hiltz, & Johnson, 1998). Some research has suggested specificapproaches based on the type of system being built, including electronicretailing (Webb, 2000) and executive information systems (Watson & Frolick,1993; Wetherbe, 1991). Still other research has focused on the effectivenessof different methods in relation to other constructs, such as: the cognitive fit ofprocess and object methods (Agarwal, Sinha, & Tanniru, 1996), communica-tion modes and process structure (Ocker & Hiltz, 1995/96), the use of focusgroups to elicit deep structure information (Leifer et al., 1994), the relationshipbetween applications and methods (Vessey & Conger, 1993, 1994), and data-flow 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), requirementscreep (Berry, 1998), communication (Coughlan & Macredie, 2002;DeBrabander & Thiers, 1984; Holtzblatt & Beyer,1995; Kaiser & King,



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 ignorantanalyst on the team (Berry, 1995, 2002).

Several researchers have suggested models or frameworks for purposesrelated to the IRD process. Chatzoglou and Soteriou (1999) proposed a dataenvelope analysis for the requirements capture and analysis (RCA) processthat included an RCA “production” framework composed of moderatingfactors, inputs, outputs, and the RCA production process. In their results, theynote the limitation of their input and output sets and suggest further research isneeded to validate them and “shed light on whether these are exhaustive or not”(p. 522). Guinan, Cooprider, and Faraj (1998) studied the effects of technicaland behavioral factors on team performance during the requirements definitionphase. Overall, they found that the behavioral factors studied tended to havea 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 componentwith project characteristics as moderating variables in a study of the effects ofthese factors on requirements capture completion. He found that there weredifferences in the importance of factor categories for different projects anddifferent organizations. In addition, a set of quality factors for the informationrequirements determination (IRD) process has been identified, but it is basedonly upon the perspective of information systems specialists (Havelka, 2002).

User participation and user involvement have long been suggested assignificant 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 systemsdevelopment process differently than information systems personnel (Havelka,Sutton, & Arnold, 2001). The inclusion of users on development teams isadvocated primarily to capture the users’ knowledge of their job functions.Given recent research on the effects of user participation and procedural justiceon the success of systems development, (Hunton, 1996a, 1996b; Woodroof,1996), it is useful to determine a user view of the factors impacting the IRDprocess. Therefore, this study focused on the perspective of users who havebeen involved with the IRD process.

More recent research has explored the integration of nominal grouptechniques (NGT) with joint application development (JAD) to improve therequirements determination process (Duggan & Thachenkary, 2004). Thisresearch found that by using a NGT some of the negative group-related

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dynamics found in JAD due to its freely interacting structure could be mitigatedand lead to more effective requirements gathering. Also, recent research hasfocused 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 fourclasses of difficulties that help to organize and describe problems in each stageof the IRD process (constraints on humans as information processors, varietyand complexity of requirements, communication problems, unwillingness ofusers to provide requirements). They also propose techniques to address theproblems identified and improve requirements determination. Another studydeveloped a socio-cognitive process model of technology frames of referenceto understand the requirements determination process (Davidson, 2002). Thestudy 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 ANALYSISThe 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 underlyingassumption of the method is that individuals who perform a task can providevaluable insight into the important factors influencing their ability to achieve ahigh level of productivity when performing the task (Adam et al., 1986). Thismethod has been used successfully in several domains including systemsdevelopment (Adam et al., 1986; Havelka, Sutton, & Arnold, 1998; Sutton,1993). By using individuals who have had experience in a problem area, thecritical factors influencing the problem can be identified. In this study, userswho had participated in the IRD process are asked to identify the factors thataffect the IRD process. Each participant is asked to silently and individuallygenerate a list of factors that he or she believes influence the efficiency,effectiveness, and quality of the IRD process. The factors generated are thenlisted publicly in a round-robin fashion on a flip chart for all participants to viewand discuss for clarification. After all the potential factors are listed, eachparticipant is asked to individually evaluate the factors by first separating theminto two categories—critical and not critical—and then ranking the criticalfactors by importance. An overall ranking of the factors for each group wasobtained by averaging the individual rankings of each group member.



The NGT was applied to distinct groups of users from different organiza-tions and backgrounds to provide representative and comprehensive results.Details of each of the three groups used are presented in Table 1. All theparticipants in the groups met the conditions to be included in the samplingframe. The sample of users represented seven different organizations and 13distinct functional areas. Taking the practical conditions of the researchenvironment into consideration, the sample of focus group participants wasconsidered adequate; however, the nonrandom sampling approach used is alimitation 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 theNGT used and whether the users from different organizations and with differentbackgrounds tend to agree about the factors, several statistical tests wereperformed.

The first test is used to determine whether there exists agreement betweenthe groups. To determine if the groups can be considered independent, chi-square tests for independence between each of the groups were conducted.The results suggest that the groups are not independent, lending support to theconclusion that agreement among the groups does exist. This is an indicationthat the users do agree about which factors are critical to the quality of the IRD

Table 1. Summary of user groups

Group 1 2 3 Number of Participants 7 6 6 Location Rockdale, TX Cincinnati, OH Cincinnati, OH Industry Manufacturing Distribution

Manufacturing Public Utility

Marketing

Functional Area(s) Accounting Training & HR Quality Control

Purchasing

Finance Logistics

Technical Sales Support Auditing

Human Resources

Accounting Research Product

Development

# Years of IT Use 3-16 1-15 4-10 Average # Years of IT Use 10.3 7.0 6.5 # of Development Projects 1-10 1-20 1 Average # of Dev Projs 2.4 7.5 1 Role on Projects Consultant

Team Member Consultant

Team Member Primary Developer

Consultant Team Member

IRD Techniques Used Interviews Group Meetings

Meetings Review of Packaged

Applications Interviews

Observation

"Informal" Review Existing Systems & SW

Packages

# Factors Generated 41 29 19 # Critical Factors 28 19 19

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process. This finding is despite their different organizations, experiences, andbackgrounds.

The second test performed analyzes the agreement between groups of thefactor rankings using Spearman’s Rho (Conover, 1980). The factor rankingsare based on the users’ noting the relative importance of each factor. If thereis agreement among the groups, they will tend to rank the factors similarly.Spearman’s Rho is a more powerful measure of the relationship between twosamples than the chi-square test for independence. The null hypotheses of noagreement in rankings are rejected for all three comparisons at less than a 0.001critical level of significance. This is further evidence that the set of factors

Table 2. Critical factors ranked by user group

FACTORS UG1 UG2 UG3 Accountability 5 Budget 18 11 8 Communication between users & IT 1 4 7 Control of project 14 Current system documentation 16 15 Current system quality 14 Data Gathering Techniques 24 19 6 Feasibility study 20 7 15 Flexibility required 26 Goal congruence 10 2 14 IT communication skills 4 13 IT domain knowledge 3 9 3 IT technical skills 10 User/IT interaction 2 6 Management commitment 5 1 1 Multiple user groups 16 Outside resources 24 Planning 9 18 Politics 16 Project initiator 18 Project leader 11 IT/User rapport 12 Systems integration 22 8 17 Team composition 7 13 3 Technical resources 20 Testing 24 Time constraints 20 10 16 Unique system requirements 13 11 User bias 14 5 User commitment 6 12 2 User ownership 8 User participation 3 8 Users’ understanding of current system

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generated by the groups are similar and are relevant to the IRD process ingeneral, regardless of the organizational setting, project type, etc.

The last test used to validate the nominal group process was Kendall’scoefficient of concordance. This measure was used to test the agreementamong all three of the group rankings of the factors. With a small number ofrankings, Kendall’s coefficient results in a more conservative test than using achi-square distribution (Conover, 1980). Consistent with the Spearman’s rankcorrelation statistic and the chi-square test for independence, the null hypoth-esis of no agreement among the rankings of the groups is rejected at a criticalsignificance level of 0.0291. Based on the results of Kendall’s coefficient ofconcordance, there appears to be strong agreement in the rankings of thecritical quality factors among the three user groups.

The results of the statistical tests provide support for the validity of theNGT used. The tests suggest that the set of factors selected as critical by allthree of the user groups represents a set of common, relevant factors that affectthe quality of the IRD process. The aggregate set of factors given by the threeuser groups addresses the primary research question: What are the factors thataffect the quality of the IRD process? The set of critical factors resulting fromthe three focus groups is presented in Table 2. The three user groups generateda total of 33 critical quality factors. As can be seen in the Table 2, there appearsto be substantial overlap among the groups. The factors selected as critical byall three of the focus groups are discussed in more detail in the discussionsection.

A USER-ORIENTED MODEL OF FACTORSTHAT AFFECT IRD PROCESS QUALITYBased on the outcomes of the research study, a logical model of the factors

that affect the information requirements determination process quality isdeduced. The focus on the user perspective is driven by several reasons. First,research has suggested that the success of an information system may be basedon 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 processquality, managers may be able to improve these perceptions without incurringsignificant 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, &

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Rodden, 1999) emphasizes the importance of including the customer in theprocess of developing products or systems for those customers. Lastly, toolshave become available to users that allow them to develop applications forthemselves. By identifying the factors that these users consider to be critical,management should be able to improve the quality of the applications theseusers are developing.

The model suggested is composed of five categories of factors: manage-ment, organization, process, technical, and human resource. These categorieswere determined by analyzing each factor to determine a higher level constructto which the factor was an attribute, a component, or a subordinate. A total of33 factors were identified and selected as critical to IRD process quality. Agraphical view of the user-oriented IRD process quality model is given in Figure1. Each of the components of the model is described below with a discussionof its impact on IRD process quality.

Management FactorsThe user groups selected seven factors that can be considered Manage-

ment Factors. The common element among these factors is the ability of theorganization’s management or management systems to control or influenceeach of these factors’ impact on a given systems development project and,

Figure 1. A user-oriented model of factors that affect IRD process quality.

IRDPROCESSQUALITY

TECHNICALFACTORS

____________Current SystemDocumentation

Current System QualityFlexibility

Systems IntegrationTechnical Resources

Unique SystemRequirements

MANAGEMENTFACTORS

_____________Accountability

BudgetControl of Project

Management CommitmentOutside ResourcesTeam CompositionTime Constraints

PROCESSFACTORS

__________Communication

Data Gathering TechniquesFeasibility Study

User/IS InteractionPlanningTesting

User Participation

ORGANIZATIONALFACTORS

________________Goal Congruence

Multiple User GroupsPolitics

IS/User Rapport

PERSONNELFACTORS

___________IS Communication SkillsIS Domain Knowledge

IS Technical SkillsProject InitiatorProject Leader

User BiasUser CommitmentUser Ownership

User Understanding ofCurrent System



specifically, the requirements-gathering stage of the project (see Table 3).Management commitment determines whether adequate financial, human, andtechnology resources will be available. A project that lacks accountabilitywould 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 havean active interest in the project’s success. The budget and time constraints ascritical factors for IRD process quality come as no surprise; the projectmanagement triad of schedule, budget, and requirements is well established(Frame, 1995). Time constraints were most difficult when the users wereasked 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 lessresponsiveness to users’ requirements. Outside resources were consideredmore likely to be responsive to users’ suggestions and needs, especially whenbeing paid by the user area’s management. Lastly, the mix of personalities onthe project team was considered as important as the competence of individualteam members.

Organization FactorsThese factors are related to the interaction among groups or individuals

from different areas within the organization. The definition or description of

Table 3. Management factors

FACTOR DESCRIPTION Management commitment The level of importance that upper-level management

places on the successful completion of the project, the emotional or psychological obligation to the project.

Accountability The existence of an individual within the organization who is ultimately responsible for ensuring the project’s success.

Budget 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.

Time constraints The amount of time allowed for completion of the intermediate tasks and for final completion of the requirements gathering process.

Control of the project 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.

Outside resources The existence of personnel from external sources on the project.

Team composition The composition of the team, their levels of competence, qualifications, skills, and experience for the specific project.

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these factors is provided in Table 4. Goal congruence is critical to IRD processquality by focusing the development team on the purpose of the project.Without goal congruence, disagreement among user groups and the IT groupwere more likely to occur. The presence of multiple user groups influences theIRD process quality in several ways: adequate representation from all areasaffected is needed — inadequate input from a specific user area early in the IRDprocess may cause rework to be required; the integration of data and processrequirements from separate business units is necessary to avoid problemsrelated to formats of reports, ownership of data, access to data, and integrationof new applications with existing systems; and communication problems amonguser areas must be addressed, including logistical difficulties in getting peopletogether for meetings and “semantic confusion” among users from differentareas. Politics affects the quality of the IRD process primarily by wastingresources that could be used productively on other activities. Lastly, rapportinfluences the IRD process quality indirectly, by improving communicationbetween all the stakeholders and increasing the level of “trust” among all themembers of the IRD team.

Process FactorsProcess factors include items that are related to the organization’s process

or method of gathering and specifying information requirements. These factorsare described in Table 5. The most important aspect of user participation wasthe inclusion of the “correct” users. The quality of communication betweenusers and IT was considered to be much more important than the quantity. Thequality of user/IT interaction was considered a separate and distinct factor that

Table 4. Organization factors

FACTOR DESCRIPTION Goal congruence 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.

Multiple user groups The existence of more than one user area that would be affected by the system being designed.

Politics 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.

Rapport between IT and user groups The general level of goodwill and trust between the IT department and the client departments involved with the project -- their working relationship.



would impact IRD process quality. Data-gathering techniques that allowedusers to “get it over with” or that “doesn’t interfere with my work” and were theleast intrusive techniques possible to get the requirements documented quicklywere preferred. A completed feasibility study was believed to be a criticalfactor due to the “scoping” nature of the report, that is, the requirements wouldbe more easily identified and defined if the project has well-defined boundariesand 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 require-ments as they are elicited and specified, particularly with users who were notparticipating in the requirements-gathering process. Again, the importance ofensuring that the true requirements are incorporated into the final requirementsdocument was emphasized to reduce the amount of rework later and to ensurethe system developed is the system desired.

Technical FactorsThese 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

Table 5. Process factors

FACTOR DESCRIPTION Communication between users and IT specialists

The quantity and quality of communication including feedback from and to one another during the information requirements-gathering process.

Data gathering techniques The actual procedures used to determine and discover the specific information needs of the client/users.

Feasibility study 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.

User/IT interaction The amount and type of group activities performed and other modes.

Planning 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.

Testing The activities and time spent to verify and validate the information requirements specified during the process.

User participation 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.

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information about how the business process is currently being supported.Current system quality also impacts the IRD process. If the current systemwere completely out of date, it would encourage more participation from theusers. Or, if the current system was meeting most of the users’ needs, there maybe user resistance to a new system. Flexibility impacts the IRD process qualitydue to the level of complexity it necessitates. Similarly, system integrationaffects IRD process quality; as the number of systems needing integrationincreases, the risks to successful completion also increase. Technical re-sources available affect IRD process quality by limiting the features or functionspossible. Lastly, unique system requirements impact IRD process quality byincreasing the risk of failure due to the lack of experience with fulfilling therequirement. The constructs identified as technical factors appear, to a greatextent, to be “given” for the project, that is, they are constraints that should berecognized and planned for but may not be easily changed or manipulated.

Personnel FactorsThese factors are related to human resources that are critical to IRD

process quality (see Table 7). IT communication skills are expected to directlyimpact the communication with users and the quality of the IRD process. ITpersonnel domain knowledge increases the ability of the team to correctly andquickly specify the requirements. IT personnel technical skills are expected toimpact the IRD process quality through the identification of time-savingtechnology or by recognizing the feasibility of specific features prior to thedesign and development. User bias influences IRD process quality in different

Table 6. Technical factors

FACTOR DESCRIPTION Current system documentation The level and understandability of written procedures,

input documents, output documents, and data used for the work system being studied.

Current system quality The properties and attributes (positive or negative) of the current system that may affect the gathering of requirements.

Flexibility The number of different types of tasks that must be performed by the system under study, usually identified for different user groups.

Systems integration The impact that the application under consideration will have on other systems within the organization.

Technical resources The computing resources (hardware and software) available for development of the application.

Unique system requirements The presence of requirements that are new or that have not been addressed in previous applications.



Table 7. Personnel factors

FACTOR DESCRIPTION IT personnel communication skills 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 mimicsthe system being replaced. User commitment affects IRD process quality byinfluencing the quality of user participation and other factors. User ownershipwas considered to be distinct from user commitment and is similar to thedefinition of ownership as some form of a “right.” User understanding of thecurrent system impacts the IRD process quality through the users’ ability toprovide knowledgeable information about the features and functions of thecurrent system that were useful and necessary and those that were difficult toperform or were not needed. Some organizations explicitly recognize theimportance of having a project leader and name a high level manager as the“sponsor” or “champion” for the project. Whether the IT department initiatesthe project or a user area does is critical to IRD process quality. If the IT areadrives the project, the project may encounter resistance from users who feelthreatened or simply resist change. On the other hand, if a project is user-driven, the IT personnel may not feel the urgency or importance that the projectmay require.

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DISCUSSIONTaking an overview of the focus group results reveals some additional

interesting information. Using a weighted average of the three groups’ rankingsfor each factor (adjusted for factors not considered critical by the group) givesan indication of the overall and relative importance of each factor. Table 8shows all the factors in order of their average ranking. Based on this view ofthe data, management commitment to the IRD process is clearly the mostimportant factor. This finding should not be surprising. A project with strongupper 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



needed to succeed. Following management commitment, several factors areranked highly (average < 10): communication, domain knowledge, user com-mitment, team composition, and goal congruence. Of these factors, commu-nication 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 beendiscussed in prior literature as being important to the IRD process, but at leastone author has argued that domain ignorance is critical to successful require-ments engineering in the sense that the analyst would then question assumptionsand make these explicit (Berry, 1995). The impact of user commitment, teamcomposition, and goal congruence on the IRD process has received littleattention from researchers.

Using the averages to evaluate the relative importance of each componentof the suggested model reveals that overall the process factors were rankedhigher than the other components. Table 9 presents the average rankings of thefactors in each component of the model. This may give managers somedirection in allocating resources to projects.

The results of the study validate some commonly held beliefs regarding theIRD process, that is, management commitment is critical to process quality.They also reveal some unexpected information that should help managers betterapply the scarce resources available or reduce risks. Several constructs thatwere expected to be important were not identified, not the least of which isrequirements stability or requirement “creep.” Perhaps users do not see this asa critical problem or perhaps it is not as important as previous research hasimplied. Regardless, the absence of the construct is conspicuous.

Another potentially telling phenomenon is the identification and selectionof 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

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interaction between user and IT, rapport between IT and users by the userparticipants. But none of the user groups identified users’ communicationskills as a factor. Could it be that users view communication during require-ments determination as the primary responsibility of the IT members of theteam? Obviously, the users recognize the importance of interaction with the ITpersonnel. Further research may be needed to investigate additional aspectsof communication during the IRD process.

CONCLUSIONThis chapter reports the results of an empirical study focused on identifying

factors that affect the quality of the information requirements determinationprocess. The study used a series of focus groups composed of users who havehad experience with the IRD process for software development. By develop-ing a model for IRD process quality based on the user perspective it is hopedthat improvements can be achieved by recognizing the constructs consideredmost important by the user/clients, thereby improving the usefulness, ease ofuse, and productivity of the information systems developed.

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Zmud, R.W., Anthony, W.P., and Stair, R.M.J. The use of mental imagery tofacilitate information identification in requirements analysis. Journal ofManagement Information Systems, 9(4), 175-192, Spring.

ENDNOTEAn earlier version of this paper was published in the Information Re-

source Management Journal, 16(4), October-December 2003.

26 Cunha & Putnik


Chapter II

Business Alignment inAgile/Virtual Enterprise

IntegrationMaria Manuela Cunha

Polytechnic Institute of Cávado and Ave, Portugal

Goran D. PutnikUniversity of Minho, Portugal

ABSTRACTThe concept of strategic alignment between business strategy andtechnology is essential for improving competitiveness. The driving forceof business is to fully satisfy customer needs with the right products/services, at the right price, and with the required quality and responsivenessin a global competitive market. In this context, by alignment we mean theactions to be undertaken to gain synergy between business, that is, amarket opportunity, and the provision of the required product, with therequired specifications, at the required time, with the lowest cost and withthe best possible return. In this chapter we focus on a leading organizationalmodel, the Agile/Virtual Enterprise model, characterized by a fastreconfigurability or adaptability face to the dynamically changing marketand introduce the concept of a Market of Resources as the environmentable to assure a permanent alignment of the networked structure withmarket. We also propose alignment strategies between businessopportunities and the creation/reconfiguration of the Agile/VirtualEnterprise that is expected to meet that opportunity.

Business Alignment in Agile/Virtual Enterprise Integration 27


INTRODUCTIONThe concept of alignment was initially introduced in the field of Information

Systems and Technology. It is widely accepted that the effective use ofInformation and Communication Technology (ICT) to leverage the skill andknowledge base of the organization can provide competitive advantage in themarketplace (McFarlan, 1984). The model proposed by Galliers (1991, 1993)defends different strategies associated with an organization and the corre-sponding Information Systems—the information strategy, the implementationstrategy, and the human resources strategy—recognizing also the need tomanage the organizational change.

The potential benefits to be gained from the effective deployment of ICTobliges organizations to consider the alignment of their ICT and their business(Shams & Wheeler, 2000). In this sense, alignment refers to actions undertakenby management to gain synergy between ICT and the enterprise’s informationsystems, products, markets, and business administration by ensuring thatinternal policies match external policies in these areas.

Henderson and Venkatraman (1994) propose two definitions of align-ment: traditional linkage, by “ensuring that Information Systems activities arelinked to business requirements,” and strategic alignment, by “selecting theappropriate alignment perspectives for achieving business objectives.” In thischapter, we adopt a perspective based on the second definition.

The driving force of business is to fully satisfy the more and moredemanding customers with the right products/services, at the right price, andwith the required quality, at the right time, in a global competitive market. At thesame time, although the constant stream of innovations in goods and servicesallows manufacturers and service providers to offer higher quality products, itincreases customers’ expectations and, thus, requires higher levels of compe-tition. In this context, we define alignment as the actions to be undertaken togain synergy between the business—that is, the market opportunity (orbusiness opportunity) and the provision of the required product, with therequired specifications, at the required time, at the lowest cost, and with thebest 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 proposealignment strategies between business and the integration of resources in anA/V E to answer to a market opportunity, supported by the environment of aMarket of Resources.

28 Cunha & Putnik


With this contribution, we intend to provide a better understanding of anenvironment supporting the Agile/Virtual Enterprise integration process– a Market of Resources, developing a set of alignment strategies that must beverified in order to increase the potential success of A/V E integration. Thechapter introduces the Agile/Virtual Enterprise model, discusses the support ofA/V E integration by the creation of a Market of Resources, describes itsstructure and the processes of selection and integration of resources in anA/V E, and finally presents a strategy for business alignment and its operationalcomponents.

BACKGROUNDThis background section introduces some emerging networked and

reconfigurable organizational models, in particular, the A/V E model, discussesthe corresponding reconfigurability dynamics requirement, presents the mainnetworking and reconfigurability dynamics disabling factors (that should beovercome if we want to make the A/V E model a competitive reality), andfinally discusses infrastructures to support A/V E integration.

In our context, A/V E integration must be understood as including theprocesses of search for potential partners, selection and negotiation betweenthem, and the integration of the selected in an A/V E. A/V E reconfigurationinvolves the same activities.

The Emerging Organizational ModelsIf traditionally the goal of the enterprise was to fulfill the customer

requirements using its internal limited set of resources, the knowledge andphysical resources associated to the development and production of most oftoday’s products often exceed what a single firm is able to accomplish. Firmssearch for cooperation with other companies, under several formats. One of themost widely discussed areas in recent business literature is that of organizationalnetwork structures, as the basic principle to achieve flexibility and quickresponse 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 modelshave been proposed since the “Virtual Factory” suggested in 1990 by PeterDrucker (1990).

According to Cullen (2000), the Kauffman’s (1995) metaphor of a“knowledge landscape” suggests that firms can improve their fitness within that



landscape by sharing knowledge between firms and by extending the sum of thewhole beyond its individual components.

The Core Competence Theory (Prahalad & Hamel, 1990) outlines thatsuccess and failure of an organization are necessarily based on its unique orspecific potentials, assets, or resources. Core competencies are a competitiveadvantage and should provide access to a wide range of markets, shouldsubstantially contribute to the benefit of the product, should be visible for theclient, and also hard to copy and out of competitors’ reach. In a network-basedstructure, each partner contributes with its best practices and core competen-cies to achieve the highest competitiveness of the structure as a whole.

A successful company must acquire the capability to achieve and explorethe 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 organiza-tional models, corresponding to the recent approaches of the ExtendedEnterprise (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 thesense that it is the expression of a dynamically reconfigurable information-based 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 theauthors, an Agile Enterprise is a broadly change-proficient enterprise, anenterprise that exhibits competency at dealing with change in the importantcompetitive business practices of its business sector. Vernadat (1999) pro-posed a definition for agility as the ability to closely align enterprise systems tochanging business needs in order to achieve competitive performance. Insummary, 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,

30 Cunha & Putnik


integrated from independent enterprises—primitive or complex—with the aimof taking profit from a specific market opportunity. After the conclusion of thatopportunity, the virtual enterprise dissolves and a new virtual enterprise isintegrated, or it reconfigures itself in order to achieve the necessary competi-tiveness to respond to another market opportunity.

We designate by resource any function, service or product provided byindependent enterprises (resources providers), who are potential candidatesto integrate an A/V E. The resource is a recursive construct; resources can beprimitive or complex, where a complex resource consists of a meaningfulcombination of primitive resources.

Reconfigurability Dynamics: The Agile/VirtualEnterprise 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 ahighly dynamic reconfiguration, assuring or pursuing a permanent alignment ofthe partnership with business opportunities (Cunha & Putnik, 2002).

There are several factors determining the performance of the A/V Emodel. In the BM_Virtual Enterprise Architecture Reference Model(BM_VEARM) (Putnik, 2000), the author presents “fast adaptability” or “fastreconfigurability” as the most important characteristic for the competitiveenterprise, enabling the agile alignment with the market, a characteristic intrinsicto the A/V E organizational paradigm.

A/V E reconfigurability face to the unpredictable changes in the environ-ment (market) implies the search and selection of substitute resources to beallocated to the task to be performed in order to satisfy new circumstances(new tasks, optimization of old tasks, “deadlocks,” etc.), that is, to bepermanently aligned with the market that originated its creation. An A/V E canhave as many instantiations as required either by product changes or as arequirement of quality and competitiveness improvement. It should be notedthat reconfigurability dynamics must not be confused with operational dynam-ics. In other words, while operational dynamics is solved by means of a fixedstructure, reconfigurability dynamics require the partnerships’ permanentreconfiguration.

In order to achieve its maximum competitiveness, that is, to be competitivein delivery time, quality, and cost, and to yield satisfactory profit margins, theimplementation of the A/V E model requires a supporting environment assuringreconfigurability dynamics, that is, assuring fast transition betweeninstantiations of an A/V E.



An environment designed to assure the A/V E requirement ofreconfigurability dynamics, should present as main characteristics the ability of(1) flexible and almost instantaneous access to the optimal resources tointegrate in the enterprise, the negotiation process between them, selection ofthe optimal combination, and its integration; (2) design, negotiation, businessmanagement, and manufacturing management functions independent from thephysical barrier of space; and (3) minimization of the reconfiguration andintegration time (Cunha & Putnik, 2004).

The first characteristic implies the existence of a market of independentcandidate resources for integrating an A/V E. This market role provides: (a) theenvironment and technology and the corresponding procedure protocols, thatis, “an open system architecture” for the efficient access to resources, efficientnegotiation between them, and its efficient integration; and (b) a domain forselection of participant resources providers in an A/V E, large enough to assurethe best or near the best options.

The second characteristic implies the utilization of advanced ICT to theoperation of the market of independent resources, that is, technologies provid-ing technical conditions to efficiently accede to the globally distributed re-sources providers, efficient negotiation between them, and its efficient integra-tion.

The third characteristic is necessary in order to provide reconfigurabilityas fast as possible.

Two Factors Against Networking and ReconfigurabilityDynamics

The main critical aspects associated with the A/V E model—a modelprecisely based on networking and reconfigurability dynamics—are the trans-action costs and the leakage of private information.

A/V E integration activities (such as selection of eligible resources provid-ers, negotiation among them, selection of an optimized combination of re-sources providers, contractualization, and enforcement) can be too complexand too delicate. There is a vast spectrum of available resources providers,each with different characteristics, leading to difficult selection and integrationdecisions. The costs of networking are composed of both the explicit cost ofcarrying out the transaction and hidden costs due to coordination difficultiesand contractual risks. The major costs associated include (1) the transactioncosts and (2) the leakage of private information.

32 Cunha & Putnik


Transaction CostsFirms can carry out their transactions internally (within the firm’s bound-

aries), outside the firm (completely externalized), or in the grey area betweenthe firm and the marketplace (Oster, 1994). Every organization has a set ofstrategic decisions that involve the decision of which transactions are to bemade internally and of which transactions will be made using the market (useof external resources providers). This set of decisions is known as the “make-or-buy” decisions. The principles governing these decisions were first articu-lated in 1937 by Ronald Coase (1937), the father of transaction costseconomics, in his pioneering work The Nature of the Firm. Transaction CostTheory (Coase, 1937; Williamson, 1975) is an often-employed framework ina firm’s choice between internalizing the function or relying on the market.Several recent schools of thought developed other institutional modes ofeconomic 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, andenforcing contracts. They include the adverse consequences of opportunisticbehaviour, 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 partnerssearch, selection, negotiation, and integration, as well as permanent monitoringand the evaluation of the partnership performance (Cunha & Putnik, 2003b).Externalizing functions can involve high transaction costs, and networking reliesintensively on extending the enterprise boundaries, and on partnering functions.The A/V E model is extremely dependent not only on networking, but ondynamically reconfiguring, so the concept of A/V E requires tools to overcomethe transaction costs barrier.

Leakage of Private InformationA 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 informationis a core competitive advantage that distinguishes a firm from its competitors.It may concern production know-how, product design, or consumer informa-tion.

Networking or partitioning tasks between resource providers increasesthe risk of losing control of such type of information, which can be safeguardedonly through complete contractual agreements and, furthermore, through anenvironment assuring trust and accomplishment of the duty of seal. Theimplementation of the A/V E model requires tools to enable the preservation ofthe firm’s knowledge.



Infrastructures to Support Virtual Enterprise IntegrationAny 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 physi-cal structure (or one instance) of an A/V E may last (at most) only for afew 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 performanceevaluation 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 trustand the highest possible performance of the A/V E.

• Reduction of the time-to-contract and risk minimization in a contractualagreement.

• Provision of knowledge support in A/V E creation/reconfiguration (whichshould be provided by a mediator or broker).

Several supporting infrastructures and applications must exist before wecan take advantage of A/V E organizational model (Carvalho, Putnik, &Cunha, 2002), such as: electronic markets of resources providers, legalplatforms, brokerage services, efficient and reliable global information sys-tems, electronic contractualization and electronic negotiation systems, andsoftware tools.

Information and Communication Technologies, Internet, and Internet-based Agent technology are the main technologies for the implementation of awide set of applications, ranging from assisting with procurement processes, upto contributing to several functionalities required by the virtual enterprise modelin general, in terms of quality, flexibility, speed, and cost efficiency. Thesetechniques or applications, which were developed to support isolated activitiessuch as procurement, partners search and selection, negotiation, and enterprisecollaboration within supply chains or extended enterprises, include Web-based applications and solutions (sometimes dispersedly developed), such aselectronic marketplaces, directories and search engines; electronic automatednegotiation applications; online auctions and bidding systems; market broker-age services (with different possible degrees of automation); agent-basedapplications for partners search and negotiation, etc. (Cunha, Putnik, Carvalho,

34 Cunha & Putnik


& Ávila, 2002). However, they do not support the most critical functionalitiesrequired by the A/V E model, such as knowledge support (to avoid badspecifications of resources requirements or of negotiation parameters), trust,historical information on performance of resources providers in previouspartnerships, monitor and control of the resources providers performance afterintegration, etc.) (Cunha & Putnik, 2003a). If these systems do not cover thefull process of A/V E integration, they could hardly support the A/V E model.

The organizational challenges of (1) partitioning tasks among partners inthe distributed networked environment so that they fit and take advantage of thedifferent competencies in an A/V E, (2) integration of the same, and (3) coor-dination and reconfigurability management in order to keep alignment with themarket requirements are of main concern and can determine the success orfailure of an A/V E project. The implementation of the emerging models, suchas the A/V E, requires the support of an environment able to assure the above-mentioned functionalities and to cope with the reconfigurability dynamicsrequirement.

Cunha, Putnik, and Ávila (2000) have proposed the Market of Resourcesconcept as a possible alternative to these existing tools, developed without thepurpose of responding to the A/V E requirements. In Cunha, Putnik, and Silva(2005) and Silva, Putnik, and Cunha (2003), the authors discuss how theexisting technology can support the development of the Market of Resourcesconcept.

The general model of electronic commerce, in particular when concerningbusiness-to-business relations, suggests that Internet provides more informa-tion, more choice opportunities and more opportunities to establish networks,lowering the cost of information and reducing information asymmetries. This isgenerally classified as the “democracy of Internet”. However, the new modelslike A/V E or the new forms of value creation, where market informationconcerns information about resources (complex and primitive) to integrate,although reinforced by the ability to use more globally distributed resources andby lower transaction costs provided by ICT and by Internet usage, claim for awider support environment, assuring better quality and better response at lowertime. This corresponds to the Market of Resources concept.

Table 1 summarizes the contribution of some technologies and environ-ments to the main networked (more or less dynamic) models: Virtual Enter-prise, Extended Enterprise, Agile Enterprise /Manufacturing, A/V E and OneProduct Integrated Manufacturing (OPIM). The importance of reconfigurabilitydynamics for each model is also illustrated.



Importance of reconfigurability

dynamics

medium

medium

high

high

high

Market of Resources

X

X

X

X

high

Environments

eMarket places

X

X

low

Agent-based brokerage

X

X

X

X

X

Electronic auctions

X

X

X

X

X

Techniques

WWW searches

X

X

X

X

X

Network models

Extended Enterprise

Agile Enterprise / Manufacturing

Virtual Enterprise

Agile/Virtual Enterprise

OPIM

Ability to support fast reconfigurability

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

The techniques included in Table 1 (WWW searches, electronic auctions,and agent-based brokerage and negotiation) contribute to activities of all themodels in the first column, but do not support the models, as this was not thepurpose of their development. The Market of Resources is proposed as anideal environment to support the requirement of fast adaptability of the mostdynamic models life cycle (A/V E and OPIM), as validated by the authors anddemonstrated in Cunha and Putnik (2003b, 2003c). Electronic marketplaceswere designed to cope only with procurement needs in supply chains andelectronic business models (not included in Table 1) and can accomplish therequirements of the Extended Enterprise model. Functionalities of the Marketof Resources are not indispensable for the Extended Enterprise as they are forthe other four models included in Table 1. The Extended Enterprise model andthe Agile Enterprise/Manufacturing are not characterized by a highreconfigurability dynamics.

Other similar Market of Resources concepts, services, and productsinclude the new generation of high value-added electronic marketplaces, e-alliances, electronic institutions, breeding environments, and virtual clusters;however, they have not been developed to address the A/V E model require-ments.

36 Cunha & Putnik


MARKET OF RESOURCES AS ANENVIRONMENT FOR A/V E INTEGRATION

BM_Virtual Enterprise Architecture Reference Model (BM_VEARM) isa virtual enterprise reference model conceived for enabling the highest inter-organizational dynamics of an A/V E (Putnik, 2000).

The main tools suggested in the BM_VEARM (Putnik, 2000) for manag-ing, controlling, and enabling networking and dynamics, overcoming the twodisabling factors, are:

1. the Market of Resources as an environment for enabling and managingefficient A/V E integration, assuring virtuality at low transaction costs andreduced risk of knowledge leakage;

2. the broker or organization configuration manager, which is the main agentof agility and virtuality, acting either between two operations of the A/V E(off-line reconfigurability providing agility only) or online with the opera-tion (online reconfigurability, providing virtuality and a higher level ofagility) (Ávila, Cunha, & Putnik, 2003; Ávila, Putnik, & Cunha, 2002;Ávila, Putnik, & Cunha, 2005); and

3. virtuality, which makes possible the transition from one physical struc-ture (instance) to another in a way that the enterprise or process owner isnot affected by the system reconfiguration and is not aware of thereconfiguration (i.e., virtuality means that the underlying service structureand reconfiguration process are hidden).

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

The Market of Resources ConceptOffer and demand are usually matched under several different circum-

stances, from unregulated search to oriented search or from simple intermedia-tion mechanisms to the market mechanism, all with the possibility of being eithermanually performed or automated (Cunha, Putnik, & Gunasekaran, 2002). Amarketplace of resource providers will provide the matching between firmslooking for potential partners for integration and firms offering their resources,facilitating A/V E integration, and offering a larger number of business oppor-tunities.

The Market of Resources is an institutionalized organizational frameworkand service assuring the accomplishment of the competitiveness requirements



for A/V E dynamic integration and business alignment. The operational aspectof the Market of Resources consists of an Internet-based intermediationservice mediating between offer and demand of resources to dynamicallyintegrate in an A/V E, that is, mediating between candidate resources providers(integrating the Market of Resources knowledge base) and clients (organiza-tions looking for resources to integrate an A/V E) to answer to a marketopportunity (Cunha, 2003; Cunha & Putnik, 2003a). Brokers act within theMarket of Resources as intermediation agents for agility and virtuality.

Independent resources providers subscribed to the Market of Re-sources. This subscription corresponds to the formal description of theresources using a Resources Representation Language and its integration in aknowledge base.

In Cunha and Putnik (2003b, 2003c) and Cunha, Putnik, Gunasekaranand Ávila (2005), the interested reader can find the discussion and validationof the ability of the Market of Resources to efficiently support A/V Eintegration, and the proof that the service assures low transaction costs andincreased efficiency when compared with the traditional Internet-basedtechnologies (directories and search engines), besides assuring the partners’knowledge preservation. This aspect of leakage of knowledge is being dealtwith through a specific regulation, presently under development by the authors’research group.

Process Structure of the Market of ResourcesThe 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 ofResources as the environment to support the A/V E Design and Integration andthe A/V E operation, offering technical and procedural support for the activitiesof 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. Acustomer is the entity giving rise to a business opportunity and is consideredoutside the Market of Resources. The client entity (or A/V E Owner) is thebridge between the Market of Resources and the customer. Client is the onerequiring the integration of an A/V E to answer the market, that is, to satisfy thecustomer.

38 Cunha & Putnik


• Process A.1.—Market of Resources Creation and OperationThis 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 andpermanent adaptation and updating of the managerial aspects (such asregulation and rules, criteria for selection, management and brokerageprocedures, organization of the Market, commitments definition, evalua-tion, etc.), and including the performance of the Market itself in order toimprove the Market of Resources organization.

• Process A.2.—A/V E Design/IntegrationThis process consists of three main activities: A/V E Request, ResourcesSelection, and A/V E Integration. A/V E Request consists of treating therequest presented by the A/V E owner, and involves the design of theA/V E configuration/reconfiguration (A/V E project) that matches therequirements to produce the desired product. Resources Selection in-volves the search for the eligible resources providers to participate in the

Figure 1. IDEF0 representation of the global process for the Market ofResources and for A/V E design, integration and operation (adapted fromCunha, Putnik & Gunasekaran, 2002)

Market of Resources

Creation and Operation

A1

A/V E Design / Integration

A2

A/V E Operation

A3

A/V E Contract

Resources

Virtual Enterpr. Ref. ModelProject Management

A/V E Integration Management

Client/Server Project Constraints

Market of Resources Management

A/V E Management

Requirements for Resources Selection

Raw Materials Specification

Process PlanProduct Requirements

Database and Software Tools

Resources Representation Language

Communication Tools

Algorithm to Organise the Market

Algorithm for Search over the Focused DomainAlgorithm for Optimal Search

Client Search Constr./Negot.Param.

Market of Resources

Selection Failure

Operation Results

Operation Failure

Products


Selection Results

Simulation Tools

Integration Failure

Integration Results

Dissolution

Focused Markets


A/V E Contract

Focused Markets



A/V E to be created/reconfigured, negotiations among them, and thenselection of the “best” combination of resources to be integrated in theA/V E. The redesign or reconfiguration of an A/V E, implying the substi-tution / integration of new resources, is also considered in this process, asis the dissolution of the A/V E. Integration consists of formalizing theA/V E (contractualization) and the establishment of procedures regardingthe integration of the participants and the implementation of managementand evaluation techniques. Process A.2. is detailed in Figure 2.

• Process A.3.—A/V E OperationThe service provided by the Market controls the operation of theintegrated A/V E, tracking the performance of each resource providerand restructuring the A/V E design (reconfiguring the A/V E) whenevernecessary to assure business alignment. The operation results are ofinterest to keep actualized historical information about the performance ofthe resources providers, to be taken into consideration in future selectionprocesses, and to adjust the management procedures.

Focusing on discussing the alignment between (1) the client of the Marketof Resources, (the one capturing and traducing the customer or the marketrequirements 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 integrationprocesses (Cunha & Putnik, 2004)

C2 Virtual Enterpr. Ref. Model

C4 A/V E Integration ManagementC1 Market of Resources Management

I6 Requirements for Resources Selection

M3 Communication ToolsM2Database and Software Tools

M1Resources Representation Language

M4 Algorithm for Search over the Focused DomainM5 Algorithm for Optimal Search

I4 Market of Resources

O3A/V E Contract

A/V E Request

A21

Resources Selection

A22

A/V E Integration

A23

I5 Client Search Constr./Negot.Param.

Selected Resources

O4Selection Failure

I1 Operation Failure

O1Selection Results

O5Integration FailureO2Integration Results

O6Dissolution

I2 Operation Results

I3 Focused Markets

Request Contract

Selection Failure

A/V E Project

C3 Client/Server Project Constraints

A/V E Contract

40 Cunha & Putnik


O3Selected Resources

C2 Virtual Enterpr. Ref. ModelC1Market of Resources Management

M5Algorithm for Optimal Search

M4Algorithm for Search over the Focused Domain

M3Communication Tools

M2Database and Software Tools

M1Resources Representation Language

Focused Domain

Identification

A221

Automatic Search

A223

Bargaining Based

Negotiation

A224

Direct Negotiation

A225

CandidateResources

Resources Req.not match

Neg. Parametersnot match

O1Selection Failure

O2Selection Results

I4 Focused Markets

I3Client Search Constr./Negot.Param.

I1 Selection Failure

I2 A/V E Project

Selection

A226

Focused Domain

Focused Domain Filtering

A222

Eligible Resources

Figure 3. IDEF0 representation of Process A.2.2.—Resources Selection(Cunha, Putnik, Gunasekaran, & Ávila, 2005)

resources providers (mapped into resources), and (3) products/services/operations (into which resources are mapped), this contribution is centered onProcess 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 resourcesto integrate should be obtained almost in real time. The complexity of theresources selection in general means that a compromised domain size (as a basefor the solution space construction) should be used for each resource search.This concept, as proposed in Cunha (2003) and Cunha et al. (2000) isdesignated by Focused Market of Resources and is defined as a subset of theMarket of Resources where a given search for an independent resource is totake place.

For each search, the Market of Resources proposes a Focused Domain(composed by Focused Markets of Resources), reasonably dimensioned toallow a good match at a limited time.

The first step of the design and integration process is the design of theA/V E; that is, the A/V E Project (Process A.2.1.), which means (1) thetranslation of the specification parameters provided by the client and traducingthe Market Requirements (input flow “Requirements for Resources Selection”)into “Normalized Resources Requirements,” and (2) the translation of the



specific search constraints defined by the client under the format of “Negotia-tion Parameters” (input flow “Client Search Constraints / Negotiation Param-eters”) into “Normalized Negotiation Parameters.”

The Resources Selection Process (A.2.2. in Figure 3) takes place in threephases: (1) eligible resources identification (Processes A.2.2.1. and A.2.2.2),(2) negotiation, that is, the identification of candidate resources (ProcessesA.2.2.3., A.2.2.4. and A.2.2.5.), and (3) final selection or identification ofselected resources (Process A.2.2.6.). The process corresponds to visiting allthe elements proposed by the focused domain in order to identify negotiationparameters (availability, time to respond to the demand, or time to offer theresource, and costs), and perform an optimal search algorithm considering theclient’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 thepartnership: establishing procedures, normalizing processes, interoperability,responsibilities, and commitments. While selection means to check availabilityand to find the best resources that meet the requirements, integration meanseffective allocation and formalization of the partnership.

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

1. Clients (the client of the Market of Resources)—those looking for aproduct, components, or operations to integrate an A/V E, according toan A/V E project.Information considered relevant consists on information about the prod-uct to be produced and its process plan, the negotiation parameters,project constraints, etc.

2. Agile/Virtual Enterprise—the set of integrated resources providers withrespect to the A/V E project who are able to answer to a marketopportunity. The A/V E created/reconfigured is itself a complex entity,made up of the client (A/V E owner) and the resources integrated toprovide 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 theproject constraints. Information considered relevant consists of informa-tion concerning the network, dependencies between the nodes, thecontract and commitments between the integrated resources and theclient, and all the details, in order to manage the process.

42 Cunha & Putnik


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

3. Resources Providers (enterprises registered in the Market of Resourcesto specifically provide resources / add value to products or processes)—resources providers are mapped into resources (Products and Opera-tions). Information considered relevant consists of information about theenterprise, its structure, products/operations provided, provision condi-tions, negotiation details. The same enterprise can be present in theMarket offering several resources.

4. Products (we are including services in product entity, so when referringproducts, we are referring to products and services)—resources provid-ers are mapped into components or parts of products. Informationconsidered relevant: data about conditions under which resources provid-ers provide each product or part, negotiation details, availability.

5. Operations associated to each component of a product; elementaryoperations performed by resources providers while executing an opera-tion on a specific product or part—resources providers are mapped intooperations, and operations are mapped into products.Information considered relevant: information concerning conditions underwhich resources providers provide each operation, negotiation details,information to allow further production control and evaluation.



Using a simplified representation of an Entity-Relationship Diagram2

(Chen, 1976), Figure 4 shows how the five entities described above are inter-related.

The information associated with the referred entities can be represented atseveral 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 (compo-nents 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 orproducing a product or component. Resource providers are mapped intoproducts and into operations.

• Products and operations that resources providers can perform arepresented in meaningful groups or sets called patterns for client search(“Client Search Constraints,” in Figure 2).

BUSINESS ALIGNMENT IN AGILE/VIRTUALENTERPRISE INTEGRATION

Business alignment in A/V E integration is complex and challenging, asalignment has to incorporate immaterial components in the relationships withinthe integration of resources. It is not just an internal strategy but a set ofintegrated and inter-related integration strategies that must be verified so thatthe 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 supportingenvironments requires the definition of business alignment strategies. If organi-zations respond to market requirements (end-users requirements), traducingthese requirements into a project of A/V E and pushing them along the processof selection and integration of resources providers under the format of anA/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 OFRESOURCES is the environment enabler for efficiency and effectiveness in theintegration process and, thus, supports the virtual enterprise alignment withbusiness.

44 Cunha & Putnik


Strategic alignment between business and AV/ E integration involves a mixof dependencies between market requirements, product requirements andresource providers requirements (process requirements must also be consid-ered, but we opted to include them in resources requirements).

The MARKET OF RESOURCES must assure to the client the alignmentbetween the market and the resources providers selected and integrated in theA/V E. Also, the Market of Resources must try to assure that the client hascorrectly captured the market requirements, which is a task performed by abroker (the Market of Resources offers a knowledge-based service). Thisway, the process must align the client with the market (business) and then alignthe resources (by the selection and integration processes) with the client andwith business.

Integrating an A/V E corresponds to aligning the five entities discussed inthe previous section with business. The Market of Resources is expected toguide the client in aligning the A/V E with the market opportunity. The processconsists of pushing the market requirements downstream.

The proposed referential for alignment must consider:

1. Market Alignment (alignment with customer or market requirements)Before the creation of the A/V E, the client traduces the customerrequirements into product specifications and projects the system ofresources for the A/V E. The A/V E project consists of the genericidentification of the characteristics of the resources that will accomplishthe execution of the process plan to the required product, that is, theprocess plan that will allow the production of the product verifying themarket requirements.

2. Product/Service and Operations AlignmentAligning the product with the specifications, that is, with the marketrequirements. Operations provided by the selected resource providersmust conduct to the desired product.

3. Resources Providers AlignmentAligning resources providers with the market requirements representswhich characteristics resources providers must assure, so that the clientcan trust that the selected set of enterprises is able to be integrated into anA/V E able to produce the product that meets the requirements previouslycaptured by the client (market requirements).Resources providers requirements include economical, managerial, andorganizational aspects.



These three sets of requirements for alignment are grouped in Table 2 anddetailed in the following sections. Tables 3 to 5 present the items on thechecklist of Table 2, followed by operational analysis questions. They are notexhaustive listings, but the main aspects are included.

The aspects of Product/Service and Operations Alignment and ResourcesProviders Alignment are implemented through the Algorithm for Search overthe Focused Domain (see Figures 2 and 3). The Algorithm for OptimalSearch (see Figure 3) checks the other aspects of Resources ProvidersAlignment that are not verified by the Algorithm for Search over the FocusedDomain.

Market AlignmentThe client must have a correct capture of the business opportunity and

must traduce it either into product /service requirements or into the A/V Eproject accordingly to the rules /instructions provided by the Market ofResources to start the process. The aim of the A/V E must be clear andconsistent with the application of the “client search constraints” and “negotia-tion parameters,” defined by the Market of Resources, input flows of processA.2. in Figure 1. The product /service and resources alignment will determinethe 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 marketrequirements. The definition of the requirements for the resources providers

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 − Quality − Quick Response: the

desired product, on time, in the required conditions

− Transparency and legality

− Trust and confidence − Correct capture of

market /customer requirements

− Cost − Quality − Integrability − Interoperability

between different providers

− Standards

− Availability − Ability to meet Product

/Service /Operation requirements

− Certification − Dependability − Flexibility − Responsiveness

− Competitiveness and Proactiveness

− Past information of previous A/V E integrations

46 Cunha & Putnik


alignment is basilar to the success of the A/V E in responding to the market, butis not enough. Product and resources alignment should also be assured so thatthe final product is able to meet the market requirements.

The client must show a transparency and legality image to the integratedresources and, at the same time, win trust and confidence from the market.These aspects must drive all his behavior. Before proposing the optimalcombination of resources to be integrated in the client’s project of A/V E, theservice provided by the Market of Resources must assure that the require-ments for Market Alignment in Table 3 are met by the client, in order tominimize the risk of failure.

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?



Table 4. Product/Service/Operations Alignment


Cost - 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?

- 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?

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

- 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 AlignmentSome 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 providersof resources, standards. Technology is an enabler but can also represent abarrier.

Table 4 lists the main analysis questions needed to meet the requirementsfor 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 providingthe service /performing the operation; quality adjusted to the price; flexibility(intra-flexibility); and historical information of previous A/V E integration. Thislast item of information (an intangible element) must be kept by the Market ofResources and is the result of the management/evaluation process that theMarket performs during an A/V E operation, quantified under specific perfor-mance metrics.

48 Cunha & Putnik


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

CONCLUSION AND FUTURE TRENDSThis chapter intended to provide a better understanding of the environment

supporting the Agile/Virtual Enterprise integration process and to contribute tothe 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 areferential for alignment and its operational components to assure the alignmentbetween business requirements and the integration of resources providers in anA/V E.

Table 5. Resources providers alignment


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.



The development of environments to support the virtual enterprise model,in general, are of increasing importance, and the Market of Resources tendsto be a contribution in that direction. However, it is an innovative approachwhen compared with the other developments that literature provides, which arenot as integrated as the Market of Resources and cover only aspects of thevirtual enterprise life cycle, in a less dynamic approach to the virtual enterpriseconcept. The service provided by the Market of Resources is able to cover avirtual enterprises’ extended life cycle (the life cycle corresponding to a highlydynamic virtual enterprise model), understood as integrating the A/V E design,the contractualization with a market of resources, and managing reconfigurabilityand business alignment (Cunha, Putnik, & Ávila, 2004).

The introduction of the proposed alignment strategies requires the supportof operational procedures and the development of tools, namely the develop-ment of the expert systems appearing as mechanisms in the IDEF diagramsunder the designation of algorithms for search. A more detailed specification ofthe model, the construction of a demonstrator for the service, and thedevelopment of management procedures are now being researched, in orderto 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).

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ENDNOTES1 IDEF stands for ICAM DEFinition methodology (ICAM—Integrated

Computer-Aided Manufacturing). IDEF diagrams illustrate the structuralrelations 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 themechanisms for the transformation (the bottom arrows of a process) andconstrained by control information or conditions under which thetransformation occurs (the top arrows).

2 In the representation, squares represent the entities, the arrows indicatethe relationships, and the respective line ends.

E-Government: The Future of Red Tape 55


Chapter III

E-Government:The Future of Red Tape

Vincent HomburgErasmus University Rotterdam, The Netherlands

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

56 Homburg


INTRODUCTIONFor more than a century, western public bureaucracies have been con-

structed and constrained by a paradigm known as “traditional public adminis-tration.” As noted by Wilson with respect to the American administration in theend of the 19th century, traditional public administration is a reaction “… thepoisonous atmosphere of [city] government, the crooked secrets of stateadministration, the confusion, sinecurism, and corruption ever again discoveredin the bureaux at Washington” (Wilson, 1887, p. 206). In order to curtail theinfluence and power of the tiny cogs in the wheels of public sector organizations(Bovens & Zouridis, 2002) and, in general, to map ways to restrict personal-istic, patrimonial, and patriarchal modes of governance, the ideal type ofbureaucracy has its value. However, actual manifestations of bureaucracy alsobear a number of well-known drawbacks with them, such as diminishedperformance, cumbersome operations, lack of citizen orientation, and otherphenomena usually referred to as “red tape.” Therefore, the classic publicadministration paradigm has been criticized since the 1970s. With the expan-sion of the scope of markets, citizens increasingly began to think more ascustomers 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 gov-ernment” played an important role (Hammer, 1990; Osborne & Gaebler,1992). Guy Peters (1996) has identified four basic, dominant patterns in newpublic management practices (1996):

• market government (emphasizing “pay for performance”);• participatory government (emphasizing empowerment and flatter organi-

zations), 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 anotion of departure from the classic public administration paradigm. Thischange of view on how governments should work has been fueled by a new kindof rationalization or reform: e-government (or, in general, the use of Internettechnologies). Initially, it was focused on improving and reengineering internalprocesses, but later it also included the redesign of external relationships inorder to improve public administration’s accessibility and quality of serviceprovision. E-government has a techno-optimistic, analytical flavor and seems



to reinforce the effects new public management has on the organization andprocesses of public sector organizations throughout the industrialized world.For example, in the American National Performance Review, administrativerestructuring by means of applying information and communication technolo-gies (ICTs) was aimed at creating customer-focused public bureaucracies(Fountain, 2001). Fountain stated that the use of modern information technolo-gies, like new public management techniques, affects the chief characteristicsof the classic public administration paradigm and, therefore, they reshape theproduction, coordination, control, and direction processes that take placewithin the public sector (Fountain, 2002). Some even foresee a Web-enabledgovernment (Dunleavy & Margetts, 2000). Symonds (2000) projected that“[r]einventing government, a fashionable but premature idea a decade ago, isat last being made possible by the Internet” (p. 5). Furthermore, Bellamy andTaylor (1998) claim that “[t]he patterns of organizational change which are socommonly associated with the information age are remarkably consistent withthe patterns associated with current forms of managerialism in public adminis-tration” ( p. 37; see also van Duivenboden & Lips, 2001; Heeks, 2001).

In conclusion, it can be stated that governments throughout the industrial-ized world are implementing reforms, both managerial and technological innature. 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 ismeant or what the underlying information strategy actually is. Therefore, in thischapter, the concept of “e-government” is explored as a managerial, techno-logical, and institutional innovation in the public sector.

This chapter is structured as follows. In the next section, the concept of e-government is defined. Then, the democratic antecedents of e-government arediscussed, whereas the “rhetoric” of national e-government policies is revealedin the following section. The next section deals with implementation issues andinformation resource management challenges of e-government initiatives.,followed by presentation of conclusions.

E-GOVERNMENT DEFINEDThe Dutch municipality of Dordrecht offers various services on its award-

winning Web site. The Web site offers opportunities to request (and pay forelectronically) permits, download forms and brochures, make appointmentswith civil servants, track-and-trace requests, request e-mail notification ofcouncil discussion of a specific topic. The site also occasionally hosts interac-

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tive sessions with the mayor or with city administrators to discuss topics likeurban 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 onehand and citizens and corporations on the other hand. The interaction consistsof service delivery but also of electronic deliberation. Furthermore, it addressescitizens as well as corporations (for whom a dedicated bar on the Web site hasbeen created). For specific services, cross-organizational information ex-changes (for example, with the Chamber of Commerce) have been realized.

Many writings on e-government refer to comparable initiatives to describeand delineate the concept of e-government. Actually defining e-government isnot an easy task—the concept itself seems to be based more on pragmaticexperiences and visions (European Commission, 1996, 1997, 2000; NationalAudit Office, 2002; National Performance Review, 2000) and managementconsultancy (inspired by e-commerce experiences) than on a solid theoreticalview. In terms of academic knowledge, there is an abundance of empiricalresearch that is focused on the effects of ICT on the functioning of publicadministration (Danziger & Viborg Andersen, 2002; Snellen & van der Donk,1998), but a solid theoretical base seems to be lacking (exceptions includeBekkers, 1998a; Gazendam, 1993; and Homburg, 1999). In practice, nowa-days, the emphasis of ICT application in various countries’ public administra-tions is on service delivery, in most cases by using the Internet. A definition ofe-government therefore could refer to the production and delivery of govern-ment services through ICT applications (Moon, 2002). As such, a definitionfocusing on service delivery does not differ significantly from “e-commerce forgovernments.” Critics (Chadwick & May, 2001; Grönlund, 2003), however,state that such a view does not take the specific role of government (as opposedto private sector companies) into account. And, referring to the example of themunicipality of Dordrecht mentioned above, only a part of the interactions areincluded in this definition.

For example, at first sight, it may seem that the target population of e-government initiatives is citizens, just as customers are the target population ofe-commerce initiatives. This is partly true, but if one takes a closer look it canbe seen that the citizen is a much more multidimensional concept than acustomer in an e-commerce transaction. It is possible to distinguish many rolescitizens (as primary stakeholders) can play in relationship to governments:customers of public services and goods, voters, taxpayers, subjects of regula-tion, 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 addressescitizens and businesses in their roles of customers. In practice, this type oftentakes the form of citizens receiving information, contacting civil servants and/or performing transactions using a Web site as a one-shop-no-stop deliverychannel. Fountain (2001) provides the example of an International Trade Datasystem that provides businesses with licenses and permits that are requiredunder international and federal legislation. In practice, such a form of servicedelivery brings along a need for G2G interaction because tens of agencies areinvolved in the execution of policies regarding international trade, safety, healthinspection, and so forth. Such a type of e-government necessitates the designand implementation of Web services and other means of electronic communi-cation and, more urgently, the coordination and information exchange betweenvarious, often compartmentalized, public bureaucracies. In the United King-dom, the result of this kind of coordination is named “joined-up government.”

Another form is G2C interaction aimed at voters. This type of interactionis often referred to as online voting. At this moment, online voting takes placein Australia (Australian Capital Territory), Brazil, Canada, Germany(Niedersachsen), New Zealand, and the United States (California), amongother places (Aarts, Leenes, & Svensson, 2001). In many cases, e-votingoccurs alongside postal voting and regular voting.

A third form is G2C interaction with “citoyens” (Moon, 2002). This typeof interaction often takes place in discussion forums and is aimed at participa-tion of citizens, interest groups, and other stakeholders in the policy anddecision-making process about, for instance, urban and rural planning projectslike the reconstruction of a neighborhood, a shopping mall, or the planning ofa rail road. Grönland (2003) mentions examples of local electronic forums inthe Swedish city of Bollnäs, where citizens engage in electronic discussions withthe local politicians. And, apart from these forms, which are all targeted at pro-active, responsible and demanding citizens, there are some services that targetthe less benevolent aspects of citizens. E-government services can also be usedfor criminal prosecution or enforcement of legislation. Sometimes, this occursin concurrence with or under the heading of service delivery. For example, inmany countries, internal revenue services (tax agencies) are front-runners in theapplication of e-government. One of the more important motives for taxagencies to use e-government services is to promote compliance of taxpayersby supplying them with accurate and more compelling information.

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

• the classic public administration paradigm, because of its focus on citizensin various roles and other means of (inter)organizational coordination thanon a functionally differentiated form; and

• e-commerce initiatives because of the multifaceted nature of the citizensas customers, Good Citizens (“citoyens”), voters, and subordinates of thestate.

In this chapter, we focus on the communicative and reforming aspects ofe-government initiatives. We therefore define e-government as the use ofinformation and communication technologies, especially Internet and Webtechnology, by a public organization to support or redefine the existing and/orfuture relations with “stakeholders” in the internal and external environment inorder to create added value. In this definition, stakeholders can refer to othergovernments (for example, to make one-stop shopping possible), but also tocitizens 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 redesign-ing relationships with stakeholders in the environment, it is not immediately clearwhat kind of direction the redesign should take. In fact, neither the e-government nor the new public management literature is very consistent in thisrespect (Gruening, 2001; Homburg, 2004). And in fact, various trajectoriesare to be observed in various countries (OECD, 2003).

The kind of direction is inherently entwined with the view on democracyone has. Typically, two models can be discerned (Chadwick & May, 2001;Homburg, 2004). A first model can be labeled as consumer democracy. Otherauthors refer to this trajectory as digital new public management (Dunleavy &Margetts, 2000) and a “managerial model” (Chadwick & May, 2001). Ingeneral, this trajectory emphasizes service delivery to firms and citizens in theirroles of consumers of services, purely within the executive realm. In order todo this, executive organizations may deliver services proactively through



profiling their clients. Accountability is sought in reporting on performance ofthe service delivery, preferably directly to the users of services (for example,by querying user panels). In a way, the consumers’ preferences penetrateexecutive organizations (Bekkers, 1998a) by “magnetizing” the orientation ofthe executive organization in terms of both service delivery and accountability.Underlying information processes focus on generating performance indicatorsin terms of costs and quality of services for accountability purposes. As statedby Chadwick and May (2001),

A key claim is that ICTs will allow for more accurately targetedcommunication of citizen requests and faster responses. Long-estab-lished state objectives […] can be furthered through support andfacilitation of the information economy and the enhancement of agen-cies such as the police, the armed forces, the prison service and thecourts (p.6).

A central tenet of this model of democracy is that government shoulddeliver public services to citizens; the better the services match the preferencesof citizens, the more democratic the government is.

A second model is concerned with mediating the interaction betweencitizen and government. It is referred to as consultation (see also Chadwick& May, 2001), and it borrows slightly from new public management the notionof participatory government and especially leans on specific participationservices as exemplified in the e-government literature. Typical examples that fitwithin this trajectory are advisory referendums, e-voting, and electronic townmeetings. This model builds upon the assumption that knowledge that isrequired for policy formulation and policy execution is discursive and mal-leable. Furthermore, the model assumes that knowledge emerges from interac-tion between societal groups. In this trajectory, electronic discussion environ-ments are the basis for transforming social capital into policies. This trajectoryborrows slightly from new public management the notion of participation andbreaking down governments, but especially from e-government’s focus onparticipatory services. Accountability focuses on process and is targeteddirectly at citizens in their role of “citoyens” or Good Citizens.

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E-GOVERNMENT INITIATIVESIN VARIOUS COUNTRIES

IntroductionIf 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 bettergovernment 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 programsregarding e-government have been formulated, and to look for ‘rules’, vision,and sources of inspiration that guide the behavior and interactions of individu-als, groups, and organizations in and around public administration. This isespecially important because, as has been mentioned before, the bulk ofinspiration of many e-government initiatives in the industrialized world can befound in policy documents and consulting reports, rather than in theoreticalconcepts. In essence, the question to be answered is: what is the rhetoric of e-government in various national e-government policies? The answer is dealt within the next two subsections.

United StatesIn 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 ve-hicles to reengineering government. In fact, application of ICTs was at the heartof the New Public Management-inspired National Performance Review of1993. The line of thinking was developed further in the first decade of the newmillennium (National Audit Office, 2002; National Performance Review,2000). In fact, the Access America program can be regarded as an update ofthe National Performance Review (NPR), with the noteworthy addition of theInternet (which, of course, wasn’t mentioned in the first NPR reports).

In the national policy documents, there is a strong belief that ICTs ingeneral 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” therelationship between government and citizens.

The main focus is on reengineering service delivery by creating virtualagencies 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 severalagencies to have the service delivered to them.



In 1999, it was clear that the progress with respect to the creation of Web-enabled virtual agencies was slower than expected. As a reaction, the FirstGovportal was introduced in 2000. FirstGov offers a rather all-encompassingscheme of federal public services, and it is considered to be the nearest anygovernment has come to presenting an easily navigatable interface to publicservices, with an emphasis on servicing individual consumers of public services(Chadwick & May, 2001).

On the whole, federal policies regarding e-government in the United Statesclearly emphasize service delivery (and thus emphasize a new public manage-ment- and a consumer-democracy orientation) and do not focus on participa-tory arrangements.

European E-Government InitiativesEuropean 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, namelythe 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 theHigh-Level Group on the Information Society (Bangemann Commission). Ingeneral, policies are aimed at fostering the advantages of the InformationSociety. In general, there is no attention towards either service delivery in aconsumer-democratic model, or to participation in a participative conceptionof democracy. In national policy programs, however, attention is in fact givento these aspects.

For example, in the United Kingdom (UK) documents ModernisingGovernment (Minister for the Cabinet Office, 1999) and E-Government: AStrategic Framework for Public Services in the Information Age (Ministerfor the Cabinet Office, 2000), e-government (defined as information agegovernment) is an aspect of modernizing government that has only onepurpose—to make life better for citizens and business. The emphasis lies on theimprovement of electronic service delivery in such a way that it reflects real livesand delivers what people really want, and on a more effective use of theGovernment’s information resources. In order to accomplish these goals, allparts of government have to work better together— joined-up government isneeded. In the document, attention to an ICT-strategy that will establish cross-government coordination machinery and frameworks on such issues as digitalsignatures, smart cards, Web sites, and call centers is requested.

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In the eyes of the UK government, it is important to develop a corporateICT strategy for government that encourages the convergence and intercon-nection of ICT systems of individual public service agencies. In such a strategy,key objectives are formulated, frameworks for technologies that requirestronger coordination are identified, a Government Secure Intranet will bedeveloped, and attention is given to the protection of privacy and other humanrights while, at the same time, providing a clear basis for sharing data betweendepartments. Effective implementation requires a focus on delivering definedbusiness objectives with measurable benefits, strong leadership, clear account-ability, improved project management, and attention to risk management.

The UK vision of the citizens expresses the idea that people are exercisingchoice and demanding higher quality, not only in the private sector but also thepublic sector. This implies a genuine partnership between those providingservices and those using them. Moreover, it implies that government mustconsult with and listen to citizens instead of independently imposing solutions.Also, it states that government should not only serve those who embrace thenew technology. The information age should increase the choices of howcitizens and businesses receive services, not restrict it. The Internet is just oneof the service delivery channels citizens can choose. In the document E-Government: A Strategic Framework for Public Services in the Informa-tion Age, e-government is primarily seen as the development of a new set ofservice delivery channels for citizens and business.

In the Danish vision of e-government From Vision to Action: TheInformation Society 2000, (Ministry of Research and Information Technol-ogy, 1995), e-government is embedded in the idea of the revolution of theinformation society—a worldwide short circuit of time, space, people, andprocesses. In relation to the functioning of the public sector, ICT should support therealization of a number of special values. ICT should support the free access toinformation and exchange of information, support democracy and give the indi-vidual the opportunity to exercise his influence, support personal development in hisworking situation and in his leisure time, support openness in the public sector bymaking it more transparent, contribute to the promotion of efficiency and rational-ization in public institutions, enable them to provide better services, and ICT shouldbe used to sustain the disadvantaged of society. A subsequent document TowardsE-Government: Vision and Strategy for the Public Sector in Denmark (DigitalTask Force, 2002), stated that e-government should systematically use digitaltechnologies to introduce new ways of thinking and transforming organizations andwork processes for improving the quality of service and efficiency.



In the Danish strategy, collaboration between the private and public sectoris seen as a necessary condition for Denmark’s transition toward the Info-society. The public sector should carry its share of the work by realizing the ICTapplications. The focus is on implementing a relatively small number of projectswith realistic goals and clear deadlines. The emphasis is on the realization of acomprehensive and interconnected electronic service network for the publicsector.

In the Danish vision of the position of the citizen, attention is paid to theincreased 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 newtechnology, who know the possibilities of the Info society and who are able tolearn and to develop the necessary qualifications. Attention is also paid to therisk of “Big Brother.” Because ICT is a natural element of everyday life, it ispossibly placing individual citizens under central surveillance. The Danishreport proposes the use of ICT to support the personal development of thecitizen and to give individuals the opportunity to exercise their influence toharness this threat. In The Netherlands, the e-government goals, as formulatedin Action Program for Electronic Government (Ministry of the Interior andKingdom Relationships, 1999) and The Digital Delta (Ministerie vanEconomische Zaken, 1999), are increasing the accessibility of government,improving the quality of public services, and enhancing the internal efficiency ofgovernment. E-government requires the Dutch government to take an activefocus on its role as producer of public services. In a subsequent documentContract with the Future (Ministry of the Interior and Kingdom Relation-ships, 1999), the scope of e-government is broadened—the political partici-pation of citizens is also mentioned as an area that deserves stimulation.

In the Dutch view on electronic government, the emphasis lies primarily onthe establishment of virtual services counters that are theme oriented, such asliving and building, care and welfare, companies, and on the reduction ofadministrative 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 beshared by several parties are stored.

In The Netherlands, the emphasis is on the citizen as a consumer ofgovernment services. In Contract with the Future, a relationship between therise of the empowered and intelligent citizens and the process of individualiza-tion is identified. This new citizen demands a government that is responsive to

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

Reflection: Conceptions, Barriers, and Challenges ofE-Government

From the various national policies on e-government, it is possible toconstruct the “rhetoric” of technology policy in terms of observed risks,challenges to be tackled, and view on the nature of the redesign of therelationships between government and its surrounding stakeholders.

A first striking observation is that a dominant type of redesign of informa-tion relationships takes place in the context of a new public management typeof orientation. There seems to be an emphasis on service delivery and a focuson customers of public services. As such, in many policy documents (notablythe American, British, and, to a lesser extent, the Danish and Dutch), the viewof the citizen as “consumer” takes preference over a view of citizen as“citoyen.” In our interpretation, this especially has to do with an implicit viewon democracy and the normative roots of administrative reforms.

A second observation is that the primary obstacle for service orientationis the absence of “joined-up government” (United Kingdom), virtual agencies(United States), or, in general, cooperative structures between various agen-cies that enable information exchange and joint service delivery. As such, thisis not a stunning conclusion, and it is quite compatible with the Red Tapemetaphor. In Modernizing Government, the UK government gives a numberof reasons why the UK government and governments in other countries arelagging behind in their quality of service delivery. One reason is that organiza-tions consider their own interests, and public services are organized around theneeds of risk-avoiding providers rather than the users, who have no seriousmeans to express their desires and interests regarding the quality of servicedelivery. Also, an assessment was made of the barriers that obstruct informa-tion age government. The most important barrier is that government hasfollowed a largely decentralized approach to IT development. The result in theUK is that government is unable to maximize the benefits of IT for governmentas a whole.

It is noteworthy to state that, in various countries, executive institutions likeInternal Revenue Services are experimenting with personalized Web services.In some cases, however, the multifaceted character of government makes ithard 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 notonly as public service provider, but also as enforcer of tax laws. As an enforcerof tax legislation, the agency does not want to increase administrative transpar-ency too much because it would enable and probably promote calculativebehavior of citizens. So, the IRS as public service provider might be willing tooffer digitalized services tailored to the needs of citizens, but the IRS asenforcer is, for understandable reasons, not willing to offer personalizedservices.

Third, it is of interest to take notice of the methods and instruments that areproposed to make virtual organizations or joined up government possible.Especially in the U.S. and the UK, there is an emphasis on nation-wide e-government strategies, in which standardization is promoted. In the Danish andDutch policy documents, on the contrary, local initiatives and even publicprivate partnerships are encouraged. In the Danish policies, the public sector(and Danish companies) is unable to adequately redefine working routines anddevelop new IT-based products. But apart from capabilities, such an approachis rejected because a view on the Information Society as a centralist, surveil-lance society which threatens privacy is rejected. Obviously, these nationalpolicies take a more pragmatic and bottom-up approach, whereas the Anglo-Saxon approach seems to emphasize a centralized perspective.

And fourth, when analyzing the policies that are aimed at redesigning therelationship between government and citizens, it is worth looking at the way thepolar ends of the relationships are viewed. From the first remark, it is clear thata dominant view of government in the reform is that of a primarily service-providing, preferably seamless web of agencies. On the other polar end, thereis the citizen. Most noticeable in the Dutch case is the view of the citizen as anintelligent consumer who is willing and able to make choices according toindividual (rather than political) preferences. This view is more or less presentin the UK and U.S. policy documents. The Danish line of thinking marks adifferent path here, as it is also concerned with questions of the Digital Divide.These aspects are almost completely ignored in the Anglo-Saxon nationalpolicy documents.

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CHALLENGES OF THE IMPLEMENTATIONOF E-GOVERNMENT INITIATIVES

Information Resource Management Challenges ofE-Government Initiatives

In the previous section, the information strategies and contexts of actual e-government initiatives have been described. It should be clear now that e-government initiatives have different emphases in various national settings. Inorder to eventually realize e-government, the strategies, goals, objectives, andvisions have to be implemented in actual e-government systems.

The implementation of e-government initiatives tends to raise complexchallenges 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 innova-tion, but also organizational and even institutional transformation (Meijer &Zouridis, 2004). For instance, electronic service delivery may in practicequestion historically grown practices concerning territorial foundations ofgovernments, discretionary power of bureaucrats, foundations of bureaucracy,and the structure of policy-making processes. For information resourcemanagement, this implies increased complexity of processes and sometimes-unexpected resistance from political levels.

Second, many e-government interactions between governments and citi-zens (for example, the delivery of public services) result from the actualexecution of legislation. Changes in legislation may occur frequently (Gazendam,1993), thus resulting in a continuous need to adjust and modify not only actualinformation systems, but also organizational procedures and structures in-volved in the delivery of services. In the e-government practice, procedures todraft or revise legislation and to design and implement e-government servicesoften happen at the same time (van Venrooij, 2002), thus resulting in acontinuous need to coordinate and adjust both trajectories of change. Ingeneral, legal requirements are by no means a stable design requirement.

Third, and probably foremost, many e-government initiatives do not takeplace at a relatively simple organizational level. In practice, developing elec-tronic public service delivery, especially the integration of various back offices,involves various agencies, and many e-government initiatives require at least asectoral (i.e., social services sector, tax and customs sector, environmentalsector) rather than an organizational perspective. This necessitates all kinds ofinter-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 e-government services, data models, procedures, and organizational require-ments have to be coordinated and integrated. This requires the active involve-ment and cooperation of a diverse set of stakeholders. A very importantcompetence for e-government information managers, therefore, is what isnowadays called “stakeholder management” (van Venrooij, 2002). Withstakeholder management (sometimes referred to as “process management,” asby Homburg and Bekkers [2002]), reference is made to the actual managementof decision-making processes regarding the development and use of inter-organizational information systems, in terms of the governance of cooperativearrangements. So, not only does the content of cooperative arrangements (datamodels, procedural arrangements, and information requirements) require at-tention, but the process of cooperation, like the generation of trust betweenvarious agencies (Allen, Colligan, Finnie, & Kern, 2000), the selection andmobilization of actors in various phases of the decision making and design, andthe design and agreement of procedures to settle disputes between agenciesalso have to be dealt with.

In practice, this goes beyond a project management approach. Projectmanagement approaches tend to focus on content (data models, procedures,design requirements) and seem to have severe difficulty dealing with processualissues of stakeholder involvement, varying objectives, and, over time, changinginterests of stakeholders that are typical of e-government initiatives. It istherefore not surprising that in many e-government initiatives in practice, so-called “battles of the back offices” (Homburg & Bekkers, 2002; Kraemer,Dickhoven, Tiernet, & King, 1987) are taking place.

Dilemmas in Implementing E-Government InitiativesInformation resource managers face various dilemmas in the actual imple-

mentation of e-government initiatives due to the complex nature of e-govern-ment initiatives (i.e., the involvement of a large variety of stakeholders fromvarious agencies and the continuously changing design requirements stemmingfrom newly drafted or revised legislation) (van Venrooij, 2002).

First, there is a tension between design requirements stemming from aclassic bureaucratic focus on equity before the law, legislative quality, and soforth on the one hand, and design requirements resulting from a focus on citizensor customers of public sector organizations on the other. In practice, theserequirements may conflict with one another, and various stakeholders involvedin the design and development of e-government services may adhere to variousvalues involved in e-government initiatives. This requires careful consideration,

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balancing requirements, and stakeholder management skills apart from projectmanagement skills.

Second, there is a tension between matters of privacy and customerorientation. Customer orientation may require extensive exchange of informa-tion between various agencies, for example, in order to prevent agencies fromrepeatedly asking citizens to submit information they have submitted manytimes in the past to other agencies. However, especially in the context of publicservice delivery, the ability of public sector agencies to draft a rather completeand integral picture of citizens raises issues of the protection of privacy.

Therefore, the values of protection of privacy and adequate servicedelivery have to be confronted almost continuously when designing e-govern-ment services.

Third, there is a tension between a redistribution of tasks and responsibili-ties for the sake of a better-informed, responsive, and citizen-oriented elec-tronic government on the one hand, and the need to safeguard “checks andbalances” in government on the other hand. This tension is most notable injudicial systems in the context of penal law enforcement. The exchange ofinformation about subjects between, for example, police offices and magis-trates might serve the efficiency and, to some degree, customer orientation ofpenal law enforcement; however, a basic value in penal law enforcement inWestern countries is the separation of powers (“checks and balances”)between judicial and executive branches. This value of separation of powersthus imposes restrictions on the technologically feasible information exchangein back offices of penal law enforcement.

Pace of Change in E-Government ImplementationIn the introduction of this chapter, we mentioned that many e-government

initiatives are inspired by e-commerce experiences. Characteristic of many e-commerce initiatives is a commercial market imperative, embodied in the rise(and sometimes, quick fall) of innovative enterprises, often start-ups andradical organizational transformation of service-delivery processes.

Given the challenges and dilemmas involved in setting up, designing, anddeveloping e-government services, it may not come as a surprise that govern-ment information resource managers and e-government executives—becauseof the “checks and balances” of government apparatus—cannot easily start upinnovative enterprises or programs to capture opportunities for improving thevalue provided by governments to its citizens. Possibilities for radical redesignand transformation cannot be denied, but, in many cases, e-governmentimplementations are characterized by incrementalism rather than radical change.



The message here is that this incrementalism can be understood as a manifes-tation of the continuous balancing of diverse and sometimes contradictorydesign requirements, rather than as a result of sometimes-claimed structuralincompetence of government and a continuous process of waxing and waningthat some authors attribute to public sector operations (for a discussion, referto Homburg, 1999, and Homburg & Bekkers, 2002).

For the actual management of e-government, these challenges and dilem-mas underline the importance of stakeholder-management and process- man-agement techniques and competences, and the ability to confront and deal withcomplex and sometimes even contradictory design requirements. Inherent inthis is that the pace of change in e-government is often lower than might beexpected from e-commerce experiences.

CONCLUSIONOver the past ten or so years, governments throughout the world have

adopted e-government initiatives to redesign their relationships with citizensand corporations, and, in the process, they have also reformed themselves tobe able to cope with the requirements posed by redesigning relations. In thischapter, we have opted for a rather broad view on these redesigns (and thuson e-government) so that in principle it includes e-voting (where the citizen isaddressed as voter), service delivery (where citizens and corporations areaddressed as consumers), and electronic deliberative meetings (where citizensare addressed as Good Citizens or “citoyens”).

Although it is sometimes claimed that e-government is the public sectormirror image of e-commerce, we have argued that, in fact, e-government is farmore complex, comes in a variety of manifestations, and raises painstakingtechnological, organizational, and institutional issues.

At the roots of e-government initiatives, not only technological choiceshave 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 currentmodel of democracy play decisive roles in the way in which e-governments takeshape and should be managed. Moreover, the foundations of governments, thevariety of roles government agencies can play, and the existence of separationof powers (“checks and balances”) and juridical basis for service delivery raiseintriguing information resource management dilemmas and issues with respectto the way services can be rendered. For example, it has been noted thatpossibilities for personalized services by national Internal Revenue Services aresometimes hampered by the fact that government agencies are both service

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providers and law enforcers at the same time. And actual technologicallyfeasible possibilities for information exchanges in the back office of penal lawenforcement are restricted by separation of powers between judicial andexecutive branches in penal law enforcement.

It has also been noted that normative choices with respect to the envisagedmanifestation of electronic government services tend to vary, and in variousnational and federal policies, different choices are being made. Predominantly,throughout various industrialized countries, there seems to be an implicit choicefor the consumer democratic model as the funding principle of e-governmenttypes of reforms. However, as we have argued above, this may very well stillresult in conflicting design requirements stemming from normative grounds (forexample, “checks and balances”) for government-citizen interaction, and thusin a need to confront and deal with conflicting values and norms in actual e-government implementations.

For the information resource management of e-government initiatives, thismeans that the development and design of especially the back office of e-government systems both consists of substantive issues (so, the developmentand refinement of data models, organizational procedures, and so forth) andprocessual issues (the design of decision-making procedures in which actorswith varying interests interact with one another, the generation of trust betweenactors, the design and effectuation of procedures to settle disputes, and soforth). However, overall, e-government initiatives tend to be bound by legal andinstitutional boundaries, at least more than comparable e-commerce counter-parts. Thus, designing and implementing e-government, again most likely morethan 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 proce-dures of governments are.

REFERENCESAarts, 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 inter-

organizational information systems: The case of the electronic tradingcommunity TransLease. Information Systems Journal, 10(1), 21-40.

Bekkers, V. J. J. M. (1998a). Grenzeloze overheid. Over informatiseringen grensveranderingen in het openbaar bestuur. Alphen aan den Rijn:Samsom.



Bekkers, V. J. J. M. (1998b). Wiring public organizations and changingorganizational 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 system-level bureaucracy: How information and communication technology istransforming administrative discretion and constitutional control. PublicAdministration Review, 62(2), 174-184.

Chadwick, A. & May, C. (2001). Interaction between states and citizensin the age of the Internet: ‘E-government’ in the United States,Britain and the European Union. Paper presented at the AmericanPolitical Science Association (APSA), September 2, San Francisco, CA.

Danziger, J. N. & Viborg Andersen, K. (2002). Impacts of informationtechnology on public administration: An analysis of empirical researchfrom the golden age of transformation. International Journal of PublicAdministration, 25(5), 591-627.

Digital Task Force. (2002). Towards e-government: Vision and strategy forthe public sector in Denmark. Copenhagen: Projekt Digital ForvaltningDen 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. Paperpresented at the Annual Conference of the American Political ScienceAssociation, Washington, D.C., September 4.

European Commission. (1996). Working and living in the informationsociety: People first (Green paper). Brussels: European Commission,Directorate General V Employment, Industrial Relations and SocialAffairs.

European Commission. (1997). Building the European information societyfor all of us. Brussels: European Commission, Directorate General VEmployment, Industrial Relations and Social Affairs.

European Commission. (2000). Government online. Brussels: EuropeanCommission, Directorate General V Employment, Industrial Relationsand Social Affairs.

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Fountain, J. (2001). Building the virtual state. Washington DC: The BrookingsInstitute.

Fountain, J. (2002). A theory of federal bureaucracy. In E. Kamarck (Ed.),Governance.com. Democracy in the information age. WashingtonDC: The Brookings Institute.

Gazendam, H. W. M. (1993). Variety controls variety. On the use oforganization theories in information management. Groningen, TheNetherlands: Wolters-Noordhoff.

Grönlund, A. (2003). Emerging electronic infrastructures (Exploring demo-cratic 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: Inter-national practice in IT-enabled public sector reform. London:Routledge.

Homburg, V. M. F. (1999). The political economy of information manage-ment. Groningen, The Netherlands: SOM.

Homburg, V. M. F. (2001). The politics and property rights of informationexchange. Knowledge, Technology and Policy, 13(3), 49-66.

Homburg, V. M. F. (2004). New public management and e-governmenttrajectories of a marriage between managerial and technologicalreform in government. Paper presented at the Information ResourceManagement Association (IRMA), New Orleans, LA, May 24.

Homburg, V. M. F. & Bekkers, V. J. J. M. (2002). The back-office of e-government (Managing information domains as political econo-mies). 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. NewYork: Columbia University Press.

Meijer, A. & Zouridis, S. (2004). E-government as institutional transfor-mation. Paper presented at the Information Resource ManagementAssociation (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 frame-work for public services in the information age. London: Minister forthe Cabinet Office.

Ministerie van Economische Zaken. (1999). De Digitale Delta. Den Haag:Ministerie van Economische Zaken.

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Ministry of the Interior and Kingdom Relationships. (1999). Contract withthe future. Den Haag, The Netherlands: Ministry of the Interior andKingdom 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-govern-ment. London: National Audit Office.

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Organisation for Economic Co-operation and Development (OECD). (2003).The E-Government Imperative. Paris: OECD.

Osborne, D. & Gaebler, T. (1992). Reinventing government: How theentrepreneurial 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.

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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.

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Chapter IV

Implementing CRMSystems:

Managing Change or AcceptingTechnological Drift?

Bendik BygstadThe Norwegian School of Information Technology, Norway

ABSTRACTMany companies have large expectations of the use of CustomerRelationship Management (CRM) systems, expecting to harvest benefitsfrom dialogue marketing and internal knowledge synergies. How shouldthese systems be implemented? And how easy do the benefits come? Theresearch approach is a longitudinal, six-year case study of a companyimplementing CRM both as a marketing principle and as an informationsystem. The implementation was, from the outset, regarded as anorganizational experiment, and the case is laid out in some detail toprovide a somewhat “thick description” of the social setting and actors’behavior. The high failure rate of CRM projects illustrates the gapbetween our intentions and outcomes. Interpreting a longitudinal casestudy and the research literature, we find two options to improve ourpractice. From a managerial view, we should treat CRM projects ascomplex challenges, needing tight project control and the application ofchange management techniques, focusing on the marketing process anddata quality. In contrast, we could accept that the mechanisms at work at

Implementing CRM Systems 77


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

INTRODUCTIONIncreasingly, 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 thata company has the skills to implement information systems fast. As docu-mented in IS research, implementing information systems into an organizationis 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 impres-sive success stories (Hines, 2002; SAS, 2002), failure rates of CRM projectsmay be as high as 70% (Tafti, 2002). Comparing the large expectationsregarding CRM with the actual results in companies, a picture of soberingconsideration and sometimes downright disappointment emerges. Why is it sodifficult? It is documented that most problems in CRM implementation are nottechnical. Instead, common problems include organizational change and fluc-tuation, 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 areactually capable of doing, as a major challenge for strategic managementtheory. 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 decisionsmanagers and employees make during the implementation of change andcreation of knowledge. Examples may include problem solving, communica-tion with employees, inter-departmental conflicts, and single customer relation-ships—situations where the battle of change and learning really happens.

We suggest that studying these microactions and the defensive routines atwork in an organization is relevant for understanding the implementation puzzleof CRM. This chapter tells the story of a six-year CRM project and describesin some detail how a knowledge-based organization addressed the challenge.

The gap between intent and outcome may also be described as techno-logical drift (Ciborra, 2000). Arguing that the modern knowledge-basedorganization cannot be as planned and controlled as an industrial enterprise,Ciborra suggests that the alignment between technology and organization is aprocess of conflict and negotiations between different actors, including the

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technology itself. This process is only partly controllable in a modern organi-zation with empowered employees. On the level of microactions there will oftenbe choices and options of behavior. There may be several ways of reaching agoal or solving a problem. The actual behavior may be influenced as much bypractical considerations using technology as by managerial goal-setting, and theaccumulated result of these small decisions may gradually alter the course ofhow information systems are used. We think this aspect is underrated in thechange management literature and will illustrate this point in the actual case.

The chapter is structured as follows: first, the case methodology isdescribed. In the next section, there is a brief outline of the promise of CRMsystems. Then, two process perspectives on implementation are presented,and the case is described in some detail, focusing on the implementationprocess and actor behavior. The following section outlines two different viewsfor interpreting the case: a management view and a “drift” view. Finally, thechapter concludes with lessons learned and some implications for furtherresearch.

METHODOLOGY: A CASE STUDY IN ANORWEGIAN NON-PROFIT ORGANIZATION

This chapter tells the story of a Norwegian non-profit, knowledge-basedorganization, the Institute of Technology (TI) in Oslo, that started implementinga 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 thisperiod.

Using a qualitative and interpretive approach (Miles & Huberman, 1994),the study focuses on behavior as a practitioner experienced the project, usingonly very simple theoretical concepts.

Data was collected throughout the project.

1992: Requirements Specification, Contract with vendor1993: CRM project report1994-1998: Semi-annual user satisfaction surveys1994: Organization development project 11995-97: Organization development project 21998: Specification for new version



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

THE PROMISE OF CRM SYSTEMSTheories 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 relation-ships. In addition to economic transactions, there is, sometimes, a developmentof trust. These relationships may give benefits to both sides; among them are ahigher degree of customer loyalty, lower marketing costs, mutual learning, andother forms of strategic cooperation. Developing long-term customer relation-ships is a part of the company’s strategy development and should involve everylevel of the company (Hakansson & Snehota, 1995).

Since relationship marketing is heavily dependent on the richness ofcustomer information and also on frequent communications with the customers,the pioneers were aware at an early stage of the potential benefits to be derivedfrom IT. Today, CRM systems represent a large and growing part of thesoftware industry (Tafti, 2002).

Ciborra and Failla (2000) describe CRM as an information infrastructure,consisting of processes, people and technology. CRM is linked to the BusinessProcess Reengineering (BPR) thinking in the way that CRM is also processoriented, and focused on dramatic and fundamental change. CRM structuresand supports all activities in a business transaction lifecycle, from the first leadto fulfillment.

Figure 1 illustrates simplified assumptions about the positive effectsderived from a good CRM system. As shown, CRM is a long-term businessstrategy, where the CRM system is an important component. The reason for thehigh expectations is that the CRM systems seem to connect the two centralresources of the modern, “flat” and decentralized company, namely, the corecompetence of the knowledge workers and the company relationships to itsmost important customers (Kay, 1993).

A CRM system holds three promises for the knowledge-based organiza-tion:

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

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“managing oneself” has become the management challenge for the knowl-edge worker.

• Secondly, it provides a tool for dialogue marketing, allowing the companyto individualize marketing activities, whereby the customer gets only theinformation he or she wants and needs (Hakansson & Snehota, 1995).

• And finally, it represents a synergic potential for the company. If all thisinformation could be utilized in market analysis and product conceptdevelopment, it might be a basis for new products and markets, tran-scending the barriers of business functions and locations.

This is not trivial. If successfully implemented, this implies that the CRMsystems could be an important technology for the non-hierarchical, knowledge-based organization of the 21st Century.

Figure 2 shows the rich functionality of a medium-sized Norwegian CRMsystem, SalesMaker, used in the TI case.

THE CASE: COULD A FORMERGOVERNMENTAL INSTITUTE, BECOME A

FLEXIBLE AND MARKET DRIVENCOMPANY WITH THE HELP OF CRM?

TI was made a private foundation in 1989. The main market was the small-and medium-sized companies in Norway (being 95% of all the Norwegiancompanies) that are too small to do their own technology development andtransfer. The services provided were technical consulting, practical courses indisciplines 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.

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



As a private organization, TI had to earn its own income, and thegovernmental support was gradually reduced during the 1990s from 50% to25%, while the total income increased from 125 million NOK to 185 millionNOK.

The 260 employees were not accustomed to marketing and sellingservices. After privatization, all the managers were recruited from the privatesector, while the technical consultants were retained from the former organiza-tion. The latter were primarily interested in technical matters and regardedmarketing as a possibly necessary but unwanted activity. The culture in thetechnical departments was practical: the manager of the furniture department,with a lifelong experience with electrical sawing tools, was proud to say aboutjob applicants: “Well, it’s OK that he has a Ph.D., but then at least he shouldn’thave more than nine fingers!”

TI’s only real competitive advantages were the 8000 small- and medium-sized customer companies and thousands of personal contacts. Could thisasset be capitalized and become the springboard for developing TI into amodern and market-driven company? And could CRM play an important rolein this transformation? The director thought so, and in 1992 she commissioneda major project called “The Customer Project.” The objectives were:

1994: Better financial control of the consulting projects (about 4000each year);

1995: More effective and efficient marketing by systematic dialoguemarketing; and

Figure 2. Features of Norwegian CRM system SalesMaker

SalesMaker Prospects Offers Sales meetings Products Segments Projects Activities Budget Campaigns Documents CUSTOMER Sales Archives Other Report applica- generator tiones SQL database

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1996: Develop long-term relationships with the most importantcustomers.

It was easier said than done. In 1992, the Institute did not even have aLAN, and the workforce absolute strangers to the concept of CRM. How wasthis to be accomplished?

Methodology: Software Engineering—Or OrganizationDevelopment?

Around 1990, IS projects were often analyzed in terms of success factors(Kwon & Zmud, 1987). The critical success factors (CSF) for the CustomerSystem were assumed to be strategic alignment, cross-functional synergies(BPR-inspired), workforce participation (Scandinavian school), technicallycompetent implementers, and a sound technical solution. This was rather “bythe book,” and was augmented by the teaching of the TI consulting staff.

The CSFs give, however, not much guidance on how IS should beimplemented. In practice, there was a choice of two models, the SoftwareEngineering or the Organization Development model. The SE approach takesas a point of departure that an information system is developed and imple-mented into an organization (Sommerville, 2001). The mainstream of the ITindustry—like Microsoft—has traditionally focused on the functional attributesof the system (features, platforms, etc.). The Scandinavian school has focusedmore on the user participation and acceptance. At both schools, however, thestarting point is the technology and the emphasis is on structure and rationality.

The Organization Development (OD) model originates in the behavioralsciences, and the point of departure is that organizations are stable organismsthat change slowly and reluctantly (Argyris & Schön 1996). To succeed, theorganization should prepare for the change, then change slowly, and lastlyinstitutionalize the change (“freeze”). The OD discipline has traditionally notbeen very interested in IS, and has focused on the irrational aspects of changeprocesses, and observed that the normal outcome from a change process is agap between intentions and results. One reason for this gap, among otherfactors, is resistance to change.

At TI we chose the software engineering approach, following the recom-mendations of the vendor of the CRM system. This did not imply that theCustomer Project was seen a purely technical project. On the contrary, greateffort was made to ensure user participation and organizational alignment. Oneof several measures was to merge the IT and marketing departments into asingle unit assigned the responsibility for the CRM implementation.



The First Attempt in 1993/94: CrisesThe 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 withboth the financial system and with office software like MS Word. For anorganization not familiar with CRM systems, it appeared complex, with manyscreens 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 technologyat 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 anddemanded additional support.

An even larger problem was the fact that the core of the system, thecustomer information, had quality problems. The reason was trivial: whenregistering a new customer, the user should check if the company was alreadyregistered. If this was not done, the result may be a double or a triple registrationof the customer (each spelled a little bit differently), which in short time createschaos in the system.

When users did not check if the company was not already registered, thereasons 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.”

Table 1. Chronology of the CRM project 1991-1994

Chronology Autumn 1991 : IT strategy, concluding with the Customer Project, is approved. Winter 1992 : A project group and a steering group are established. A requirements document is made after interviewing all departments. Spring 1992 : 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. Rest of 1992 : Database is implemented and prototyping in a 4GL is done in close cooperation with different user groups. Installation of LAN, WAN, and servers. Autumn 1992 : User training with in-house instructors. Managers were sent to courses to learn to use the report facilities. January 1993 : System set into production. Spring 1993 : System in production, but technical problems in client/server technology Autumn 1993 : Data quality problems. Spring 1994 : Data quality problems attacked, but not solved. Confidence in system declining.

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This was the origin of a vicious circle. The existence of double and triplecustomers very quickly threatened the confidence in the system. “One cannottrust the new system— it is useless,” became a common comment. The positiveusers became reserved in their use, and the negative ones had lots of complaintsin the company canteen.

The result of these problems was that the system was not used by as manyusers as intended. In spite of several activities to increase the quality ofinformation, parts of the organization lost faith in the concept. The system didnot give the expected benefits because it contained incorrect information andlack of trust reduced the pool of users. It also became evident that the userparticipation strategy had had little effect. One reason why the data qualityproblem persisted was that the system was not considered important enoughto spend the necessary time to learn it properly. It was not integrated in the day-to-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 theimplementation had failed on important points, and TI began looking foranother way to succeed.

1995-98: Second Attempt—Elephants and GiraffesJoke: How do you proceed to eat a whole elephant? Answer: One bite

at a time!

Table 2. Chronology of the CRM project 1994-1998

Chronology Autumn 1994 : 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. 1995 : The Elephant Method was a success in most departments, both in terms of user satisfaction and in financial savings in the DM activities. 1996-98 : 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. 1998 : Project is evaluated partly successful, but local (department) culture is stronger than central push.



In the autumn of 1994, the steering group initiated a task force, consistingof IT specialists, marketing staff, and line managers, to help a troubleddepartment to do its marketing activities more systematically. This attempt wasgradually developed into the “Elephant Method” (after the how-to-eat-an-elephant-joke), which was a step-wise method for market segmentation andDirect 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 cutby half. The direct savings from reduced DM volume were substantial—at leasthalf a million NOK each year. Together this was the first visible success of thesystem, and this was also acknowledged by the organization.

The experience illustrated two mechanisms. First, the departmentsneeded hands-on guidance in using the CRM system in a way that gave acommercial effect. Second, it showed that only very concrete results couldchange the attitudes in the departments. Traditional user training and generalinformation had very little effect.

In 1996, the perspective was broadened. Under the motto “stretching alittle further,” the Giraffe Project was started. Its aim was to concentrate themarketing activities on the most important customers (“A-list” customers) toincrease the profitability of the Institute, that is, to make it less dependant ongovernment money.

All managers, secretaries, and key consultants were taken to kick-offmeetings and follow-ups to listen to national “relationship gurus” and discussthe concept. All departments were organized into marketing teams, andsystematic reporting to the top management group every month was instigated.

The following two years, the Giraffe-1 and Giraffe-2 were run continu-ously, with a focus on changing the culture from a focus on technical disciplinesto focusing on the customer. The whole bag of OD tricks were used, such asimage and brand building, team building, leadership development, skills devel-opment, parties, and prizes.

The results were generally positive, but progress was slow. Some depart-ments worked very systematically and achieved good results. Others weremore half-hearted and gave priority to other activities. A few were ignoring thewhole project and worked with other concepts. The attitude of the manager andthe most senior consultants seemed to determine the culture. Also importantwas the fact that the CRM system did not support all kinds of products and thattwo departments completely lacked a core of loyal customers and wereworking in a spot market.

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Summing up, in 1998 the CRM strategy had worked for five years. Whilehaving a partial success, the process was not self-sustainable. It was stilldominated by central staff pushing reluctant technicians into the market. Thelocal cultures were a stronger influence than the central push. Only when thecommercial perspective was very short was there any real commitment to theproject. Thus, while the DM activities continued to be rather successful, themore long-term approach of using customer relationships more strategicallywas much harder to achieve. The Giraffe ambition of changing the culture wastherefore judged to be a failure.

The IT and Marketing Departments were now questioning whether thewhole concept was wrong, not only the implementation. Our concept was builton releasing the potential synergies in cross-functional coordination. Did sucha potential really exist? Or is it, at the end of the day, only within the individualprojects that there are synergies? Is the modern knowledge organization tooculturally complex and immune to this kind of standardization? Should the focusbe changed to satisfy the more immediate needs of the knowledge worker?

Third Attempt 1998-2000 and Summing-Up the CaseA new version of the Customer System was introduced at the start of

1998. The emphasis was now changed to the consultant users, and focused oncalendar, 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 ofprojects and more efficient direct marketing—were achieved. The DM activi-ties were concentrated in a new unit, and the “A-list customer” concept wasimplemented throughout the whole organization.

The third and most important goal—to establish partnerships with the “A-list” customers in a cross-functional cooperation and use this systematically inchanging the organization—had mainly failed. This goal was more or lessabandoned, and the departments were left to develop their customer relation-ships individually.

Using DeLone and McLean’s (1992) key concepts of actual use, usersatisfaction, individual and organizational impact, we may summarize the casein the following table.

As Table 3 shows, the four implementation periods achieved differentresults. Concerning the organizational impact, the greatest success was theteam development activities of the Elephant Method, which, in addition toincreased sales, had a direct financial impact of saving at least half a millionNOK each of the following five years. This paid for the whole CRM investment.



However, the organizational impact of the more ambitious Giraffe Project washarder to measure, as it was more variable. In some departments, the revenueswere increasing due to more focus on profitable customers, but the cross-functional benefits were small.

The next section will discuss these findings.

DISCUSSIONA single case from a small country is hardly a convincing empirical base

from which to generalize. We would rather argue that the findings are consistentwith other research, and use the case to discuss some important aspects ofCRM implementation. This section offers two interpretations of the case, firstfrom a management view, then from the “drift” view.

The Management ViewSumming up the CRM implementation research from a management

perspective Tafti (2002) concludes that success stems from a combination offour factors, described in Table 4.

The factors in Table 4 are congruent with other streams of IS implemen-tation research, for example, Swanson’s implementation puzzle (Marble,2000).

Table 3. Summarizing the project, using DeLone and McLean’s (1992) keyconcepts

Period Implementation strategy

Actual use

User satisfaction

Individual impact

Organizational impact

1993-94 Software Engineering

Medium

Low

Low

Low

1994-97 Elephant Method

Team development

High

High

High

High (but variable)

1995-98 Giraffe Project

Organization development

Medium

Medium

Variable

Medium (and variable)

1998-2000

Voluntary, individual use

Medium Medium Variable Low

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Reviewing the TI case, it is reasonable to say that the strategic understand-ing was sufficiently developed and supported by top management. It is alsoreasonable to conclude that the software solution was adequate, after the initialproblems. The first implementation failure (1993-94) is neatly explained by theother two factors:• CRM project management: The first part (1993-94) of the TI project

was organized as an IT project, lacking marketing expertise and processfocus. As a result, there were data quality problems and user resistance.

• Change management: There was no assessment at the start of theproject 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 waschanged in the Elephant and Giraffe Projects. The project was redefined as amarketing project dealing with the marketing process and focusing onbusiness results. The CRM system was now perceived more as a tool, not anend, and user acceptance grew during the small Elephant Projects. In the termsof Argyris and Schön (1996), examples of the critical real-time microactionscould be identified as the trivial situations when small, important decisions aremade, such as:

Table 4. Factors for CRM implementation success (Tafti 2002)

Factor Description Strategic planning Understanding how CRM should be used to reach

important business objectives. CRM project management

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.

Technology (CRM system)

A carefully selected solution, easy to use, and appropriately scaled.

Change management

First investigate whether the company accepts change. Then implement a change process supported by top management, focusing on training, incentives and user acceptance.



• When a department manager decided to support an Elephant initiative (ornot). 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 solvea practical problem, rather than just blame the system.

• When a secretary was told to correct the misspelled names of employeesof a customer and did so immediately.

The sum of these small and outwardly insignificant actions seems to makethe 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 projectis not well suited for CRM implementation, and that large-scale organizationalinterventions of change management are critical. But the problems of the GiraffeProject are a warning that something may be wrong in this analysis.

The main problem is a particular distribution of roles, where central staffis pushing reluctant line managers to overcome user resistance to a new system.This setting is well known in implementation research, and it is well establishedthat this “push” will usually not solve the resistance. In some organizations, thesolution was to redesign the process, to change the incentive structure (Markus& Keil, 1994). This was attempted at TI by establishing marketing teams withassigned team leaders and economic incentives to succeed, but this proved tobe a failure in most cases. Reasons are discussed in the next section.

The Drift ViewAfter documenting several examples of large discrepancies between IT

visions and plans and the actual outcome, Ciborra (2000) asserts that thesolution cannot be more managerial control, which has proven to be part of theproblem. Instead, he asks “why not play with the idea of a different partitionbetween the limited scope for our management of the infrastructure and thescope for the infrastructure itself to manage us?” (p.40).

In this context, implementation is less about managerial decisions and moreabout creating a self-feeding process where an infrastructure of an installedbase provides useful services for new users, which will increase the installedbase, and so on.

Regarding the CRM (system, people, and routines) as an infrastructure,we may ask what mechanisms are critical for implementation. Returning toArgyris 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 moreambitious, knowledgemanagement approach of the Giraffe Project. Why not?

One answer may be that the first type of project had support in pre-existingcapability in the organizations’ formative context - the institutional arrange-ments and cognitive frames (Argyris & Schön, 1996), while the Giraffe Projectwas a foreign and abstract concept, in the language of management. The systemand the concepts could not be translated into a departmental culture that hada very practical problem-solving way of working. The technical teams at TIwere small and tightly knit, and the members much preferred working on theirown projects to formal cross-functional coordination meetings. The mostimportant learning was in the projects, and it was shared with the othermembers during the irregular coffee break. Such teams, seen from within, haveno need for a CRM system.

Instead, there is a case of technological drift, that is, the system is used ina way that is not planned. In the TI case, the drift was towards a more voluntaryand individual use of the system (1998-99). From the management point ofview, this was an unplanned and partly unwanted development, because it tookmost of the knowledge synergies out of the project.

Was it equally unwanted from the drift view? This is a hard question toanswer, because the expected marketing and knowledge synergies from CRMrequire that an organization defines its knowledge and actions in ratherstandardized classes that could be registered into the system, and that theemployees 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 neversucceeded in making this a self-sustainable process.

As Schwarz, Schliebs, and Wyssusek (2000) point out, while CRM isfocused on valuating the customers, successful implementation of CRM is reallydependent on the actions taken based on this valuation. In a knowledge-basedorganization, this is hard to accomplish by force; it has to be voluntary andbased on a conviction that it makes sense. The drift observed in this case maythus be regarded as a sensible compromise between the knowledge workersand the CRM system.

CONCLUSIONImplementing CRM is hard. As Ciborra and Failla (2000) bluntly states,

“CRM seems to have no built-in mechanisms by which it acquires its ownmomentum and the diffusion becomes a self-feeding process” (p. 116).



This seems to leave us with two alternatives. The first is to accept anupward struggle of organizational interventions and, in particular, use themanagerial tools of change management. As this case and others (Schwartz,Schliebs, & Wyssusek, 2002; Tafti, 2002) have shown, the challenge is a largeone and not necessarily successful.

The second option is to accept the technological drift—that the system willbe used in other ways than intended. The mechanisms at work at a micro levelare only partly controllable by management techniques, and often so interwo-ven with local culture and routines that in practice it is impossible to predict theoutcome. 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 themicro level actions in successful CRM projects.

ACKNOWLEDGMENTSI thank the anonymous reviewers of IRMJ and my colleagues, Asle

Fagerstrom and Cecilia Haskins, for critical and useful comments. I also thankmy former employer for accepting publication of this material.

REFERENCESApplegate, L., McFarlan, F.W., & McKenney, J. (1999). Corporate infor-

mation 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: Thequest 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 businessnetworks. 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: OxfordUniversity Press.

Kwon, T. H.& Zmud, W. (1987). Unifying the fragmented models of informa-tion systems implementation. In J.R.B.R. Hirscheim, Critical issues ininformation systems research, (pp. 227-251). Chichester, UK: Wiley.

Marble, R. P. (2000). Operationalising the implementation puzzle: An argu-ment for eclecticism in research and practice. European Journal ofInformation Systems, 9, 132-147.

Markus, M. L. & Benjamin, R. (1997). The magic bullet of IT-enabledtransformation. Sloan Management Review, Winter, 55-68.

Markus, M. L. & Keil, M. (1994). If we build it, they will come: Designinginformation systems that people want to use. Sloan Management Re-view, 35(4), 11-25.

Miles, M.B. & Huberman, A.M. (1994). Qualitative data analysis. Thou-sand Oaks, CA: Sage Publications.

SAS. (2002). SAS Warehouse Administrator® lies at the heart of Sprint’sCRM 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 incorporate CRM. In L.V.S. Lakshmanan (Ed.), Proceedings of the 4thInternational Workshop on Design and Management of Data Ware-houses (DMDW 2002) at the 13th Conference on Advanced Informa-tion Systems Engineering (CAiSE 2002), Toronto, Canada, (pp. 90-96).

Sommerville, I. (2001). Software engineering. Harlow, UK: Pearson Education.Sprint (2002). http://www.sas.com/news/success/sprint.htmlTafti, M. H. A. (2002). Analysis of factors affecting implementation of

customer relationship management systems. Proceedings of Informa-tion Resource Management Association Conference, Seattle, WA,May 19-22, (pp. 782-785). Hershey, PA: Idea Group Publishing.

Sources from Institute of TechnologyAnnual Reports 1989-98Project documents from the Customer Project 1991-99User satisfaction evaluations 1994-98

Measuring Organizational Readiness for Knowledge Management 93


Chapter V

Measuring OrganizationalReadiness for Knowledge

ManagementW. A. Taylor

University of Bradford, UK

M. A. SchellenbergUniversity of Bradford, UK

ABSTRACTWhile organizations continue to grapple with the implementation ofknowledge management, there remains a need for empirical research intothe practical difficulties they encounter. In this chapter, we investigatethe challenges faced by one multinational telecommunications companyin a post-merger environment. We develop an instrument to evaluate theknowledge-sharing culture and information infrastructure and, by usingqualitative and quantitative data from a survey of five European sites, weillustrate how managers can measure gaps between the effectiveness ofcurrent practices and their importance, and decide whether to directresources toward changing employee attitudes, organizational practices,or knowledge-management infrastructure. More significantly, we highlightthe need for senior managers to be in agreement about the strategicdirection of their business and the strategic alignment between businessstrategy and knowledge-management strategy. Without such consensus,knowledge management is likely to remain, at best, a series of fragmentedand unrelated initiatives at local levels.

94 Taylor & Schellenberg


BACKGROUNDIn today’s knowledge economy, it is often asserted that for organizations

to compete effectively they need to focus on creating and using intellectualassets (Grant, 1996; Murray, 2002). Ask most business leaders if knowledgeis 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’sknowledge for competitive advantage, and the answers will be less convincing(Pollard, 2000). The key transition is from appreciating the importance ofknowledge to being capable of managing it or, perhaps more accurately, beingable 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 afocus of research and subject to much debate. The problem is exacerbated bythe 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 ina global telecommunications company that provides data network services tomultinational clients. We examine the challenges of managing knowledge in apost-merger environment. In particular, our results illustrate the practicaldifficulties in creating a conducive knowledge-sharing culture in such a mergedorganization, especially when it is organized around a business unit structure.We also show how the information infrastructure assumes critical significancein underpinning knowledge-sharing efforts, particularly to move beyond local-ized knowledge sharing and maximize the benefits of global organizationalknowledge.

Especially since the Telecom Reform Act of 1996, the telecommunicationsindustry has been experiencing intense competition, with several competitorsfacing serious financial difficulty, bankruptcy, and even break-up. Coupledwith the rapid rise of hybrid networks, the challenge for many surviving networkproviders is to maintain profit margins through efficient asset management oftheir physical products while migrating to a more services-oriented businessmodel, where additional revenues derive from enhanced network solutions,integration services capabilities, and telecommunications consultancy. Thisplaces greater emphasis on the importance of managing knowledge to supportand secure such a change in strategic intent (Figure 1).

Our research in the focal firm was motivated by the need to investigate thepreconditions that influence the implementation of knowledge management(Alavi & Leidner, 2001; Gold, Malhotra, & Segars, 2001; Walczak & Zwart,



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

1. Where is the company now, in terms of its culture and informationinfrastructure and its current methods for sharing and accessing knowl-edge? To address this question we used an employee survey.

2. Where is the company going with regard to its business strategy? Answersto this question are necessary to ensure the correct focus for knowledgemanagement efforts to support the strategic intent (Hansen, Nohria, &Tierney, 1999). We interviewed three senior executive vice presidents inthe firm to explore this issue.

3. What should be done to improve the firm’s business transformationthrough knowledge management? The answers to the preceding ques-tions provide fertile clues regarding whether the focus of change andimprovement should be on employee attitudes, organizational practices,or knowledge-management infrastructure. We consider this more fully inour discussion of results.

In the next section, we review the pertinent issues for improvement ofknowledge- management practice in multinational organizations. We then

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

ENABLERS OF KNOWLEDGEMANAGEMENT

From the extant literature, there is consensus that Knowledge Manage-ment (KM) requires a parallel focus on people, processes, and technology(Massey, Montoya-Weiss, & O’Driscoll, 2002; Tiwana, 2002), but thattechnology should only be seen as a fundamental support element. At best, ITonly 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 organiza-tional. The inherent danger is to place information technology at the center ofKM implementation, endeavoring to push information and knowledge towardemployees rather than creating the demand-pull for knowledge by enthusingemployees with a desire for knowledge (Kluge, Stein, & Licht, 2001).

In a recent survey of KM practices, one of the most recurring weaknesseswas 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 thatemployees feel interconnected through their personal networks. In essence,connecting employees is more about building personal relationships and thedevelopment of a knowledge-friendly culture (Davenport, DeLong, & Beers,1998; Walczak & Zwart, 2003) than the physical connections afforded by ITsystems.

However, in a global organization, face-to-face relationships are notalways possible, giving rise to difficulties in accepting knowledge from un-known outsiders—the “not-invented-here” syndrome (Kluge et al., 2001).Instinctively, employees tend to rely more heavily on “nearest” knowledge fromphysically proximate colleagues, perceiving such knowledge to be moredependable (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



units, inter-unit rivalry and competition can impede collaboration and knowl-edge 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 anorganization, yet it is far from easy to construct such systems (Stewart, 2001).Equally, high-touch collaborative technology environments that enable virtualcommunities do not necessarily lead to collaborative cultures (Tissen, Andriessen,& Deprez, 2000). Technology-mediated communities of practice may be aconstructive way to build relationship capital (Wenger & Snyder, 2000), andcircumvent the barriers of a business unit structure, but there is, as yet, very littleempirical evidence of their effectiveness (Lesser, 2001).

As with most new organizational initiatives, the role of senior managers iscrucial. They are responsible for identifying and communicating the role ofknowledge management within the organization’s strategic business plans, andfor ensuring that the business strategy and knowledge strategy are in closealignment (Abou-Zeid, 2003; Zack, 1999). All too often, this link is relativelyweak and poorly understood (Davenport, 1999; Davenport et al., 1998).Clear definition of the contribution of knowledge to the achievement of businessstrategy is essential in order to specify which knowledge must be managed andwhich measures are needed to assess performance improvement (Holsapple &Joshi, 2000; Treacy & Wiersema, 1996). Senior managers also influence theprevailing organizational culture and the commitment of resources to theimplementation of KM practices (Bukowitz & Williams, 1999).

In this chapter, we assess the effectiveness of knowledge-managementcapability in the focal organization and the importance that employees assignedto knowledge management for the future success of the organization. We alsocompare these findings with results from interviews with senior executives in thefirm, contrasting the dichotomous perceptions between these two groups. Ourmethod is outlined below.

RESEARCH METHODResearch 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 productsare global data networks and related services, and its market focus ismultinationals in the Global 2000 list of firms. The company has requestedanonymity and therefore cannot be identified.



The employee sample was drawn from the Marketing and Sales Depart-ments in five European countries of the focal firm, namely, Switzerland, UnitedKingdom, Germany, The Netherlands, and Belgium. The sample framecomprised of 389 knowledge workers, excluding clerical and administrativestaff, and a random sample of 102 participants was selected. Each person wastelephoned to establish willingness to participate in the survey. Key informantinterviews were also conducted with three senior executives responsible forprofessional services, strategy, and product marketing, respectively.

Instrument DevelopmentThe 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 andthe questionnaire was pilot tested prior to distribution. The survey wasstructured 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 importancefor the future success of the organization, and (b) the effectiveness of currentpractices, each anchored by 1 = strongly disagree and 5 = strongly agree. Eachsection included open questions to permit further comment and opinion. Wealso gathered categorical data on respondents, including their country, depart-ment, and position in the organization. The survey was distributed by e-mail,with 90 completed questionnaires returned, representing a response rate of88%.

The interviews with senior executives explored their views of the long-termgoals and strategies of the firm and their personal commitment to knowledgemanagement in this context. We were particularly interested in the degree ofconsensus regarding the need to change the business model from a focus oneffective asset management to a true value-added services orientation. Allinterviews were tape-recorded and transcripts analyzed for key themes.



Data Analysis ProceduresFirst, we used the chi-square test of significance to test for differences

based on country, department, or position. No significant differences weredetected. We then used t-tests to evaluate differences in item means forimportance and effectiveness, where the presence of significant negative scoresrepresents employees’ thirst for a better knowledge culture and infrastructureand a demand-pull for improvement. Conversely, a significantly positive scorewould indicate an activity where management was doing more than employeesbelieved to be necessary. The sample size did not permit the use of advancedstatistical analysis due to the low case-to-variable ratio. However, for anexploratory study, we believe that analysis of the differences in mean values forthe ratings of the importance and effectiveness of each item gives a good initialindication of issues worthy of deeper investigation.

RESULTSWe firstly present data that indicates the current effectiveness of the

knowledge-sharing culture and the support provided by the informationinfrastructure, together with employee perceptions of the importance of thesedimensions. In each table, we also include the gap between the mean valuesfor importance and effectiveness.

Knowledge-Sharing CultureThere 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 betweenthe importance (I) assigned to each of these behaviors and the effectiveness (E)of current levels of practice. The largest gaps relate to:

1. The time available for creative thinking, which is eroded by spending toomuch time on “firefighting” problems;

2. Having a process to avoid re-inventing the wheel by being able to re-useand build upon the work of others;

3. Giving more time and attention to learning from mistakes and failures;4. Developing a more trusting and open climate in the organization; and5. Being more responsive to requests from others.



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

Information InfrastructureA 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.

Item Importance Effectiveness Gap Time is allowed for creative thinking (versus always firefighting)

4.38 2.47 -1.91

Looking for best practices or work that can be re-used is a natural standard process

4.54 2.70 -1.84

Considerable time and attention is given to learn from failures and errors

4.70 3.06 -1.64

A climate of openness and trust permeates the organization

4.52 3.19 -1.33

People are responsive (e.g., e-mails and voice mail get answered in a timely manner)

4.28 3.08 -1.20

Recording and sharing knowledge is routine and second nature

4.16 2.98 -1.18

All employees are ready and willing to give advice or help on request to anyone else on the organization

4.38 3.48 -0.90

Employees take responsibility for their own learning 4.05 3.23 -0.82 Informal networks across different parts of the organization are encouraged

4.03 3.26 -0.77

We have unrestricted access to non-confidential or personal information

3.74 3.35 -0.39

Overall 4.05 3.23 -0.82 (n = 90) 1 = strongly negative 5 = strongly positive

Table 1. Gaps in knowledge-sharing culture

Table 2. Gaps in information infrastructure

Item Importance Effectiveness Gap We can rapidly find necessary information on our IT systems

4.59 2.72 -1.87

Our IT system provides excellent ease of access to information

4.56 2.86 -1.70

We have up-to-date information from our IT systems 4.58 3.01 -1.57 Our IT infrastructure is an excellent source of information and knowledge

4.47 3.10 -1.37

We can trust the information in our IT systems 4.59 3.24 -1.35 IT is a key enabler of efficient knowledge sharing 4.22 3.11 -1.11 Overall 4.50 3.01 -1.49 (n = 90) 1 = strongly negative 5 = strongly positive



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

Importance of Knowledge and Information SourcesCurrently 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 aboutinter-country learning is complemented by the findings relating to the usefulnessof knowledge-sharing methods, as discussed in the next section.

Knowledge-Sharing MethodsIn 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 3. How useful are the following knowledge/information methods?

3 3.2 3.4 3.6 3.8 4 4.2 4.4

Intranet data base

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Local sources within own department

Learning by doing

Local sources within other departments

Professional Services Practices

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Self study on own initiative

Own department in other countries

Mean score

Figure 2. How important are the following knowledge/information sources?



Table 3. Gaps in sharing local and global knowledge

Item Importance Effectiveness Gap We appraise individuals on how they share knowledge and information globally

3.66 2.14 -1.52

We are improving the global sharing of knowledge 4.08 2.64 -1.44 We proactively encourage global sharing of knowledge and information

4.24 2.86 -1.38

We are improving the local sharing of knowledge 4.01 2.89 -1.12 We appraise individuals on how they share knowledge and information locally

3.69 2.62 -1.07

We proactively encourage local sharing of knowledge and information

4.32 3.36 -0.96

(n = 90) 1 = strongly negative 5 = strongly positive

comments made it clear that product information was shared through theintranet, while face-to-face communication facilitated local knowledge sharingwithin their own departments and geographically adjacent departments.

We explored this further by asking about the importance and effectivenessof local, within-country knowledge sharing compared with global, inter-country and inter-business unit sharing (Table 3).

These results suggest that the largest gaps between importance andeffectiveness of current practices exist at the global level of knowledge sharing.Overall, these respondents attach more importance to knowledge sharing thanis currently reflected in company practices, but the gap is more pronounced atthe global level. Moreover, by plotting the mean values for the answers to thelocal and global items respectively, we can see that, although the firm is viewedas being better at managing local knowledge, the overall gap between globaland local knowledge sharing is not as significant as the overall improvementneeded in effectiveness (Figure 4).

Figure 4. Overall gap between local and global knowledge sharing

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The preceding results provide a way to assess an organization’s currentstate of readiness to implement knowledge-management practices. Thesemethods provide answers to our first research question: “Where are we now?”and should be evaluated by senior management before going further along thepath 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 firmand the consequent implications for knowledge management (Table 4). Theinterviews revealed significant disparities in the three respondents’ viewsacross each of the themes contained in Table 4. For example, in relation to mostdesirable business model, the strategic direction of the organization, and theurgency for changing, the executives were polarized, with in extremis, theExecutive VP of Strategy espousing the status quo, whereas the Executive VPof Professional Services advocated an immediate and proactive shift away fromcurrent products toward a value-added services portfolio. Similarly, while theyall acknowledged the importance of knowledge management, they differed onits strategic priority. This lack of strategic consensus was also mirrored in theirviews about the need for top management commitment, inter-country knowl-edge sharing, culture change, and employee incentives.

Therefore, in relation to the second fundamental question, “Where are wegoing?,” this firm appears not to be ready to adopt knowledge managementbecause of its inability to articulate a clear and shared strategic direction, fromwhich a knowledge-management strategy should be derived (Massey et al.,2002). These executives’ views contrast sharply with our earlier results, whichhighlighted 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 accurateinformation to enable their sharing of knowledge. Our findings are furtheremphasized by the employees’ views about the kind of incentives they believewould stimulate them to share knowledge (Figure 5).

Incentives for Knowledge SharingThe results in Figure 5 indicate that respondents regard non-financial

incentives as more useful. Their supplementary comments suggested that theincentives should become embedded in the company culture to avoid knowl-edge sharing becoming a “mercenary action for money.” Comparing theseresults with the related comments from our interviews with senior managers in



Table 4. Selected quotations from interviews with executive vice presidents

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hift

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now

. Ev

entu

ally

, eco

nom

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gic

will

pus

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rtan

ce o

f K

now

ledg

e M

anag

emen

t for

the

firm

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le K

M is

impo

rtant

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t we

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l y

need

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ette

r int

erna

l mea

sure

s and

pe

rfor

man

ce d

ata

— p

rodu

ct st

atist

ics,

ne

twor

k co

sts,

etc.

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wle

dge

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bsol

utel

y cr

ucia

l to

whe

re

we

need

to g

o, b

ut w

e do

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yet

hav

e a

clea

r stra

tegy

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know

ledg

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lver

bul

let.

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stra

tegy

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mm

itmen

t, an

d di

rect

ion

and

I don

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ink

we

have

that

toda

y.

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man

agem

ent

com

mitm

ent

Top

man

agem

ent r

ecog

nize

s the

nee

d fo

r mor

e co

mpl

ete

and

accu

rate

in

tern

al d

ata

and

bette

r inf

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atio

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stem

s to

mak

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ecis

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vest

men

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on't

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ask

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appe

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ou a

sk m

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pre

dict

th

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er!

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r-co

untr

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arin

g I h

ave

no sp

ecifi

c vi

ew a

bout

this

- it i

s no

t my

resp

onsi

bilit

y.

We

don’

t sha

re w

ell y

et, b

ut w

e m

ust.

W

e ar

e no

t yet

whe

re w

e ne

ed to

be.

Th

ere

shou

ld b

e a

view

that

we

are

a gl

obal

co

mpa

ny, a

nd th

at in

form

atio

n sh

ould

be

avai

labl

e gl

obal

ly, b

ut n

ot y

et.

Cul

ture

cha

nge

for

KM

Ther

e is

very

littl

e w

e ca

n do

to c

hang

e ou

r cul

ture

bec

ause

we

have

ove

r 100

cu

lture

s in

the

diff

eren

t cou

ntrie

s.

We

shou

ld n

ot o

nly

defin

e th

e fr

amew

ork

of th

e th

ings

to d

o, b

ut a

lso th

e di

men

sion

s of t

he c

ultu

re w

e w

ant t

o cr

eate

.

It is

not

a p

riorit

y fo

r man

y m

anag

ers o

r em

ploy

ees.

W

e ar

e st

ill fo

cuse

d on

ass

ets,

proc

esse

s, an

d ec

onom

ics.

Em

ploy

ee in

cent

ives

fo

r sh

arin

g kn

owle

dge

We

coul

d m

anda

te k

now

ledg

e sh

arin

g in

job

desc

riptio

ns.

We

need

to fi

nd a

mec

hani

sm to

mot

ivat

e pe

ople

, but

I do

n't k

now

if th

ey n

eed

to b

e fin

anci

al o

r som

ethi

ng e

lse.

This

is n

ot a

pro

blem

. The

re is

no

bloc

kage

to

shar

ing

info

rmat

ion.



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

DISCUSSIONWe set out to investigate the current status of knowledge-management

capability in the focal firm. In both the knowledge-sharing culture and theinformation infrastructure, there were significant gaps between the effective-ness of current levels of practice and the importance assigned to thesepractices. These gaps represent the latent employee expectations for improve-ment in these key areas and are guidelines as to where management needs tofocus its efforts. If the importance scores had been lower, then there would alsohave been a need for managers to stimulate more awareness of the need forknowledge management by stressing its business value. In the followingsections, we review our findings and use illustrative quotations from thequalitative data in the survey.

Knowledge-Sharing CultureThe results in Table 1 indicated several areas where the organization needs

to close the gap between current practices and employee expectations. Oneof the most important areas for improvement is the climate of openness and trustthroughout the organization. Several respondents commented on this lack ofopenness and attributed it primarily to the competition and rivalry between theorganization’s business units.

2 2.5 3 3.5 4 4.5

Individual feedback that their knowledge was used

Personal recognition within the organization

Financial through bonus system

A criterion for promotion

Holidays, meals, gift tokens

Make it mandatory to share

Mean score

Figure 5. Which incentives would be most effective in stimulatingknowledge sharing?



“Business units have been trained to be protective of their knowledge.Competitive behavior is built into the organization mainly because of thecurrent sales incentive plan.”“Again and again business units fight over who will get a particularcustomer. 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 finallyrush an answer.”

Another reason given for low levels of openness and trust was the recentmerger.

“Trust has partially broken down since the merger, and has since thennot been fixed. What we need to achieve is to make employees feel theybelong to something more than their business unit. We need to createcommunication channels across business units that break down the silostructure that prevents knowledge flowing efficiently across the orga-nization. The thirst for knowledge should become more powerful thanthe influence of the silo guardians.”

It appears that there is a significant thirst for knowledge, as evidenced bythe scores for the importance of the ten cultural items, and that managementneeds to develop a cross-cutting communications infrastructure that enablesinterconnection across temporal and geographical boundaries.

A second area for improvement is the ability to re-use and build upon thework of others to avoid re-inventing the wheel. In this regard, we cite twopertinent respondents’ comments below:

“I know that there’s not a day or a week that passes where we are notworking on a new proposal that might be relevant somewhere else in theorganization. Often, what enables us to win a new proposal is not justthe features and functionalities of our services, which we have inboilerplates, but mainly the knowledge of where we have done it beforeand the type of people we can direct to that sort of project. If we lookat our re-use of knowledge globally on a scale of 1 to 10, we areprobably around 2.”“We have to re-use what somebody else has learned instead ofspending 100 hours doing it again. Let’s remember that part of ourbusiness is highly repetitive; Knowledge Management will tell us whatwe do not know that we know.”



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

Information InfrastructureThe 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. Thefollowing comments give additional insights into the nature of the disparities.

“We have too many information sources and a huge amount of dataresulting in difficulties finding the right information. On Lotus Notes, wehave 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. Respondentsalso commented on the difficulty of connecting with a key contact in anothercountry. This can be a particular hindrance for sales and marketing staff whoare 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 meapproximately an hour before I found the person that was able to helpme. 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 com-plete and up-to-date telephone directory, seem to have been neglected in thepost-merger scenario.

“Today, more than one year after the merger, we still haven’t managedto have a completed and updated phone book. It is left to individualsto register either in Lotus Notes and/or the intranet, but some peopleare neither in one or the other system (and we are just talking aboutcontact information).”

Sources of Information and KnowledgeWe 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 comple-mented by the results for the perceived usefulness of knowledge-sharingmethods, where there was comparatively little perceived value in knowledgesources in respondents’ own departments in other countries. It may be thatemployees have not yet recognized or do not believe in the benefit of workingwith colleagues in other countries. Such reliance on immediate coworkers is notuncommon (Alavi & Leidner, 2001), but it does limit the potential for exposureto new knowledge, since individuals in the same group tend to possess similarinformation (Robertson, Swan, & Newell, 1996) and can be subject togroupthink (Janis, 1982).

From the qualitative comments, many respondents cited reasons that wereagain concerned with inter-business unit rivalry, erosion of trust after themerger, and the difficulties of knowing who to contact and how to contact them.This lack of regard for organizational information and knowledge beyondrespondents’ own geographical unit was underlined by the results relating tolocal versus global knowledge sharing (Table 3), where the largest gaps existedat the global level. Development of an effective communications infrastructurewould provide a baseline for addressing these barriers, including a comprehen-sive telephone directory, a “Yellow Pages” catalog of experts, and, possibly,communities of practice that link experts in common fields across the businessunits, potentially circumventing what one respondent referred to as the “siloguardians.”

Incentives for Knowledge SharingIt is unquestionably important to create an environment wherein employ-

ees are stimulated to share knowledge (Szulanski, 1996). Mere exhortationsto share are rarely sufficient, while mandating it is unlikely to succeed (Huber,2001). Management practitioners and some researchers often advocate theuse of financial incentives as extrinsic motivators of knowledge-sharing behav-iors (Ba, Stallaert, & Whinston, 2001; Koudsi, 2000), founded on the notionof rational self-interest, yet there is substantive evidence that extrinsic rewardsare, at best, short-term incentives that can undermine intrinsic motivation toshare 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 todevelop sharing behaviors (Pfeffer, 1998; Rappleye, 2000). Taken as a whole,the literature on appropriate incentives for knowledge sharing is incongruentand inconsistent, and “our ignorance in these matters is considerable” (Huber,2001).



Our interviews with senior executives underpin this conclusion and high-light the lack of understanding of this complex issue in the focal firm. One ofthe interviewees did not recognize the need for incentives, anticipating thatknowledge sharing would happen spontaneously, while another thought thatmandating sharing behaviors in job descriptions would be an adequate solution.The third interviewee at least recognized the need to find appropriate motiva-tors but admitted ignorance as to what they might be. The most logical actionwould be to ask employees, which in this case revealed a diverse set ofresponses (Figure 5). While the respondents were most positively disposed tonon-financial rewards associated with self-esteem and recognition, thesefactors were closely followed by financial motivators such as promotion andbonus payments.

These findings have two practical implications for senior managers. First,top management should explore employees’ views about the most importantincentives for knowledge sharing and understand what is most likely toengender desired behaviors. Second, where employees express preferencesfor a mixed-economy of financial and non-financial rewards, there is clearly nostraightforward solution. While this endorses the complexity and ambiguity inthe 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 steptoward effective knowledge sharing.

Strategic AlignmentFinally, we explored the strategic direction of this telecommunications

company and the perceived importance of KM to support the strategy. Wediscovered a lack of clear consensus among senior executives, and this isperhaps the most significant of our findings and the one with the most seriousramifications. We echo Davenport’s (1999) observation that for knowledgemanagement to succeed, it must “affect the most important areas of thebusiness, improve the firm’s most critical objectives, and be viewed as anintegral part of strategic business objectives.” The danger for companies suchas this is that when faced with survey evidence that there are significant gaps inthe culture or IT infrastructure, improvement activities can be sanctioned underthe umbrella of knowledge management without having clarity or consensusabout the underlying purpose or desired outcomes (Abou-Zeid, 2003; Kim etal., 2003; Zack, 1999). Clear business strategies are critical to ensure thatknowledge management activities support business drivers and performanceobjectives (Murray, 2002; Poage, 2002). One employee’s comments seem



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

CONCLUSIONAs a contribution to research, the chapter adds to the small number of

empirical case studies of knowledge-management practices. The approachused in this research provides managers with a tool to evaluate their organiza-tions’ current knowledge-management capability, both in terms of the cultureand supporting infrastructure. By measuring gaps between perceptions ofcurrent practices and their importance, managers can identify areas for im-provement and decide whether to direct resources toward changing attitudes,practices, or infrastructure.

Taken together, these results illustrate the challenges facing a telecommu-nications company operating in a highly competitive and rapidly changingenvironment. In such markets, there are inevitable pressures on time, such thatunless the organization recognizes the need to set aside time for creativethinking and learning from failures and errors, this will not happen. Moreover,while mergers are common occurrences, senior managers need to address theirpotential impact on knowledge-sharing capability and ensure that, at least in theshort term, the disruption of a merger does not erode personal networks ofcontacts or the openness of the merged organization to share with newcolleagues.

Our data suggests that the knowledge-sharing support platform inad-equately satisfies the knowledge appetite of respondents. Harmonizing theinformation infrastructure of a merged organization can be a critical challenge,not only to reconcile a plethora of databases, but also to provide a comprehen-sive “Yellow Pages” facility to facilitate contact with key people. Our resultsalso underscore the longer-term challenge to enhance the effectiveness of abusiness unit structure by ensuring that inter-unit rivalry does not inhibit globalknowledge sharing.

Perhaps most strikingly, the interview data revealed how important it is toachieve consensus among senior managers about strategic direction, withoutwhich knowledge management is likely to remain, at best, a series of frag-mented and unrelated initiatives at local levels.



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Davenport, T. (1999). Knowledge management and the broader firm: Strat-egy, advantage and performance. In J. Liebowitz (Ed.), Knowledgemanagement handbook. (2.1-2.11). Washington, DC: CRC Press.

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Grant, R. M. (1996). Toward a knowledge-based theory of the firm. StrategicManagement Journal, 17(Winter Special Issue), 109-122.

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Walczak, S. & Zwart, D. (2003). Organizational knowledge management:Enabling a knowledge culture. In Proceedings of the InformationResources Management Association International Conference, Phila-delphia, 18-21 May, pp. 670-673.

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Knowledge Management of E-Business Initiatives within Two Global Organizations 115


Chapter VI

Knowledge Management ofE-Business Initiatives withinTwo Global Organizations:

A ComparativeCase Study Analysis

Mahesh S. RaisinghaniTexas Woman’s University, USA

Pegi ProffittUniversity of Dallas, USA

Jonathan BarhamUniversity of Dallas, USA

Michael McCurdyUniversity of Dallas, USA

ABSTRACTThe concept of Knowledge Management concerns the creation of structuresthat combine the most advanced elements of technological resources andthe indispensable input of human response and decision making. Thischapter addresses a very interesting topic—Knowledge Management

116 Raisinghani, Proffitt, Barham & McCurdy


(KM) and e-business initiatives within global organizations. It comparesand contrasts the experiences of two global corporations as they haveconceived and implemented KM initiatives. After in-depth secondaryresearch on the subject, both companies developed their own KM in e-business strategy. The two case studies discussed in this chapter highlightBusiness-to-Business (B2B), Business-to-Consumer (B2C), and Business-to-Employee (B2E) initiatives at these two global organizations. Thisprovides concepts and viewpoints related to the drivers of KM, the hurdlesto 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’scompetitive strategy, and how to deploy a sustainable KM system thatsuits the business needs of an organization.

We now know that the source of wealth is something specificallyhuman: knowledge. If we apply knowledge to tasks we already knowhow to do, we call it productivity. If we apply knowledge to tasks thatare new and different, we call it innovation. Only knowledge allows usto achieve those two goals.

—Peter F. Drucker (2002)

INTRODUCTIONMany organizations approach Knowledge Management (KM) as a set

of principles, practices, and technologies focused on innovation and optimiza-tion of their core internal Business-to-Employee (B2E) and Business-to-Business (B2B) processes. Most KM efforts are being delivered as enterpriseportals, combining unstructured and structured information aggregation andcontextual, 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 codifiedknowledge are information in databases, data warehouses/marts, previouswork products, documents, and software code. Examples of experientialknowledge include techniques and insights gained from personal experiencesand interactions. Although the discipline of Knowledge Management is onlyabout a decade old, the definitions of Knowledge Management range fromnarrow, utilitarian views to much more conceptual and broad perceptions. Onedefinition of KM is that it is “about connecting people to people and people toinformation to create competitive advantage” (Hoyt, 2001). Another definitionof KM states that it caters to the critical issues of organizational adoption,



survival, and competence in the face of increasingly discontinuous environmen-tal change. Essentially it embodies an organizational process that seekssynergistic combination of data- and information-processing capacity of infor-mation technologies and the creative and innovative capacity of human beings(Malhotra, 1999; 2000a; 2000b; 2001). This definition not only recognizes thediscontinuous environment, but also the importance of both techno-centric andsocio-centric approaches. The traditional view of KM primarily relies on theprepackaged or “taken for granted” interpretation of the knowledge. Suchknowledge is generally static and does not encourage the generation of multipleand contradictory viewpoints in a highly dynamic and ever-changing environ-ment.

Definitional elements include the distinction between information andknowledge and the procedural aspects of this resource. Understanding thedifference between information and knowledge and how to transform one to theother answers the question of what a knowledge base can be. A completedefinition, such as the one by Beckman (1999) that describes KnowledgeManagement 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 connec-tion between the system and the users, or just how the system is used in a givenenvironment. An organization’s intellectual capital, as some authors refer to it,is the complex and ever-changing mix of information resources and the workersthemselves.

“To conceive of knowledge as a collection of information seems to robthe concept of all of its life…Knowledge resides in the user and not inthe collection. It is how the user reacts to a collection of information thatmatters” (Churchman, 1971).

“The business problem that Knowledge Management is designed tosolve is that knowledge acquired through experience doesn’t getreused because it isn’t shared in a formal way. Whether it’s how toavoid 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 conceptunder which information is turned into actionable knowledge and madeavailable 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 noagreement 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 theprocess through which organizations generate value from their intellectual andknowledge-based assets. Most often, generating value from such assetsinvolves sharing them among employees, departments, and even with othercompanies 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 withineach of the organizations.

While management and knowledge workers are grasping to understandKnowledge Management, it seems so obvious to start with the customer. Firstand 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 under-lying value proposition should be firmly grounded in the customer-centric focus.An effective KM program should help a company foster innovation byencouraging the free flow of ideas, improve customer service by streamliningresponse time, boost revenues by getting products and services to marketfaster, enhance employee retention rates by recognizing the value of employ-ees’ knowledge and rewarding them for it, streamline operations, and reducecosts by eliminating redundant processes (Amidon & MacNamara, 2000;Barua et al., 2001; Boeri & Hensel, 2001; Harris & Jacobs, 2000). Althoughone may acknowledge the benefits of managing intellectual capital as part of themost valuable corporate asset in e-business, the actual implementation of sucha practice is often overwhelming. To understand how this affects a company’sstrategy, we looked at two large, global organizations. The chapter derivesdata from the interviews conducted by the authors with employees andmanagers of two organizations practicing KM, as well as from secondarysources. The first company is a global information technology (IT) companythat is a provider of technology solutions for the travel industry and the othera global telecommunications company.

Once the top management team members of the two companies haddecided that their organization could benefit from the management of intellec-tual capital, the next question was, “How do they actually do it?” This chapterexplains how two global companies addressed their internal KM initiativeswithin their e-business organizations.



BACKGROUNDKM starts with electronic repositories for knowledge, but that is the easy

part. The greater challenge comes in building a knowledge-oriented culture andchanging the work habits and attitudes of employees who often see knowledgeas status rather than something to be shared. The interviews and online surveysof employees conducted by the authors at these two global firms found thatseveral respondents did not know their companies had KM initiatives, whileother respondents in the same work groups were keenly aware of theseinitiatives.

KM is a way of thinking. It is not necessarily just about having electronicfiles that can be accessed by a given group. KM provides a methodology forcreating processes within the organization to promote knowledge creation andsharing. It is for this very reason that processes— rather than technology—drive KM (Orr & Higgins, 2000). The ability of firms to marshal and deployexpertise is one of the few sources of sustainable competitive advantage.Intangible resources that are the source of such firm capabilities are embeddedin the knowledge of their employees, in the design of organizational structures,in the operational processes, and in the complex synergistic interactions ofthese factors. As a result, there is increasing acknowledgement in both thepopular business press and in the scholarly literature of the importance of KMin organizations. Thomas W. Brailsford, manager of knowledge leadership forHallmark 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 thatare grounded in the sociology of knowledge and based on the view oforganizations 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 whenindividuals create new knowledge by combining explicit knowledge accessedfrom KM systems with their prior knowledge, normally in tacit form. These fourprocesses enable end-users to generate and share knowledge while interactingwith their KM system.

According to Dan Holtshouse, director of business strategy knowledgeinitiatives at Xerox, there are ten domains of knowledge that give structure tothe activities around which KM plans should be built (www.xerox.com; also,see Figure 1a). Companies that have mastered these domains are promotingknowledge sharing and best practices, making that sharing an enterprise-wide



responsibility, and capturing and re-using past experiences. They are alsoembedding knowledge in their products, services, and processes.

The World Bank is a case in point. Instead of focusing on lending, theWorld Bank wants to be thought of as a place where you can get expertise onhow to use money. In all the countries in which it has offices, the World Bankwants to capture the best practices that have been developed and make themavailable worldwide. It is putting in the infrastructure and bringing together thecommunities 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 toachieve innovation. Finally, they are trying to manage their intellectual assetsand—most difficult of all—are laboring to measure the value of knowledge inall its forms.

TYPES OF KNOWLEDGE INITIATIVESThe purpose of this exploratory research is to determine if there is a

correlation between KM of e-business initiatives within two organizations. Toadd clarity and focus to the research question, a case study analysis of twoglobal corporations was chosen as the primary research methodology. Al-though the implementation of KM in general is context-dependent, we wereinterested in exploring the common threads (if any) between these two globalorganizations from an ontological perspective. An ontology (Jurisica, Mylopoulos,& Yu, 2004) enumerates and gives semantic descriptions of concepts, definingdomain-relevant attributes and various relationships among them. For example,an ontology describing wines would include concepts like vintages, wineregions, wineries, and grape varieties. It will also include relations such asproduced by, made from, color, year, and body of wine. Similarly, the ontologyof the two organizations in this study is explored.

A qualitative research methodology of a case study was employed to takea closer look at KM of e-business initiatives in two global organizations. A casestudy was considered most appropriate since it allows for the adoption ofmultiple case, data-collection methods (Yin, 1984), which was thought to beimportant in order to develop the rich case description needed to buildtheoretical understanding. Methods of data collection for this case studyincluded on-site observation and documentation and semi-structured face-to-face interviews. Stake (1995) suggests that adopting multiple methods isimportant, not only to enhance the richness of findings but also to ensure validityand consistency through the process of triangulation across the different



sources of primary and archival case material. Hence, documents (such aspress releases, media articles, minutes, and reports) and intranet sites wereused to further enhance the richness of the material collected. Case researchhas the advantage of allowing the researcher(s) to study the concepts in arealistic setting and place the research in the context of the environment in whichit naturally occurs. The ability to focus on the dynamic interaction in each of thetwo global organizations and the ability to probe a situation in depth to studythe aspects of a situation were considered important for this study. Thedisadvantage is that it is difficult to replicate, due to the variety of extrinsicfactors that are present in any real setting. While there were no prior hypothesesat the outset of the inquiry, patterns emerged from the data that suggested thekey issues and theoretical linkages.

Since the two organizations and the subjects interviewed for this studywished to remain anonymous, interviews were not tape-recorded. The authorsalso felt that recording the interviews would be impractical as it may lead tomore inhibited, “politically correct” responses by the subjects. To validate thedata, each author monitored all conversations designated as research, andnotes were subsequently compared. The 25 subjects in each organization wereselected based upon the authors’ knowledge and the recommendation of thesenior 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

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

Top 10 Domains for Knowledge

Management

Instituting Responsibility for Knowledge

Sharing Capturing and Reusing Past Experiences

Sharing Knowledge and Best Practices

Leveraging Intellectual

Assets

Understanding and Measuring for Value

of Knowledge

Building and Mining Customer Knowledge Bases

Embedding Knowledge in

Products, Services, and Processors

Producing Knowledge as a Product

Driving Knowledge

Generation for Innovation Mapping

Networks of Experts



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

CASE 1: A GLOBAL IT COMPANYFor decades, the global IT company has been developing innovations and

transforming the business of travel. From its original system, to advanced airlineyield management systems, to leading travel Web sites today, this firm’stechnology has traveled through time, around the world, and touched all pointsof the travel industry.

The IT company is a provider of electronic distribution services for thetravel industry around the globe as part of KM technologies. The IT companysupplies information and systems support to travel agencies through its globaldata center. It also develops software tools for the travel industry. Thiscompany enables airline, hotel, rental car, and cruise vendors to distributedetailed information about their products to the travel agency community. Inaddition, the IT company now provides application programming interfaces(APIs) and development assistance to the travel industry for using the Web innew and innovative ways to contact customers.

The corporation built its original systems and services on a platform ofmainframe computers—first, providing access to airline reservations, and thenexpanding into hotel, rental cars, and cruise lines. Today, the IT company hasa global presence in numerous countries assisting thousands of travel agencies.The IT company provides access to the travel industry by supporting a varietyof operating systems residing on their clients’ terminals. The Microsoft Web-solution platform now in use supports real-time access to data and servicesprovided by the mainframe central reservation system.

The company’s customers connect to the systems through multiple net-works, using just about every standard and nonstandard operating system andnetwork protocol. The IT company must supply its customers with a wide rangeof APIs and graphical user interfaces (GUIs). The company develops or worksin cooperation with the customers to provide customized and extensibleapplications.

Now, the Web, as the tool of implementation of KM in e-business, hasbrought a new challenge to the IT company. The travel industry needs topresent more of its information on browsers, either as part of its business sitesor by offering its customers access to a Web-delivered product. With the



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

The Need for KM at the Global IT CompanyThe majority of data sources within the company either replicated data or

had redundant data within them. Therefore, meaningful search and retrievalcould not be done, as navigating to the required data was cumbersome if notimpossible. More often than not, multiple data sources were required forobtaining 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 theinformation infrastructure was fragmented throughout the organization. Everygroup or department had its own information, which was not shared throughoutthe IT company. There was no central repository for the knowledge workerto obtain and use a centralized data source of information. For example, manyapplications or Web sites maintained their own employee database separatefrom the Lightweight Directory Access Pro (LDAP) e-mail server. Employee-related information from multiple point sources was the norm instead of theexception. Management could not get access to detailed financial information

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

ModelCurrent

State

Align withBusinessChange

PerformTransitionPlanning

UnderstandPlans for

Future

DefineFutureState

ConductExternal

Research



without relying on financial analysts and multiple spreadsheets. If the data inthese spreadsheets was tied to organizational data, it was usually incorrect oroutdated. Under this current model of unstructured information, many employ-ees were working on mundane data-manipulation activities that were necessaryto feed information to the decision makers and frontline sales force. The ITcompany was not effectively leveraging its workforce or its business intelli-gence.

This situation arose for various reasons. First of all, there was no commonarchitecture to create common KM standards. Each implementation team hadthe ability to choose the platform, data definition, and access mechanisms toobtain knowledge. Simply saying “use Informix” did not constitute a uniformapproach to the management of data that must roll up to a common enterpriseview. There was also no common means to access the data that led intohomegrown departmental data repositories. These issues fostered an environ-ment of knowledge redundancy/duplication, created data definition issues, andled to a fractured view of business information.

Issues and Concerns Regarding KMBased upon the interviews with senior management, knowledge workers

at the IT company agreed that KM was important to their job, although less thanhalf of those surveyed were aware of any formal KM initiative. This implies thatcommunication of the KM initiatives at the IT company needed to be ad-dressed. A common understanding of what KM is must exist among allemployees of the IT company.

Second, there must be improved processes for ensuring proper distribu-tion and sharing of knowledge within the business units and across theorganization. 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. Organiza-tional structures and personnel can change often — KM would help shorten thelearning curve — benefiting the company’s customers and its knowledgeworkers.

There was also a reoccurring theme of redundancy and rework. Thereneeds to be more alignment of organizational goals and awareness of progressmade against these goals by an enhanced focus of job tasks, thereby increasingproductivity. The use of technology was a strong indicator on how to bestimplement a KM initiative. The participants of the survey felt frustrated andisolated due to the lack of a formal internal KM structure.



The Global IT Company’s Solution to Internal KMProposed Solution

The IT company has already identified some areas of improvement for KMand the internal architecture of the KM system as illustrated in Figure 2—although nothing formal has been initiated. The IT company needs to implementthe physical architecture of the KM system illustrated in Figure 2 , for bettermanagement and control of information throughout the organization. Eachsegment is designed to functionally align the IT company’s internal systemsstrategies with its business strategies and support the prioritization and planningof the IT company’s internal KM initiative.

Figure 2. Physical architecture of the KM system (Source: Interviews withglobal IT company’s management)

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

EIM

• Billing • Billing Detail

Management • Collections

RCM

• Sales Force Automation

• Marketing & Advertising

• Sales Management

CRM

• Demand Forecasting

• Prioritization • Capacity

Planning • Resource

Management • Labor

Tracking

DDM

• Event Mgmt. • Remote

Mgmt. • Network

Mgmt. • Security

Admin. • Software

Dist. • Cap / Perf.

Mgmt.

ESM

• Asset Mgmt. • Change

Mgmt. • Customer

Order Mgmt. • Problem

Mgmt. • Workforce

Mgmt.

IRP

• Accounting • Human

Resources • Finance • MRP /

Warehouse • Inventory

Management • Procurement

ERP

Productivity and Office Automation / Legal / Strategic Planning Corporate Services / Corporate Communications

BCA



The Global IT Company’s Proposed KM StrategyThe following briefly discusses a proposed structural resolution to many of

the IT Company’s internal architecture and KM problems. Next, we discusseach of these segments of the IT Company’s proposed KM strategy.

Business and Corporate Administration at the Global IT CompanyThe BCA business segment includes the business areas that support the

business operations for the IT company’s Knowledge Management. The BCAportfolios 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 adoorway for all the knowledge workers to get the content and data within andbeyond the enterprise, that is, providing knowledge workers with a uniformstarting place for finding information and completing tasks. The conceptscentral to this initiative are content and data aggregation, collaboration andcommunity services, and personalization. The primary business objectives forBCA are to:

• more fully enable knowledge workers and promote productivity andgrowth 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 ITcompany researched the related solution requirements for Knowledge Man-agement. It was determined that the project scope should be significantlyexpanded to include the following elements as well:

• Focus on leveraging Web services: Within the company, there has beena pronounced shift toward the use of Web services to deliver dynamicservice offerings personalized to the user’s business needs.

• Web content and document management requirements: There are numerousexisting business needs for managing Web publishing activities, managingdocuments, and incorporating related business process workflows. All ofthese can best be deployed within the context of a portal solution.



Demand and Delivery Management at the Global IT CompanyThe Demand and Delivery Management (DDM) focuses on the IT

Company’s staffing needs. As new projects are introduced, the need forresources increases. DDM systems allow project managers to obtain theknowledge to forecast resource demands, plan capacity, prioritize, and allo-cate resources accordingly. The DDM portfolios identified at the organizationwere demand tracking and forecasting, prioritization, program/project man-agement, resource management, time tracking, and tracking of demand for theIT company’s resources.

DDM will capture the need for human resources and will distributedemand notification to appropriate portfolios for forecasting equipment, facili-ties, and infrastructure resources. The IT Company will rank the requests fordemand based upon organizational strategy and the ability to deliver. DDMprovides the ability to effectively allocate human resources to defined priorities.The DDM also provides the ability to consistently plan, manage, and report onwork throughout the organization, using established methods for managing andcompleting work activities on time, within budget, and according to specifica-tions. This allows the tracking of actual time to feed project management,billing, payroll, and financial reporting. By implementing DDM, the IT Com-pany has more control over the information of resources.

Customer Relationship Management at the Global IT CompanyThe IT Company’s Customer Relationship Management (CRM) system is

an enterprise-wide business strategy designed to optimize profitability, rev-enue, and customer satisfaction by organizing the enterprise around customersegments, fostering customer-satisfying behaviors, and linking optimized pro-cesses. CRM is enabled through a set of discrete applications and technologiesthat focus on automating and improving business processes in front-office areassuch as marketing, sales, customer service, and support to enable one-to-onemarketing. Implementing CRM for the IT Company will provide a wide rangeof benefits to the organization such as the ability to:

• Capture and effectively utilize all data resulting from customer “touchpoints.” Touch points include the IT Company’s Web site, help desks,field service, sales force, account executives, marketing, product instal-lations, service centers, and so forth.

• Enhance productivity in front-office functions through applications such ascontact management and calendar management for the sales force.



• Streamline front-office workflow through application integration to en-hance efficiency by eliminating silos and fostering best practices.

• Optimize front-office resource utilization by providing business KMthrough applications such as customer data warehousing, data mining, andanalytical tools.

Revenue Cycle Management at the Global IT CompanyRevenue Cycle Management (RCM) focuses on business areas within the

IT Company that are closely related to creating and processing client invoicesand how that knowledge is managed. Billing cycles, processes, details, andterms are all included. Accounts receivable aging, overdue analysis, andcollections are also part of RCM. Invoice management, pricing, and usagemanagement are the key RCM components in managing this knowledge.

Enterprise Resource Planning at the Global IT CompanyThe concept of Enterprise Resource Planning (ERP) for the organization

encompasses the systems, information, and processes associated with aspecific 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 isoptimized for the particular way that the department performs its work. Today,the ERP model strives to combine these functional areas into a single KMrepository. This integrated approach allows the business areas to more easilyshare information and seamlessly communicate with each other. The benefitsof 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 CompanyThe Infrastructure Resource Planning (IRP) includes those areas within the

firm that are responsible for acquiring and managing corporate assets used to



support business operations. The five portfolios identified for the IRP wereasset management, change management, customer order management, prob-lem management, and workforce management.

Deploying a successful IRP infrastructure is a key piece for the ITcompany success, as it allows the organization the ability to deploy assetsquickly and manage them effectively. Efficient deployment and managementtranslates into lower costs throughout the organization. Assets managed byIRP systems include desktops, mid-range equipment, network and data centerequipment, facilities infrastructure, and software. The IT Company’s IRPprocesses manage equipment ordering, asset installation, problem identifica-tion, problem resolution, and change implementation. This is a key fundamentalpart of managing the knowledge for corporate assets.

Enterprise Systems Management at the Global IT CompanyThe Enterprise Systems Management (ESM) is comprised of the business

areas associated with managing a distributed computing environment. ESMsystems are designed to increase system availability and performance throughmonitoring and managing network services, user security, job scheduling,software distribution, and software upgrades. For the corporation, the ESMportfolios that have been identified are: event management, remote manage-ment, network management, security administration, software distribution, andcapacity/performance management.

Enterprise Information Management at the Global IT CompanyThe Enterprise Information Management (EIM) includes all business areas

that provide data that management relies upon to make quick and accuratedecisions. The portfolios in the EIM area that the IT Company needs to identifyare: data warehousing, reporting, enterprise application integration, decision-support systems, document management, and imaging.

The objective of this effort is an enterprise-wide data warehousing andreporting environment that facilitates the sharing of business information andknowledge across the IT Company (spanning all organizational, product/service, and system/platform boundaries). EIM integrates data across appli-cations on multiple platforms in a manner that is transparent to the end user. Italso provides an end-to-end view of business information by providingcommon definitions of enterprise data. This also integrates into the overallinternal systems architecture and support of the IT Company’s enterprisesystems efforts. EIM delivers the competitive advantage by providing the rightknowledge, to the right knowledge worker, in the right form, at the right time.



CASE 2: EXTRANET PORTALEXPERIENCE AT A GLOBAL

TELECOMMUNICATIONS COMPANYA global Internet and communications leader (referred to as the “Telecom-

munications Company” [TC] in this case to disguise its identity) has capabilitiesspanning optical and wireless products and services for the Internet and intranetinfrastructure and e-business in 150 countries and territories. The success storyof this global telecommunications company encompasses more than 100 yearsof technological, social, economic, and political change. From its beginningsas one of the pioneers in the creation of the worldwide telecommunicationsnetwork—surely one of our greatest inventions, this company has played a keyrole in the remarkable history of communications technologies over the lastcentury. Today, the Telecommunications Company (TC) is firmly positioned inthe heart of the Internet revolution.

The TC’s overall e-business strategy is focused in two separate areas:

1. How to do business directly with their customers both today and in thefuture, and

2. How to capture information from customers, suppliers, partners, andemployees for internal use by the company’s knowledge workers.

The sharing of information between the company, customers, and suppli-ers (see Figure 3) would facilitate taking orders, getting products and servicesto the customer, and receiving payments faster.

But there are interim objectives as well, such as:

• Gathering knowledge through intelligent Web tools to anticipate whatcustomers want and when;

• Accepting an order faster and actually having the inventory on hand aretwo different things; and

• Sharing information throughout the supply chain is more important thanever with the large amount of outsourcing that is taking place in theindustry.

Through the Internet the customer would have one URL, a personalizedportal that would verify his identity, allow him access, and provide a person-alized view of his favorite sites on the TC’s extranet. A customer couldconfigure complex switches, look up prices, place orders, view order status,



exchange large documents, give future forecast information, and even down-load software capable of turning on features in an existing telecom switch. Thisis part of a concept referred to as Enterprise Self-Service (ESS). ESS is theaccessibility of an enterprise’s applications, information, and business pro-cesses, across the Web and over wireless devices, to effectively serve itsemployees, partners, and customers in a personalized and collaborative way.The promise of ESS is measurable benefits. It cuts costs because it unifies Websites, streamlines business processes, and reduces sales expenses and servicecosts, all while enabling an enterprise to share knowledge. The reality might besomething different.

Change has not always come easy. It is a substantial adjustment for theTC’s customers and employees to share information in a less formal manner.Previously, a representative for the customer would request information. Therepresentative from the TC would gather the information and fax or mail it tothe customer. In today’s world, the customer wants the information now. Thechange was reasonable; the TC had to find solutions.

In the quest for providing and sharing knowledge with customers andemployees, a growing number of unregulated intranet/extranet sites were beingdeveloped on the TC’s network. Like most large corporations, the global TCwas feeling the strain of the growing number of unregulated sites managed bymultiple groups within the corporation. Product groups had set up sites tofeatures their products and programs. Customer account teams had set up Websites to post information very specific to their accounts. Since most of the TC’s

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

eBusiness Applications

Customers

Suppliers

Work Force

Channel Partners



employees and the customer’s employees were knowledge workers, theyneeded access to this knowledge.

These unsanctioned Web sites were beginning to cost the corporationmillions of dollars. An actual figure is unknown, but it was becoming clear therehad to be some control and consolidation of the data.

The e-business operations organization was formed. This was not to policethe network but to actually make it a user-friendly experience for the customerwhile limiting the need for multiple sites. To accomplish this consolidation, theCompany decided to move toward providing personalized portals to employ-ees and customer alike as one of its e-business KM initiatives. In addition toallowing secured exchange of information and access to other Web pagesthroughout the TC’s site, the portal was a widely accepted Web tool.

Within a company’s network, Business-to-Employees (B2E) allows em-ployees to have access to the greatest amount of the enterprises knowledgeassets. The Business-to-Business (B2B) partners have somewhat restrictedaccess to the information, and the end-user (B2C) has extremely limited accessto information. Figure 4 shows the access levels of each of the constituents.

Personalization allows each user to customize his view of the informationto 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 thematerial presented. Armed with this new technology and the need to addresschange, the TC set out to dismantle the myriad of Web sites existing inorganizational silos that focused on individual customer communities and toconsolidate them into a handful of enterprise portals. These portals would besupported by a centrally managed, highly scalable environment with distributedadministration and content management capabilities. E-business operationsplaced its focus on the customer, with plans to extend the company’s reachfurther than ever before by concentrating on a best-in-class, Web-enabledcustomer experience. “It’s all about execution and leveraging the Internet toextend our reach,” said one company VP responsible for the e-businessstrategy and operations.

To accommodate all the major accounts and to bring costs in line, apersonalization project was conceived and implemented. Each customer’semployees would be given access to a customer-specific Web site that wouldbe personalized using off-the-shelf portal technology. Sites would be mucheasier to create and maintain, and a designated employee either from thecompany account team or the customer could grant secure access to approvedpersonnel.



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

The Results of the Portal ImplementationThe portals were implemented, and information was transferred from

existing account team Websites to these new communities. The implementationteam was pleased with the results. But the customers had a different opinion ofthe new portal than the TC’s management. The customers would have liked aportal, but they would have preferred the portal to be on their Web site, not theirsuppliers’. Additionally, there was actually more management required thanbefore the implementation of the project. New users had to be added to thecommunities 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-to-date. As a user signed in, there might be news of an event or tradeshow that hadalready past. The personalized portals are still in use today because that is theonly controlled extranet access the telecom company will allow, but they are notexactly a success. Many of the accounts teams have abandoned them alto-gether.

Con

fiden

tialit

y

Quality of Content & Applications

Finance

Systems

Policies & Procedures

Product / Service Information

B2E B2B

General Information

B2C

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



CROSS-CASE ANALYSISFrom a conceptual standpoint, KM is a framework within which the

organization views all its processes as knowledge processes. In this view, allbusiness processes involve creation, dissemination, renewal, and application ofknowledge toward organizational sustenance and survival. KM was found tobe necessary for both the organizations in this study because what workedyesterday may or may not work tomorrow with respect to the assumptionsabout the optimal organization structure, the control and coordination systems,the motivation and incentive schemes, and so forth. To remain aligned with thedynamically changing needs of the business environment, both these organiza-tions felt the need to continuously assess their internal theories of business forongoing effectiveness and ensure that today’s “core competencies” do notbecome the “core rigidities” of tomorrow.

These two case studies also found that KM shifts the organization to anongoing organic mode of functioning. KM facilitated continuous and ongoingprocesses of learning and unlearning, thus minimizing the need for imposing top-down “radical change.” Furthermore, “fundamental rethinking” does notmaterialize in the form of top-down reshuffling of organizational processes,people, and structures. It is ingrained in the day-to-day operations of thebusiness at the grassroots level and driven by the people who interact with theexternal environment on the frontlines of the business. These are the people inboth these global organizations who are directly in touch with the dynamicallychanging reality of the business environment.

Today’s business world does not put a premium on playing by predefinedrules but, rather, on understanding and adapting as the rules of the game—andthe game itself—keep changing (Stewart et al., 2000; Usoro, 2001). Examplesof such changing business rules, conventions, and assumptions are suggestedby the emergence of virtual corporations and business ecosystems. There aresome generic KM strategies that were common between these two globalorganizations.

The first is that these two organizations choose to use knowledge tosupport innovation. The main strategic thrust of the two organizations westudied is “What don’t we know that we should know or need to know?” Onlyafter they analyze these knowledge needs can they take action, whether it isthrough internal development or acquisition (for example, IBM buying Lotus tolearn 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



the best microchip factory or fast-food restaurant, create a blueprint, andreplicate this design point-by-point worldwide.

The third strategy we found in these two organizations is the knowledgediffusion and absorption model. This happens when company executives startthinking, “Part of our company knows how to do X very well, and we wish therest of the company knew how to do it as well.” But how do you get the messageout? This knowledge strategy was not evident in either organization since itusually involves transferring a group of employees so that they can show byexample the changes that need to be made.

Lastly, there is the idea of commercializing knowledge. This is a very viablestrategy for both the organizations in our two case studies. Although the ITcompany has made more progress in implementing this strategy than the TC, thefull potential of this strategy has not been realized by either organization. Eachorganization needs to take a closer look at in-house, promising ideas that canbe leveraged but have not sold for whatever reason, and evaluate whetherchanging technology and/or customer needs have now made this idea market-able.

IMPLICATIONS FOR MANAGEMENTThe concept of leveraging a company’s intellectual capital is being ap-

proached with the development of KM practices. After interviewing vicepresidents, managers, and knowledge workers, and reviewing articles, busi-ness journals, and various trade journals, a common theme permeated ourfindings. Both primary and secondary research validated that employees atboth 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, sincemost knowledge workers do not agree on what constitutes KM. If the businessworld and academia cannot agree on a common definition of KM, how canknowledge workers expect to understand management’s KM initiatives?

The rationale for KM and the practicalities of its implementation wereoften discussed together by the employees in these two organizations. Somecompanies automate KM by using a codification strategy that reuses codifiedknowledge to provide high-quality, reliable, and fast information-systemsimplementation (e.g., Anderson Consulting and Ernst & Young); others employa personalization strategy to provide creative, analytically rigorous advice onhigh-level strategic problems by relying on their people to share knowledgethrough more traditional means (e.g., McKinsey & Company and Bain &



Company) (Hansen et al, 1999). Productive utilization is the reason for theexistence of any technology, so providing a rationale for KM without thecapability of implementation is not convincing to the audience of these sources.A commonly expressed view is that the need for KM is technology driven. Thevast amount of information produced and distributed so effectively by technol-ogy must be received, organized, filtered, re-packaged, distributed, andrecycled. Individuals and organizations are motivated by either the desire totake advantage of greater resources or the fear of significant loss and wastefrom not being able to efficiently use available resources. Technologicalsolutions to these needs are in the beginning stages, and the applicableparameters impacting those solutions are still being discovered. Of moreinterest, as uncovered by these two case studies, are the human considerationsfor implementation.

The key considerations for managers are motivating employees to shareknowledge, measuring knowledge that is captured, providing incentives toshare knowledge (perhaps by storytelling to ignite action [Denning, 2000]), andaddressing the implications of employees leaving the company/retiring (i.e.,taking knowledge with them). From a holistic, systemic perspective, knowl-edge is not simply a “tool” or “resource” so much as a social construct. It is areciprocal, interdependent process of learning arising from knowledge transfer,information flow, and communication—a socio-technical perspective thatamalgamates the “dualism” of people and technology.

IMPLICATIONS FOR RESEARCHERSAfter reading numerous documents regarding KM in various organiza-

tions, an unmistakable definition of KM has still not emerged. A clearunderstanding should have defined it by now and become part of commonvernacular. In contrast, Re-engineering, the buzzword of the 1990s, wasclearly defined as “the radical redesign of a company’s business processes ...in order to meet the demands of a modern economy” (Hammer, 1995). In orderto have consistent meaning to different individuals in different enterprises, adefinition of KM will have to emerge. The authors argue that the term KM iscontextual.

Some key questions for future research are as follows: Is KM themanagement of the intellectual property each employee possesses? Shouldemployees be required to share this knowledge? Is KM the informationcovertly gathered from customers as they travel through your site or call intoyour call center? Is KM all the data captured in a data warehouse/CRM tool



or is it the multitude of structured and unstructured server farms within theenterprise? Is it simply knowledge when it’s not shared and KM when it’sshared? 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 supportsystems to interactive knowledge-support systems, more sophisticated tech-nology will be used for automating and manipulating information effectively, toadd value to human endeavors. This combined with an explicit recognition oftacit knowledge and related human aspects, such as ideals, values, or emotions,is necessary for developing a richer conceptualization of KM.

FUTURE TRENDSOne 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 placebehind operational efficiencies and customer interaction. As time goes on, it isclear that information and knowledge are the forces within the business units toautomate their operations. At the information level, data integration betweenold systems and new systems, old process and new processes, will enable moreWeb operations. Figure 5 illustrates the difficulties encountered in implement-ing KM by organizations (Davis, 1999).

Many firms that participate in KM have difficulty trying to quantify orjustify its costs and savings into present-day dollars. Management feels that theKM initiatives help the company share resources, but at what cost? Companiesthink that KM helps their operations, but our investigation showed that neithercompany has measured the effectiveness of its KM initiatives. The primaryreason is that KM is difficult to measure. Without an industry-by-industrystandard, an organization may have difficulty proving its success in implement-ing KM initiatives.

KM means different things to different people; therefore, knowledgeworkers have difficulty in understanding their firms’ KM initiatives. Knowledgeworkers from both the Global IT Services Company and the Global Telecom-munications Company were questioned about their firm’s knowledge initiativeswith 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 theirKnowledge Management initiatives. Advanced knowledge analysis tools willbe embedded into a range of business applications, which themselves will be



linked through an enterprise portal to other Knowledge Management tools andresources. The distinction between Knowledge Management and businessintelligence (data warehousing, Online Analytic Processing [OLAP], and datamining) will become increasingly blurred in terms of functionality offered andcompeting vendors, as acquisition and mergers create more companies thatspan both markets (Pelz-Sharpe, 2004).

KM promotes development and application of tacit, explicit, and embed-ded 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 yearsthat include:

1. A developing area of increasing insight is the role that understanding—ormeaning-connected knowledge—and abstract mental models play inintellectual work.

2. Future knowledge-management practices and methods will be system-atic, explicit, and relatively dependent upon advanced technology inseveral areas. However, overall we expect Knowledge Management tobecome more people-centric as the recognition spreads that it is the

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



networking of competent and collaborating people that forms the basis forthe behavior and success of any organization.

3. Management and operating practices will change to facilitate KnowledgeManagement in many ways. Incentives will be introduced and disincen-tives eliminated to promote innovation. Effective knowledge exchange,learning, and application of best knowledge practices will be the norm inall work situations.

4. There will be efforts to embed knowledge-management perspectives andconsiderations into regular activities throughout the enterprise.

5. New practices will focus on a desired combination of understandingknowledge, skills and attitudes when assembling work teams or analyzingrequirements for performing work. For example, Awazu and Desouza(2004) discuss the open-source revolution in KM.

6. Most organizations will create effective approaches to transfer personalknowledge to structural intellectual capital. Increased transfer will allowbetter utilization and leveraging of the intellectual capital.

CONCLUSIONThis chapter explored how two global corporations, an IT service pro-

vider and a telecommunications firm, addressed and executed their own KMinitiatives. These firms had different customers—one internal and the otherexternal—but similar issues and results. Across the board, professionals,managers, researchers, and academicians have different views as to whatknowledge management is. This confusion was evident within our two casestudies. Management felt strongly about certain KM initiatives, while profes-sional knowledge workers had different opinions. In addition to a clearunderstanding of KM, employees have to be part of developing the process thatcaptures the knowledge and shares it with the appropriate stakeholders/employees. It is critical that the management and employees define and buy intothe process. In both of these organizations, knowledge workers told research-ers that processes were not in place to capture information in a format thatfacilitated sharing it with others. Companies are still relying on the “tribal”knowledge of the organization; that takes people — a rare resource in manycompanies today (Coffman, 2003). It also takes an understanding of acompany’s organization before a customer can locate the knowledge. Manyworkers 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 orrelying on the right people?



Larry Prusak, executive director of IBM’s Institute for KnowledgeManagement, cites Nynex, the telecom company that has since merged withBell Atlantic to form Verizon. The company, says Prusak, wasted tens ofmillions of dollars trying to build a system that would store the expertknowledge of its most valuable employees (Berkman, 2001). The trouble wasthat the systems couldn’t reproduce the problem-solving processes of itsexperts. “[Nynex] didn’t think through what an expert knows and why they’reexperts in the first place,” states Prusak.

The key lessons learned from these two case studies (that were alsocommon threads between the two organizations studied) are to focus onbusiness results; adopt a common KM model that is well understood across theglobal organization; focus on process, people, and technology; deliver value atregular intervals; and move fast. Moreover, strong leadership is paramount tothe success of KM of e-business initiatives and e-business system implemen-tation. The concept of KM suggests the creation of structures that combine themost advanced elements of technological resources and the indispensable inputof human response and decision-making. The authors conclude KM is abouthow an organization can capture a body of tacit and explicit knowledge to bemore efficient and effective in its daily processes. In many companies, theseinitiatives are formal technological solutions, and in other companies, these areinformal employee networks. Perhaps a hybrid solution would be the best,since search tools are unable to efficiently understand the simple nuances ofwhy a solution would work, and employees may not be able to find everydocument in the company related to a particular subject.

In the final analysis, KM should be well integrated within a company byinculcating this practice throughout the organization. In order to transformintellectual assets into business value, organizations need strong collaborationwith their internal and external communities. They must develop a supportiveatmosphere of openness and trust in order to effectively leverage their workers’knowledge for competitive advantage and develop business processes that cantake advantage of the IT architecture. Future work should focus on building acumulative tradition in KM theory and practice.

REFERENCESAlavi, M. & Leidner, D. E. (2001). Review: Knowledge management and

knowledge management systems: Conceptual foundations and researchissues. MIS Quarterly, 12(1), 1-10.



Amidon, D, M. & MacNamara, D. (2000). The seven Cs of knowledgeleadership: Handbook of business strategy. Wilmington, MA: EntovationInternational Ltd.

Angus, J., Patel, J., & Harty, J.(1998). Knowledge management: Greatconcept…but what is it,” Information Week, March 16. RetrievedSeptember 12, 2003 from http://www.informationweek.com/673/73olkno.htm

Awazu, Y. & Desouza, K.C. (2004). Open knowledge management: Lessonsfrom the open source revolution. Journal of the American Society forInformation Science and Technology, 55(11), 1016-1020.

Barua, A., Konana, P., Whinston, A., & Yin, F (2001). Managing e-businesstransformation: Opportunities and value assessment. Retrieved Septem-ber 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. RetrievedAugust 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. RetrievedSeptember 10, 2003 from http://www.emedialive.com/news/2001/01/news0101-17.html

Churchman, C.W. (1971). The design of inquiring systems: Basic conceptsof systems and organizations. New York: Basic Books.

Coffman, T. (2003). Personal interview with Tammy Coffman, CustomerFacing 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 inknowledge-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 changewithin organizations: Lessons from two cases. Journal of GlobalInformation Management, 9(3), July-September, 15-22.



Hammer, M. (1995). The reengineering revolution. New York: HarperCollins 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 formanaging knowledge? Harvard Business Review, 7(2), March-April,106-116.

Harris, J. & Jacobs, J. (2000). Knowledge management vs. informationmanagement. Gartner Group Research Commentary, September.Stamford, CA: Gartner, Inc.

Hoyt, B.(2001). Knowledge Management News, a service of Hoyt consult-ing. Retrieved August 31, 2003 from http://www.kmnews.com/Edito-rial/km.htm

Jurisica, I., Mylopoulos, J., & Yu, E. (2004). Ontologies for knowledgemanagement: An information systems perspective. Jul, 6(4), 380-392.

Malhotra, Y. (1999). What is really knowledge management? Inc. Technol-ogy, 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 forbusiness model innovation. Information Resources Management Jour-nal, 13(1), January-March, 5-14.

Malhotra, Y. (2000b). Knowledge management for e-business performance:Advancing information strategy to “Internet time.” Information Strat-egy, The Executive’s Journal, 16(4), 5-16.

Malhotra, Y. (2001). It’s time to cultivate growth: You can. March. RetrievedSeptember 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 designof knowledge systems and processes. Information Resources Manage-ment Journal, 13(1), January-March, 24-43.

Orr, K. & Higgins, D. (2000). Knowledge exchange: Real-time collaborationin 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.



Stewart, K. A., Baskerville, R., Storey, V., Senn, J., Raven, A., & Long, C.(2000). Confronting the assumptions underlying the management ofknowledge: An agenda for understanding and investigating knowl-edge 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.

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Chapter VII

ERP Systems andCompetitive Advantage:A Case Study of Key Success

Factors and Strategic ProcessesThomas Kalling

Lund University, Sweden

ABSTRACTThis chapter describes the processes that firms and managers go throughin their quests to create and sustain competitive advantages based on so-called Enterprise Resource Planning (ERP) systems. It is based on resource-based theory, combined with the strategy process perspective and withexisting literature on information technology and ERP. The theoreticframework is extended through a detailed case study of a specific in-houseERP venture in a European multinational manufacturing company in thepaper packaging industry. The emergent resource management frameworkdescribes cognitive and cultural factors that support or hamper progress,including uncertainty, knowledge gaps, knowledge transfer issue, and theproblems of ensuring that ERP usage is converted into competitiveadvantage. The framework also addresses managerial implications andpotential solutions to such obstacles throughout the process.

ERP Systems and Competitive Advantage 145


INTRODUCTIONThe demand for so-called Enterprise Resource Planning (ERP) systems1

has soared. Triggered by Y2K-compliance problems and the popularity ofsystems such as SAP’s R/3, corporate investments in ERP have been significantover the last years. Research into ERP has focused on how these systems addvalue (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 howthey 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 havenot been covered well in research—yet. Two such interrelated issues are (1)the relation between ERP and competitive advantage, and (2) the managerialand organisational processes that lead to ERP-based competitive advantage.

Relating to first issue, it is still questionable whether investments in ERPsystems have produced competitive advantages for investing companies, aquestion that is valid for IT in general as well. There is a shortage of empiricalresearch on the specific matter, and the few references that do exist treat theissue 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 com-petitive advantage (Barney, 1991; Dierickx & Cool, 1989). Within IT, thisneed has been addressed by Clemons and Row (1991) and Powell and Dent-Micallef (1997) in the application of the so-called competitive necessityconcept, 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). Onesuch limitation is the relative focus on the strategy content (e.g., strategicresource attributes) rather than the strategy process (e.g., how resourcesbecome valuable and unique). In relation to IT, this stream of criticismcorresponds to the second issue described above. Not only is there lackinginsight into the attributes of ERP resources that enable competitive advantage,there is also lacking insight into the processes that lead to ERP-basedcompetitive advantage. Within the field of IT, only Ciborra (1994) and Andreuand Ciborra (1996) have addressed the importance of combining RBV with aprocess perspective. There is a relative focus on IT content or conditions(Mata, Fuerst, & Barnet, 1995; Powell & Dent-Micallef, 1997). The pro-cesses by which such advantages evolve and how managers and users manage

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the IT resource to become a source of competitive advantage are still relativelyobscure. In line with Robey and Boudreau (1999), it is assumed that the linkbetween ERP and improved performance are not deterministic, but thatorganisational and management efforts are required.

The aim of this chapter is to develop a framework that improves ourunderstanding of the processes organisations go through as they try to gaincompetitive advantage based on ERP applications. This is done by addressingRBV and process theories, extended with theory on ERP. A discussion of themethod applied follows. In the next section, an emergent framework ispresented, based on an analysis of how the empirical findings assist indeveloping the theory. The concluding section discusses the validity of theemergent framework and summarises managerial implications.

THEORY ON RESOURCEMANAGEMENT PROCESSES

The core of RBV is the assumption that industries are heterogeneous andthat resources are imperfectly mobile across firms within industries. Thisjuxtaposes RBV from the Industrial Organisation perspective (Bain, 1968;Porter, 1980), which uses firm-external factors, such as the “five forces,” toexplain competitive advantage. According to RBV, firms have competitiveadvantage when they have one or more resources that are idiosyncraticallyfit, valuable, leveraged, unique, and costly to copy or substitute (cf.Barney, 1986, 1991). Consequently, one preliminary assumption is that theoverarching process of creating competitive advantage involves attempts tomeet these resource attributes. For the sake of simplicity, the outline of thediscussion about such processes can be structured in accordance with thesetasks or sub-processes: Idiosyncratic fit has to do with resource identificationprocesses. Value, in turn, refers to resource development processes, whereasresource leverage requires (internal) resource distribution. Uniqueness andcostly imitation/substitution, finally, require resource protection. By this simpletransformation of attributes into verbs, we have a structure for the reviewbelow, which is based on a combination of process-orientated RBV andstrategy process literature and on theory on IT and ERP. Hence, the followingdiscussion addresses how resources (e.g., IT) can be managed in differentstages, according to theory.



Resource IdentificationThe 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 resourceobtains on the factor market and, if successful, it allows for a quicker payback,ceteris paribus (Barney, 1986; Peteraf, 1993). Literature on identificationprocesses implies that the task is complex and related to the management ofdifferent constraints on “rationality.”

Resource investment decisions are difficult because of uncertainty abouttechnology, markets, and firm capabilities (Amit & Schoemaker, 1993). Theconsequence might be over-emphasis on past strategic actions and, ultimately,a lack of creativity. For competitors that approach the decision more “imagi-natively,” there might be opportunities for resource investments with first-mover advantages. The decision context is often multivariate, creating prob-lems for decision makers working under bounded rationality (March & Simon,1958). According to Schoemaker and Amit (1994), there are two ways, exante, to assess how a resource will affect competitiveness: correlational andcausal reasoning. Correlational reasoning means learning through empiricalassociation between variables and relies on the notion of correlation. Causalreasoning is deductive in nature and based on theory. Correlational reasoningis difficult due to the tendency to disregard minor correlations and non-linearityif there is no guiding theory or statistical analysis at hand. Conversely, when apriori theory exists, humans tend to overestimate the relation. Thus, resourcedecisions 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 needto desire common resources, under the constraints provided by the paralleldemands on knowledge. Social problems can arise when the resource decisionchallenges the identity of the organisation and the legitimacy of its norms andvalues. However, the more homogeneous the values of the group of decisionmakers, 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 resourceuniqueness (Oliver, 1997).

In sum, identification is about managing knowledge and culture to ensurethat resource ventures are related to strategy and fit with the knowledge andculture of the organisation.

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Resource DevelopmentA resource is valuable if it helps the firm implement strategies that reduce

costs or increase sales turnover (Barney, 1991). This implies that as theresource has been acquired and internalised, firms should develop it in order toenhance 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 fitwith operations and strategy. From a managerial perspective, this involves theallocation and balancing of slack resources to projects.

Knowledge infusion, experimentation, continuous improvement, and theestablishing of dynamic routines facilitate development (Lei, Hitt, & Bettis,1996). Exploration and discovery are critical. Opportunities to learn fromoutsiders, such as customers or alliance partners, should be taken. Organisation,particularly the composition of project groups, needs to be dealt with. Differenttypes 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 itselfsuccessful over the years can be difficult to challenge due to unbridgeableperceptions of perfection. Stronger communication channels and internal“marketing” efforts, as well as clear structures, may help organisations over-come such obstacles (Leonard-Barton, 1992).

Development of resources, initiated when the resource is internalised, isfundamentally a learning issue requiring both organisation and a coordinativemanagement style.

Resource ProtectionTwo central RBV criteria for strategic resources are that they are unique

and costly to imitate or substitute (Barney, 1991). Thus it is important to protectresources from being acquired or otherwise obtained by competitors. Uniquehistorical conditions, social complexity, and causal ambiguity are factors thathinder imitation and substitution (Barney, 1991).

Roughly, there are two ways to protect resources: by legal arrangementsor by “isolating” the resource (Collis, 1996). However, legal protection can becostly. Property rights and patent applications require costly administration andstill have limited duration; a more undisclosed organisation constrains com-munication, and so forth (Liebeskind, 1996). Other ways to protect resources



include isolationistic measures, for example, preservative actions such asexternal resource acquisition and deterrence. However, apart from isolating theresource by means of increasing social complexity and causal ambiguity,organisations can also sustain uniqueness by continuously developing theresource. Flexible, modular resources and the ability to create alternativeresources may help firms to “protect by developing” (Rotem & Amit, 1997).

In sum, protection is costly and about making sure to balance spending onpatenting, deterrence, and so forth, with the benefits of uniqueness. Certainresources are not worth protecting.

Internal Distribution of ResourcesStrategic resources need to be organised and leveraged across intra-

organisational 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 manage-ment 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 knowledgetransferred, the source of the knowledge, the recipient, or the context in whichthe transfer takes place (Szulanski, 1996). Empirical evidence indicates thatlack of absorptive capacity at recipient, causal ambiguity, and arduous relation-ships are key knowledge barriers (Szulanski, 1996).

Organisational context is another potential constraint. Autonomousorganisational units, such as profit centres, may find it uneconomical tocooperate and share resources corporately. As a consequence, synergies arenot realised. Some of these problems can be handled by the formation ofexplicit rules. Another way to deal with it is to simply refrain from trying todistribute resources at all. Artefacts such as, for example, IT tend to imposetheir own views of the world on businesses and operations and may not suit alllocal units (cf. Grant, 1996).

Resource distribution requires efforts both by the source and the recipientof knowledge. It also requires a facilitating management style, supportingthrough incentives and structure.

IT, ERP, and StrategyThere 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 tocompetitive advantage. Furthermore, the number of texts that describe pro-

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cesses that lead to sustained competitive advantage through ERP systems is yetsmaller. This section discusses such theory.

A fundamental assumption among “content-orientated” IT and RBVresearchers is that IT only produces sustained competitive advantage when itsupports (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 bea source of advantage (Bharadwaj, 2000; Ciborra, 1994).

Among the relatively few texts on the longitudinal organisationalprocesses that lead to IT-based sustainable competitive advantages, it isassumed that such processes are culturally, politically, and cognitively con-strained, and rarely the result of grand plans set by apex decision makers(Ciborra, 1994). Instead, IT processes are bottom-up in nature, incrementalrather than radical, local rather than central, ad hoc rather than planned, and soforth. Bricolage, meaning local tinkering and trial-and-error learning, is oftenthe antecedent to larger, leveraged IT projects, which tend to develop in three“learning loops,” as individual routines are improved, capabilities created andstrategic advantages generated through the use of IT. These processes areoften bottom-up in nature, without a clear strategic intent up front (Andreu &Ciborra, 1996). The role of top management is to empower and create slackfor such local ventures. Uniqueness is created through the idiosyncraticembeddedness IT has with operational routines (Ciborra, 1994).

The ERP literature is focused on success factors in implementation andproject phases, while the preceding strategy decision process and the succeed-ing ERP deployment are still relatively obscure. Process descriptions focus onalterations of the design – implementation,– stabilisation, continuous improve-ment, and transformation stages, and imply that problems include the underes-timation of requirements on organisation and business changes, failure to setobjectives, and technical issues such as data clean-up and bug hunting.Frameworks are relatively close to technology and functional operation—notstrategy or sustainability of advantages. Product differentiation (Davenport,1998), “business results” (Markus & Tanis, 1999), cost reductions, customerresponsiveness, and strategic decision making (Ross & Vitale, 2000) areamong listed “dependent” variables.

In terms of success factors and organisational processes, texts on successfactors in relation to ERP systems often list top-management support, projectteam 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 ap-



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 ERPprocess stages: chartering, configuration/rollout, shakedown, and onward/upward, all of which are quite close to the functional implementation. Robey etal. (2002) extend the discussion about factors and refer to knowledge barriersthat have to be overcome: the configuration of the system and the assimilationof new business processes. This can be in either of two ways: with a piecemealapproach whereby things are done step-by-step, or in a concerted approachwhereby both the configuration and the process changes are done simulta-neously. The implementation approach often needs to be incremental ratherthan radical. Giving time to units to get used to the system, using experiencedproject teams to assist in the rollout, and appointing “super users” areincremental means to make sure knowledge barriers associated with theassimilation of new business processes are removed. However, as indicated,Robey et al. remain fairly close to the system implementation, and theirframework covers activities leading up to the assimilation of new workprocesses—there is no extended discussion about what it takes to make surethat new processes result in cost reductions or quality improvements.

The above literature review is aimed at providing means by which tointerpret the process of managing ERP systems to become competitiveadvantages. The theory is used as a “platform” by which to (1) enquire aboutmatters in the case, and (2) interpret empirical findings.

METHODThis 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 orpreconceptions, conducts field studies, retreats to existing theory for compari-son, adds more empirical data, and so forth, to emerge theory iteratively untilit is “saturated.” A key question which researchers still debate is the extent towhich a priori theory should be applied in a Grounded Theory study. Someclaim that a clear mindset is important in order to avoid interpreting inaccordance with existing theories (Glaser & Strauss, 1967), whereas others(Eisenhardt, 1989; Miles, 1979; Yin, 1994) claim that a priori theory isimportant for positioning emergent theory and stimulating analysis. This studyacknowledges this logic and is based on the theories briefly described above.

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The CaseThe 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 plantsacross Europe. The reason for choosing this particular case was primarily theaccess provided and the aspect richness this allowed. Although this case coversone firm and one system, the sample of units (plants run as profit centres) isbroader and taken from different European countries, offering diversity. Thedisadvantage of only using one case, like when using ten cases, is obvious—lack of generalisation. However, the purpose of this study is exploratory innature, dealing with phenomena that are relatively novel. In such a setting,statistical generalisation is limitedly relevant.

Data and AnalysisData was gathered through interviews, archival research, and by observa-

tion. One hundred and fifty in-depth structured and semi-structured interviewswere made with 120 top managers, representatives for users and operationalmanagement, alliance partners, and consultants, and vendors. Written sourcesincluded more than 3,500 pages of project documentation (project plans,evaluation reports, audits, specifications, selected sections of contracts, cor-respondence, etc.), board meeting minutes, annual reports, industry organisationreports, personnel magazines, internal market analyses, and consultants’reports, ranging from 1991 to 2003.

Data gathering aimed to outline the longitudinal, historical sequence ofincidents 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 asystem that would help it improve its performance and realise its strategic goals.This meant creating a chronological outline ranging from the very conceptualisationof the idea to use ERP until the system was installed and employed. Thetheoretical constructs of Identification, Development, Protection, and Distribu-tion were used as “sensitising categories” (Glaser & Strauss, 1967).

As a consequence, data gathering first centred upon capturing the keyevents in relation to the overarching question of how organisations act whenthey attempt to gain ERP-based competitive advantage. All in all, more thanthirty such events where identified (with different degrees of importance).Examples include events such as the decision to invest in ERP, the selection ofconsultants and vendors, the specification of functionality, the feasibilitystudies, 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 thenscrutinised by seeking answers to why, what, how, where, when, and whoquestions, which in turn required both quantitative and qualitative data. Causalrelations between events were, of course, studied, being an important featureof longitudinal research. Oral accounts of incidents were controlled usingmultiple sources, such as other respondents and documentation. Quantitativedata, including a variety of different types of data, such as vendor selectioncomparison results, contract cost details, labour costs, order frequency, full-time 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 ofsources has been extended until no more new data or contradictions could beobtained about an event. Inter-rating of accounts has also been used.

The goal has been to challenge and develop the framework with theempirical data. The emergent theory is thus the product of an iterative process,including comparison to the initial theory, analysis of the empirical contribu-tions, and proposed extensions/refinements of the initial theory. This relationbetween data and theory corresponds to Yin’s (1994) concept of “pattern-matching” between data and initial propositions. Three aspects of validity havebeen particularly important (Glaser, 1978):

1. Integration refers to the coherence of emergent theoretic models, that is,how well theory components are inter-related.

2. Explanatory power refers to the relative ability of the framework toexplain 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)

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3. Relevance is determined by the extent to which the results of the studygive ideas and constructs that are useful either in the theoretical orempirical context of the study.

EMERGENT THEORY AND DISCUSSIONThe 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 individualphases; and it showed how such problems can be managed. Process-pervadingproperties were also identified. This section discusses key empirical findings inrelation to theory and outlines a model for how ERP resources are managedover time, in order to become sources of sustained competitive advantage.Overarching Process

The process of building competitive advantage can be seen as holding fourmajor tasks, or phases—identification, development, protection, and internaldistribution. In relation to that, the case findings offer two observations thatextend theory. The theory should include a fifth task—usage—to clarifymanagerial efforts post-implementation. Second, ways to interpret relationsbetween the phases are identified.

A central interpretation is that the theory needs to be extended with a phasethat describes usage, that is, managerial efforts and organisational activitiesfocused on business, not technology, occurring post-implementation. Surpris-ingly, these matters are not well addressed either by RBV or ERP literature. Itappeared after cross sub-case comparisons that more successful units hadmoved away from focusing on the system as such, and focused instead onchanging their businesses, taking into account both the system and otherbusiness opportunities, such as labour cost rationalisation, business processreengineering, organisational specialisation and integration, meeting specificsupply chain performance targets (response times, delivery performance, stocklevels), and so forth. The successful plants put more emphasis on actuallychanging local strategy and structure, without explicitly attempting to optimisethe system. Costs went down, since the work of administrative personnel inrelated functions was automated, and there was less need for communicationthrough time-consuming meetings. In one plant, the amount of staff in CustomerService and Sales was reduced from 38 to 16, allowing for an annual labourcost reduction of approx. 1 EURM. Response times were reduced from hoursor days to minutes due to improvements in communication and informationaccess. Delivery performance was improved, and delivery times were reduced



overall from, on average, two weeks to four working days. These improve-ments generated a cash-flow that paid back the plant’s investment in less thantwo 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 receivedanything in terms of financial payback, due to reasons discussed in subsequentsections. Nonetheless, including usage is key, since installing a system meansnothing economical has happened apart from the creation of a sunk cost thathas to be dealt with.

With a longitudinal approach, it becomes obvious that, initially, the systemis the object of attention, whereas once it is applied. it becomes an independentvariable that supports or restrains business performance. It has to be viewedas part of a larger resource-base holding several opportunities for businessimprovements. Usage is imperative in order to generate value and to enforceuniqueness of the system-organisation match. And because there are differentlevels of usage, it appears correct to view usage as distinct from internaldistribution, and view system employment (distribution, usage) as distinct fromresource creation (identification, development, protection). We thus have adistinction in the chronological dimension: a resource phase (the output is asystem) and an employment phase (the output is improved business). Thedistinction is important particularly because the management attention differs.Distinguishing resource processes from employment processes is not interest-ing if one is only concerned with resource attributes or the strategic status of asystem. But for a manager, resource development and employment aredistinguished by time and should be separated in a process-based framework.ERP-based competitive advantages stem from interdependent development ofthe system and of the way it is used.

The case also gave some indications as to how the five phases can beinterrelated over time. Identification is bound to occur before the otherphases, for a given system, even if, naturally, there is often reiteration betweenphases. This phase includes clarifying a business strategy and identifying actionareas among which are systems improvements, feasibility studies, specifyingbusiness needs and requirements, selecting vendors, signing contracts, and soforth. Logically, it ends with a binding commitment. Development is initiatedwith the commitment to continue and includes specification and programming(or selecting functionality if it is an “off-the-shelf” product), meaning thatfunctionality has to be decided upon in great detail. The firm also takes actionto secure uniqueness hence Protection efforts occur in parallel. Observationsindicate that there is causality between development and protection efforts, forinstance in the way functionality is selected and in the way that firms evaluate

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uniqueness. Exclusive rights and other protection mechanisms are costly, thusreducing resource value. Internal distribution follows upon having prepareda system that is possible at least to pilot in a business context. As systems aretentatively being used, new learning processes are initiated, regardless ofwhether users and managers have been involved in previous phases. Problemsbecome different in nature: business is highlighted, as well as initial ambitionsand visions. When business concerns start to dominate the attention of staff,firms enter the Usage phase, during which the system is subordinate to businessimprovements. Managers and users learn new ways to conduct business andidentify needs to improve the system.

Figure 2 shows the five phases outlined. It highlights the overall process offusing resources from the factor market through the processes of the firm andmaterialising it through the offering on the product market. In the CBS case,successful units created and employed a resource that rendered unique costpositions and service levels on the product market. The system was a sourceof temporary competitive advantage. But what were the obstacles?

Within PhasesThis section describes obstacles and means to resolve them throughout the

process.

IdentificationDuring identification, uncertainty, cognitive limitations, and social limita-

tions affect decision making. Processes take place primarily through bottom-up processes, that is, “bricolage,” with limited interaction by top management.

Uncertainty: Empirical findings imply first, that because there are fewopportunities to fully test and try the system prior to starting to develop it, a

Figure 2. A conceptual framework for systems resource managementprocesses

Identification

Protection

Development

Distribution Usage

Factor market

Product market

Time Employment Phase Resource Phase



“practical uncertainty” leaves decision makers with the option to deduce andhypothesise about the resource in question. A strategic vision, which in thecase was formulated as “differentiation of supply chain management” by havinghighest service levels (response times, delivery performance, etc.) and the mostefficient administration (reduced labour cost, reduced stock levels, etc.) incompetition, was key to providing a business context to the CBS venture. Thestrategic vision also needs to be broken down into a resource vision, which isfit with other firm-specific factors (e.g., size, culture, structure). Other factorsthat reduce uncertainty are the involvement of top management and commit-ment 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 supportedthe identification efforts relatively closely. These propositions confirm andextend the view of Amit and Schoemaker (1993) and Schoemaker and Amit(1994).

Cognitive limitations: The case gives some examples of “cognitivestrategies” during identification. Deduction and causal reasoning are impor-tant. Access to knowledge (internal and external skills) within the three keyfields of operations (as held by, for example, a functional expert), strategy (asheld by a CEO, for example) and technology (as held, for example, by an ITconsultant) is equally important due to the practical uncertainty under whichprojects progress. It requires management of a large and fragmentednetwork of stake-holders and is a potential source of time consumption (cf.Amit & Schoemaker, 1993). In the case, this was managed by aggressivenetworking, including knowledge from senior managers, users, operationalexpertise from different national units, and consultants and vendors.

Social limitations: ERP resources can challenge the view people have onwork processes, organisation, and strategy. Choice of vendor and technology,time frames, work process design are all potential hotspots. The case doesindicate that firms can handle such limitations by a broader approach tounderstanding the different risks/benefits of different choices, including deeperanalysis of possible scenarios. “Cognitive variety”, for example, a widerepresentation of different units and internal and external functional fields mayassist. Top management plays an important role, due to its holistic view,business understanding, and as communicators of values and norms, andindirectly as providers of “purpose” to the investment. The communication ofnew strategic and technical values and visions is important. These propositionsstand in contrast to, for example, Ciborra (1994) and Robey et al. (2002).

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DevelopmentThe case gives some perspectives on how development can be managed

and organised.

Learning: The case suggests that “bricolage” can be combined with moretop-down approaches (cf. Ciborra, 1994). Certain elements of the process, forinstance the coupling of the system with the strategy vision, require a strong top-down approach. Decisions about finer details of functionality may be solved byoperational and technology experts. Given the ambition to gain competitiveadvantage, the case implies that a “bricolage” approach could be too costly,limitedly radical and novel, and difficult to distribute. For the radical approachthat uniqueness requires, all three knowledge fields of IT, operations, andstrategy must be managed and coordinated. Local, detailed knowledge isnecessary, but a strategic logic is the fundamental platform for a project withsuch high ambitions.

Organisation: During specification of the CBS, a large sample of expertswas involved and had “their say.” This had obvious benefits: broader sets ofknowledge were included, people felt they were part of the development of apath-breaking system, and they all got a glimpse of what ERP systems could doto their business. The negative side to this was high costs, time-consumingdiscussions, and occasional animosity between a diverse range of functionalexperts from several European countries. In the end, many questions aboutfunctionality had to be resolved by democratic vote. This indicates that diversityis double-sided in nature and has to be balanced carefully. It is valuable forgroup comprehension but might be destructive to deftness. Comprehensionand deftness could be negatively correlated, offering some nuance to themodels of McGrath et al. (1995). Increased formalisation, centralisation,planning, and budgetary procedures are means to handle questions of thisnature. External knowledge partners, such as consultants, are important—butcostly.

ProtectionEfforts to protect the resource from imitation are parallel and partly

identical to the efforts applied to develop it (such as specifying idiosyncraticallyfit functionality). Exclusive rights and resource isolation are means to preventimitation, and the case gives perspective on situations managers can be facedwith trying to protect resources.



Legal protection: Concerning ERP resources, there is always a risk thatthey are bought “off-the-shelf” by competitors. There is also a risk that systemsare created that provide the same effects on the product market, for instance,lower costs for service or better delivery performance. In the CBS case, therewere no similar business-specific systems that substituted the effects. Hence,SCAP eventually turned to the vendor with the system that was best suited forspecific, customised functionality. Alternative solutions were based on inter-faced modules for Sales, Production, and Logistics, with limited swiftness andcommunication. However, in other instances, systems are often duplicated andsubstituted. Thus, legal protection is the only means to obtain exclusivity of thesystem. Within SCAP, it was the clear intention of top management to createa customised system that could not be obtained by other competitors. How-ever, the negotiator (a senior manager) came under pressure to cut projectcosts and, against his instructions, signed a contract that did not grant thecompany exclusive rights. The software vendor offered SCAP the opportunityto buy restricted sale of select functionality to a select number of competitorsfor a given time period, which was rejected. Today, the system is available tocompetitors, but only a few have bought it, and those that did only boughtselected modules. Competitors perceive the system as complex and unfit withbusiness processes. This implies that in order to gain exclusivity and unique-ness, managers need to communicate the value of uniqueness, especially tokey people such as negotiators. In this case, the price of buying exclusivityshould be seen as an “investment” in uniqueness.

Isolation: Firms can also use ERP systems in ways that enable sustainedadvantages. The case offers some examples of how radical changes in all thethree knowledge dimensions (technology, strategy, and operations) can en-force causal ambiguity for an outsider. If the changes in the three dimensions arealso interrelated, ambiguity increases further. SCAP, who specified the system,knew better than its competitors how to apply it and modify business pro-cesses. 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. Thesocial complexity of a resource depends on who is observing it. For a projectmember, it is clearer than for a competitor because of superior knowledgeabout the system and how it is embedded with routines and strategy.

Internal DistributionMany theoretically proposed problems were observed in the study, which

also indicated how they could be managed.

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Observations imply that in ERP cases, the main transfer problems relate toweak motivation and weak absorptive capacity at recipient units and, impor-tantly, the structural context in which the transfer takes place. There wasresistance when the system was launched, despite the fact that local staff alwayshad had its say during specification periods. There was a lack of knowledge andof willingness to change. What could be referred to as cognitive and culturalsediments impaired the implementation in some plants. Users and managershad retreated to praising the old systems, claiming that key features of the newsystem were not needed. Even the strategy the system was meant to supportwas questioned. An important factor was the time span between “specification”(1994) and implementation (1997). Original suggestions were almost forgot-ten, business changes had already occurred, and the technology was no longerleading edge. There is a range of arguments why projects should be sped up,including cost escalation and first-mover advantages. The fact that the logicbehind an investment may become obsolete prior to implementation is anotherargument.

Learning processes: The system was initially implemented stepwise in 20plants. Lessons from previous installations were documented. Local learningstrategies included continuously improved installation processes and prepara-tions, utilisation of accumulated experience of implementers, customisedsupport, unlearning of old systems, and hands-on user experience. Lesssuccessful units were unable to take it further than installation and were happywhen their operations were as reliable as they were with the old systems.

Structural context: The role of the structural context can not be under-estimated. The case shows some examples of how structure affects distribution.SCAP has a decentralised culture and plant units are profit centres. Thismeans that local general managers have significant autonomy and, althoughinstalling the system had been directed from top management, it is imperativeto ensure that local managers are both knowledgeable and committed to thesystem. In the CBS case, they were not well informed, since they had neverreally been involved in development. This meant they also found it difficult toattach a meaning to the system. In that sense, more central efforts could havehelped also in the implementation phase, but this was neglected initially by topmanagement, who assumed that local managers would optimise the use of thesystem due only to the communicated ambition that CBS should give advan-tages. The resource allocation was based on implementation being drivenlocally. This supports strongly the concept of the “tyranny of the SBU”



Figure 3. Conceptual framework for systems resource managementprocesses

DEVELOPMENT Learning, Knowledge sharing Organisation

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

Employment Phase Resource Phase

Product market

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

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

Time

USAGE 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

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

IDENTIFICATION 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

(Prahalad & Hamel, 1990), which stipulates that autonomous (profit) centresmight have a conflict of interest with the corporation.

UsageThe 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 thesystem and the interrelations between the system, the operations, and strategyserved as the platform for advantages.

Learning processes: Learning in relation to IT and ERP can take the formof “loops” (Andreu & Ciborra, 1996), but it does not have to be a bottom-upprocess. 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, inthe reverse order or in an iterative fashion, which contradicts the learningprocesses introduced by Andreu and Ciborra (1996).

Cognitive obstacles: Knowledge of how the system, the strategy, and theoperational aspects are interrelated must be held by users and local managersin order to generate business benefits. Learning can be stimulated by, forexample, control incentives such as capital investment responsibility, commu-nication, and support through direct channels or through local champions. The

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view that three interrelated streams of knowledge are required, that is,knowledge about operations, strategy, and technology, should be seen as aparallel to the view of Robey et al. (2002) of two kinds of knowledge barriers.

Cultural issues: Reaping the business benefits of an ERP system mayrequire making personnel redundant, changing structures, reshuffling hierarchi-cal positions, and changing work processes. Being able to deal with suchproblems is an everyday issue for many managers, but not for all. In certainsettings, these management tasks may be completely new, even to an experi-enced manager. It could be that the attitude towards the ERP resource declinesand stimulates further political problems.

In the SCAP case, it turned out that the conversion of the resource intoprofit was far from automatic. And to decentralised corporations, the successof 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. Itis based on the initial interrelation of the five phases, yet with the inclusion of theproblems and solutions discussed above. This model highlights the questions,challenges and possible solutions that managers have to deal with in relation toERP systems.

Pervading PropertiesThe case also indicates that three pervading properties affect processes of

this kind: (1) Irreversibility, (2) Cognition, and (3) Top Management Involve-ment.

Irreversibility—Key PremiseA 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 costsof both “off-the- -shelf” and in-house solutions. These costs have to becommitted to relatively early on in the process, without prior testing and hands-on experience in the actual settings of business. Having made the commitmentby contract, other alternatives, including switching systems, become costly incomparison. 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 thatpeople have to make in unlearning and learning may be an obstacle in its ownright. As a consequence, firms might be unwilling to invest in new, cognitivelydemanding ERP systems too frequently, limiting the abilities to reverse projectsand choose alternative solutions. Thus, having initiated learning—which is arequirement—firms are likely to be less tolerant with infusing new, competingknowledge to the process, and consequently less tolerant to changes ofsolutions.

Third, systems and processes are cultural embodiments of norms abouthow to conduct business. They are political, meaning wide-swept agreementupon them requires “internal marketing” between stakeholders. Once this hasbeen achieved, people tend to “lock in” one way of doing things. Any changesto a system, including replacing it, may cause declining motivation. Thus, oneargument against halting ERP projects is that the restart would require too muchcostly convincing. The saying that a system is never as popular as when it isabout to be replaced probably bears some truth.

Cognition—Main focus of Managerial AttentionCognition is a factor in all the processes discussed. Access to knowledge

about operations technology and strategy is key and affects both the resourceand how it is employed.

During the resource phase, learning is essentially experimental and explor-ative. Deduction, scenario-based analysis, and tentative, causal reasoning arethe main learning mechanisms. During the employment phase, hands-on expe-rience, trial-and-error, empirical, inductive learning is possible, and it is onlythen that the visions and ambitions can be realised. It is then that the actual valueof the resource becomes apparent. Experience from using the system then feedsback negatively in order to modify the resource to fit better the operations andstrategy as they evolve. At some point in time, strategy, operations, or newtechnology will force the firm to abandon the system definitely to develop a newone.

The statement that cognition is important sounds tautological, but theimportant consequence for managers is that they understand what types ofknowledge they need, that they are prepared to search and access them andpay to get it. It must be orchestrated and interrelated in order to generate newknowledge and challenge inherent knowledge and norms and values.

Top Management Involvement —Key Organisational ChallengeA third property is related to the involvement of top management. If the

ambition is to create an ERP that gives competitive advantage, business

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strategy is bound to set the direction of the venture. And business strategy isnormally shaped by top management. Top management infuses the project withits meaning. Furthermore, strong involvement by top management will ensurepractical facilitation such as funding and access to resources.

Of course, without the efforts of local staff, technologists, and operationalexperts little will happen. But if top management does not take the lead andsponsor the venture, others will achieve little. Bottom-up approaches will becostly, the political risks are presumably equally high, the time frame willprobably be extended, but, most importantly, it will lack strategic insight, eventhough it may well be operationally fit.

The idea that the centre of firms need to be involved is not new. Fororganisations where cooperation and knowledge sharing between autonomousunits are favoured, this appears inescapable. Despite a relative distance frompractical matters, managers do not automatically lack knowledge about ITresources and operation. In a business world where diversified firms“downscope” to focus on core businesses, top managers are often qualified tounderstand matters close to the operative core. The proposition that strategicERP ventures require a strong top management involvement, and a top-downapproach is in contrast with some propositions about ventures of this kind, suchas Ciborra (1994) and Andreu and Ciborra (1996), and supports the view of,for example, Prahalad and Hamel (1990).

Implications for ManagementThe resource management model describes implications of a decision to

implement an ERP system. More specifically, the following implications appearimportant to management.

IT is just a tool. It is a potential resource at best. Sometimes it is anobstacle. Hence, managers should strive to hold knowledge sufficient tounderstand the business improvement opportunities that ERP can provide. Thisinvolves ensuring that managers are surrounded by knowledgeable experts toensure that ERP ventures have strategic fit and purpose.

Managers should be prepared to engage in hefty investments, with arelatively obscure payback and payback period. This does not mean commit-ting to ERP investments without scrutiny. On the contrary, a careful cap appexercise with line managers expressing commitment both to the investment andthe payback mechanisms is a valuable tool.

Managers should also be prepared to enforce new organisationalstructure and control mechanisms. This means, potentially, to ease up deep



decentralisation and alter incentive structures. This could have far-reachingconsequences on morale.

Managers should also consider the value of uniqueness. Uniqueness cancome through the system and/or the use of the system, but uniqueness in relationto competitors’ cost, regardless of protection strategy. Managers must under-stand 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 alsoexisting knowledge bases and culture. Managers must make sure they areprepared to pursue the potential improvements in the face of these challenges.

CONCLUSIONThe 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 theERP resource management process framework described and illustratedabove. It was stated, initially, that the validity of a framework such as the onepresented 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, thepresented framework does not primarily contradict previous approaches toERP and strategy. The contribution, I believe, lies in the longitudinal outline andthe detailed discussion about managerial challenges that lie ahead of anyoneattempting to utilise ERP to gain competitive advantage.

Regarding explanatory power, one distinctive property of the frameworkis the use of RBV and strategy process theory. These are relatively scarcelyused in IT/ERP research, and they are rarely combined (exceptions includeCiborra, 1994, and Andreu & Ciborra, 1996). They are, however, oftenrequested (Powell & Dent-Micallef, 1997). With RBV, the resource unique-ness is put in focus, which is important. The process focus says something aboutthe scope of problems and challenges managers face and have to solve in orderto gain sustained ERP advantages. It also allows us to distinguish betweenresource phases and employment phases, to identify pervading properties, andshows, over time, how difficult it can be to gain advantages based on ERP. Inrelation to the RBV-based IT and ERP research, the framework gives someindications of what it might be like to “embed” ERP systems with otherorganisational 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

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difference here is the focus on ERP, not IT in general. This may be the reasonfor the different views on, for instance, the role of top managers, the structuralcontext, and the learning cycles that occur in processes of this nature. Thischapter has overlaps with other process approaches as well, but it differs withits focus on strategy and advantages—not just improved operations (e.g.,Markus & Tanis, 1999; Robey et al., 2002; Ross & Vitale, 2000). In relationto content-orientated research on ERP systems (e.g., Parr et al., 1999; Somers& Nelson, 2001), this study is supportive; the difference lies in the processfocus used here, as well as the wider focus on uniqueness.

The methodological objective in case research is not to be able togeneralise to a larger population, but rather in relation to theory (Yin, 1994).Nonetheless, it is important to discuss the academic and practical relevance ofthe framework. The CBS case is explicit, and competitive advantage is activelysearched for, meaning that for ventures that unintentionally become competitiveadvantages, selected parts of the model are less interesting. The same goes forcases where firms buy systems “off-the-shelf,” rather than develop themthemselves—they probably put less emphasis on identification, development,and protection. Regarding practical relevance, the framework describes mana-gerial processes and should be useful for any manager in any of the stages ofERP implementation. To strengthen practical relevance, managerial advice hasbeen listed too.

Given the popularity of ERP, there are plenty of research opportunities.We need to know more about the processes organisations go through whenthey invest in, nurture, and exploit ERP systems. The RBV with its focus onuniqueness and the strategy process view with its focus on the obstacles torational change are vital for the future, for example, given the increasingtendency to buy systems “off-the-shelf.” The emergent framework, which isrelatively diverse, could also be studied “section-wise.” It is difficult tostatistically test the proposed model in a true/false sense. It is a supportingmodel.

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ENDNOTE1 Enterprise resource planning systems, as defined by Markus and Tanis

(1999): Commercial software packages that enable the integration oftransaction-orientated data and business processes throughout anorganisation.

APPENDIX: AN INTRODUCTION TO SCAPACKAGING AND THE CBS

SCA Packaging (SCAP) is one of the largest European suppliers ofcorrugated paper packaging, with a sales turnover of roughly 4 BEUR perannum. Having been a relatively small business unit within the SCA Group, itstarted to grow, by acquisition, during the late 1980s, a strategy that took itfrom being a business unit with less than 10 plants in a few European countriesto a company with more than 200 across Europe and in Southeast Asia and theU.S. The current structure of SCAP is geographical, with each geographicregion 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 appointedpresident. CBS was the result of the growth strategy; in order to standardisecommunication and to link acquired plants, a new system was needed. Thesystem was also intended to help SCAP improve so-called supply-chainmanagement. Previously, the company and the industry had been very focusedon production. Machine utilisation and productivity were key variables, andother functions were largely non-prioritised. The goal was to use the system todifferentiate and make functions such as customer service, production planning,and logistics more efficient. At the time, it could take several days to givecustomers a price for a box, and it could take hours to inform customerswhether they would receive orders on time. Delivery lead-times occasionallyamounted to several weeks. In addition, there were many different systems



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 actionprogrammes were initiated (one of which was the CBS) intended to help thecompany gain competitive advantage through supply-chain management.

SCAP cooperated with Digital Equipment, who helped SCAP envisionwhat sort of system and technology it would need, given its operations andstrategy. In 1993, a project team of seven SCAP staff (representing allcountries) and two consultants, sponsored directly by the president andcooperating with a network of local experts, summarised the business require-ments in a comprehensive document detailing all requirements down to indi-vidual work tasks in different functions. The team also evaluated all availablesystems (23, globally) and found that none matched the requirements very well.The choice eventually fell on a German software provider who already had arelatively usable Manufacturing module. The system lacked functionality inSales and Logistics, and it was decided that SCAP would help develop theseand further refine the existing Manufacturing module to fit its own requirements.SCAP—at least the President and the project team—had intended from thestart that sales of the system would be restricted, but when the contract wassigned in April 1994, it turned out that the main negotiator (not a member of theproject team) had turned it down exclusivity rights in order to reduce theprogramme costs.

The system was specified during 1994 and 1999, and the first moduleswere piloted in 1997. Of the 60 SCAP plants that are going to use it, only 20have done so as of 2001. The modules were specified sequentially, startingwith Sales, then Manufacturing, followed by Logistics. It is based on WindowsNT and was programmed with Visual Basic. There were many factors thatcaused the prolongation of the system: development took longer, mainly due toproblems of agreeing upon functionality, technical problems (Visual Basic 4was 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 andstructured in sequential mode, with two pilot plants in the UK and theNetherlands, respectively. As the project lagged, the decision was made in1997 to install it in plants with Y2K problems, specifically France, Benelux, andthe UK.

Implementation has been a mixed experience. The piloting of the Salesmodule (1997) went fine, but when the Production module was installed(1998), things took a turn for the worse. The plant operations were disrupted

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for several days. Practical issues such as invoicing, planning, order entry,administration, and work instructions had to be communicated manually. Therelationship between the plant and the project teams turned arduous. Eventu-ally, the system started to work, and operations became reliable. Hands-onlessons learned as the implementation evolved were important in improving therollout process at each plant, and subsequent installations went increasinglysmoother.

However, many of the plants never took the level of utilisation further thenthe “reliable level,” corresponding, basically, to the level of performance theyhad with their old systems (by 2001, less than half of the 20 plants can claimpayback streams). Those plants that succeeded in not only stabilising opera-tions but improving business had an active commitment from local managers,drew upon corporate expertise, appointed “champions” and approached thesituation as a business project. They asked themselves where they could taketheir business, given the new system and other resources at hand. Those thatsucceeded cut personnel costs and capital costs through rationalisation, andincreased customer-perceived quality by improving response times to cus-tomer enquiries and by improving logistics performance (smaller orders, just-in-time delivery, reduced stock, etc.). In terms of advantages, they decided,explicitly, to make sure their level of systems usage was unique now that thesystem was available on the market. In line with the deeply decentralised natureof SCAP, senior management has done little to enforce a local level of usagethat aggressively brings back the investment. Control mechanisms have notbeen modified. Whether local plants (profit centres) actually embark – andsucceed – with change and improvement of supply-chain functions is depen-dent upon the aspiration levels of local general managers.

The cost of the project has been allocated across plants. For successfulplants, the cost has been recovered in less than two years by cost reductionenabled. With regard to uniqueness, a handful of smaller competitors havebought 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 toodifferent from theirs. Consequently, successful SCAP units enjoy advantages,but whether they are sustained remains to be seen. Cost advantages can begained by other means, such as manufacturing benchmarking, business-pro-cess reengineering, and so forth. But since SCAP are equally strong in theseareas, it is increasingly difficult to compete on costs.

Towards an Emotionally Intelligent IT Organization 173


Chapter VIII

Towards an EmotionallyIntelligent IT Organization

Eugene KaluzniackyUniversity of Winnipeg, Canada

ABSTRACTConsiderable attention has recently been focused on the area of “emotionalintelligence” (EI) in business administration circles as well as in ITmanagement. Often, it is being suggested that IT workers need the “softskills” of emotional literacy, especially when dealing with users and co-workers. However, how can one develop this “emotional intelligence”?What might be its various components? Moreover, to what degree andhow might IT management get involved to try to move its IT organizationon 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 forcognitive 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 whoseprograms were most efficient and had the fewest errors would be consideredthe 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

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“emotional literacy” among IS developers. Since then, a number of articles haveappeared calling for development of “soft skills” and lamenting that IT workersare often emotionally weak. Such articles often call for another type ofintelligence in addition to superior cognitive, logical skills.

Harvard psychologist and educator Howard Gardner (1983) had, in the1980s and beyond, promoted his theory of multiple intelligences. He main-tained 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 ofperspective, Daniel Goleman, a psychology Ph.D. who formerly taught atHarvard, in his 1995 international bestseller Emotional Intelligence (1995),focused widespread attention on the reality that what matters regarding one’sability 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, theability to manage distressing moods, maintaining hope in the face of setbacks,having empathy, and being able to get along with people. In his book, Golemansets out on a quest “to understand what it means—and how—to bringintelligence to emotion.” He also declares that “the market forces that arereshaping the work life are putting an unprecedented pressure on emotionalintelligence for on-the-job success” [italics added]. Using a brain physiology,neurological exposition, Goleman shows that brain circuitry is extraordinarilymalleable and “temperament is not destiny.” In fact, he seems to be assertingthat inner growth and transformation of personality are indeed possible.

In his sequel book, Working With Emotional Intelligence (1998), DanielGoleman identifies a number of “emotional competencies”; on the personallevel, he promotes recognizing one’s emotions, assessing one’s strengths andweaknesses truthfully, a sense of self-worth, self-control, honesty, responsibil-ity, adaptability, motivation, commitment, initiative, and optimism. On thesocial dimension, he identifies understanding others, assisting others to de-velop, persuasive ability, conflict management, change management, nurturingof 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 theeffectiveness and motivation of many of today’s IT professionals, particularlythose that interact with other people in the course of their work. Moreover, itis not only emotional intelligence, strictly understood as above, but also abroader spectrum of psychological awareness that would be in order for the“information resource professional” of the 21st century, as opposed to the “DP



professional” of past decades. Such awareness could incorporate at leastconsciousness of one’s own personality type as well as that of co-workers andusers, awareness of one’s cognitive, creativity, and learning styles, andcapacity for significant access to one’s deepest inner self. Operating on a dailybasis out of such a broadened consciousness would enable an IT worker topossess “enhanced emotional intelligence,” which could be defined as theability to respond more effectively in given work situations based on anincreased awareness of the psychological functionings of self and others on thelevels of intellect, emotion, personality and deep inner self.

The remainder of this chapter provides an exposure to each of theidentified dimensions of enhanced EI, showing how they could positivelyimpact the work of an IT professional. Finally, a growth stage model ispresented for the development of Emotional Intelligence within an IT organiza-tion. 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 behavioraland emotional characteristics” of a person (Hohmann, 1997). It refers to,essentially, how a person functions in life. Most of us, even without any trainingin 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 samesituation. But, is this an issue that is closely connected to IT work? It dependson the factors of which the work consists. Most would agree that personalityrelates to communication, learning style, and to what one finds stressful. Yetability to learn, to communicate, to reason, and to maintain one’s health are keycompetencies for which recruiters of new IS graduates are looking. Thus, it ispostulated that the IT area and, in particular, system development (IS) canbenefit significantly from awareness of particular characteristics of differentpersonality types.

The Myers-Briggs Personality Type approach to classifying personalitieshas been widely accepted and applied in a diversity of fields such as socialwork, counseling, career planning, and management. It assesses four differentdimensions of a person:

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

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2. Intuition/sensing—relates to two different ways of perceiving, of takingin information. An intuitive person focuses on new possibilities, hiddenmeanings, and perceived patterns. A sensing person focuses on the real,tangible, and factual aspects. Thus a sensing person can be described asbeing more practical, whereas an intuitive is more imaginary. This dimen-sion is coded N for Intuitive and S for Sensing.

3. Thinking/feeling—relates to how a person comes to conclusions, howa person normally prefers to make judgments. A thinking person employslogical analysis, using objective and impersonal criteria to make decisions.A feeling person, on the other hand, uses person-centered values andmotives to make decisions. This dimension is coded T for Thinking and Ffor Feeling.

4. Judging/perceiving—relates to two essential attitudes of dealing withone’s environment. A judging person prefers to make judgments or cometo conclusions about what one encounters in one’s outer environment. Aperceiving person prefers to notice one’s outer environment while notcoming to conclusions or making judgments about it. This dimension iscoded J for Judging and P for Perceiving.

Thus, we see that the Myers-Briggs personality classification systemidentifies personality according to four dimensions. Since there are twopossibilities for each dimension, there are sixteen different Myers-Briggspersonality types. Elaborating on the four dimensions, extraversion/introver-sion refers to where a person gets most psychological energy; sensing/intuitionpoints out to what a person pays most attention; thinking/feeling shows how aperson prefers to make decisions; and judging/perceiving relates a preferredattitude to life.

There is considerable documentation outlining general work characteris-tics of each Myers-Briggs dimension. Many of these modes of operation canhave significant relevance to system development work. Some highlights fromthis area are now presented.

Myers-Briggs in ITThe Myers-Briggs Type Indicator (MBTI) had made its way into IT over

15 years ago. In “The DP Psyche,”, Michael Lyons (1998) reports on aninternational survey of personalities of over 1000 professionals employed byover 100 different companies. About one-third of those surveyed wereemployed as programmers or analysts, and about 20% were in IS management.Table 1 shows the breakdown along the four MBTI dimensions. We notice



twice as many introverts as extraverts, slightly more intuitives than sensingpeople, a very high percentage (80-90%) of thinking types, and a two-to-oneratio of judging to perceiving types.

We now examine the main characteristics of each of the four dimensionsas they relate to IT work.

Extraversion/IntroversionWhile 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, andnetwork 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, usertraining, and help desk activities, for example.

Sensing/IntuitionThe clear distinction here is “reality thinking” versus “possibility thinking.”

A considerable amount of system development activity definitely fits with andappeals to the practical, details-and-facts-oriented sensing mentality. Much ofactual technology is practical, and activities such as system installation, detailedtelecommunication design, physical data modeling, as well as programming,testing, activity scheduling, and detailed documentation would appeal to andenergize the sensing person.

However, there are certainly more conceptual aspects to system develop-ment, some more structured and others more open-ended. Activities such assystem planning, high-level business and data modeling, object modeling, andpolitical “positioning,” would be much more in the realm of intuitive types. Sincethere is considerable opportunity for both sensors and intuitives to find IT workappealing, in Lyons’ survey (1998) we find the most balance along sensing/intuitive lines (46% S to 54% N).

Table 1. Breakdown by personality dimension of 1229 system developmentprofessionals (Lyons’ Datamation Study, 1998)

Introverts: 67% Intuitives: 54%

Extraverts: 33% Sensors: 46%

Thinkers: 81% Judgers: 66%

Feelers: 19% Perceivers: 34%

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Thinking/FeelingWe recall that while both types certainly think and feel, the thinking types

prefer to decide with logical analysis while feelers tend to base decisions onpersonal values and feelings. Considerable IS development activity, no doubt,involves the thinking function, whether it be practical thinking (as in telecommu-nication design or testing) or conceptual thinking (object modeling, systemplanning). Often, the thinking must be structured and yield specific deliverablesthat can execute on specific machines. But, how can feeling types find a homein IT work? Since they place considerable focus on harmony, feelers can beparticularly sought after as group/team leaders, high-level business modelers,or analysts, where considerable effective interaction with non-IT staff isessential. Feelers may become prominent IS “politicians” who can forgeeffective relationships with others in organizations. They can also contributeinnovatively and effectively in development of training materials and in thetraining process itself. As systems move towards integration of a variety ofcommunication modes through multimedia and Internet access, the contributionof artistically minded feelers will be increasingly desirable. It is worth pointingout 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 functionwhen it is called for. Most Fs in IT, however, would need to possess a well-developed capacity for thinking. Lyons’ study showed an overwhelmingproportion (80.9%) of thinking types. Later, we will see evidence that suchsignificant dominance may slowly be changing.

Judging/PerceivingThis 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 aJudging orientation, as would be detailed telecommunication design. Yet, therecertainly are activities in the development and maintenance of systems wheretoo much structure and predictability would not be desirable. System planningand brainstorming, for example, thrive on flexibility and spontaneity. Businessand 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. Thisreflects a large reliance on structure but admits open-endedness as a preferencein one-third of the sample.

We thus see that each part of each Myers-Briggs dimension has a role toplay in system development work. In this field, it is beneficial if the individual



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 invarious facets of system development.

Four TemperamentsPsychologist 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; andDionysian (Artisan)-SP. Thus, each of the sixteen types belongs to one and onlyone temperament. There are specific life attitudes particular to each tempera-ment and, of course, these attitudes are carried into the work environment.

The Guardian comprises about 38% of the U.S. population. A person ofthis type longs for duty and exists primarily to be useful to society. The SJ mustbelong and this belonging has to be earned. He has a belief in and a desire forhierarchy. The SJ is “the foundation, cornerstone, flywheel, and stabilizer ofsociety.” This is the conservative traditionalist. As we have seen earlier, SJsmake up the largest fraction of IT professionals.

The Rational is found in about 12% of the U.S. population. The NT valuescompetence and loves intelligence. He wants to be able to understand, control,predict, and explore realities. He often seeks to study the sciences, mathemat-ics, and engineering—what is complicated and exacting. NTs tend to live intheir work and to focus on the future, having a gift for the abstract. They havethe capacity to think strategically and to develop visions of the future. Theywork 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 hasa hunger for action in the here and now. SPs are spontaneous, optimistic, andcheerful. 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 thedeepest feeling person of all types and values deep meaning in life. The mainneed of this type is authenticity to one’s deepest self. NFs speak and writefluently, often with poetic flair. They seek interaction and relationships. Theyenjoy bringing out the best in other people. NFs work towards a vision ofperfection 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 offera more aggregated approach that nonetheless highlights key differences among

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people. Thus, the Keirsey temperaments can make a valuable contribution tothe systems development area.

As we consider the key strengths of each temperament—NT-vision,competence, abstraction; SJ-detail, practicality, facts, organization; SP-spon-taneity, practicality; and NF- authenticity, relatedness, we see readily that eachof these strengths is very welcome in the systems profession. Informationsystems development comprises a variety of activities and tasks, and thestrengths 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 onthe workers’ energy and productivity.

Rational-NT: The strength of the NTs is competence, abstraction, high-level vision. Their strengths are particularly desirable in systems planning,process redesign, and high-level modeling. NTs excel at applying logic to newpossibilities, often in a creative manner. They can also abstract away and modelessential elements of a business process and can identify, with thoroughness,inter-process connections. Thus, NTs have been linked with tasks such asproject scoping, system planning, establishing business policy, and data andprocess modeling. Such types are valuable in business process re-engineering.The introverted NTs will tend to think about business processes and futuresupporting systems differently from current consideration. Extraverted NTswill actually take the lead in carrying out change. They can be instrumental inplanning and initiating systems projects at a high level. With the immediate futureof information systems focusing on large-scale enterprise resource planningsystems and on innovative Internet-based e-commerce applications, the con-tribution of NTs will be invaluable and requirements for such strengths will likelyincrease. To carry out such work without the NT may cause unnecessary risks.The SJ will lack the visionary, abstract orientation and could tend to focusexcessively on details. The SP would likely find such long-term planning andmodeling work as lacking spontaneity, action, and immediate realism. To theNF, extended hours of abstract logic without a human, relational focus, mightbe draining and unsatisfying.

Guardian-SJ: The SJ temperament undoubtedly has a definite and likelypermanent place in the IT profession. The Australian survey (Thomsett, 1990),shows SJ types comprising 73% of the survey sample — three out of every fourIT workers in the sample had the Guardian temperament. An SJ is character-ized 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



have traditionally been attracted to and have excelled in procedural computerprogramming and have often been promoted from programming to other areasof systems work (analysis, design, project management, etc.). SJs have beenidentified with lower-level modeling of the current processes (when the need fordetail supercedes the need for abstract conceptualization of future possibili-ties), program structure charting, physical data modeling (where the real isemphasized over the conceptual), network and technology design, program-ming, testing, listing user acceptance criteria, creation of the system proceduresmanuals, and system installation. We can see that each of these tasks requiresdetailed, logical thought with practical consideration. Such tasks, therefore, arethe natural domain of the SJ; from them, he derives energy and motivation.

An important question for the future of the IT profession is whether thesphere of influence of the SJ is shrinking. In days of basic, functional,transaction-oriented reporting systems mostly constructed in COBOL, the SJspredominated in the systems profession; many people of other temperamentsmay not have found such a profession attractive. However, the times havecertainly changed. The systems area encompasses a much broader scope ofactivity and competencies. Systems are making use of a variety of media andinformation types. Their influence is expanding significantly and their role inmany business organizations has become more central. Thus, while thereremains a significant proportion of “SJ activities” in systems work, room formeaningful contribution from NTs and also SPs and NFs has increased. Theprofession has become much more diverse.

Artisan-SP: This temperament was found in 3-9% of the survey samplesmentioned. Although not that many SPs appear to be in the IT profession, theircontributions cannot be undervalued. They value practically and spontaneityand do not like to work at only one task at a time. Thus, SPs are ideally suitedto maintenance (“firefighting”) work, because of the variety and unpredictability.SPs can also be found at help desks. Also, SPs can be valuable working besideSJs on tasks requiring a practical, functional orientation. They may providevaluable 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 unpredictabledifficulties will be handled as energizing challenges. With the introduction ofvisual system development environments and multimedia systems, SPs mayindeed be attracted in larger numbers to the systems field, once they can beassured that they will not be drained by routine and boredom.

Idealist-NF: NFs are also not numerous among systems professionals; 6-12% were reported in the surveys. An NF is a person of deep feelings that are

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either dominant or auxiliary and mostly ahead of thinking. They must beauthentic to their deep self when they are working and have a strong relationalorientation. Usually NFs in systems work, although they prefer feeling, are alsoquite capable in the thinking function. Thus, they can have a unique andsignificant role, if they are recognized for their particular talents. Many systemsprojects, to be successful, need effective human relations at several points:initiating the project and obtaining support from higher management, gettingenthusiastic user support during requirements determination, enabling of cohe-sive teamwork during analysis, design, and development , and production oftraining materials that would be enthusiastically adopted by the users. NFs areadept at listening, persuading, motivating, and harmonizing. They are the mostemotionally insightful of people and very adept at perceiving non-verbalcommunication. The increasingly socio-technical nature of most systems effortsnearly mandates input from capable NFs. Such people are often sought afteras managers and motivators of system professionals.

Thus, we see that each temperament is uniquely suited to specific tasks inthe system development effort. All temperaments have something to contributein IT. It is important, however, not to continuously try to fit the “square peg intothe round hole.”

Applications in IT PracticeMBTI has been widely accepted in the area of general management. Thus,

many organizations have been bringing in consultants for a half-day or one-dayworkshop. In some cases, a follow-up workshop may be held some time later.IT professionals have, in many cases, been included in such workshops andhave thus been introduced to personality type concepts. However, often therehas been little follow up to an initial workshop, and the typical IT worker mayhave benefited only marginally from initial exposure.

However, there are indeed situations in IT where MBTI was acceptedmore seriously with impactful results. At Corning Inc., MBTI has been usedmore extensively, particularly in relation to teams. After initial introduction toMB types, the IT staff go through four-hour training sessions that haveparticipants play roles, solve hypothetical problems, and listen to one another.

For example, they may gather all NFs in one group and SJs in another andhave the two groups solve the same system development problem. Then eachgroup shares with the other how it solved the problem, that is, what steps ittook. These steps are then related to MB concepts. This is a prime exampleof “emotional literacy” education in the IT area. Such heightened awarenesshas increased trust among Corning’s team members, since they are aware of eachother’s perceptual differences and are not as likely to be intimidated by them.



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 thepersonality component of the program because it had (1) acceptable validitystudies and documentation, (2) books and conferences where people couldlearn 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 topicsrelated well with MBTI—the three related to group work stages. Thus, IBMcreated three separate modules, each about four hours long.

The first module introduces type differences and gives participants exer-cises to understand each of the four dimensions. Then, the members respondto a series of teamwork dilemmas. This module ends with formation of a planof action as to how this team will work with its differences.

The second module looks at the function pairs ST, SF, NT, NF, sincethese are seen as influencing communication the most. People examine theircommunication styles, and each person practices communicating with someoneof another type. Then the participants are shown how famous businessdecisions were made and which of the function pairs were used in making them.

The third module examines leadership and learning styles based on the fourKeirsey temperaments (1978). Team members’ leadership preferences arerelated to the leader’s temperament.

IBM finds that having three modules is effective, since people have time toabsorb basic information and only then get into more depth. In just over threeyears, more than 30,000 booklets of the Team Pac materials for the MBTImodules have been used.

Such an extensive and focused application of MBTI is encouraging. Theuse of MB in the IT area may, at some point, need to be assessed through amaturity stages model. Many organizations have yet to introduce it; some haveintroduced it, but have left any follow up to the individuals themselves; and afew, like IBM, have taken MBTI involvement to another level of maturity. It islikely, though, that unless type awareness is an ongoing effort in the ITenvironment, it will not realize its true potential.

Yet another noteworthy application has occurred at Hewlett-Packard inCalifornia. A team was created to implement SAP enterprise resource soft-ware. Considerable time was spent at the start examining communication andpersonality dynamics on the team. At first, team members were skeptical aboutinvesting such a significant amount of time on “touchy, feely stuff,” but as thegroup gelled, the people realized that they did not lose days but actually gainedweeks. One HP manager commented that, for them, Myers-Briggs was a

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turning point! Team members realized that “diversity and differences are whatmade the team successful in the first place.”

The two most highlighted uses of MBTI in systems development relate toteams and tasks. In teamwork, it is important to be conscious of the reality thatwhat energizes one person actually drains another, decreasing the person’seffectiveness, productivity, and motivation. As a concrete example, twoanalysts at a finance company, one an ISTJ and the other an ISTP, were askedwhat stresses them most in the course of their daily work. The ISTJ replied thatshe was really stressed when she had a number of different projects to workon simultaneously. She would have much preferred to complete one item ofwork, 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 thingtoo long. She actually needed to be working on several items at once and likedswitching from one to the other spontaneously.

The above story is very significant, not only because it is true and agreeswith type theory, but it is noteworthy above all because it shows how the workenergy of the different types, if not harnessed properly by psychologicallyaware IT management, will largely be wasted.

In teamwork, therefore, assigning tasks to people naturally suited for themis a primary issue. Following this is the need to balance teams such that eachmember’s energy is utilized as functionally as possible. Such an orientationrequires considerable awareness on the part of team members and managers,as well as deepened trust, in order for team members to be open enough todiscuss genuinely their strengths, weaknesses, and occasions of drainedenergy.

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 allaspects of personality. A noteworthy personality analysis tool that has achieveda significant presence in both personal growth and management applications isthe Enneagram System of Personalities. The essence is said to havedescended from the ancient Sufis and modern adaptations have been made bya 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 Enneagramfocuses more on why we function in a particular way— what is our underlying



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

Nine Basic TypesThe Enneagram proposes nine personality types, with each type being

assigned a specific number, one to nine. It is assumed that each type operatesunder the often subconscious influence of a specific emotion, as pointed out inTable 2. Moreover, each type is said to have a main desire, along with a mainfear. Such tendencies are often explained by the notion that no one has had aperfect upbringing environment. The interaction of a person’s innate emotional“slant” and the type of inadequacy in the upbringing environment are said to giverise to the nine ways of viewing and reacting to reality.

In short, each of the nine types requires some “condition” to be satisfiedbefore he/she can experience him/herself as being “OK.” Behavior is guided bythe underlying emotion so as to satisfy the critical condition.

1. The Perfectionist-1 can feel OK only if he is performing nearly per-fectly—if he is doing the “right” thing.

2. The Helper-2 can feel OK only if she is helping someone else andreceiving appreciation from the one being helped.

3. The Status Seeker-3 can feel OK only if his image in front of others is thatof a successful, important person.

4. The Artist-4 can feel OK only if she is free to be unique—different fromeveryone else and to express this uniqueness in her own way.

5. The Knowledge Seeker-5 feels OK only if he has impartially observed,analyzed, and learned as much as possible about his environment.

6. The Loyalist-6 can feel OK if she is obedient to external rules anddictates; she is often hesitant to act out of personal initiative.

7. The Fun Seeker-7 feels OK if he is having fun, even in difficult situa-tions—an external optimist who carefully avoids suffering and mayoverlook important warning signs of impending danger.

8. The Power Seeker-8 feels OK if she is the “mover and the shaker,” nothaving to submit to others.

9. 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 undoubt-edly notice people in our personal or work lives who fit some of the abovedescriptions. 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,

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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 theentrance of the place where the event is to be held. Suddenly, one of them tripson a cracked sidewalk and falls. Each of the others (assuming each is of adifferent 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)

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

Seeker)

Greed

Six (Loyalist) Fear

Seven (Fun Seeker) Gluttony

Eight (Power Person) Lust

Nine (Peace Maker) Sloth



Each type has provided a different response as a result of having viewedand experienced the event from his basic life-view.

While each type is associated with a particular “compulsion” and thus atype of dysfunctional energy, the actual diagram of the Enneagram system(Figure 1) offers what are called “directions of integration” (arrows for eachtype). Conscious progression for each type along the indicated path allows thetype to become broader, deeper, and more balanced, thus utilizing psychologi-cal energy more effectively and more dynamically.

From the Enneagram, we can appreciate much more clearly and directlyhow different people can be doing the same IT work but from differentunderlying motivations. Thus, they will recognize different challenges in thesame IT work and will exhibit different reactions. For example, in a situation ofconsidering significant reduction of intended project scope, a One may bemotivated by meeting the intended original deadlines. A Two, on the otherhand, would consider, above all, the effect of the intended reduction on users.In deliberating whether to introduce a new system development methodologyor technology, or possibly whether to change to an ERP system, an enthusiastic(possibly overly optimistic) Seven might favor “jumping right in,” while thefearful, cautious Six would likely advocate further, detailed feasibility analysis,possibly hoping for a “no” decision. In a power struggle between IT and aninfluential user department related to the direction and pace of automation, theEight IT manager might adopt a “bulldozing” approach and force the user toaccept his decision, whereas a Nine could be overly accommodating to thedetriment of optimum effectiveness.

Within the IT employee himself, the key question is how might his reactiondrain his own inner mental and emotional energies, making such energies

Figure 1. The Enneagram—showing directions of integration

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Table 3. Enneagram types in IT—A summary

Compulsion Emotion IT Strengths IT Weaknesses Growth Direction One (Perfectio-nist)

to follow the highest principles, to be "perfect”

Anger programming, quality assurance, testing, auditing, technical support, telecommunication

strategic planning, evaluation of system alternatives, group consensus, dealing with ambiguity

to Seven - relax the need to perform perfectly, have fun

Two (Helper)

to help others, with expectation

Pride

system requirements determination, prototyping, help desk, user training

isolated work, data modeling, systems programming

to Four- focus on your own emotional needs freeing yourself from need for admiration by those you are helping

Three (Status Seeker)

to promote and maintain one’s image of success

Deceit team leader, IT manager, CIO, high-profile technical specialist

detailed "grunt work" with a low profile

to Six - focus on working out of genuine loyalty rather than to maintain an image

Four (Artist)

to be always unique and different; to avoid the mundane

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

auditing, maintenance programming, prolonged, procedural programming

to One - look outside, to high standards rather than mostly within yourself

Five (Know-ledge Seeker)

to seek increasingly more knowledge, mostly for its own sake

Greed strategic planning, high-level process and data modeling, high-level telecommunications design, research and development, business process re-engineering

people management, user interaction, routine and detailed work

to Eight - step outside your own mind to commit knowledge to powerful action

Six (Loyalist)

to seek security in loyalty and obedience to external parties

Fear programming, auditing, data modeling, lower- level design, testing

dealing with ambiguous situations, accepting new paradigms, conflicting goals

to Nine - don’t let fear drive you, don’t make goals so absolute-everything is not "a big deal”; seek peace

Seven (Fun Seeker)

to have fun, in whatever situation

Gluttony system initiation, particularly e-commerce systems for competitive advantage, management, embracing change, user interaction, visual design

procedural programming, lower-level modeling, auditing, work with prolonged isolation

to Five - seriously learn a few things in-depth, even though it may not always be fun

Eight (Power Person)

to be invulnerable, powerful, in control

Lust management, CIO, champion of change, ERP consulting

procedural programming, low-level modeling, auditing

to Two - use power not to be in control but to help others genuinely

Nine (Peace Maker)

to avoid conflict, to seek harmony

Sloth team leader, JAD leader, programming,

technical support, work with tight deadlines

to Three - instead of compromising results for the sake



unavailable for solving the problem at hand. Between individuals, how mighttheir differing reactions to a situation they face in common initiate caution,mistrust, and lack of synergy instead of the intended effective, synergeticcommunication? Whether alone or with others, a person who has not integratedthe various perspectives of the Enneagram to at least a fair degree willexperience a considerable amount of stifling energy blockage, underutilizing hispotential and reducing his possible level of fulfillment. Can the IT area of todayand tomorrow afford to accommodate passively such a reality?

More systematic investigation and research would need to be done to havean initial orientation as to how Enneagram insights relate to system developmentpractice. At this point, therefore, it may be useful to examine a preliminaryattempt —a tabular summary of all the types and their strengths and weak-nesses, albeit mostly hypothesized, as related to IS work.

COGNITION INTELLIGENCEWhile personality relates to one’s behavior as a whole, cognitive func-

tion relates more explicitly to mental information processing. Since the majorityof system development work and IT work in general involves intellectualfunctioning, it is not difficult to see that how a person performs “mind work” isa relevant psychological factor in IT work. In fact, it is in the area of cognitionin which a majority of psychological research in computing /information systemshas been carried out.

According to Hayes and Allinson (1998), cognitive style is “a person’spreferred way of gathering, processing, and evaluating information.” Streufertand Nogami (1989) identify cognitive style as a pervasive personality variable.It influences what information in one’s environment a person focuses on andhow he/she interprets this information.

One main way of dichotomizing cognitive functioning is the analytic,sequential versus intuitive, wholistic functioning. Some psychologists havereferred to the former as “left-brain thinking” and the latter “right-brainthinking” (although other scholars may consider this an oversimplification). Theformer focuses on “trees” and the latter sees the “forest” in solving problemsand coming to conclusions. There are suggestions that link MBTI tempera-ments with the two predominant cognitive styles. Huitt (1992) identifies NTsand SJs as more linear and serial, and NFs and SPs as more wholistic andintuitive.

We have all likely seen classic examples of each style, either at work orelsewhere. The analytical person abstracts, analyzes, structures, organizes, and

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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 limitedimagination.

The intuitive person integrates many perspectives, finds problems anddiscovers opportunities, and generates new visions. She is sensitive to bothlogical and emotional issues, viewing them as one. However, she may overlookimportant details, may not communicate precisely enough, and may put offdecisions.

The analytic is like a tax lawyer, the intuitive, like a criminal lawyer; theanalytic like an accountant or chemist, the intuitive like an athlete or artist; theanalytic prides himself on intellectual rigor, the intuitive on imagination. As withpersonalities, most people may not fall exactly into two opposing “boxes”;however, there appears to be a definite preference in one direction.

The Adaptor-InnovatorOne 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 thata person feels appropriate within which to solve a problem or to embark oncreativity.

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 doingthings differently. According to psychologist/consultant Michael Kirton(1989), the Adaptor favors precision, reliability, efficiency, prudence, disci-pline, and conformity. He seeks solutions in “tried and true” ways, seeksimprovement 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 newparadigms. He is more interdisciplinary, approaches tasks from unsuspectedangles, and often treats accepted means with little regard. He tends to takecontrol in unstructured situations, but is usually capable of detailed routine workfor only short bursts of time. While an Adaptor has higher self-doubt and isvulnerable to social pressure and authority, an Innovator does not needconsensus to maintain confidence in face of opposition.

To distinguish Adaptors from Innovators, Kirton (1989) developed theKirton Adaptation-Innovation Inventory (KAI), a questionnaire consisting of32 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 beenobserved over time and culture; it may be measured adequately even early ina person’s life. KAI distributions for general population samples from sixcountries conformed almost exactly to the normal curve with a mean of justabove 94 (where the theoretical mean would be 96) (Kirton, 1989). KAIscores did not correlate significantly with IQ, achievement, or creativity tests.This emphasizes that KAI is a measure of cognitive/creativity style rather thancapacity.

Cognitive Style in ITIt 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 harnessedand managed, will provide significant contributions to the development andimplementation of information systems, particularly Web-based multimediaapplications.

The late researcher Dan Couger (1996) applied KAI to a representativesample of IS professionals and found that most were inclined to the Adaptiverather than the Innovative style. This would agree with the preponderance of SJtemperaments in IS. In this situation, however, many IT organizations willdevelop Adaptor managers who prefer the Adaptor (analytic) style. Valuablecontributions from talented Innovators may be ignored or discouraged. Thismay indeed be dangerous in an area where paradigm changes are paramount.

In Kirton’s book (1989), we see a consulting case where an internationaloil company was experiencing a conflict between two department managersand their senior analyst. The managers required that the analyst’s work tie indirectly to the business plan and not deviate from the established “businessclimate”; he had to establish credibility with other managers. The analystaccused the managers of being short-sighted and not perceiving the futurepatterns of business nor preparing adequately for them. When the three tookthe KAI, the managers averaged 86 and the analyst 117. Eventually, the analystdecided to seek employment elsewhere. Anecdotal reports suggest that thedifference of more than one standard deviation in KAI scores may causesignificant problems in employee communication. Again, for the IT profes-sional, the key is awareness.

In IS development, there are tasks that require applying establishedtechnologies to new situations (adapting) and others that benefit from entirelynew approaches. The latter can usually enhance competitive advantage.However, according to MIS researcher Michael Epstein (1996), “the need tointegrate the mechanistic logic of computers with the ambiguous nature of living

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human systems remain fundamental to the successful design and implementationof computer-based information systems.” Thus, the mature IS developer willincreasingly need to combine both views consciously and effectively. More-over, it is not only a matter of “system” issues requiring an analytic approachand “people” issues requiring the integrative, wholistic perspective. “Right-brain” contribution can indeed be significant in specific areas of analysis,design, and development. Design of user interface and Web pages andmultimedia components, clarifying and improving upon user-identified systemrequirements, process re-engineering for ERP implementation, and identifica-tion of domain objects can all benefit significantly from a thinking process thatis intuitive and innovative. It remains for interdisciplinary IT research to identifymore specifically how such “right-brained” efforts complement the traditionallyaccepted analytic approaches to IS development.

To gain practical insight into the issue of thinking style in IT, one canconsider some significant developments in applied computing and hypothesizewhich style may have contributed most in each case. For example, the conceptsof Computer Aided Software Engineering (CASE) tools or Enterprise Re-source Planning (ERP) systems may well have resulted from a more traditional,analytic style. CASE mainly automates and integrates existing approaches tosystem development; thus, the CASE concept is an extension of an existingparadigm. Similarly, ERP systems are a large-scale adaptation of previouslyexisting smaller integrated business applications.

However, the OO paradigm is likely the result of the innovative, intuitivethinking style — it models data and related processes in an entirely new way.Such an intuitive style may also be responsible for innovative ways in assistingsystem users, for example, the recording by an EIS of which screens anexecutive uses most often. Also, considering that system development effortsare often initiated by problems and opportunities, it is quite possible that while“left-brain” thinking can address existing problems adequately, it is the “ right-brain” approach that can capitalize on new opportunities from an IT perspec-tive.

With the scope of information systems continually and rapidly expanding,the many problems to be solved and decisions to be made will no doubt benefitfrom a functional, conscious synergy among workers with differing styles. Huitt(1992) stated a researcher’s opinion that “the problem-solving techniques aremost powerful when combined to activate both the logical/rational and intuitive/creative parts of the brain.” Agor (1991) stated emphatically that “it is of greatconcern today that organizations often thwart, block, or drive out intuitivetalent,” and also “organizations typically know their personnel by formal job



title, responsibility, or years of experience — seldom do they know which brainskills are possessed that can be applied to difficult problems.” Undoubtedly thelatter comment applies quite directly to most IT organizations.

It is quite probable that the IT profession and system development inparticular is ready to begin a concerted, conscious awareness regardingcognitive style. However, an individual system developer needs to be suffi-ciently motivated and sufficiently supported to achieve this goal.

FOUNDATIONAL INTELLIGENCE—THE DEEPEST INNER SELF

Psychological factors examined until now have dealt largely with how webehave 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 aconceptual as well as experiential point of view, yet another component to thehuman person? If so, how can explicit awareness of this component contributeto 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 well-adjusted, aware human person. Furthermore, this central core can truly providerejuvenated psychological energy in times of stress and change, and it can alsoprovide stability and impetus to significantly creative efforts. Thus, it isproposed here that conscious awareness of one’s deepest self can indeed adda very important dimension to the work of an IT professional, particularly onewhose work involves human interaction. In addition, it is pointed out thatconnection to one’s inner self provides the theoretical and empirical basis forthe notion of “emotional intelligence.”

A Two-Tier Model of Human ConsciousnessFor a majority of people, at least in today’s Western world, their self-

awareness is largely limited to a one-tiered view as shown in Figure 2. Here themind (intellect), feelings (emotions), and the body (with its senses) areidentified. The will is the force that channels one’s consciousness to the variousparts in various proportions during the day.

A person at this level of awareness has the three components available foruse. However, each of these three parts can be at different levels of positivityor negativity at any point in time. For example, the mind can be thinking clearlyor be confused; feelings can be elated, peaceful, or angry; the body can be

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healthy or sick. Indeed, these very “human,” imperfect components cannot becounted 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 ofwhich have received notable acceptance from professional circles, propose thetwo-tiered model of the human person, shown in Figure 3. Here, the threehuman dimensions are receiving energy/direction from the deepest self/coreenergy/inner being, which operates on a separate, deeper level. Moreover, thesubstance of this core energy is only positive —there is nothing negative andnothing missing (for deep psychological wellness) in the inner being. Thedifficulty, though, lies in establishing and maintaining a strong enough connec-tion between the human and the being parts.

Dr. Bernie Siegel (1989), well-known health counselor and former YaleUniversity surgeon, points out that:

Most of us are in touch with the inner self only intermittently, if at all... it’snot located in the conscious mind... this perfect core self seems to fit in withneuropeptide theories... I first got to know this perfect core self throughmeditation.... however you get there, you’ll know you’ve arrived — it’s likecoming 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

Figure 3. Two-tier model of the human person

INTELLECT EMOTION BODY (SENSES)

DEEPEST INNER CORE

EMOTIONAL BLOCKAGES

INTELLECT EMOTION BODY

(SENSES) HUMAN

BEING



We can usually switch our attention, our concentration, willingly from themind 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, atbest, willfully relinquish control of the mind, body, or feelings and try to focuson one’s “felt truths”; the core energy simply surfaces to consciousness.

Also, in the two-tiered model, note the “wedges” between the human partsand the inner core energy. These are the reasons why most of us are not oftenin touch with our “true, authentic self.” According to a number of personalgrowth perspectives, there are five basic inner needs that we have when weare developing psychologically:

1. to be SEEN for what we are experiencing deep within us;2. to be HEARD attentively when we try to communicate something of deep

importance to us;3. to be TRUSTED in our innate ability to develop “for the good” without

“micromanaging”;4. to be RECOGNIZED and addressed as a unique person who has infinite

value much beyond behavior and performance; and5. 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/ornegative (perhaps, but not necessarily abusive) impact creates emotionalblockages, many of which are initially subconscious. These are largely thereasons why many people, IT professionals included, are not sufficiently awareof 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 andlimiting blockages. The reality of the pure, deep, inner core energy has shownto have significant potential for psychological empowerment in personal andprofessional life. Can IT professionals afford to ignore such a potential?

It is hypothesized here that, besides personality/cognition factor aware-ness, an IT professional’s conscious self-development according to a two-tiermodel would provide significant additional benefits to his workplace. However,this psychological dimension may be, at least initially, the most difficult for theIT worker to assimilate.

IT workers, the majority of whom are TJ types in MBTI, are accustomedto structure and precise, logically definable realities. For some, perhaps many,such realities have exclusively formed their life view. In such a view, being in

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control, understanding, and “scientifically predicting” are counted on to pro-vide inner security, self-worth, and motivation. However, the rapid change intechnology and in IT paradigms (such as OO) coupled with increased expec-tation in the Internet era of mega-connectivity are eroding, at times significantly,“security from control.” Consequently, many IT workers may, knowingly ornot, 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 ofinner security and identity on which most (perhaps all) of their life rests.

The IT profession seems to be recognizing the threat of impending “massburnout.” In a recent issue of the Cutter IT Journal, dedicated to IT Burnout,Edward Yourdon (2002) states, “Burnout is still a topic that most seniormanagers would rather not confront, but it has become so prevalent and severethat some IT organizations have become almost completely dysfunctional.”

However, breakdown can lead to breakthrough. To minimize the damageof prolonged stress in IT, a new vision is first of all needed, a wholistic modelof a “functional IT worker,” a model that can have its roots in the two-tierperspective outlined earlier. From this vision, effective assistance measurescould indeed be provided.

A major contribution to such a “new vision” that can apply to ITprofessionals can be seen in the work of Gary Zukav, author of the bestsellerThe 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 survivalas the central objective of the human experience. . .the old speciesexplored the physical world and it created security by manipulating andcontrolling what it discovered. The new species creates security bylooking inward to find the causes of insecurity and healing them…Thisis the path to authentic power. Authentic power is the alignment of yourpersonality with your soul [i.e., deepest core energy] (p. 159).

For these authors, and numerous others, a deep, inner self-awareness iscapable of providing a complementary psychological empowerment thatawareness 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 visionof a “functional IT professional” of the 21st century. However, strategy mustlead to tactics. There must be available prescriptions as to how one can developa “deep inner connection,” as well as a clarification of the relationship of such



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

A Structural Foundation for Emotional IntelligenceWhen 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 easilylabeled “emotional.” There is no other component in this model to which toappeal.

However, the term “emotional intelligence” may appear vague and confus-ing. 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 couldabound in, say, trying to make an IT department “emotionally intelligent” whenworking 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, deeppsychological core energy from the deepest inner self/being, then the entireconcept of “emotional intelligence” is immediately clarified. The intelli-gence comes from the gratuitous innermost zone, the second tier. It thenilluminates the intellect, the emotions, and the body, which, having access to thisreservoir of wisdom, can thus display all the features that Goleman and othersidentify with “emotional intelligence.” Both the mind and emotions become theservant of the inner being.

Thus, in this view, the way to develop emotional intelligence is to work atremoving (evacuating) the blockages between the intellect-emotions-body andthe deepest inner self, and then to allow one’s thoughts and feelings to be guidedby the now accessible inner energy where all the necessary awareness shouldultimately be found.

Benefits of Increased Awareness to ITIncreased inner consciousness and the resulting empowerment must be

seen to yield important benefits to the IT workers, their employers, and to theuser community.

The main benefit to IT of growth into and work from the deepest inner selfis psychological robustness, capacity for psychological resilience in the faceof overwhelming challenges. Change management consultant Diana Larsen, in“Embracing Change” (2003) notes: “Change agents and those involved withchange who have the personal and social skills of emotional intelligence will

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show more resilience in the face of a shifting environment.” Personal growthprograms that help one to access one’s deepest self could, thus, be a veryimpactive resource for IT workers.

Ordinarily, when reacting to stressful, unfamiliar circumstances, unfavor-able emotions such as anger, frustration, fear of failure, and the like, can takeover the psyche and largely disempower the intellect. However, the revitalizingpsychological energy of the inner being is present deep within, at the level morefoundational than the intellect, emotions, or body. It indeed provides theempowering psychological energies that accrue when one has grown suffi-ciently to be able to “drop oneself into” one’s deepest core energy in the faceof external storms in the course of IT work. Availability of such an empoweringinner resource depends on maturity in growth. This significantly affects one’sessential, 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 likelyhappening for each of them at an inner level? What are they feeling, how arethey reacting emotionally to the tasks and challenges at hand? More impor-tantly, she may wish to assess which persons are capable of being very involvedyet not attached in dependency (not addicted to their work). This is emotionalintelligence in action!

With a two-tier consciousness in IT workers, teamwork and usercommunication will unquestionably become more effective, by a “quantumleap.” With a one-tier consciousness, much communication is hampered byemotional “self-protection”—one does not want to show one’s professionaland/or personal insecurity; one may be threatened by approaches or stylesdifferent from one’s own. With a growth-induced, two-tier awareness, suchdefense mechanisms are unnecessary and would not even be considered. Withsuch an awareness, one knows that one can dissipate self-consciousness withconsciousness of the pure, all-encompassing energy emanating freely from thedeepest 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 shortcomingsand limitations, because one is simultaneously aware of one’s indisputablevalue, goodness, and worthiness which come from deep within.

With an expanded consciousness and self-concept, and, thus, a trans-formed identity (from “techie” to a multidimensional “information resourcefacilitator”), the new IT worker can indeed be effective in the current systemdevelopment 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 outlinedearlier, such an IT worker would become truly emotionally intelligent.

In teamwork, he would gladly listen to and assess opposing viewpointsand would be secure enough at the deepest level to welcome constructivecriticism. Out of a profound sense of self-respect—the sense that comes freelyfrom deep within—a developed IT worker could indeed make users feel valuedand have their needs and reservations respected and addressed adequately. Aproject manager with considerable growth in the inner self could be sensitive tothe unique talents and psychological needs of subordinates. She could truthfullyexpress firmness or disapproval of a person’s behavior without anger or fearand without having the person feel undesirable. Through her openness andgenuine humanity she could invite openness among subordinates, generatingconsiderable trust.

Moreover, such growth-based cohesive teamwork need not be restrictedto physical teams but can be considered in the virtual team context. ResearcherRuggero Rossi de Mio (2002a) attempts to define “virtual emotional intelli-gence” and to understand the “group cohesion reaching process”; in thiscontext, it would be instructive to examine the degree of “two-tier conscious-ness” among the members of a virtual group progressing towards cohesion. Inaddition, de Mio (2002b) proposes a method for quantitative measure ofemotional intelligence in face-to-face and computer-mediated communication.How might such measures relate to a proposed indicator of the degree ofintrapersonal, two-tier connectedness?

If a manager addresses a subordinate from the intellect (alone), thesubordinate’s reaction will also likely come from the intellect. If the managercommunicates with emotion (perhaps superficial), the subordinate will respondlikewise. However, if the manager connects from her own deepest inner,authentic self, this will prompt a response from the same deep level, especiallyif the subordinates have been undergoing their own process of inner unblockingand deeper connecting. As an example of such a phenomenon, we can relatethe eloquent words of Jim McCarthy, from his book, Dynamics of SoftwareDevelopment (1995):

... a leader’s empathic perception of the psychological state of his or herteam is the beginning of what we call vision. If the leader can thenresonate with the team’s complex emotional state—identify with it,articulate it, and give the whole constellation of feeling and thought avisible, concrete reality in his or her own personal voice or gesture—the boundaries among individual team members and the leader will

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collapse... Empathy will be established: the leader and the team will feeland know as one, giving voice and identity to what was an incoherentpsychological community substrate. And it will feel good to the team tobe understood and to understand... Without empathy, vision is hollow,an ersatz vision that might fulfill a requirement that some words appearon a slide, but won’t provide the visceral motivation that inspires a team togreatness.

In addition, Kent Beck, the originator of the Extreme Programming (XP)paradigm (2000), dismisses the idea that IT work is “some Vulcanic world ofpure rationality” and declares that “To be successful, we must learn andgrow 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 workin the post-modern era.

Conflicts with a team or with users can be much easier to resolve from aninner- centered consciousness. There will never be attacks on a person or hisdignity out of a sense of bruised ego, since inner-centered persons do not relyon ego for security and strength. The deep, freely available inner strength willallow for considerable flexibility in generating new approaches that parties inconflict will be able to accept—people will not need to “defend their turf” sorigidly as if their life, self-worth, and meaning depended on it. Furthermore,such an orientation to conflict management, made possible by a two-tieroperational self-awareness, could be developed not only among working ITprofessionals, but also among IS university students. Hignite, Margavio, andChin (2002) studied conflict resolution profiles of emerging IS professionalsand isolated factors that were shown to influence conflict resolution style.Could a two-tier consciousness significantly influence or perhaps even alter aspecific style and could it make the style more effective?

In the course of IT work, frustration, anger, and disillusionment, which arehumanly natural, will not disappear from people who are considerably inte-grated. However, the negative effect of these stress-inducing emotions on thethinking capacity, motivation, and physical health will be considerable less-ened, since these emotions will not need to be inappropriately expressed orunhealthily repressed but will be offset and largely “melted” by access to a morecentered, profound, powerful, peaceful, and energizing inner force. Also, suchemotions will not be as likely to perpetrate dysfunctional work decisions amongIT workers. For example, in “XP and Emotional Intelligence,” Kay Pentecost(2002) relates an incident where her development team, wishing to please itsmanager, took on a dubious goal of trying to improve a working demo for an



executive in a very short period of time and failed to have even the basic demoworking on time. In hindsight, she acknowledged that the desire to please itsmanager clouded the team’s judgment as to the feasibility of his request. Shepointed out that, “In this group of supposedly logical developers was a lot ofnegative emotion: blame, fear, anger, frustration, and some amount of despair.”Then, some time later, a similar situation arose, with an inappropriate requestfor an “express enhancement” to a working demo. The author, tapping into herinner strength and wisdom, truthfully told the supervisor that the team could notdo 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 manysystem developers having come from a third-generation language programmingbackground, structure was paramount and control over one’s program wasvery possible. Now with realities such as unrealistic deadlines, ongoing changesin requirements and development approaches, and frequent organizationalrestructuring, a sense of control over one’s work tasks, one’s competencylevel, and one’s career path is often eroded. For many structured personalitieswho may have relied on such control for most of their essential personalsecurity, such an erosion can indeed be traumatic, causing what is termed as“image violation.” Recently, Niederman and Sumner (2003), in a study ofturnover among IT professionals, proposed that forward-thinking companiesdevelop “management programs to head-off declining job satisfaction associ-ated with image violation.” In time, such programs may well address the realityof the deepest inner self and present methods of how to access this stabilizingpsychological reality.

With an active connection to one’s deep inner self, which feeds one’sconsciousness with all the deep essential security one needs or wants, one canbe emotionally interdependent with work structure and control rather thanbeing emotionally dependent on it. One can be close to structure, work withit, maintain it, yet be simultaneously emotionally free of it. Then, a disruption instructure 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 energyfor productive responses to the IT work reality.

Related to loss of control are the needs within IT (among both developersand users) for coping with ongoing change and the need for constant,substantial learning. With a two-tier connection, one can be emotionally closeand free to one’s work efforts. Considerable distress in change results fromneeding to let go emotionally of what has become comfortable, fulfilling, and

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even affirming. However, an emotional “letting go” is significantly easier if oneis deeply, inwardly connected. In recent research, Shen and Gallivan (2004)showed that negative consequences of the need to deal with change aremoderated by the autonomy that IT users experience in their work. Yet in thetwo-tier model, there is, besides external autonomy (in the workplaceenvironment), an internal autonomy (lack of emotional “clinging” enabled bya connection to the deepest self). The role of the latter will certainly be worthexploring, as IT workers and their managers collectively begin to accept thereality of the psychological inner core.

Rootedness in one’s deep authentic self provides positive energy to theemotions and intellect. One then can, by his authentic presence, motivateothers genuinely. One can also be inwardly free enough to attempt new,creative approaches to established work tasks. In addition, deeper innerconsciousness has positive effects on the planning of one’s IT career.Following one’s deep authentic self, one is motivated basically by truth (as seenby the “inner eyes”) and not by image or external goals. Such an IT worker willseek to know, truthfully, his natural talents and shortcomings; he will be contentto work at his current level until genuinely motivated, in all parts of him, to seekanother level. He will avoid career management through restlessness, the driveto constant progress, or addiction to “mental highs” in order to drown out abasic inner malaise. Sumner and Yager (2004) identified “managerial compe-tence” as a career anchor of IT personnel. In time, IT workers may look formanagerial support of two-tier self-awareness as a component of such compe-tence.

A rooted IT worker living mostly with her intellect, emotions, and body atthe service of the deepest inner core energy will indeed become emotionallyintelligent at work. She will have the courage and ability to access andunderstand her own feelings and to intuit about the feelings and attitudes ofothers. Moreover, the inner wisdom of the being will serve as a valuable guidein specific situations. She will “just know” what words to use to diffuse a client’sanger; 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 adevelopment is best addressed by comprehensive integration, by connecting aninformed intellect, aware feelings, and a healthy body to the deep core energy—by promoting “personal wholeness” within IT work.



AREAS FOR FURTHER RESEARCHUntil now, acceptance of psychological factors in general has been quite

sporadic within IT management. Cases where Myers-Briggs application hadsignificant 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 proliferatingpersonal development literature, and such perspectives are being introduced ingeneral management training, the deepest inner self, as a separately identifiablepsychological reality, has not yet made significant, formal inroads into themanagement of IT. However, if the reality of the deepest self, which transcendsthe 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 increasingattention in IT research of the near future. After recognizing isolated incidentsof apparent two-tier awareness specifically within IT, particular topics relatedto consciousness of the inner self are proposed for interested and daring ISresearchers.

Over twenty years ago, U.S. mathematician and computer scientist OrestBedrij had worked out fundamental mathematical equations for parallel pro-cessing of long series of numbers with multiple integers—equations that werethen patented by IBM. Bedrij subsequently became IBM’s technical directorat the California Institute of Technology Jet Propulsion Laboratory and wasresponsible for the development and integration of a computer complex thatcontrolled the first soft landing on the moon. To discover the equations, Bedrijprayed and fasted intensely for long periods of time, as was his wont indiscovering new formulas. He ceased any attempt at deliberate calculation andsat 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, andreligion, pointing to the oneness of existence and humanity.

Although such an approach may indeed appear extreme for today’scorporate IT culture, researchers Carrington et al. (1980), in “The Use ofMeditation-Relaxation Techniques for the Management of Stress in a WorkingPopulation,” report that where telephone company employees practicedmeditation twice daily for six months, there was an effective reduction insymptoms of stress such as depression, somatization, and anxiety. Also, fromparticipants’ spontaneous comments, the most frequent benefit was an “im-provement in cognitive functioning.” Other comments included: “My reasoningprocess is clearer”; “I think, remember, and organize better”; “… increased

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interpersonal awareness”; and “… do not feel so defensive in my relationshipswith other people.” These effects may be interpreted as resulting from havingthe 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 wherea psychologist had administered the Bar-On EQ-i test to gauge the copingabilities and emotional intelligence of 150 IT professionals. The researcherfound that the IT workers had a lower score than most other groups ofprofessionals that he had tested.

Whereas meditation may lead one to a greater inner awareness thattranscends 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 devel-opers.

In a 1998 weekend edition of the Boston Globe, an advertisement for ITjobs in an insurance company contains the following: “Sometimes you have tolisten carefully, to hear the loudest voice. It’s the voice inside. Stop ignoring thatvoice—it’s coming from your soul.” At the start of the popular IS text,Introduction to Information Systems—Essentials for the InternetworkedEnterprise (1998), author James O’Brien tells his readers “May you love theLight 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 Sideof SAP Implementation.” meditation and religion are identified explicitly asavenues for managing stress. Recently, in his conference presentation on“Transcendent Significance of MIS Students’ Service to the Community”, MISprofessor K. Gregory Jin (2004) points out that giving out service learningprojects to his MIS students helped them grow “not only intellectually, but alsoemotionally and morally beyond their technical consciousness and pragmaticconcerns.”

Thus, the reality of foundational intelligence of the deepest inner self hasmade inroads into IT. The following are suggestions for possible furtherresearch that would more comprehensively relate this central component ofemotional intelligence to theoretical and pragmatic IT concerns.

First, it would be useful to survey the attitudes of different classes of ITworkers towards emotional intelligence and the promoted idea of the deepestinner 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



a group has an average score lower than many other professions. Would asignificant difference be found among classes of workers with different orien-tations (e.g., programmers vs. systems analysts)? Also, an instrument could bedeveloped that would attempt to measure an IT worker’s conscious connectionto his/her deep inner self. The degree of such a connection could then becorrelated with one’s score on an accepted Emotional Quotient measure.

An attempt could then be made to relate the degree of one’s emotionalintelligence to ease of handling what are commonly recognized as difficult “softissues” and stresses in the course of daily IT work. A list could be formed ofspecific tasks where IT workers who had actively developed in inner psycho-logical intelligence report a significant impact of their increased self-awareness.

The role of personal growth according to the two-tier model on stressfulexperiences in IT work could certainly be examined. To what degree and underwhat conditions are employees finding previously stressful situations mucheasier to handle? What effect does a deeper inner consciousness have on trustand morale on a software development team? How can user relations beameliorated when working from one’s deeper center? To what degree does ahigher emotional quotient mitigate image violation in IT work?

Since attempts to relate growth in the deepest self explicitly to IT work arerelatively recent and quite sporadic, this psychological dimension ought toattract considerable research focus in the near future. However, the entire issueof increased psychological awareness within IT, in its many dimensions, will beeasier to research and to promote with a concerted, integrated effort. To thisend, a new academic field may become appropriate, perhaps initially called“Psycho-informatics.” However, such an area of study would mandateconsistent interaction of researcher academics with IT practitioners “in thetrenches.” A dedicated Web site, such as the one developed for the recentbook by Kaluzniacky (2004) (currently at http://itwellness.ncf.ca/) may wellserve as a catalyst. In addition, research into effects of greater emotionalintelligence on IT need not be carried out only within academe. Recently, theapplicability of action research to the field of IT has been promoted (e.g., inEstay-Niculcar and Pastor-Collado, 2000). Action research (AR) involvesaction and research on that action that is carried out by the same person inparallel. More formally stated, AR is a research method the essence of whichis the juxtaposition of action and research, in practice and in theory, throughcyclic execution of four characteristic phases: planning, action, observation,and reflection. There should be considerable potential for action researchwhere an IT worker or manager is applying a psychological factor in an ITsituation.

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

STAGES TOWARDSEMOTIONAL INTELLIGENT IT

At this point, it may be useful to hypothesize how a typical North AmericanIT organization might evolve in psychological awareness/emotional intelli-gence. Such a vision may be useful in showing IT managers, in encapsulatedform, what may indeed be possible.

In 1974, Richard Nolan identified six stages of data processing growthwithin an organization: initiation, contagion, control, integration, data adminis-tration, and maturity. Here, a similar attempt is made to identify and describegrowth stages in enhanced emotional intelligence within an IT organization.

A Growth Stage ModelInitially, before the first stage, no formal attempt has been made to

introduce psychological factors to the IT organization. A few individuals mayhave read some books on personality or motivation and may have discussedsome of this material privately with receptive co-workers.

Stage 1: OrientationMembers of the IT department are given a Myers-Briggs personality type

seminar. Each person has his/her type assessed. The presenter speaks gener-ally of organizational applications but does not address IT specifically.

In the following weeks, some IT staff members discuss their MBTI typeswith 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) inprofessional IT journals and newspapers. Such articles may be posted on thecoffee 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 suchas this one and consider at least half-seriously the possibilities presented.

This is the stage of orientation. People begin to become aware of theirpreferences with regard to the four MBTI dimensions. The Myers-Briggssystem, because of its structure and adaptability in wide circles, is likely the beststarting point for psychological awareness in IT.

To move an organization beyond this stage, more relevant articles appear-ing frequently in professional literature will definitely help. Applied research anddevelopment (from “psycho-informatics” researchers collaborating with seniorMBTI trainers) may yield literature applying MBTI directly to IT. For example,a booklet parallel to the existing one on “Type in Organizations” (1990), canbe produced on “Type in IT Organizations,” outlining main work characteris-tics, strengths, weaknesses, and areas for development for each of the 16types. Such an effort would indeed be very valuable to get organizations toprogress beyond the first stage.

Stage 2: ConsiderationAfter reading recurring articles on the value of MBTI in IT, after attending

MBTI workshops at professional conferences, and after reading newly developedIT-specific Myers-Briggs material, IT management decides to “get serious.”

An IT-specific Myers-Briggs workshop is given. Management circularsencourage personality type consideration in IT work. Team members begin todiscuss openly personality issues as related to cooperative efforts.

In some organizations, specific applications are described in an internalnewsletter. Particularly, applications that imply increase in effectiveness beginto be noticed by management.

By this time, research and development efforts (perhaps initiated by theformation of an “Institute of Psycho-Informatics (IPI)” composed of MISacademics and Myers-Briggs trainers/psychologists) will have produced abooklet and workshop on personality type and user training, focusing on users’learning styles and the development of training efforts to accommodate differentstyles. Personality/learning styles are considered in user training. Successfulefforts are publicized.

Until now, nearly all psychological considerations have revolved aroundthe Myers-Briggs system. Other psychological dimensions are discussed hereand there, for example, at coffee breaks.

The main characteristic of this stage is the serious acceptance of at leastone psychological dimension, Myers-Briggs personality, as having a specificrelevance to IT work. To achieve this level of involvement, widespread

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communication of specific, impactive efforts is required. In addition, a selectgroup of Myers-Briggs trainers, for example, from the Association for Psycho-logical Type, can recognize significant, concentrated potential for MBTIapplication and begin to develop workshops and materials oriented specifi-cally to the IT field. In time, a few such people, coupled with several appliedacademics, may indeed form an “Institute of Psycho-Informatics” that couldhave a research arm and a development arm and could be dedicated to thesystematic introduction of psychological factors leading to enhanced emotionalintelligence in the vast IT industry.

Organizationally, to move from the first to the second stage, it will beindeed useful to have a “champion,” a person in higher middle management(quite possibly an intuitive feeler). He/she would be willing to publicize existingapplication in the industry and to specifically promote a more concentratedinvolvement within his/her IT area.

Stage 3: Initial AcceptanceBy this time, IT people have been using MBTI, at least semi-formally, in

task assignments, team cooperation, and user training. Now the use of MBTIexpands to system requirements determination with users and to career-pathplanning.

Development of specific, visual materials (e.g., on a CD) to train analystshow to recognize communication trends among different types of users can bevery motivating and very useful.

At this point, Human Resources personnel dealing with IT become morestrongly involved. Policies on using MBTI formally (e.g., in interviewing) areestablished. Also, cognitive style consideration becomes more widespread.Kirton’s KAI test may be formally administered to IT personnel. Consider-ations related to creativity may be initiated.

Myers-Briggs Personality and Cognitive/Creativity styles are applied tospecific IT methodologies, such as Extreme Programming. At this stage, ITpersonnel are beginning to feel “at home” with such psychological dimensions.They begin to accept them as part of their job consciousness. More time isdevoted to such psychological topics at professional conferences, and moreprint space is devoted in professional publications. Organizationally, a specific“Psych Factors” electronic newsletter may be produced and distributedquarterly. In the industry, a specific IT Psych Factors Web site is established.Specific comments from individual IT workers one how such consciousnesshas made their work become more effective (and, we hope, more enjoyable)become most noteworthy.



While Myers-Briggs personality, cognitive style, and creativity modes willhave become, at least to a fair degree, acknowledged and accepted in the ITorganization, issues regarding emotions will not yet receive formal attention.However, the communication sources to which IT workers will now be lookingacceptingly for further development on MB and cognitive awareness, may nowbegin to expand their content into areas such as Enneagram types and emotionalintelligence.

Some IT organizations may, thus, be ready to add, for example, the Enneagramto their psychological repertoire. The Enneagram is particularly useful in moving astructured, analytic person into initial emotional considerations. First, it is apersonality typing system and, with Myers-Briggs already acknowledged in theorganization, another system will not be intimidating. Second, it is structured (andnumeric), with its own diagram. Third, it postulates an underlying emotion for eachtype as well as an emotional pattern. Here is the point of greatest progress for anIT worker in this third stage. Persons will begin to see how their emotionalpatterns have both enhanced and hampered their work. Fourth, the Enneagramcontains specific, prescribed growth paths for each type, implying the capacity ofeach type for emotional development.

At this point, IT workers are beginning to recognize and discuss previouslyhidden emotional needs that have largely motivated their work. They begin tonotice dysfunctional emotional reactions while under stress and relate this toestablished 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 profes-sional conferences and in trade publications. More IT staff take note ofsignificant improvements in effectiveness due to awareness of Myers-Briggs,cognitive style, and Enneagram patterns. Relationships of such awareness tostress management is noted.

Some individuals (again, likely intuitive feelers) have read Goleman’sWorking with Emotional Intelligence and are beginning to discuss possibleapplications. 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 Myers-Briggs as a “soft skill” in IT. Attention is given to cognitive styles. Moresignificantly, though, an explicit open focus on underlying emotions andemotional response patterns is made possible by the Enneagram. Such a directfocus on emotions is a great step forward for the heretofore exclusively analyticIT workers. It will open new doors in the next stage.

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The key requirement in this stage is recognition, in specific instances, of thenoteworthy impact of Myers-Briggs awareness on various aspects of IT work.IT workers will wonder if one type of psychological awareness can indeedmake a significantly positive impact, then what about others?

Stage 4: Emotional FocusAt 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 movementwithin the IT organization has taken hold.

Considerable focus is now placed, at least semi-formally, on emotionalintelligence. IT workers are becoming more aware of their own feelings andthose of their coworkers. Internal IT newsletters refer to specific applications.An industry-wide Web site provides literature, Q&A boards, and discussiongroups.

Now, a variety of other psychological techniques are examined: neuro-linguistic programming, focusing, and meditation. These approaches are re-lated to stress management.

Some Psych Factors Groups meet more often, with more fruitful discus-sion. The Institute of Psycho-Informatics will have produced numerous mate-rials related directly to IT; its staff will be providing a variety of workshops. Inaddition, higher management has taken note of this undeniable movement to“soften and broaden” IT. In some organizations, higher IT managers aresponsored for the Hoffman Quadrinity Process (Hoffman, 1988) in an attemptto “go all out.”

In this stage, the IT organization has, as a whole, said “yes” to psychologi-cal awareness/emotional intelligence. Calls for “growing the whole person” (asmade by Kent Beck [2000]) and for “empathy... that provides visceralmotivation” as promoted by Jim McCarthy (1995) are seen as central to IT’seffectiveness within the organization

The role of NF types (intuitive feelers) in ITs arriving at this stage cannotbe underestimated. Such psychological awareness is the natural preoccupa-tion 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 suchawareness can be developed and promoted to types other than their own. Thiscan be a major challenge.



Stage 5: Intended WholenessAt the start of this stage, the organization is actively “working on”

emotional intelligence. However, the effort is largely made from an intellect-emotion-body perspective of the human person.

However, a number of higher IT managers who have completed theHoffman Quadrinity Process have now realized another, deeper dimension.Such IT Hoffman graduates form their own “fraternity.” In time, the perspectiveof the deepest inner self is promoted more directly.

More IT employees are sponsored for the Hoffman Process and similarbeing-centered growth efforts. Deep authenticity of IT workers is promoted,in policy and in fact. “Growing the whole person” now becomes an ITstrategy. Psych-Factor Groups now become Inner-Growth Groups, wherenot only valuable ideas are shared, but feelings are expressed, and deeperinner energies are reached. The multi-dimensional welfare of the IT workerbecomes of paramount importance; stress issues are addressed head-on.

Retention of employees is increased as they feel respected and addressedas “whole persons.” Conflicts are handled more fruitfully. Creativity is increas-ing, as is motivation and morale. IT professionals are forming an integral partof international “Spirit at Work” movements.

Many employees at this stage have appropriated, to a fair degree, thepsychological factors promoted in this chapter, as well as valuable others. Thedays of the “techie-nerd” are long gone! The IT organization, at this point,is wholistic and emotionally intelligent (Kaluzniacky, 2004).

CONCLUSIONWith recognition of Information Systems as a socio-technical field, greater

awareness of specific psychological dynamisms within and among IT profes-sionals is a worthy goal at this point in the profession’s evolution. Properlyharnessing such awareness can result in more efficient and effective IT workeffort and in significantly decreased stress for IT workers.

While the concept of “emotional intelligence” has gained considerableattention is management circles and is making inroads into IT, this chapter hasoffered the concept as a structural foundation in the form of “two-tier con-sciousness” in an IT worker. It has also been proposed that such enhancedfoundational intelligence goes along with increased insight in perhaps morewidely accepted areas of personality and cognition intelligence, forming whatmight be termed “enhanced emotional intelligence.” Such a focus could extend

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current IS research in novel and useful directions, and it could offer newperspectives for IT work practice.

However, the psychological, emotional maturing of the IT profession willnot happen overnight. The hypothesized, five growth stages could well takeover 15 years to implement, but at this point, the stage appears set for starting.With individual IT workers, employing IT departments, professional associa-tions, university academics, and the user community each doing their parts, theIT work world of the future will respond to its current challenges with wisdomand fruitful innovation.

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& Schuster.

Identification and Measurement of the Knowledge-Sharing Requirements 215


Chapter IX

Identification andMeasurement of theKnowledge-Sharing

Requirements inCollaborative Business

ProcessesFarhad Daneshgar

University of New South Wales, Australia

ABSTRACTThis chapter introduces a modelling language called Awareness Net forboth representation as well as measuring the knowledge-sharingrequirements in collaborative business processes. It is a conceptual modelthat facilitates representation and analysis of knowledge-sharingrequirements of the actors in collaborative business processes. Therepresentation and measurement are handled by a set of collaborativesemantic concepts and their relationships. The proposed language enforcesoverall specification of what matters to the actors in collaborativeprocesses when collaborating in business process to keep them aware ofthe collaboration context.

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INTRODUCTIONOnce knowledge is acquired, it must be organised in an applications

knowledge base for later use. A knowledge base can be organised in severaldifferent configurations to facilitate fast inferencing (or reasoning) from theknowledge (Turban, 2005). Knowledge and database applications in recentyears have progressively converged towards integrated technologies that try toovercome the limits of each single discipline in terms of knowledge and datarepresentations. Research in Knowledge Representation (KR) originally con-centrated on logic-based formalisms that are typically tuned to deal withrelatively small knowledge bases but provide powerful deduction services, andthe language to structure information is highly expressive. In contrast, Informa-tion Systems and Database (DB) research mainly dealt with efficient storageand retrieval of powerful query languages, and with sharing and displaying largeamounts of multimedia documents. However, data representations were rela-tively simple and flat, and reasoning over the structure and the content of thedocuments played only a minor role.

By increasing the rate of growth in changing character of data bases intoknowledge bases, this distinction between the requirements in KnowledgeRepresentation and Databases is vanishing rapidly. According to Artale,Dixon, Fisher, and Franconi (2004), to be useful in realistic applications, amodern KR system must be able to handle large data sets and provideexpressive query languages. This suggests that techniques developed in the DBarea could be useful for KR systems. On the other hand, the information storedon the Web, in digital libraries, and in data warehouses is now very complex andhas deep semantic structures, thus requiring more intelligent modelling lan-guages and methodologies, and reasoning services on those complex represen-tations to support design, management, flexible access, and integration. There-fore, a great call for an integrated logic-based view of Knowledge Represen-tation and Database technologies is emerging (Artale et al.).

This chapter presents a unified modelling language for both representationof the collaborative business processes and for measurement and identificationof the knowledge-sharing requirements of the actors involved in collaborativebusiness processes. Collaborative business processes (or collaborative pro-cesses, for short) is defined here as organizational processes that requirescollaboration of multiple human entities in order to achieve their expectedorganizational 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



aid the representation and execution of structured tasks in some way, theproposed language goes a few steps further to identify the knowledge-sharingrequirements of collaborative business processes. In a sense, it provides a high-level and conceptually unified view of the collaborative process, integrating thecommunication, cooperation, and coordination (3Cs) perspectives.

The framework has already been applied to a Network managementenvironment and resulted in valid requirements (Daneshgar, 2000). It is alsocurrently being used in both inference engine as well as knowledge-basecomponent of an Expert System for providing human capital expert advice tothe financial consultants (Royal, Daneshgar, & O’Donnel, 2004).

BACKGROUNDThe 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. Indefining the knowledge- sharing requirements, the view taken in this chapter isan 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 subspaceswithin which an object chooses to direct either its presence (nimbus) or itsattention (focus) (Sumi & Mase, 2002). The more an object is within one’sfocus, the more one is of that object; and the more an object is within one’snimbus, the more aware it is of the person. Such definitions are used in thischapter for defining awareness levels of the actors in collaborative businessprocesses. Such a level is a combination of nimbi and foci exposed/possessedby the actors. In other words, the level of awareness that actor A has of objectB is some function of A’s foci and B’s nimbi.

In order to operationalise the above concept of awareness and knowl-edge—sharing capabilities in collaborative business processes, a processawareness framework was initially developed by the author followed by agroupware for maintaining actors’ levels of process awareness at requiredlevels (Daneshgar, 2000). This chapter extends this previous work by applyingthe primitives used in the existing awareness framework in order to introducea new modelling language called the awareness net, which can be used foridentifying knowledge-sharing requirements of the actors in collaborativebusiness processes.

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THE OBJECTIVES OF THE MODELThe proposed model called awareness net is a representation of a

collaborative business process and consists of a collection of collaborativesemantic concepts and their relationships for the purpose of defining andmeasuring the awareness requirements of the actors involved in collaborativeprocesses. In setting objectives for the proposed modelling language, it wasnoted that one distinguishing factor that separates process models from othertypes of models in computer science is that humans rather than machines mustenact many of the phenomena modelled. As a result, a good collaborativeprocess model must not focus solely on the actors’ behaviour at the interfaceor the flow and transformation of data within the system but must also focus onthe 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 providea common representation format that facilitates human understanding andcommunication and, at the same time, supports and automates collaborativeprocess 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 attributesof the proposed language are discussed:

Providing a combined and integrated 3C (cooperation, communica-tion, and coordination) perspective and functional, behavioural andorganisational perspectives, for analysis of knowledge-sharing require-ments of the actors in collaborative business processes: Generally speak-ing, the perspectives that a process model is able to present are bounded by theconstructs of the language (textual, graphic, objects, etc.) used for modelling(Curtis, Kellner, & Over, 1992). The object-orientation of the constructs of theproposed language facilitates interleaving of all these perspectives, resulting ina comprehensive analysis of the knowledge-sharing requirements of the actorsin collaborative business processes.

Providing a unified analysis of both the knowledge-sharing require-ments as well as the collaborative business process: Generally speaking,this ideal situation is arrived at if the same analytical tools are used forrepresentation of both the knowledge-sharing (or awareness) requirements ofthe actors within the collaborative process and the collaborative process itself.This means that there should be no need to have separate models—one for thecollaborative process and one for its actors’ knowledge-sharing requirements.



A special type of connected graph is used for representation of the collabora-tive business process by which the knowledge-sharing requirements of theactors can be identified in terms of the collaborative semantic concepts used torepresent the process. This will result in a unified analysis of the knowledge-sharing requirements of the actors in collaborative business processes. In orderto provide such a unified analytical approach, a rule-based model wasdeveloped by the author (Daneshgar, 2000) that guides the representation ofboth the process structure and the relationships among the language constructsin a way that knowledge-sharing requirements of the actors can be defined interm of the process elements.

INTRODUCING THE AWARENESS NETA list of collaborative semantic concepts used in the awareness net is

described in the next section, followed by an in-depth analysis of awarenessrequirements and awareness levels. In the section after that, a methodology bywhich the knowledge-sharing requirements of the actors can be identified. Tosimplify the explanation of the concepts, a real-life example of awareness netis shown in Figure 1 that represents the insurance claim process within theAustralian Health Insurance Sector (AHIS) involving multiple collaboratingroles (Daneshgar & Mawson-Lee, 2003). According to this awareness net,Patients receive treatments from Medical Practitioners, pay a fee, and canclaim it from a Health Insurance Fund. This example will be used throughout thechapter.

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. Theseattributes and functions are related to one or more aspects of the 3Cs.

ACTORS: These are human agents that enact a set of tasks by assumingone or more roles within the process. In the awareness net, there is no graphicalrepresentation for the “actors”; instead, they are represented indirectly by therelevant role(s) that they play within the process.

ROLE: A set of norms expressed in terms of obligations, privileges, andrights 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 asequence of actions or execution steps that can be planned from the knowndependencies 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 thatutilise certain resources and/or artefacts for their execution. There is nographical representation for the actors, however, they are represented withinthe process script as embedded attributes of the task object.

COLLABORATIVE TASK: Is composed of two or more tasks that havea common goal, and must share a task artefact. A collaborative task is alwaysassociated with a unique task artefact and two or more simple tasks. They aregraphically represented by a subset of the awareness net consisting of a pair ofrelated tasks and the common task artefact. In Figure 1, the sub-graphconsisting of the objects “Lodge Claim,” “Claim Form,” and “Supply ClaimPayment” represents a collaborative task.

ROLE ARTEFACT: This object carries knowledge/resources about howto perform the actions within a task. The role artefacts are personal and areeither possessed by the actors, or they know how to obtain them whenrequired. For this reason, it is assumed in this chapter that role artefacts canbe stored either within the actor’s mind in a way that others cannot formallyaccess and use this knowledge, or are stored explicitly in personal knowledgebases 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 verticesare graphical representations of the role artefacts. In Figure 1, the “TreatmentKnowledge” is a role artefact for the role “Medical Provider.”

TASK ARTEFACT: This object carries knowledge about how variousactions associated with a collaborative task are executed. Contrary to therole artefacts which may or may not exist explicitly within the organisedknowledge bases, it is assumed here that task artefacts are always kept withinthe organised knowledge bases in order to be accessible and be shared bymultiple actors when performing collaborative tasks. Arcs that connect a pairof task vertices together graphically represent task artefacts. In Figure 1, the“Patient Record” is a task artefact that is shared by both the Medical Providerand the Patient in order to collaborate in “Treatment.”

COLLABORATIVE BUSINESS PROCESS (or, Process, for short): Isa set of roles, role artefacts, tasks, and task artefacts that are linked togetherto achieve certain process goals. A process is represented by a connectedawareness net. It is formed when at least one collaborative task exists withinthat process. A collaborative task is created when some of its actionscompete with each other in using certain process resources used by other tasks



within the process at the same time; hence, the concept of task dependencyand collaboration.

AWARENESS: Is knowledge about the objects that lead an actor to anunderstanding of various aspects of the collaborative process. It is defined byand measured in terms of the collaborative semantic concepts used in theawareness net, that is, roles, role artefacts, tasks, and task artefacts. See thenext section for graphical representations of various levels of awareness.

ACTUAL AWARENESS: Represents the focus of the actor with regardsto the collaborative process. Actual awareness is represented by an integernumber, 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. Re-quired awareness is awareness that is attached to a task and is a property ofthe task object. It represents the awareness level that is expected from theactor who performs that task. It is also represented by an integer ranging fromzero to four. When the require level of awareness of a task is higher than theactual level of awareness of a role, there is an “awareness gap,” meaning thatthe role is lacking the appropriate knowledge-sharing capabilities and thereforemay not perform the task successfully.

Definition of Awareness and Awareness LevelsIn order to operationalise the concept of awareness levels within the

context of collaborative business processes, a process awareness frameworkwas initially developed by the author followed by development of a groupwarefor maintaining awareness levels of the actors at required levels (Daneshgar,2000). This awareness framework has already been applied to many real-lifesituations, and some interesting collaboration patterns were identified (seeDaneshgar & Mawson-Lee, 2003, for the latest application). The frameworkhas also been applied to Enterprise Resource Planning (ERP) processes(Daneshgar, 2001a; Daneshgar, 2003) as well as the community of KnowledgeManagement (Daneshgar, 2001b; Daneshgar & Amaravati, 2004). The role ofthe framework in identifying knowledge-sharing requirements of actors invirtual communities has been identified through its capability of providingcontextual knowledge in virtual communities (Daneshgar et al., 2004), as wellas being used as a design directive for implementation of groupware systems(Daneshgar, 2004). This chapter combines and extends all of this previouswork by the writer with the aim of introducing a combined, multiple-perspectivemodelling language for the collaborative business processes.

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In the following paragraphs, various levels of awareness are discussed intheir original form using the simplified awareness net shown in Figure 2. In thenext section, these levels are used to describe the proposed modellinglanguage.

Level-0 Awareness (Failed Level): An actor is at level-0 if s/he pos-sesses contextual knowledge about the objects that lead the actor to anunderstanding of the tasks that the actor performs within the collaborativeprocess. According to the Figure 2, level-0 awareness for the role X is a sub-graph that contains the following set of objects:

Figure 2. An awareness net with four roles and 14 tasks

2

8

c

Y

X

V

T

6

1 4

e

3 5

d f

a

b 7

HealthInsurance

Fund

SupplyClaim

Process Claims DB Claim Procedures

Lodge

Claim

Patient

ProviderAccount

CompleteClaim

ClaimRequirements

RequestPaid

ProvideAccount

ProviderAccount

PayTreament

RequestTreatment

TreatmentCost

Request forTreatment

ProvideTreatment

PatientTreatment

Money

UpdatePatient

MedicalProvider

PatientRecord

DB

ProducePatient

Treatm

ent

Knowled

ge

Spreadsheet

Account

Figure 1: An awareness net representation of the Insurance ClaimProcessing in the AHIS



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 thesum 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 theactors with adequate awareness to get them involved in any kind of knowledge-sharing transactions with others. The reason is that it does not include objectsbeyond the actor’s perception of his/her own personal “tasks” within theprocess.

Level-1 Awareness (Direct Cooperation and Communication): Level-0 awareness is a prerequisite for this level. An actor who reaches level-1awareness will possess level-0 awareness, plus knowledge about all theobjects that leads the actor to awareness about some of the actors within theprocess. 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 taskdependency with one other role, that is, role “X.” In this particular case, thereare two alternatives/paths for the V’s level-1 awareness, because there are twoseparate relationships between V and X. The mathematical set presentationsfor 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 aware-ness will have knowledge about the objects that lead the actor towards anunderstanding of all other roles within the process. Level-2 awareness for therole “V” is its level-1 awareness, plus the path that links V to all other rolevertices within the process. There are many alternatives for the V’s level-2. Themathematical 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-3awareness has the knowledge about the objects that lead that actor towards anunderstanding of all the interactions that occur between any pair of roles withinthe process. Attaining level-3 awareness enables an actor to initiate level-3context-sharing transactions within the VC. The mathematical representationof this level for the alternative 1 of the level-2 awareness for the role V is:

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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 werenot included in the alternative_1_A2(“V”).

Level-4 Awareness (Coordination): An actor at level-4 awareness hasa specialised knowledge about the objects that lead that actor to an under-standing 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, withwhom, etc. In other words, this level provides awareness about how peoplewithin the VC perform their tasks (that is, the sum of all the actors’ level-0awareness), who directly collaborates with whom and how (sum of all the level-1 awareness), who directly or indirectly collaborates with whom and how (sumof all the level-2 awareness), and, finally, how other actors collaborate with oneanother (sum of all the level-3 awareness). The mathematical representation ofthis 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-3awareness, plus the sum of all the other roles’ tasks and corresponding roleartefacts that obviously were not included in the role’s level-3 awareness.Awareness at this level is highest within the context of the collaborative businessprocess, as the actor will know not only how everybody interacts with others,but also how each role performs its own very personal and non-collaborativetask(s).

A MODELLING LANGUAGE FORCOLLABORATIVE BUSINESS PROCESSES

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



constructs useful for representing and reasoning about the various aspects of acollaborative process. The proposed awareness net represents three perspec-tives in order to identify awareness requirements of the actors in collaborativebusiness processes. These perspectives are functional, behavioural, andorganisational perspectives (Curtis et al., 1992); and the requirements arecommunicational, cooperational, and coordination requirements.

It is believed in this chapter that when combined, these perspectives willproduce an integrated, consistent, and complete model of the collaborativebusiness processes. The definitions for these perspectives are:

Functional Perspective: This represents what process elements arebeing performed, and what flows of informational entities (e.g., data, artefacts,products) are relevant to these process elements. As demonstrated before, theawareness net clearly specifies what task objects are performed, what artefactobjects are used, and what features (e.g., attributes, methods, constraints,flow, etc.) these elements/objects have.

Behavioural Perspective: Represents when process elements are per-formed (e.g., sequencing), as well as aspects of how they are performedthrough feedback loops, iteration, complex decision-making conditions, entryand exit criteria, and so forth. While providing information about this perspec-tive was not the main thrust of the awareness net, it is capable of encapsulatingthe above behavioural variables within various features of the process elements.Alternatively, the awareness net can easily be transformed into an interactionsequence diagram or a collaboration diagram (Law & Hassard, 1999),both demonstrating behavioural aspects of the collaborative semantic conceptswithin the process. Due to limited space, no attempt was made in this chapterto demonstrate the latter potential for the awareness net.

Organizational Perspective: Represents where and by whom in theorganization process elements are performed, the physical communicationmechanisms used for transfer of entities, and the physical media and locationsused for storing entities. Again, the strong role-relationship attribute of theawareness net, coupled with its object-orientation nature, is potentially capableof providing information regarding this aspect of the collaborative process.

The following paragraphs demonstrate additional capabilities of the aware-ness 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 andexecution of structured tasks (as defined earlier). Historically, role interaction

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nets represent roles, dependencies, and process elements. The awareness netgoes one step further; it highlights the 3C (communication, collaboration, andcoordination) requirements of the actors in collaborative business processes.

Awareness net also introduces a new and de facto notion of team. Thisde facto notion is built on dependencies among roles on the basis of thecollaborative tasks that the actors perform, as well as the task artefacts thatthey share for their collaboration. This is different from the common notion ofteam, which is based on the reporting relationships. With awareness net, aprocess plan can be designed as a decomposition of tasks, roles, taskartefacts, and role artefacts. A project plan, on the other hand, is establishedwhen roles are assigned to actors. One actor may hold many roles, and a typeof role may be assigned to several actors. Awareness net can then be used asa method of coordinating the flow of artefacts among collaborating roles andas a method of tracking progress by the completion of interactions among roles.This formalism can be used for coordinating activities in process-drivenenvironments. Equipped with a rule-based awareness model/levels, the aware-ness net also provides communication and collaboration support as previouslydiscussed.

A METHODOLOGY FOR IDENTIFYINGTHE AWARENESS REQUIREMENTS

The main objective of this methodology is to identify potential areas forenhancing collaboration in collaborative business processes, starting withidentifying the awareness requirements of the actors. The methodology is basedon elimination of the awareness gap. The awareness gap for an actorperforming a task consists of those objects that do not exist on the actor’s actualawareness 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 theactor in order to raise his/her actual level of awareness to its task’s requiredlevel 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 touse software developed by the writer and is called “Aware-WareTemplate” or AWT (Daneshgar, 2000). Actors interact with this softwareand express their awareness (Yes/No) with regards to the objects that



exist on the awareness net. The algorithm of this software is capable ofparsing the awareness net, which has already been mapped into adatabase, in order to identify various objects that make up variousawareness levels for each actor, based on their responses. Anothermethod for determining the actual level of awareness in smaller processesis the “interview” method. Both of these methods have already been usedand significant results were produced.

Step three: Define a required level of awareness for each task that an actorperforms within the process. It is assumed in this chapter that such levelof awareness is directly related to both the nature of the task and theorganizational culture. Although no attempt is made in this chapter totackle these issues, these required awareness levels are treated asparameters to the model and therefore are determined externally. Again,the AWT software can be used to identify objects that constitute variouslevels of awareness that are required from the actors within the commu-nity. In the absence of the AWT software, this can be done either byinterviewing the actors or by manually tracing the awareness net andrecording the objects (that is, nodes and vertices) that constitute variouslevels of awareness for each actor.

Step Four: For each actor, if the highest value of his/her required level ofawareness is higher than the actual level of the actor’s awareness, that is,if there is an awareness gap, then there is potential for enhancingcollaboration. This can be done by exposing the actor to the relevantobjects that constitute the awareness gap. Alternatively, another actorcan be assigned to this role who possesses a higher actual level ofawareness.

SOME ISSUES IN AWARENESS NETIn this section, the three common process modelling issues are addressed.

These issues have initially been raised by Curtis et al. (1992) and are frequentlyaddressed 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 levelof ambiguity or imprecision that may be introduced by mathematical formalismwill adversely affect the quality of this language, and therefore is avoided. Forthis reason, the level of mathematical formality used to describe tasks needs toclearly identify actions and resources used, but does not need to be high enoughto make the awareness net enactable on a computer, as this has not been a mainobjective of the awareness net. Also, the multi-perspective nature of theawareness net imposes further requirements to the level of mathematicalformality used to describe it. Generally speaking, process elements need to beformalised to a degree that flow of information, their timing, and varioussimultaneous links among them are not disregarded by such formalism. Forthese reasons, the author recommends a standard object-oriented modellingformalism such as UML, and higher level of formality is discouraged if themultiple 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 adefined process specifies all the process steps needed to produce accurateresults. In the case of awareness net, granularity will depend on the purpose ofthe model, as well as the attributes of the actors who execute the process. Asfar as the process task structure is concerned, an action in the awareness netis the smallest unit of mathematical and/or descriptive representation, whereastask is the smallest unit of graphical representation. This means that thoseactors who are directly involved in the business of executing the process in itsutmost detail would be interested in accessing the process description thatcarries knowledge about the individual actions and resources they utilise,whereas a graphical representation would satisfy needs of other actors whomay not have such needs.

In practice, it is possible that descriptions for tasks, actions, roles, andartefacts may be too large-grained for some actors, that is, having higher levelof abstraction. This will provide insufficient details for guiding those actors whoactually execute the process. In situations like these, actors are expected tohave sufficient knowledge to translate these imprecise and perhaps unstruc-tured scripts into actions by filling in detailed process steps that are appropriateto the current situation. This also means that if these actors already know manyrelevant potential scripts, a large-grained process model may be desirable inorder to allow these actors to tailor the final detailed process script enacted.



This kind of flexibility may be especially desirable when there are complicateddecision 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, theonly prescription in the mind of the writer of this chapter was certain relationalrules for the awareness net’s semantic concepts that generally apply to allcollaborative processes. Some of these relational rules include:

1. At any given time a role cannot be played by more than one actor, but anactor can play multiple roles.

2. For execution of a task a role artefact is needed. There is no task that canbe executed without having a need for some kind of explicit/implicitknowledge/resources.

3. Similarly, execution of a collaborative task would require sharing of acommon task artefact.

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

CONCLUDING REMARKSAND FUTURE WORK

The work on modelling of collaborative business processes is fairly young.This chapter introduced a new modelling language for collaborative processesthat provides an integrated view of multiple perspectives in two dimensions: thetraditional functional, behavioural and organizational perspectives, and thetraditional groupware-oriented 3Cs perspectives.

The awareness net also facilitates human understanding and communica-tion that the group needs in order to be able to share a common representationformat. It can also be used to enhance collaboration among actors. Work is inprogress for using the awareness net as a medium for analysis and design ofgroupware systems that specifically support collaborative process awareness.

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

REFERENCESArtale, 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. InternationalJournal of Cooperative Information Systems, 11(1-2), 145-173.

Bennett, S., McRobb, S., & Farmer, R. (2002). Object-oriented systemsanalysis and design using UML. Berkshire, UK: McGraw Hill.

Curtis, B., Kellner, M. I., & Over, J. (1992). Process modelling. Communi-cation 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 Technol-ogy. Sydney, Australia.

Daneshgar, F. (2001a). Enterprise resource planning based on collaborativeawareness framework. In L. Hossain & J. Patrick (Eds.), Enterpriseresource planning: Opportunities and Challenges. Hershey, PA: IdeaGroup Publications.

Daneshgar, F. (2001b). Maintaining collaborative process awareness as amechanism for knowledge sharing. In Proceedings of 2nd EuropeanConference in Knowledge Management, (pp. 121-132). November8-9. Bled, Slovenia.

Daneshgar, F. (2003). Context management of ERP processes in virtualcommunities. 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 aware-ness ontology. In B. Montano (Ed.), Innovations of KnowledgeManagement. Hershey, PA: Idea Group Inc.

Daneshgar, F. & Amaravati, C. (2004). Sharing contextual knowledge intoday’s workplace environments. Electronic Journal of KnowledgeManagement, 2(2). Retrieved from http://www.ejkm.com/volume-2/v2-i1-art1.htm



Daneshgar, F. & Mawson-Lee, K. (2003). Enhancing collaboration in theAustralian 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. InM. 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 forcollaborative ontology construction. Stanford’s Knowledge SystemsLaboratory, Stanford University, USA., http://ontolingua.stanford.edu

Humphrey, W. S. & Feiler, P. H. (1992). Software process development andenactment: Concepts and definitions. Technical Report SEI-92-TR-4,Pittsburgh, PA: Software Engineering Institute, Carnegie Mellon Univer-sity.

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). CoIDSPA: A tool for collaborative process model development. Presented atthe 33rd Hawaii International Conference on System Sciences, Ha-waii, USA.

Nabuco, O., Drira, K., & Dantas, E. (2001). A layered design model forknowledge and information sharing cooperative systems. IEEE 10th

International Workshop on Enabling Technologies, Cambridge, MA,USA.

Royal, C., Daneshgar, F., & O’Donnel, L. (2004). Facilitating organisationalsustainability through expert investment systems. Electronic Journal ofKnowledge 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 interestsand experiences in communities. International Journal of Human-Computer Studies, 56, 127-146.

Turban, E., Aronson, J.E., & Liang, T.P. (2005). Decision support systemsand intelligent systems (7th ed.) (pp. 555-557). Upper Saddle River,NJ: Pearson Education Inc.

ENDNOTE1 A previous version of this chapter have been published in the Journal of

Conceptual Modeling, Issue 32, May 2004.

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Chapter X

The Role of Interactive andSynchronized Multimedia

Content in E-LearningDongsong Zhang

University of Maryland, Baltimore County, USA

Lina ZhouUniversity of Maryland, Baltimore County, USA

ABSTRACTMultimedia-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 meettheir individual needs. Therefore, the challenges include how to integrateinstructional material in different media, and how to provide flexibleprocess control in an e-learning environment to enable personalizedknowledge construction and improve learning effectiveness. We proposean e-learning system with interactive multimedia that can help learnersbetter understand learning content and achieve comparable learningperformance to that of classroom learning. The results from an empiricalstudy provide significant evidence to support our proposition. The chapteralso discusses several important issues towards building effective andsharable multimedia-based e-learning systems.

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


INTRODUCTIONLearning is a lifetime endeavor, especially in the current knowledge-based

economy. Globalization requires new methods of delivering education andtraining, partly to enhance traditional methods of knowledge acquisition and toimpart new skills and tools (Adam, Awerbuch, Slonim, Wegner, & Yesha,1997). Traditional learning processes are characterized by centralized author-ity, lack of personalization, and linear/static learning process, which doesn’tseem to fit well with the notions of lifelong and real-time learning. It is instructor-centric because instructors control the class content (e.g., topic, coursematerial, and discussion) and pace (Baloian, Pino, & Hoppe, 2000). With theincreasing use of networked computers and advance in telecommunicationtechnology, learning methods and infrastructures are becoming more portableand flexible in order to enable anywhere, just-in-time, and self-centeredlearning.

According to the IEEE Learning Technology Standards Committee (LTSC),e-learning has become widely adopted, with solutions by individual institutionsand standardizing initiatives for learning technologies. In this chapter, the terme-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 beflexible and adaptive, and supports non-linear and personalized learningprocesses. With the latest advancement in multimedia technology, more andmore e-learning systems use multimedia content to take advantage of its richinformation cues. In many systems, however, multimedia content is presentedin a static, passive, and unstructured manner without close association amongmaterial in various media. Learners have little flexible control over learningcontent and process to meet their individual needs. As a result, it is less likelyto engage e-learners (Hiltz & Wellman, 1997; Piccoli, Ahmad, & Ives, 2001).Therefore, we face the challenges of how to integrate multimedia instructionsand how to increase interactivity and flexibility in an e-learning environment. Inaddition, multimedia learning material created by different providers is usuallynot in a ready-to-share and interoperable format, preventing people fromtaking one of the greatest advantages of e-learning, namely, exchanging learningresources (Nilsson, Palmér, & Naeve, 2002).

In this chapter, we introduce an interactive multimedia-based e-learningsystem called Learning By Asking (LBA). It features synchronized multimediainstructions and a high level of learner-content interactivity. The difference inlearning performance and learner satisfaction between a LBA group and a

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traditional classroom group has been examined through an empirical study. Theresults show that students using the LBA system achieved significantly higherlearning performance than those in the traditional classroom, while levels oflearner satisfaction of the two groups were equivalent.

The chapter is organized as follows. We first describe features and benefitsof e-learning and review multimedia use in distance learning. Then, weintroduce the prototype e-learning system (LBA) used in this study. Next, wepresent the design and results of the empirical study, respectively. Finally, wediscuss the implications of the findings from this research and metadatadescription standards and the Semantic Web for enhancing interoperability ofe-learning content.

E-LEARNINGA 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 timeand distance by offering just-in-time, on-the-job learning. It has potentialto reach a global audience.

• Cost and time savings: In e-learning, learners do not have to travel to aspecific location. It is reported that the companies using online training canexpect an average of 50% in time savings and 40% to 60% in cost savingscompared with conventional training (Khirallah, 2000)..

• Self-paced learning: E-learning fosters self-directed and self-pacedlearning by enabling learner-centric activities.

• Collaborative learning environment: E-learning links each learner withphysically dispersed experts and other learners together to form an onlinecollaborative learning community (Alavi & Leidner, 2001). By electronicmeans, an e-learning environment encourages learners to ask questionsthat they may not be able to ask in a conventional classroom and to sharedifferent ideas with others more easily through online discussion forums.

• Unlimited use of learning material: E-learning allows unlimited accessand retrieval of electronic learning material. People can review informa-tion/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 neweconomy. Effective and efficient training methods are greatly required bycompanies to ensure employees and channel partners are timely trained with thelatest information and advanced skills. In 1999, companies in the United Statesspent $62.5 billion on training or educating their employees, with more than $3billion spent on technology-delivered training (Khirallah, 2000). In the mean-while, thousands of online courses, including degree and certificate programs,are now being offered by educational institutions worldwide. Among thebiggest of those are the University of Maryland’s University College in Adelphiand the University of Phoenix. In 2002, enrollment in the baccalaureate andgraduate-degree programs at the University of Phoenix Online neared the50,000 mark, a “whopping 70% increase” from the previous year. Today,there are a number of commercial e-learning systems available for both on- andoff-campus learners, such as BlackBoard, WebCT, TopClass, LearningSpace,Learning Landscapes, CoSE, and Web Course.

MULTIMEDIA IN DISTANCE LEARNINGMultimedia involves technologies that combine several forms of commu-

nication such as text, graphics, video, animation, and sound. Simply defined,multimedia is the delivery of information in a computer-based presentation thatintegrates two or more media (Beckman, 1996). Multimedia courseware canentice learners to give full attention to a task and help maximize learners’ abilityto retain information through the vividness of presentation (Agius & Angelides,1999; Syed, 2001).

There has been extensive research on the use of multimedia material indistance education or training. Some research shows that multimedia instruc-tions can enhance individuals’ problem-solving skills and improve learningeffectiveness (Carville & Mitchell, 2000; Gross, 1998). A large number ofstudies have reported that learning performance of students who are taught byinstructional 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 positivelyaffect the effectiveness of education (Berge, 2002). Recently, interactivemultimedia technology has been widely adopted in e-learning to enhancelearners’ perception of live interaction with virtual instructors (Bargeron,

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Grudin, Gupta, Sanocki, Li, & Leetiernan, 2002; Morales, Cory, & Bozell,2001; Piotrow, Khan, Lozare, & Khan, 2000). Interactive multimedia isdefined 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, andcommunicate (Hofstetter, 1995). Interactive multimedia permits learners tointeract with it and to be able to define and change the nature of verbal,numerical, visual, and audible display systems. It offers more flexibility andincreases 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 asynchro-nous learning networks plus videotaped lectures to evaluate the effectivenessof online courses needed for bachelor’s degrees in information systems andcomputer science. Throughout a semester, students in the online program couldaccess learning material via a Web interface. Evaluation results revealed thatstudents who took online courses tended to do as well as those in traditionalclassroom settings. At a given time, a learner could only see one of them on acomputer screen: the image of an instructor, course notes, or PowerPointslides, but not all of them simultaneously. In addition, learners had to use a scrollbar on the RealPlayer to skip or locate a portion of a lecture, which could beinaccurate and time-consuming.

Morales, Cory, and Bozell (2001) probed students’ learning effectivenessin a Web environment by comparing learning performance between traditionalface-to-face delivered instruction and instruction delivered by an asynchronouslive-switched video and an accompanying PowerPoint presentation stream viathe Web. The learning effectiveness measured by students’ exam gradesshowed no significant difference between a Web-learning group and a class-room group. A study conducted at Microsoft Research (Bargeron et al., 2002)used a Web-based system for on-demand education. The system interfacedisplayed synchronized instructional video, presentation slides, and a sharedquestion-and-answer set altogether. It was observed that students liked to skipvideo instructions that they did not want to watch.

Multimedia-based e-learning technology is also widely used in manycompanies, 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://www-3.ibm.com/services/learning/us/elearning/). For example, in CISCO e-learn-ing, a video of a lecturer (a talking head) is synchronized with his/herPowerPoint slides †when the lecturer in the video finishes talking about one



slide and switches to the next, the current PowerPoint slide will automaticallyflip to the next corresponding slide (Figure 1). The major limitation of thissystem is that it provides little interactivity and flexibility to online learners. If aperson wants to relisten to the explanation for one of the previous slides, s/hehas to stop the video and re-start it from the very beginning of that lecture. Itinevitably results in a linear learning process.

Although e-learning research has consistently suggested that interactionexerts a positive influence on student engagement, satisfaction, and academicachievement (Chapman, Selvarajah & Webster, 1999; Piccoli, Ahmad, &Ives, 2001), researchers have primarily focused on learner-instructor andlearner-learner interaction. The performance comparison between e-learningand conventional classroom learning has been reported as equivalent in manystudies. However, a lot of e-learning systems provide limited flexibility andinteractivity to learners. They simply post learning material without offeringcontent-based structural support to increase learner engagement andinteractivity. For example, a learner may not be able to directly jump to aparticular point of an instructional video in which s/he is interested. Therefore,it is critical to provide structural support in a multimedia-based e-learningenvironment, especially when instructional videos are used.

In this research, we primarily investigate e-learning effectiveness with richlearner-content interactivity. We have developed an interactive e-learningsystem called LBA (Learning By Asking) that presents synchronized multime-dia material with structural content support. The basic proposition is that inorder to improve learning effectiveness, an e-learning environment should

Figure 1. A CISCO e-learning system

Slides synchronized with

video slides

Video of the lecturer

A list of online lectures

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provide structural support to multimedia instructions to allow efficient randomcontent access, and should present them in a synchronized and integratedmanner. So far, there has been relatively little research on this aspect. Wevalidate this proposition by conducting an empirical study using the LBAsystem.

THE LBA SYSTEMThe LBA system mainly consists of three components: a thin-client, a Web

server, and a video streaming server (Zhang, 2004). First, we videotapedomain experts during their lectures or interviews and store them on a video-streaming server that can be accessed via the Internet. The content of eachvideo may likely consist of many sub-topics. Then, these digital videos arelogically segmented into individual clips based on their content. Each clipfocuses on a specific topic. The time boundaries of each video clip are identifiedand recorded in order to provide content-based structural support.

On the client side, a learner only needs a Web browser, a RealPlayer, anda sound card installed on his computer to access online learning material. Onthe Web server, a metadata library is created to contain various metadata ofvideo clips, including titles, file size, speaker, keywords, starting/ending time,and so on. This library and other associated instructional material, such asPowerPoint slides and lecture notes, are stored in a relational database. Whena learner requests an online lecture, LBA retrieves corresponding content fromthe database and delivers it to learners.

We use an interactive e-classroom in LBA to validate our proposition inthis study. The e-Classroom creates an online learning environment thatpresents synchronized video/audio of instructors, PowerPoint slides, andinstructors’ lecture notes on a single interface (Figure 2).

While an instructional video is being played, the e-classroom is always ableto automatically display corresponding slides and notes about the topic that theinstructor is introducing in the video. If a student does not do anything duringa learning session, the entire lecture will flow from beginning to end automati-cally. However, she can interact with the system at any time to control thelearning pace and content by pressing control buttons located on top of theinterface. 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 goback 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



Control Buttons

Instructional Video Slides

Lecture Notes

Description

Synchronization

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

EMPIRICAL STUDYHypotheses

In this research, we were interested in investigating the learning effective-ness of the LBA system as measured by students’ exam grades and levels ofsatisfaction. We proposed that given the same amount of lecture time and thesame instructional material, an interactive e-learning system like LBA thatprovides high interactivity and content synchronization will give learners moreflexibility and help them better understand learning material than a traditionalclassroom environment. Therefore, our hypotheses are:

H1: Given the same amount of lecture time, students in an interactive multime-dia-based e-learning environment (LBA) will achieve higher learningperformance 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.

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

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

SubjectsThe subjects participated in the experiment were 39 undergraduate

students recruited from an undergraduate Management Information Systemscourse at a large public university in the southern United States. About 56% ofthem were male. The average age was 19.6. They did not have any prior e-learning experience. The subjects were randomly divided into two groups.Each group was then randomly assigned to one of two treatments: an onlinelecture 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, theonline group took the lecture in a research laboratory at the same time. The labwas equipped with thirty desktop computers with all the necessary softwareinstalled. Each subject in the online session had a computer with a headphoneset so that she/he could listen to the soundtrack of the instructional videowithout disturbing others. In the experiment, we applied the following controls:

1. Lecture time was the same in both sessions;2. Learning content was consistent in both sessions. The instructor who

prepared online material in advance also gave the same lecture to theclassroom group to ensure the consistency in terms of content;

3. Both sessions were given exactly same exams;4. Subjects were unaware of the lecture content before the experiment.

Experimental ProcedureAll of the participants were informed that they would be given up to five

extra course credits for participating in this study (depending on their individuallearning performance in the experiment). The online group went through thefollowing step-by-step procedure:

Table 1. Two experimental groups

Groups Online Group (LBA) Classroom Group

Sample Size 20 (Male: 12) 19 (Male: 10)



1. Brief description of experiment’s objective and procedure2. Pre-test: Participants were required to answer a few questions in a written

exam. Those questions covered some basic concepts about the subjectmatter that the lecture would introduce. The purpose of the pre-test wasto examine how much a participant already knew about the topic beforetaking the lecture.

3. The LBA system training: Subjects were given a live demonstration onhow to take an online lecture using the e-classroom of the LBA system(with the interface shown in Figure 2).

4. Online lecture session: After the training session, participants were given45 minutes to watch the online lecture. The instructional video preparedin advance lasted about 29 minutes, so they had some time to review thematerial.

5. Post-test: At the end of the study, subjects were given another writtenexam, consisting of true/false, multiple choice, and two open-endedquestions based on the lecture. The questions in the post-test were similarbut different from those in the pre-test – they were more specific and moredifficult. Both pre- and post-tests were closed-book, closed-notesexams. The potential scores ranged from 0 to 50. Finally, each subjectwas required to fill out a questionnaire to report his/her personal demo-graphic information and perceived satisfaction. Learner satisfaction wasmeasured 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 asthose in the online session except replacing steps 3 and 4 with a 45-minuteregular lecture and review. They were allowed to ask questions in the class andtake notes. Participants in the online group were not allowed to discuss withothers in order to eliminate the possible influence of interaction on subjects’individual performance.

Dependent and Independent VariablesThe dependent variables were individual learning performance, which was

measured by margins between post-test scores and pre-test scores (learninggain), and learner satisfaction. The independent variable was group (onlinegroup vs. traditional classroom group).

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EXPERIMENTAL RESULTSThe study was a between-group design varying group. Table 2 demon-

strates 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 perfor-mance of the online group was significantly better than that of the classroomgroup ( F(1, 37) = 10.508, p < .005 ) at = 0.01. It supported our firsthypothesis that students using the LBA system can achieve better learningperformance than those in a traditional classroom.

The distributions of learner satisfaction of the online group and classroomgroup are shown in Figure 3, where horizontal and vertical axes indicatesatisfaction levels and the number of subjects, respectively.

We ran a one-way ANOVA test to compare the satisfaction levelsbetween two groups. The means and standard deviations of learner satisfac-tions are described in Figure 3.

The result of analysis indicated that the levels of learner satisfaction wereequivalent ( F(1, 37) = 0.119, P > 0.05 ) between two groups. The differencewas not significant. Therefore, hypothesis 2 was not supported.

Table 2. Means and standard deviations of learning gain

Groups Online Group (LBA) Classroom Group

Sample Size 20 (Male: 12) 19 (Male: 10)

SATISFAC

7654

Cou

nt

10

8

6

4

2

0

SATISFAC

7654

Cou

nt

9

8

7

6

5

4

3

2

1

Satisfaction of Online Group Satisfaction of Classroom Group

Figure 3. Learner satisfaction



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 traditionalclass.”“I think this is a very effective and neat way to present knowledge topeople.”“I hope we can use this system in the future. It will make it much moreconvenient for us.”“The system was really good. It would be very beneficial to make upfor a missed lecture.”“I still prefer to face-to-face learning if I have a choice.”

DISCUSSIONImplications of the Empirical Study

The experimental results show that an e-learning environment like LBA,which provides content-based structural support to multimedia instructions andinteractivity, can improve learning effectiveness. First, LBA enables learner-centered 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 cango 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 notquestion or ask for repetition in the class for many reasons, even if they do notunderstand what instructors have said. Also, they do not have an opportunityto re-listen to the lecture. Another possible reason for students in the onlinegroup outperforming those in the classroom group might be partially attribut-able to learning in a new environment. Online students may be more focused inthe experiment than classroom students due to the excitement, novelty, orinterest in multimedia-based e-learning. We also noticed that although theperformance of the online group was significantly higher than the classroomgroup, levels of learner satisfaction of two groups were equivalent.

There are two major limitations of this study. First, the size of subjects wasrelatively small. It would be better if we could have had more subjectsparticipating in the experiment. Second, because our focus in this study was toexamine if an interactive online learning environment can be as effective astraditional classroom learning, we did not investigate the influence of different

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presentation formats of e-learning content and different media on learningoutcome.

Despite the interesting findings in this study, we are not in a position toclaim that e-learning will replace traditional classroom learning. We consider e-learning a complementary solution to classroom learning that is especiallybeneficial for remote and life-long learning and training situations.

We have also identified some disadvantages of e-learning and theirpotential solutions. First, preparation time for an online course, including videoediting and processing, metadata creation, and database maintenance, isdramatically increased compared to preparation time for a classroom lecture.However, we believe that, in the long run, e-learning can be more cost-effectivebecause the content can be shared and reused. Semantic Web and metadatatechnologies provide promising solutions to the above problems, which will bediscussed later. Second, since multimedia instructions such as videos aredelivered via the Internet, high bandwidth and fast data transmission speed(such as T1 or DSL) of computer networks are needed. As a result, facilitieswithout high-speed data lines and modern computer equipments cannot delivere-learning effectively. This issue will be addressed by the advances of technolo-gies in communication, data compression, and information summarization.Third, there are some challenges in content management. For example, aninteresting research question that has not been fully investigated is: What typesof material are suitable to be effectively taught online? In addition, if learningcontent frequently changes, the cost of updating e-learning material can beprohibitive. Ontology can facilitate sharing and reuse of learning material, whichbodes well for content organization, retrieval, and update.

Semantic Web and Metadata Specification StandardsEducational technologies are advancing towards enabling interoperability,

extensibility, and reuse of learning resources. As mentioned earlier, due to theheterogeneity of knowledge representations in different e-learning systems,how to form a common understanding of multimedia instructional content toenable its sharing, reuse, and composition has been a critical challenge. Acommon approach to addressing this challenge is to represent semantics oflearning 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) technol-ogy, especially XML Schema. The new generation of the Web, the so-calledSemantic Web, appears to be a promising technology for implementing e-learning (Stojanovic, Staab, & Studer, 2001).



Metadata is data about data. In the context of e-learning, metadata isdescriptive 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 toadopting interoperable metadata standards and developing specialized metadatavocabularies for resource description, which enables intelligent informationdiscovery and interoperability among various learning resources or applica-tions. One of the most common metadata schemes on the Web is the DublinCore Schema by the DCMI (Dublin Core Metadata Initiative, http://dublincore.org/). The e-learning industry is developing metadata standards fordescribing the semantics of learning objects, such as the Learning ObjectsMetadata (LOM) specification from the LTSC of the IEEE, InstructionalManagement Systems (IMS) initiated by National Learning InfrastructureInitiative 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 elementsfor describing metadata of learning objects, which are divided into ninecategories: General, Lifecycle, Meta-Metadata, Technical, Educational, Rights,Relation, Annotation, and Classification.

The Semantic Web is a W3C initiative that attempts to build a new WWWarchitecture, in support of not only Web content, but also associated formalsemantics (Berners-Lee, 1998). It constitutes an environment in which humanand machine agents will communicate on a semantic basis, allowing theseagents 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): anXML layer for representing the Web content; a RDF layer for expressing thesemantics of the content; an ontology layer for representing the vocabulary ofa domain; and a logic layer to enable intelligent reasoning with meaningful data.

XML and Resource Description Framework (RDF) formalisms are twocommon approaches to binding metadata with a learning resource. XML/XMLSchema is a data-modeling language, and designing an XML metadata instanceis purely a syntactical activity. RDF was developed explicitly for annotatingresources referenced by URIs, which is an infrastructure that enables encoding,exchange, and reuse of structured metadata. It provides the syntax, not theactual meaning, of the properties of data. Each RDF statement can beindependently distributed. Therefore, XML is significantly less flexible for

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expressing metadata than RDF. RDF descriptions, while simpler, are flexibleenough to support these principles. Unlike an XML document, which isessentially 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. Thesemantics of pure RDF, however, are very limited. It suffers from the lack offormal semantics for its modeling primitives, making it difficult for interpretationof how to use them properly.

Ontologies are specifications of the conceptualization and correspondingvocabularies used to describe a domain. In an e-learning system, ontologies canserve as the backbone for managing resources to facilitate knowledge sharingand reuse. The standards for ontology representation have been evolving, suchas DARPA Agent Markup Language (DAML), Ontology Interchange Lan-guage (OIL), and Ontology Web Language (OWL). For example, Saini andRonchetti (2003) used both an XML and a DAML+OIL representation ofontology for the computer science domain. Ontologies enable not only theorganization of learning material distributed on the Web around semanticallyannotated learning objects, but also common understanding and integration ofthem. From the viewpoint of information retrieval, the key to finding the rightcontent and people from multiple, distributed learning resources is an ontologycontaining a metadata representation of the concepts, relationships, andprocesses of the enterprise. Ontology can improve search results by identifyingboth sub- and super-topics of query keywords in a domain. Ontologies cannotonly significantly increase the scalability of an e-learning system, but also enabledifferent e-learning systems to interoperate with each other. Furthermore, theymay promote standardization of e-learning systems.

The logic layer of the Semantic Web is not fully developed yet. It aims toallow dynamic knowledge reasoning by applying logical principles.

XML Layer

RDF Layer

Ontology Layer

Logic Layer

Figure 4. Basic layers of the Semantic Web



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

CONCLUSIONE-learning is complementary to traditional classroom learning. It is espe-

cially a promising solution to remote and lifelong learning. Nowadays, multime-dia-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 providingstructural support for multimedia instructions to improve e-learning effective-ness. It is proposed that students in this interactive e-learning environmentachieve higher learning performance than those in a traditional classroom dueto the process control flexibility and increased learner-content interactivity. Theresults from an empirical study showed significant evidence in support of thisproposition. We also found that the satisfaction levels of students in e-learningwere equivalent to those of students in traditional classroom learning. This studyexplored an interesting approach to creating an effective e-learning environ-ment by presenting multimedia content in an interactive and cohesive manner.We have also discussed the importance of adopting metadata standards and theSemantic Web for e-learning.

We believe that interactive multimedia-based e-learning can be applied toa large variety of structured applications, especially those requiring both visualand auditory information, such as knowledge management, distance education,remote software technical support, online workforce training, and healthcareconsultation.

ACKNOWLEDGMENTSThe development of the LBA system was partially supported by the Ford

Foundation under Grant 10001097. We thank Jay F. Nunamaker, Jr. and

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

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terly Review of Distance Education, 3(2), 181-190.Berners-Lee, T. (1998). What the Semantic Web can represent? Retrieved on

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Morales, C., Cory, C., & Bozell, D. (2001). A comparative efficiency studybetween a live lecture and a Web-based live-switched multi-camerastreaming video distance learning instructional unit. In Proceedings of the2001 Information Resources Management Association InternationalConference, Toronto, Canada, (pp. 63-66).

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Information and Communication Technology in Supply Chain Management 251


Chapter XI

Information andCommunication Technology

in Supply ChainManagement

Vladimír ModrákTechnical University of Košice, Slovakia

Imrich KissTechnical University of Košice, Slovakia

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

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as the impact of ICT on the development of virtual logistical centers andthe development stages of SCM are presented. Moreover, the chapteroutlines pitfalls of this development trend in an effort to providepractitioners in SCM with a more complex view of this issue.

INTRODUCTIONThe application of new technologies at the turn of the millennium is

formulating new challenges for providing service for the customer in marketsupply, this is, resources, as well as on market demand or consumption. Thisimpulse, which was initiated especially by progressive development of informa-tion and communication technologies, has also manifested itself strongly in thedevelopment of Supply Chain Management (SCM). The definition of SCM thatis closest to our view is that it is “the integration of business process from endusers through original suppliers that provides products, services, and informa-tion that add value for customers” (Moberg, Speh, & Freese, 2003).

In reality, we are standing at the threshold of the so-called knowledgeeconomy and of expanding e-technologies, which, among other things, allowvirtualization of the manufacturing of products. Relative to that, more and morefrequently we come across the term “virtual organization,” which is seen bysome as a method of running companies in the future, while others see it as anadvertising trick of communication network owners. Along their development,various questions are being posed, such as: Will virtual organizations have amajor impact on the lifestyle? Do managers and specialists develop themselvesas quickly as the trends that surround them? It is apparent that it is necessaryto 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 replacesbureaucracy 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 orfunctions. This trend is also beginning in the field of logistical services in the formof emerging multi-integral logistical centers. Is it a fashionable wave or a naturaldevelopment stage in the development of SCM? Real examples from thepractice, as well as theoretical studies (Chandrashekar & Schary, 1999;Lefebvre & Lefebvre, 2002; Motwani, Lawson,& Ahuja, 1998), offer indica-tions in favor of the second possibility. Like the production field, in this field itdoes not mean the elimination of classic business models—in our specific case,



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

1. To point out to the development stages and trends in the advancement ofSCM, from production flow management to virtual logistic centers;

2. To identify decisive impacts, advantages, and risks of ICT in the devel-opment of virtual logistical centers; and

3. To outline the designing of a virtual logistical center.

METHODOLOGYIn the research, a specific theoretical approach was used that—in contrast

with an empirical one that requires extensive interaction with people—is basedon intensive research of sources. In the first place, an overview of literature anddocuments on SCM and ICT will be provided to point out parallels in thetheoretical research and aspects related with the development of SCM. In theprocedure that follows, a deductive approach is used in which substantialproperties of objects or phenomena are separated from the non-substantialones. A precondition for a correct deduction is the analysis of an object inrelation with its environment. This condition was applied by the examination ofeffectiveness factors and by defining a break-even point in the effectiveness ofestablishing a multi-integral logistical center and that of a classic high-capacitymodel of a logistical center.

RELATED WORKDue to the fact that logistics basically relates to all types of companies and

organizations (Lambert, Cooper, & Pagh, 1998), in this study we are going tofocus our attention on the supply chain management of manufacturing compa-nies. In this environment, SCM based on ICT can be developed only to theextent to which ICT is perceived to be the same as any other company resourcein the company. The evaluation of ICT in such a case corresponds withconsiderations of “where ICT could be more useful for the company.” Thoseideas wildly differ from theoretical ones, as confirmed by a number of studies(see, for example, Edwards, Peters, & Sharman, 2001). Many managersintroduce IT in their search for its perceived cost savings advantage as a result

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of the reduction of a number of employees (Zuboff, 1984). Those expectationsare usually not met, as the jobs that were eliminated by automation were oftenthose that required direct contact with the customer. The same author further-more states that the reason for the introduction of IT should be, besidesimmediate effects, also self-learning of the staff in the field of IT. According toCrainer (1988), another factor explaining the failure of IT in increasingproductivity is the fact that it is often used in wrong places. For example, qualityenhancement programs have exacerbated the situation to such an extent that thesignificance of IT was overlooked. Instead of being used as a key tool forsecuring quality and higher productivity, IT was used as a means for collectingdata and securing support for quality control programs through precisestatistical data. ICT represents a highly efficient tool for data collection, but itsuse is much wider. It offers companies a wide range of possibilities forincreasing competitiveness. For example, it allows organizations to createcloser partnerships with their customers, suppliers, and business partners. Itmeans that organizations are capable of using the potential of ICT for themodernization of a number of managerial processes, which also include SCM.

What prevents a wider use of ICT, specifically in SCM, are the socialobstacles. Those aspects were analyzed within “The Supply Chain PartnershipProject” (Fulantelli & Allegra, 2003). The result of the survey is a statement:

The lack of trust in other SMEs’ capabilities is a serious obstacle tocooperation and, therefore, to the adoption of ICT-based solutions; thesocial factors underpinning the relational and communication interfacesbetween SMEs’ are the main obstacle to the boosting of SCMstrategies (p. 47).

Beamon (1988) searched whether those social obstacles depend mainlyon the insufficient use of the potential of ICT in SME or whether there are otherserious obstacles in the implementation of ICT in SME.

Besides the basic area of securing the transfer of information betweencompanies in a supply chain (SC), the potential of ICT has recently been usedsignificantly for the integration of information and material flows and for a higherdegree of cooperation between companies. One of the substantial reasons whycompanies have not used the potential of ICT fully in this field is the previous,quite high investment into ERP systems. Despite that investment into Internetinformation systems, problems with the information compatibility betweencompanies prevent an effective deployment of ICT systems within an integratedsupply chain (Hertz, 2001).



The reason for the creation of integrated SC is the establishment of closerelationships and the creation of unified procedures aimed at increasing theeffectiveness of the whole logistical chain. In these terms, SC is characterizedas a network of mutually interconnected companies that share the fulfilling ofpromises to the final customers (Christopher, 1998; Mentzer et al., 2001).

The interest in the implementation of ICT in SCM has grown recently alongwith the change in the orientation of logistical management from internalattention to an overall company strategy focus on integrating relations withsuppliers and distributors (Meade & Sarkis, 1998). It was caused by therealization of the need of integrated information flow management in individualSC by production companies, as well as by logistical companies. An effort toreact to this new situation has manifested itself in the development andimplementation of integrating information systems in a supply chain. Like otherIS, they also failed to avoid many system shortcomings, identified in more detailby Rakotobe-Joel, Zbib, and Bakhtiari (2002). The results of their analysessuggest that:

the efficient and best performing supply chains are not those that candeliver good results in a short term, but rather those that can sustainsuch performance and show resilient characteristic that would allowthem to withstand information systems failure due to either outsideattack or system accident inside their operations (p. 473).

Another important fact is that companies with lower performance andinformation integration capability are often kept out of the ICT integration of thesupply chain (Bask & Juga, 2001).

In relation to the management of complete supply chains, a holisticapproach to the logistic management is often highlighted, which is understoodas 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 thesame attention as downstream and upstream activities. Lu and Su (2003)observed that since the outbound operations have been streamlined andextracting extra benefit has became increasingly difficult, companies are turningtheir attention to inbound logistics. According to Olin, Greis, and Kasarda(1999), the trailing behind of the development of inbound logistics is caused byhorizontal fusions of producers into large portfolio-oriented companies, focus-ing on assembly and marketing while reducing their in-house development andmanufacturing depth in favor of multi-tier supplier base.

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Communication technologies are currently increasingly used in e-com-merce. Those applications include, for example, e-mail, the Internet, ElectronicData Interchange (EDI), and Extranet. It practically places greater demands onlogistics from a physical point of view and with regard to its ability to coordinatephysical flows and flows of information (Carvalho, 2000). Thanks to the onsetof advanced ICT in SCM, the development of virtual companies dominated bytheoretical approaches is expanding. According to Davidov and Malone(1992), the virtual company of the future will appear—in the eyes of anobserver—almost limitless, with ever-changing contact surfaces between thecompany, the supplier, and the customers. Even though skeptics are alreadygathering counter-arguments against such visions, Birchall and Lyons (1995)claim that, from the 1990s onwards, only intelligent organizations that will nottry to avoid new organization forms will survive. In this sense, Kalakota andRobinson (2001) point out that the design of a new model of business shouldbe able to create alliances that emerge whenever there is a need of a new typeof 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 aconsiderable diversity of this issue. In the context of the main goal of thischapter, a company, Jeroen van den Berg Consulting (Van den Berg, 2001),deals with this issue, and old versus new supply chain structures are an objectof its interest.

FROM PRODUCTION FLOW MANAGEMENTTO VIRTUAL LOGISTIC CENTERS

The material flow is a controlled movement of materials in a logisticalnetwork, so that they are available undamaged at a specific place in a requiredquantity, in the required time, and with a predefined reliability. The logisticalnetwork is usually understood as a chain of material relations, as it includesindividual material flows, but the non-material side cannot be separated fromthis understanding since the chain contains specific information flows. Produc-tion flow management also incorporates material handling, which is “virtually allaspects of all movements of raw materials, work in process, or finished goodswithin a plant or warehouse” (Lambert et al., 1998).

Material flows are implemented as:

1. Discontinuous flows, working according to the pressure principle, bywhich the supplier supplies the customer with an agreed batch of material



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.

2. Continual material flows in a logistical chain work according to the strainprinciple, by which the supplier supplies a batch to the customer at a timeand 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 ofmaterials and the production, and the stock of finished products can bereduced to an essential capacity, which buffers the flow from the produc-tion to the customer. The frequency of the flow increases, chains pass onsmaller batches, the flow is smooth. To avoid transport problems due toan increased flow frequency, a completion element and the aggregation ofdeliveries for customers are introduced. Customers’ regular requests aredirected right into the production, which should be capable of reactingquickly and individually to changes in orders that occur in the course of thefulfillment of framework contracts.

A logistical chain with a synchronous material flow is an ideal target typeof supply chain, where the structural and process aspects are completelyadapted to flexible reactions to any change in a requirement. The material flowis balanced, smooth, without maintaining stock (with the exception of a minimalback-up stock). Inside any element and on the way between chains, there isonly a minimal quantity of raw materials or finished product that is preciselydefined at a specific moment. That is possible with parallel information flow,where the control system of the whole logistical chain secures the processingof customers’ orders and simultaneously coordinates, synchronizes, and opti-mizes all processes in the value chain. For that, it has real-time informationavailable from all partial supply chains. Dynamic management of value chains—from the development of a product, through planning, purchase, sale, up toservice—requires standardized procedures and a unified communication method.A precondition for effective communication is a consistent and completeinformation database that contains data about products, components, suppli-ers, and results of individual activities. Here the interconnection of individualcompanies through networks, access to a common information database (forexample, through Extranet) is gaining in significance (Moore, 1998). Such anapproach assists mutual perfection of the course of internal processes andthereby of the whole value chain. A precondition for a successful SCM is thetrust between the parties involved. Spekman, Kamauff, and Myhr (1988) pointout that, in the recent past, parties have kept a distance from each other due tothe lack of trust, which was demonstrated in their reluctance to share internal

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information about their companies. Saunders (1994), for example, analyzessuch supply-partner relationships in more detail and considers them to be thedecisive factor in the success of SCM.

Material and information inputs into logistic chains of a company areconnected with the development of supplier-customer relationships in the formof strategic partnership. This tendency reflects the new approach to procure-ment management, which can be expressed by an overview outlined in Table 1.

Another factor in strengthening this tendency can be the wider applicationof outsourcing. Activities carried out by specialized external providers for alarger number of customers are usually cheaper, particularly because of fixedcosts. Moreover, organizations that provide outsourcing bring their own know-how from optimization of logistical activities into the partnership. Cooperationin this field helps to eliminate or reduce unexpected idle periods in transport(long transport routes, reloading, customs clearing, and other). A higher formof outsourcing is the inclusion of a logistical center (LC) in a supply chain, whichwill secure the reception of required supplies from specific customers, carry outstock operations, and stock records, including other logistical services (comple-tion, packaging, marking, etc.). Individual deliveries from stock are taken bythe customer in the JIT mode. With the progressing globalization, the signifi-cance of individual logistical centers is increasing.

Logistical activities related to the output of finished products into thesphere of consumption have to contain all distribution, wholesale, and retail

Table 1. Comparison of approaches to procurement management

CONVENTIONAL APPROACH

INCOMING APPROACH

• Passive, inertial

• Orientation on a higher number of local

suppliers, preferring the cheapest supplier

• Minimum information for the supplier

• Short-term orders

• Suppliers without obligations.

• Active

• Reduction in the number of

suppliers, globalization of

purchasing markets, orientation on

the best supplier

• Interconnection of information

systems between partners

• Long-term contract-based

partnership

• Passing the burden of responsibility

for the quality on the supplier



elements of the supply chain, which means they should finish at the end customer—the consumer. Logistical activities of producers in the distribution and saleof products and in purchasing and sales activities of wholesale and retailcompanies are usually not harmonized. Each of those organizations creates apartial supply chain according to its market interests, and the relations betweenthem are decided by their economic strength, not by a common goal.

The expanding logistics pushes the concentration of branched stocknetworks into a minimal number of technically well-equipped logistical centerswith regional and territorial coverage, effectively resolving the conflicts be-tween the production and the retail. Conflicts are resolved as follows:

• Product range conflict results from the retail’s requirement to supply awide 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 forfrequent supplies in small quantities against producers’ supplies in bigquantities at a lower frequency. The conflict is resolved by keeping a stockof goods.

• Spatial conflict occurs as a result of the misallocation of production andthe center of consumption, and it is resolved by placing the warehouse ina place that is identical to the intermodal transport element.

LCs fulfill the primary function—supply customers with goods in therequired way and in the required range; therefore, they play the role ofcompletion and expedition. The secondary function is given by keeping thenecessary stock of goods.

Another tendency is the speeding up of the international trade through e-commerce, which significantly influences the strengthening of the internationalcharacter of logistic distribution chains. The trend in introducing e-commerceshifts from part ordering, materials scheduling, and delivery into sales, invoic-ing, and receipts (Pawar & Driva, 2000). It means substantial re-evaluation ofthe logistical wholesale practice, from ensuring stock operations and thesubsequent distribution towards complex logistical processes focused on thesatisfaction of needs of individual retail units and the increase of efficiency of theflow of goods in the interest of securing their competitiveness.

According to Ross (1997), logistics may be understood as an evolutionarystate in a number of areas of management:

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• 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 disciplinewas caused by the transition from the tactical transport and storage servicestowards more centralized logistical functions, focused on cost management andon the complexity of customer services. The role of logistical workers hassubsequently widened, from cost management to the provision of integratedlogistical solutions or fourth-party logistics (4PL) concepts. The developmentof third party logistics (3PL) and 4 PL concepts is basically based on theextension of services for providers of 3PL and on offering solutions through asingle-point-of-contact service (Hoffman, 2000).

It can be expected that further development in SCM will take the directionof widening services at the horizontal level of the value chain. Logistical workerswill extend their activities against the value flow. Gradually, integration ofcomplex logistical supply chains from semi-finished goods suppliers throughproducers to consumers will take place.

In SCM, the dynamism of the changing business environment has influ-enced the decisive goals of supply systems. In particular, those goals includethe increase in the quality of services for customers and the flexibility ofprovided services. Those growing requirements can be satisfied especially withthe support of ICT and with the use of external services of logistical companies.Even though the outsourcing in SCM brings apparent advantages, it does notmean their extent will always be satisfactory. The method of increasing theeffectiveness of logistical services goes mainly through ICT, which have beenadapted for this purpose in recent years. Infiltration of progressive informationand communication technologies into the management of logistical systemsresults in intensive development of complex transport services, using tools suchas multimedia telebridges, virtual integrated service systems, and the like. Forthat reason, in the following section, attention will be paid to virtual logisticalorganizations.



INFLUENCE OF ICT ON THEDEVELOPMENT OF VIRTUAL

LOGISTIC CENTERSIn 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 whichthe material flow is planned, organized, managed, and controlled. Innovation ofthe information and communication system based on the application of the latestinformation and communication technologies frequently offers larger benefitthan the innovation of handling technology. Each material flow can work onlyif the information comes at the right place, at the right time, and is reliable,precise, and correct.

Importance of Information in SCMInformation has gradually become the decisive factor in the perfection of

logistical processes. By obtaining and processing necessary information, it ispossible to limit storing materials or goods by better stock management andbetter coordination of supplier-customer relations, and to limit transport byimproved coordination of all elements of the supply chain.

Lack of up-to-the-minute information causes uncertainty on the customerside by questioning the meeting of delivery deadlines and uncertainty at thesupplier by questioning the sizes of deliveries for individual customers. Thoseuncertainties often lead to ineffective concentration of material on so-calledback-up stocks at both ends of the supplier-customer relationship.

Information and communication technologies may significantly assist inproviding LC services by building integrated information and communicationsystems that allow contact with other systems practically anywhere in theworld. The contents and structures of databases of individual organizations ina logistical chain must therefore be proposed to respect the need of anintegrated information system, which includes international standards for theelectronic 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, specialproperties, etc.). On the basis of that information, the receiving party canprepare 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

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flow, and it includes the confirmation of the acceptance of goods, claims,questions about the terms and conditions of delivery, additional orders, and soforth. In both cases, the information may be linked to a specific deal, related tothe purchase or sale of goods. Precisely specified, structured information isessential for the materialization of supplier-customer relations of specificbusiness cases followed by logistical operations. The information is subject ofexchange between suppliers and customers in an external information environ-ment or between specialized organization units in the internal environment of acompany. The information is usually linked to a specific stationary or mobileobject, which is related with its identification.

The implementation forms— the method of information exchange in theform of messages or documents between suppliers and customers—have theirhistory. Classic, hand-written or typed documents, delivered by post or by acourier, later delivered by telex or fax, as a result of general e-development,have modernized to the current standardized messages sent on electronic mediavia couriers or directly by the transmission of documents through computernetworks (Figure 1).

The unification of documents, in which it is defined precisely as to whatinformation they contain and where in the document it is—with information ofthe same type in other trade documents in the same place—was one of the firstrationalization steps for speeding up and facilitating supplier-customer relationsin the international trade.

Figure 1. Manners of structured information exchange



Position of EDI in SCMAnother substantial factor that made business relations more effective was

the transformation of the paper exchange of information to the electronicexchange of structured data between heterogeneous computer systems ofbusiness partners without human intervention, called Electronic Data Inter-change (EDI). EDI substantially shortens the length of the process of sendingand receiving documents through classic mail; it also increases the quality of theprocess and allows the information sent at the receiving party’s computer to beprocessed without repeated input of data.

The recognized standard for the electronic exchange of structured data isthe United Nations Rules for Electronic Data Interchange For Administration,Commerce and Transport (UN/EDIFACT). The standard defines syntacticrules for the transmission of messages, and it can be used in various fields ofhuman activities. Nowadays it is used, for example, in the healthcare, tourism,and other industries.

UN/EDIFACT covers the following main activities: Syntactic rules; Dataelements; 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 aconnection with each of their partners; it is enough for them to communicatewith a VAN, which will ensure connections required by the users. In addition,

Figure 2. Intermediation of EDI communication among business partners

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VANs can eliminate some issues of incompatibility of systems as they supportalmost 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 oforganizational issues to be solved. The use of EDI brings a change in thetraditional style of work, which can substantially influence the organizationalstructure of the company and the organization of its work processes. And it isthe area of the influence of EDI on individual activities that should not beunderestimated. Maximum attention should be paid to it, and it should beanalyzed carefully, so that a detailed picture of the new work activities, theirlinks, and, in relation to that, the idea of a new organizational structure of thecompany 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 singlecomputer system, can be transferred to a computer system of the businesspartner. It is an instant transmission from the source of information to thedestination with minimum human intervention.

• Time savings: EDI transaction are immediate; they improve productionplanning; they increase productivity, decrease stock, and thus decreaseoverall costs.

• Reduction of errors resulting from the preparation of data: Simulta-neously, the level of professionalism in business relations, based oncompetent 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



(money transfer, account statements, etc.). The company becomes moreflexible with regard to the customer’s needs. By increasing its communi-cation readiness with business partners, it improves its image over that ofits competitor(s) working with classic methods (Gottardi & Bolissan,1996).

• Widening of business opportunities: EDI offers organizations anopportunity to widen their business activities without prolonging theresponse time through the communication within an electronic networkand between networks. The preparation and implementation of coopera-tion between supplier and customer companies is quicker.

• Widening of functional characteristics of information systems: EDIwithin the integration of information logistical systems allows its directconnection with the whole internal information and communication sys-tem, including a system based on barcodes.

In a review of the literature on adoption of EDI, the following risks andweakness were mentioned:

• The more sophisticated a communication system is, the more vulnerablethe 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, EDIsystems have succeeded especially in companies with a large volume ofbusiness transitions (hypermarket chains, automobile industry, etc.), where thefavorable period of return of investment on an EDI application is achieved asa result of cost savings compared to the previous technologies, in line with theabove 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 theXML meta-language, which will simplify the current system of exchange ofinformation about components of trading documents and ensure full compatibil-ity of information systems of two partners.

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PRODUCT AND OBJECTIDENTIFICATION TECHNOLOGY

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

Optoelectronic TechnologyThe optoelectronic technology of bar coding, using the European Article

Numbering (EAN) system, allows unequivocal identification of consumergoods, a specific pallet with goods, or even a service provided, which meansthat the code is understood as a means of identification, not as a means ofclassification of goods. The EANCOM system allows communication andexchange of trading information through EDI.

Bar codes in an automated control system of trading companies give aperfect overview of the goods sold in real time. It allows ordering and addingto the stock, and introduces an automated goods acceptance system thatincludes complete stock management, monitoring of production, and expirydates, including production numbers, types of products, product price updates,and so forth.

The benefits of using bar codes can be summarized into the followingpoints:

• Precision: Application of bar codes is one of the most precise and fastestsystems of registration of a large amount of data. In the case of manualentry 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 inevery millionth entry, while most errors can be eliminated by the extensionof the code with a check-sum, which verifies the correctness of the sumof all other numbers.

• Speed: The comparison of the speed of making a data record from a barcode with the speed of its entry through the keyboard shows that even thebest operator is at least three times slower than any bar-code reader.

• Flexibility: The bar code technology is multi-purpose, reliable, and findswide possibilities of use. It can be used in various extreme environmentsand climatic conditions. Bar codes can be printed on materials that areresistant to very high or low temperatures, on materials resistant to acids,



abrasive wear, excessive humidity, and the like. The dimensions of thecode can be adapted for the use even on a miniature electronic compo-nent.

• Productivity and effectiveness: Reflects particularly in the decrease ofcosts in packaging management, optimal use of storage areas, improve-ment 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 systemmessages, which are linked in the following order:

• Identification data: The first bits of information exchanged betweentrading partners at the start of a business relation.

• Trading transactions: All information related to the purchase or saleof goods. They start with the purchasing order and they follow thewhole business cycle.

• Announcement and planning messages: They are used for informingtrading partners about business activities and plans.

• General messages: They can be used for sending the required data, forwhich no standard messages are specified. They are used for the initialtesting of transmissions between new partners or as supplementary textinformation.

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 RadioFrequency Identification (RFID). Compared to the bar code, RFID offershigher reading speed and a substantially simplified application in automatedsystems, as it does not put any demands on its operators. There is a wide rangeof RFID systems and elements, which can be classified according to a numberof 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 aresponse by a specially developed label in the form of a radio message. Thesystem consists of three components: an identification label (passive or active),

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a detector, and an antenna. The identification label consists of a reception andtransmission antenna, discrete components, and an integrated chip. Thepassive label is activated by the detector, which, through the antenna, transmitsa pulse or unmodulated RF signal. The label responds by using a small amountof energy from the received signal, by which it feeds the chip, which thentransmits a code back to the detector through a modulated RF signal. An activelabel can receive, store, and transmit data. RF systems do not have applicationlimitations typical of other systems of automatic identification, as they do notrequire direct visibility of the label from the detector’s antenna.

The application of the RF technology allows immediate communication ofthe terminal with the program that controls stock management. Part of thistechnology is a wireless network, through which the user can fully use networkresources without cable connection to a communication network directly fromthe workplace (Figure 3), equipped with a wireless adapter. The coverage ofthe workspace by the RF signal is ensured by Access Points (APs) andExtension Points (EPs), which materialize the interconnection of the twonetworks. 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 connectionof a mobile station, like in the case of GSM mobile phones.

Inductive TechnologyThe inductive technology works on a principle similar to that of RF; the

difference is that electromagnetic induction at a substantially shorter readingdistance (up to 50 cm.) is used for the transmission of coded data between thedetector and the identification label. Labels with different patterns are mostly

Figure 3. Application of a wireless network



made only for reading. The first two types of patterns are designed for theprotection of goods against theft, another two types for the identification ofobjects in an industry, and the last type for the identification of people. A routineapplication area for inductive technology is the work process monitoring andcontrol systems that are used for the identification of tools in robotizedproduction lines and logistical systems for the identification of pallets, contain-ers, and their contents. To some extent, programmable inductive labels can, forexample, replace the interconnection of individual workplaces by a computernetwork, as a manual portable terminal can sense the data recorded on aprevious workplace and can write the updated state on the inductive labelaccording to the carried out technological operation of the workplace. Theinductive technology provides a wide range of possibilities for the automaticcontrol of the movement of transport carts in production operation and inwarehouses.

Telematic TechnologyThe current telematics used in logistics allow terrestrial and satellite

systems to monitor and identify transport elements and whole transportationunits in real time. In the terrestrial systems, reading equipment installed in a fixedway along a transport route is used for identification purposes. The precisionof localization of a detected object at the place of the detector is in the rangeof a few centimeters. Otherwise the localization is possible only according tosections between detectors. Terrestrial systems can find out the order ofelements, direction of drive, and, in the case of a railway car, a railway line onwhich the transport element or the whole train is. Satellite identification systemsknown as Global Positioning System (GPS) are used for the continual monitor-ing and specification of position of railway cars and trains by means ofgeographical coordinates and for the communication of mobile units accordingto the connection scheme: mobile unit—server—client. The precision of asatellite system is about 25 m. due to problems caused by rugged terrain andtunnels.

DESIGNING OF VIRTUAL LOGISTIC CENTERS

A logistical center (LC) is considered to be a supply-distribution node thatprovides a wide range of logistical services for customers. Along with transportand handling processes, it carries out activities that are connected with the

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complex support of production and with the sale of the product. LCs are setup as complex services based on sharing work of specialized companies thatprovide logistical and other services connected with the implementation ofsupply chains in line with the needs of individual customer services. They areusually well placed in a region and generally have a high- capacity warehouseand accessibility for transport, depending on the concentration of the necessaryinfrastructure.

LCs are usually built up at nodes of combined transport, local and long haultransport, and physical and information flows. The main roles of an LC include:

• Connection of different types of transport (ground, water, air) intotransport chains;

• Design and implementation of complex logistical networks betweensuppliers and customers;

• Various logistical tasks for customers (internal company transport, stor-age, commissioning, packaging, distribution, etc.);

• Preparation, implementation, and maintenance of the needed infrastruc-ture 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 cooperationbetween the production, sales, service, and transport companies and allconsumers. From the producer’s perspective, it means, for example, that tasksrelated to the procurement of materials and the sale of products are dislocatedfrom the company. Those tasks are considered to be not characteristic ornatural to the production process. The dislocation of tasks and the applicationof the JIT concept to the production, supply, and distribution decreases storagecosts and the implementation of physical flows, and it increases the competi-tiveness of products. The application of a program—combined transportorganized by a plan—rationalizes and ecologizes transport processes.

LCs solve extensive, multilevel tasks. The result of the solution is usuallyan optimized system of logistical chains of material and non-material flows. Inwider understanding, it is the case of material flows (raw materials, semi-finished products, products, and waste), information, money, and people. Thedesign, solution, implementation, organization, management, and control oflogistical networks take into account the current conditions for processoptimization.



Portfolio of Logistic Center ServicesFunctional properties of LCs depend on the portfolio of provided logistical

services and the links between them. According to the significance of servicesin the creation of added value for the customer, logistical services can beclassified, in line with Figure 4, into three groups:

1. Basic logistical services;2. Additional logistical services; and3. 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 andimplementation of an ordered integrated supply chain. Basic logistical servicessolve the arrangement of transport, physical transport, and handing of material,including storage, dispatching and distribution.

The arrangement of transport cannot be imagined without marketing ofroad, railroad, water, or air transport services. The knowledge of theirexistence and of references, transport terms, and conditions, and a flexiblereaction to changes in the type of transport are significant bits of information forplanning, implementation, and operative control of the physical flow, from theproduction point to the point of consumption, so that they meet the customer’srequirements 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

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In the integration of supply chains, handling of material involves thecreation of handling or transport units, loading, unloading and reloading,weighing, measuring, counting, and other non-technological operations bywhich a controlled horizontal or vertical change of position, including thechange of the handled product’s orientation in the space, takes place.

Transport systems have the key role in the transport of materials, aswithout them it is not possible to secure a reliable integrated physical flow bya supply, production, or distribution processes. Transport has to adapt flexiblyto the conditions of the international, national, and internal company transport,including multimode transport. The application of JIT in the planning of supplydeadlines and in the control of transport chains is a logical precondition foreconomic effectiveness of transport, as supply chain processes are becomingmore transparent, while more progressive minimization of stock occurs.

For storage and stock management, the LC currently uses the latesttechnology in its building as well as operation. High-rise warehouses are beingbuilt that are equipped with shelf systems with the capacity of tens of thousandsof 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 andpackaging of consignments. In separate zones, besides customs or consign-ment storage, technological operations related to precise division of inputmaterials or with the final assembly of products can be performed.

The structure of elements of information and communication systems isdesigned to be able to fulfill the roles of electronic commerce and electronicmanagement, identification and monitoring of moving and stable active, pas-sive, and supplementary logistical elements. The application of the intranet andextranet in the information and control system of an LC is taken for granted.

The type of finishing operations and steps in them are specified preciselyby a concrete order from the customer. The assembly of products accordingto the customer’s specifications, packaging of products into retail and transportpackaging, marking of products and packaging, and the like, are usuallyincluded in the finishing operations.

Additional Logistical ServicesAdditional logistical services increase the feeling of satisfying the customer’s

request and the added value of the value-creating chain of implementedlogistical services. In particularly, they contain the following groups of services:

Renting out premises for the provision of additional logistical and otherservices is a way to extend the competitiveness of an LC, as it is the case of the



development of the portfolio of provided services. Hiring machines andequipment allows entry by new players into the transport market, which resultsin a possible decrease in transport prices. Besides that, it also secures flexiblereaction of an external transport capacity to more significant fluctuations on themarket.

An additional service, now taken for granted, is the repair and servicing oftransport and handling equipment. Preventive maintenance and repair systemsare preferred. Diagnostic examinations of the technical condition of machinesare carried out on a regular basis. If necessary, it is possible to pump fuel andclean vehicles at petrol pumps inside the LC’s compound.

For the needs of international transport, customs declarations of thetransported material according to international regulations on customs clear-ance are compiled. This service uses the EDI information and communicationtechnology and the identification and object-tracking means, which, on thebasis of updated information, allows customs to be notified in advance aboutthe expected arrival of a specific consignment and thus help ensure the smoothsuccession of work processes related to the customs clearance of a consign-ment.

The insurance of deliveries is included in primary financial services. Thisservice shifts the burden of responsibility for the complete and intact conditionof the transported material from the transport agent to the insurance companyand lifts the burden of the claims for damages incurred by events specified inthe insurance contract from transport agents.

Consulting services concentrate particularly on the provision of marketing,investment, and financial consulting. Topics of strategic marketing are used forthe orientation of research and development intentions of ordering parties.Capital and the linked financial consultancy can successfully navigate financialflows of investors into new business activities of the global market.

Requalification provides opportunities for flexible adaptation of the play-ers on the job market to changed conditions. It provides teaching and trainingprograms for mastering required professions and for maintaining competencein the profession by prescribed certificates.

Other ServicesOther services complement the synergic effect of complex services of the

most advanced logistical center. The customer usually uses the highest addedvalue of implemented supply chain. Those services do not need to be used inall supply chains, but their presence increases the competitive advantage due

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to the fact that they are located at the places of concentration of logisticalservices and of their effective integration into supply chains.

This is the case of postal and banking services, hotel, restaurant, andhealthcare services, property security services, and marketing communicationsupport services through advertising, promotional materials, and exhibitions.

The providers of logistical services concentrated into a portfolio ofservices of an LC are companies and institutions whose core business corre-sponds with the specifics of the required services necessary for the implemen-tation of supply chains of various development stages, up to complex supplychains. 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 machinesand equipment;

• Leasing companies renting out transport and handling machines andequipment;

• 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.



Steps in Designing a Virtual Logistical CenterThe application of business process re-engineering in production and

trading companies speeds up the trends of the application of core business inpractice. Production companies can transfer to an LC stocks of materials,semi-finished products as well as finished products, and capacities of finalcompletion processes (assembly, packaging, etc.). The transfer of all theseactivities of a manufacturing company changes the character of its businessmission 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 servicesincluded in the design and implementation of an LC.

In the first development stage, the portfolio of services consists only ofservices in which work operations of non-technological character are done, butthey should be able to meet transport needs of supply and distributionprocesses. In the second development stage, services carried out by techno-logical operations are added. The portfolio of services in the third developmentstage is extended, specifically by leasing, repair and maintenance of machineryand equipment, including the provision of requalification services. The LCprovides complex services in the fourth development stage.

It should be pointed out, however, that the structure of the portfolio ofservices of a certain development stage may contain selected services from allgroups, and their selection may be influenced by local conditions at the placeof implementation of the LC.

EFFECTIVENESS OFVIRTUAL LOGISTIC CENTERS

In the concept of a multi-integral architecture of a logistical center reflect-ing progressive trends in SCM, coordinated mutual cooperation and strategicpartnership of dispersed logistical capacities along the vertical and horizontallines are considered as economically justified procedures.

In regard to the implementation of the model, it is necessary to take intoaccount the following obstacles:

• The current competitors providing services of the same character maynaturally l fear that they could lose their independence when contemplatingan idea that they should start cooperating in the interest of providingcomplex logistical services;

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• Mistrust of possible synergic effects that would be capable of effectivelysupporting the development of logistical activities of the participatingpartners; and

• Incompatibility of logistical information systems.

In overcoming these obstacles, one may start with the following attributesof those centers.

The substance of the multi-integral LC architecture is that the scale of suchoffered logistical services does not depend on the building of new, highlydemanding logistical capacities in terms of investment, but rather on effectivelymanaged cooperation of available vital capacities of logistical resources thatalready exist. Available capacities are considered to be those resources that—with their functional properties, technical condition, technical and economicparameters, operational readiness and innovation potential—can be integratedinto a virtual logistical system.

The spatial integration of the Virtual Logistic Center (VLC) is limited bymultimodal 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 capacitiesof diverse resources, including buildings, machinery, and equipment, as well asthe workforce. Individual or group use of available capacities depends on thecustomer’s specific requirement and on the most effective way of meeting it.

In designing a multi-integral concept of a logistical center, a modular andhierarchical architecture is used as a starting point (Figure 5). In general, we canuse 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 re-



sources are, for example, acceptable roads, warehouses, reloading points,stations, container terminals, ports, airports, heavy lifting machines, and soforth.

Mobile resources are all machines and equipment, human resources, andfinancial capital of companies that can be considered realistically in thestructure of a logistical center being created. It is possible to have the aboveresources available without local limitations, in line with planned logisticalservices.

We consider information systems of logistical companies and the wholecommunication infrastructure of individual locations, including the managementand servicing potential, to be organizational and management resources, whichare coordinated by a multi-integral management system.

Stable resources even further significantly influence the structure andarchitecture of the model. With their technical and economic parameters, stableresources limit the extent and territorial coverage of the provided basic andsupplementary logistical services. The designed spectrum of logistical servicesshould accept the possibilities of the creation of integrated services byallocating supplementary services to the basic ones. By an analysis of linksbetween locations and characteristics of provided logistical services through

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

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stable resources, we can learn that the concentration of services in variousdecentralized locations may result in the growth of transport volumes.

The decentralization of locations of a virtual logistical center will also showpositively in the decrease of the capacity load of the transport routes by thedissipation of transport routes between individual locations and by the optimi-zation of transport chains. Economic influences of decentralization may beevaluated on the basis of real configuration of the deployment of individualresources of the logistical center and specific requirements on the provision ofcomplex logistical services.

The economy of transport between locations in terms of the provision oflogistical services does not depend only on technological conditions, but alsoon transport parameters that are related to the services. The components ofthose 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 betweenlocations;

• Increase in the noise levels along the transport routes betweenlocations;

• Increase in the level of air pollution along transport routes betweenlocations; and

• Worsening of road transport safety indicators.

The above parameters influence the extent of designed complex logisticalservices. Estimated negative influences can be decreased or completelyeliminated when adequate infrastructure exists between locations, or if it isgoing to be completed in the near future.

In the application of a multi-integral model of a logistical center, a justifieddilemma emerges—the choice between the realization of a multi-integral modeland a classic high-capacity model of a logistical center.

Knowing about the following dependencies should substantially influencethe decision-making:



• Internal transport costs realized at a specific technical level will propor-tionally correspond with the changes in the transport volume.

• External transport costs will grow more progressively with the transportvolume, as a consequence of special factors. The degree of progressive-ness will depend on the use of the transport agents’ capacity. The costsgrow moderately up to the planned use, but beyond the critical point thecosts grow more progressively.

• As a result of permanent negative influencing of the surrounding environ-ment, forces—so-called compensation costs—will arise in investmentactivities intended to reduce negative impacts. Those costs have to beborn by the involved businesses that form a multiregional model.

By analyzing the relationships, one can come to the conclusion thatinvestment costs of the realization of missing capacities are relatively high, butafter the implementation stage, in the utilization phase, further growth is not asprogressive as in the case of other costs (Figure 6). The point at which the totaltransport costs curve crosses the capacity development costs curve is consid-ered to be the limit point of effectiveness of a multi-integral concept of thecreation of logistical centers. Beyond that limit of transport costs, it is moreeffective to implement logistical capacity in a classic way, by building up acentralized 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 buildingin the following order:

Figure 6. Shapes of the cost curves

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• Physically isolated, horizontal-structured VLC resources should be inte-grated into a central management and information system.

• The information system between individual levels and locations has to beequipped with modern information and communication technology.

• It is necessary to create conditions for effective work of the managementof business processes that solve the provision of the ordered logisticalservices by the application of supply chains.

DISCUSSION AND CONCLUSIONDespite the fact that the dynamics of the development of the material world

—the production world—is slower than the dynamics of the world of informa-tion, substantial progress has been achieved in the area of production and non-production technologies that has also created space for the start of new non-traditional forms of organization and management of production and serviceprocesses that meet customers’ requirements to the maximum extent.

If, in the presentation of new approaches, we get close to the perspectiveof the implementation of material flows in a logistical network, we find out apositive shift in the organization of less effective continual material flows into thearea of economically effective continual and synchronized material flows.

Another current tendency is to speed up international trade, whichsignificantly influences the strengthening of the international character oflogistical distribution chain and the extension of the distances its overcomes. Itmeans a substantial re-evaluation of the logistical wholesale practice, fromsecuring storage operations and the subsequent distribution to complex logis-tical processes focused on the satisfaction of needs of individual retail units. Thecompetitive advantage is manifested by the integration of logistical services andby the increase in the efficiency of material flows through virtual LCs.

In relation to the virtuality in business, we encounter optimistic as well aspessimistic characteristics of that concept. If we start from the visions ofcompanies of the future, they are described as dynamically stable— “dynami-cally” in the sense that they are able to serve the widest range of customers andmeet variable requirements for products, and “stable” in terms of their use oflong-term process capabilities and collective knowledge. The practice andtheory of management offer a number of possibilities for the fulfillment of thoseattributes. They include cross-board organizational structures of companiesand structures based on partnerships in business with the related character ofactivities. According to the optimistic view, it is exactly those smaller forms thatwill correspond with organizational structures that will be the most frequent



ones in the future. From that point of view, virtual companies meet therequirement of a dynamic capability to meet variable requirements of themarket. The need to create a larger team in the past can be explained by aneffort to overcome the handicap of narrow specialization of individuals whohave not been able to solve more complex tasks individually. Modern informa-tion and communication technologies currently provide the individual with muchwider opportunities, which is significantly and positively reflected in thedevelopment 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 theneed to travel long distances. Other advantages resulting from that include:smaller demand for office space, reduced paper documentation, and fasterexchange of information.

Virtuality also has some inherent limitations, which are related with a keyarea of each company—human resources. For example, in the case of amanager needing to fine-tune sensitive personnel issues of his subordinate thedisadvantage of the computer communication is that it precludes the use ofelements of non-verbal communication. Similarly, computer communicationintroduces elements of business identity only marginally. Virtual teams are notallowed as creative a discussion as in the case of immediate communication,when inspiration for new ideas occurs on the principles of brainstorming. On theother hand, we can count an increasing number of contacts, but a decrease inthe quality of the communication level. As a potential risk factor for thearchitectures of network organizations, it is also necessary to consider com-puter terrorism. This problem is seriously being dealt with by softwareengineers, but it is not possible to eliminate it with an absolute certainty.

Despite those disputable aspects of virtual teams, it is clear that intellectualcapabilities are becoming the basis of the telematic or virtual company. Otheractivities can be specified by an external supplier.

ACKNOWLEDGEMENTThis work was compiled with financial support of the European

Commission’s INTERREG IIIC programme within the framework of theECO4LOG project.

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new area of supply chain management. International Journal of Logis-tics, 4(2), 137-152.

Beamon, B.M. (1988). Supply chain design and analysis: Models and meth-ods. International Journal of Production Economics, 55(3), 281-294.

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 athttp://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 ofLogistic Management, 10(2), 27-39.

Christopher, M. (1998). Logistic and supply chain management- Strate-gies for reducing costs and improving services (2nd Ed.) London:Prentice Hall.

Crainer, S. (1988). Key management ideas (3rd ed.). London: FinancialTimes Professionals Limited.

Davidov, W.H. & Malone, M. S. (1992). The virtual corporation. NewYork: Harper Business.

Edwards, P., Peters, M., & Sharman, G. (2001). The effectiveness ofinformation systems in supporting the extended supply chain. Journal ofBusiness Logistics, 22(1), 1-27.

Fulantelli, G., & Allegra, M. (2003). Small company attitude towards ICTbased solutions: Some key-elements to improve it. Educational Tech-nology & Society, 6(1), 45-49.

Gottardi, G. & Bolisani, E. (1996). A critical perspective on informationtechnology management: The case of electronic data interchange. Inter-national Journal of Technology Management, 12(4), 369-390.

Helper, S. (1991). How much has really changed between U.S. auto markersand their suppliers? Sloan Management Review, Summer, 15(3), 15-28.

Hertz, S. (2001). Dynamics of alliances in highly integrated supply chainnetworks. International Journal of Logistics Research and Applica-tions, 4(2), 237-256.



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 manage-ment: Implementation issues and research opportunities. The Interna-tional Journal of Logistics Management, 9(2), 1-19.

Lambert, D.M., Stock, J., Ellram, L.(1998). Fundamentals of logisticsmanagement. Burr Ridge, IL: Irvin-McGraw Hill.

Lefebvre, L.A. & Lefebvre, É. (2002). E-commerce and virtual enterprises:Issues and challenges for transition economies. Technovation, TheInternational Journal of Technological Innovation and Entrepre-neurship, 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 relation-ships: A network perspective. International Journal of Purchasing andMaterials Management, Summer, 32, 20-26.

McGrowan, M.K. & Madey, G.R. (1998). Adoption and implementation ofelectronic data interchange. In T. Larsen & E. McGuire, Informationsystems innovation and diffusion (pp. 116-140). Hershey, PA: IdeaGroup Publishing.

Meade, L. & Sarkis, J. (1998). Strategic analysis of logistics and supply chainmanagement systems using the analytical network process. Transporta-tion Research Part E. Logistic and Transportation Review, 34(3), 201-215.

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). ThousandOaks,CA: Sage.

Moberg, C.R., Speh, T.W., &. Freese, T.L. (2003). SCM: Making the visiona 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

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Pawar, K.S. & Driva, H. (2000). Electronic training in the supply chain: Aholistic implementation framework. Logistics Information M manage-ment, 13(1), 21-32.

Rakotobe-Joel, T., Zbib, I., & Bakhtiari, C. (2002). Information systemsfailure and its impact on the supply chain decision process, In Proceed-ings of the Annual Meeting of Decision Sciences Institute (pp. 340-347).

Ross, D.F. (1997). Competing through supply chain management –Creating market winning strategies through supply chain partner-ships. Materials Management / Logistics Series. New York: Chapman &Hall.

Saunders, A.G. (1994). Suppliers audits as part of a supplier partnership. TheTQM Magazine, 6(2), 41-42.

Spekman, R.E., Kamauff, J.W., & Myhr, N. (1988). An empirical investiga-tion into supply chain management: A perspective on partnerships. SupplyChain Management, 3(2), 53-67.

Van den Berg, J. (2001). Management outlook: Virtual warehousing. (Whitepaper). 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 ofInformation Management

Vincent HomburgErasmus University Rotterdam, The Netherlands

ABSTRACTInformation system development is often seen as a rational process ofconsecutive design activities aimed at integrated information systems.Especially in settings where actors with varying interests operate, like inthe development and use of so-called interorganizational informationsystems, these rational approaches rarely result in satisfying outcomes. Inthis chapter, the development of a Research Information System isanalyzed in terms of alternative, political views on informationmanagement. It is concluded that integration of data schemes should notbe an aim for information system development, especially for situations inwhich interests and objectives vary considerably. Furthermore, in suchsituations, information system development should be managed as aprocess in which various stakeholders enter and leave arenas, rather thanas a project.

INTRODUCTIONIn general, development of information systems is seen as a rational

process of consecutive design activities that, through an orderly process,

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results in an information system that can be put to use in organizations (Lyytinen,1987). Several authors have contributed to various design methodologies andmanagement approaches in which they try to tailor or adjust the original (oftenwaterfall-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 (inshort, information management) to cope with more complex organizationalsituations and to model and implement more complex data models as essentialbackbones of information system development projects.

It has been reported, however, that especially in environments wherevarious actors with various interests are involved in the design process,requirements change rapidly, and goals are not fixed, rational models ofinformation 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 ofinterorganizational information systems, which are by definition almost alwayscharacterized by variety in interests among the participants (Allen, Colligan,Finnie, & Kern, 2000), is particularly prone to endless postponements ofproject results and power struggles (Homburg, 1999, 2001), which results ininformation systems that do not meet expectations.

Rational views on information management and rational views on organi-zational processes, in general, have severe difficulties explaining the powerstruggles and dissatisfying results that emerge from the development of espe-cially complex, interorganizational information systems. Customarily, failure istraced back in terms of not sticking to the steps outline in specific methodolo-gies (“shortcuts to failure,” meaning skipping of stages in specific methodolo-gies) (Pardo & Scholl, 2002). However, this explanation does not address theexistence of variety in goals and interests in complex information systemdevelopment projects, nor does it explain how one should deal with theexistence of such a variety.

In this chapter, the principal objective is to demonstrate by means oftheoretical and empirical evidence that development and use of informationsystems is often characterized by political struggle. We focus on the develop-ment and use of interorganizational information systems, as the political struggleand variety of interests is most visible there. The theoretical inspiration for thischapter stems from a confrontation of more or less rational informationmanagement theories on the one hand, and political and economic organizationtheories (more specifically, property rights theory) on the other hand.



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

AN ALTERNATIVE VIEW ON INFORMATION MANAGEMENT

IntroductionTraditional information systems development concepts, which, at this

moment in time—seem to prevail in theory and practice, predominantlyemphasize the step-by-step, administrative side of the development of informa-tion systems. In general, “traditional” information system development ap-proaches emphasize integration of various data sources and coding schemes asthe backbone of any information system. One of the more popular modelsproposed in the literature is Boehm’s original waterfall and later more resilientspiral models, which are in fact aimed at creating integrated informationsystems. According to these models, system development has to followconsecutive steps from early system conceptualization to operations andmaintenance of the final system.

In general, integration of information systems has intuitive appeal from atechnical point of view, as inconsistent data semantics (e.g., different definitionsof performance criteria, product-coding schemes and vendor-purchase data)may seriously obstruct workflows and day-to-day business operations innetworks of cooperating organizations. However, even in relatively unitaryorganizations that were aware of the problems associated with inconsistentdata semantics and had attempted data standardization, integration failed or theorganization experienced major difficulties (Gazendam, 1993; Goodhue, Wybo,& Kirsch, 1992; Homburg & Bekkers, 2002), for example, because “unwill-ing” local managers refused to give up control over information systems. Inorder to understand why so many projects have failed, and why, despite theintuitive logic of “traditional” approaches, so few satisfying results have beenachieved, the following subsections focus on two “alternative” views ofinformation management: first, a political view in which the effects of integrationon organizational interdependence are highlighted; and second, property rights

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

A Political View on Information ManagementA political view (Davenport, Eccles, & Prusak, 1992; Elg & Johansson,

1997) sheds some light on the background of the struggle surrounding thedevelopment of information systems (Bensaou, 1997; Holland & Lockett,1995; Klein, 1996; Kumar & van Dissel, 1996; Webster, 1995). The mecha-nisms of the theory are most visible in highly divisionalized organizations or innetworks of relatively autonomous organizations. In political organizationtheory, for example, resource dependence theory (Aldrich, 1979; Pfeffer &Salancik, 1978; see also Levine & White, 1961), organizations inhabit acomplex 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. Thismeans that, in practice, focal organizations enter into relationships with partnerorganizations (for instance, by using information systems) in order to gainaccess to external resources. However, in doing this, they may have to complywith arrangements that may not be designed to suit them. Information-handlingprocedures, terms of use, and also data models may not always be geared totheir requirements. In such a context, standardization of data models is certainlynot a zero-sum game. According to political organization theory, each organi-zation strives to optimize its self-interest by (1) minimizing its dependence onother organizations, and (2) maximizing the dependence of other organizationson itself (Reekers & Smithson, 1996). Standardization can be used as astrategy by powerful organizations to deliberately affect the dependencebetween organizations in a way that is favorable to them (Elg & Johanson,1997). As Webster (1995) notes, standardization is an intensely political andadversarial process, because only the large and powerful parties can afford toget heavily involved in the standards development process. Truly joint design,therefore, is possibly a utopian ideal. As the less powerful parties are assumedto avoid further resource dependence, it is clear why standardization of datamodels is often forcefully resisted; if not, the interorganizational informationsystems 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 ofhealthcare data to be used in the British National Health Service (NHS), whichcan 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 aneutral and technocratic exercise, the participating organizations very activelyopposed the data model because they felt that the data model and especiallythe operational and financial data encompassed in the model, once imple-mented, could be used as a basis of comparison between NHS bodies.According to the semi-autonomous NHS bodies, the data model to be used tofacilitate the exchange of information within the network thus raised unforeseen,partly unintended, and very fundamental questions about accountability withinthe 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 suspicionthat standardization of data models was used to enhance control over relativelyautonomous divisions for the reason of “ferreting out how the knaves weredoing in the trenches” (p. 437). In a study of the diffusion of electronic datainterchange technologies, Webster (1995) identified situations in which pow-erful organizations

…unilaterally imposed their in-house computer systems or informa-tion-handling procedures upon their trading partners, extending theirown hardware systems into their supplier’s premises, dictating productand inventory coding according to their own established in-houseinformation systems, and dictating the type and frequency of data to beexchanged (p. 37).

Although political organization theory provides an explanation for theorganization-political struggle surrounding the development and use of infor-mation systems, actors are usually less realistically depicted as aberrantmanagers or deviant technologists, focusing on political aspects, nurturingorganizational autonomy, and ignoring effectiveness and efficiency. The poli-ticking in relation to interorganizational information systems, however, iscapable of being understood in other ways, among other things, in ways thatalso include aspects of efficiency. In order to show how a more sophisticatedunderstanding could throw more light on the topics under investigation here, wediscuss a body of knowledge complementary to political organization theory,namely, the economists’ property rights theory.

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A Property Rights Theory View on InformationManagement

Property rights theory is an extension to standard neoclassical analysis. Itprovides an analysis of behavior of individuals with respect to assets (Bakos &Nault, 1997), under the assumption of bounded rationality. Bounded rationalityrefers to the impossibility of formalizing all kinds of behavior in contracts thatencompass all future contingencies. Hence, property rights theory is alsoreferred to as incomplete contracts theory. If we regard interorganizationalinformation systems as information assets, it is possible to analyze behavior withrespect to these kinds of information systems with property rights theory.

Property rights theory defines property rights as the sanctioned behavioralrelations among men that arise from the existence of goods that pertain to theiruse. These relations specify the norms of behavior with respect to goods thateach and every person must observe in his daily interaction with other personsor bear the cost of non-observance. Property rights can also be defined as theowner’s ability to exclude others from the use of his or her asset. Morespecifically, three categories of property rights can be discerned: usus, the rightto use an asset, abusus, the right to reconstruct an asset, and usus fructus, theright to appropriate the returns from the asset.

If we regard an information system as an information asset, we see that fullownership of this asset involves the right to use an information system, to modifyit with quality-enhancing or cost-saving features, and to appropriate thebenefits of these adaptations. As an owner may exert the usus fructus propertyright, it has intensive incentives to perform well.

One of the options an owner of an asset possesses is to allow others to usethe asset in exchange for compensation, specified in a contract between userand owner. In such a situation, property rights theory states that because ofbounded rationality, there will always be “incompleteness” of contracts,implying that there will always be residual rights not covered in a contract. Theinstitution that allocates these residual rights is ownership and hence, the owneris the “residual claimant.” This situation occurs when in a network of organiza-tions, one organization fully owns a central database while other organizationsuse 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 forthe behavior with respect to information assets. Think of an employee who isworking with an interorganizational information system that requires somespecific investments from him, for example, participation in an on-the-job



quality improvement training program. Such an employee faces intensiveincentives to participate in such a program because, in the long run, he canbargain 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 anotherorganization, the marginal value of the participation of the employee in theprogram can be expected to be divided among employee, his employer, and theowner of the system (as in the bargaining process, the owner can exert hold-up power by threatening to withhold the asset). If the system were largelyowned by his own organization, he could expect to receive a larger part of themarginal value in the bargaining process. Here we see that, in the absence ofpossibilities to formalize complicated reward schemes in contracts (e.g.,assuming bounded rationality), a separation of ownership and control mitigatesincentives.

This situation is different in a number of specific situations, namely, if oneof the participants is indispensable or if assets are complementary. Comple-mentary assets are assets that are useless when used separately but representvalue when used in conjunction. In these cases, the individual employeeworking with the asset is better off if property rights are dispersed among fewerparticipants and the situation is characterized by more incentives to performwell for all employees, managers, and asset owners involved.

For the specific situation of interorganizational information systems, it isrelevant that the “integration” of information systems mentioned before con-fronts employees with an attenuation of property rights, and hence, theirincentives to perform well are partly mitigated. This mitigation of incentivesresults in subtle intangible costs of low effort, which will eventually appear asdistorted, missing, or unusable data. The line of reasoning can be summarizedas follows: the more the sense of “ownership” is diminished, the less intenseincentives will be. Consequently, the level of investments in the informationsystem will typically be lower, which in turn affects the functionality, profitabil-ity, and eventually the viability of the interorganizational information system(Bakos & Nault, 1997). Of course, this line of reasoning is only valid in theabsence of indispensability and complementarity of assets. In these cases,incentives of participants are best served by concentrated ownership, favoringparticipants’ chances in ex-post bargaining processes.

This property rights theory as applied to information assets provides a lineof reasoning and a view on human behavior that possibly is a caricature (aspolitical organization theory does), but perhaps not such an unrealistic one.And, combining property rights theory and political organization theory (asdiscussed in the next section) provides us with a conceptual framework that

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

Summary of the Line of ReasoningIn the introduction of this chapter, it was mentioned that there is a widely

held belief among system developers and information managers that the moreintegrated information systems are, the larger the chance for success is. Afterreviewing both political organization theory and economic organization theory,it is clear that integration, defined as the standardization of data definitions anddata structures through the use of a common conceptual scheme across acollection of data sources, also has a number of negative consequences.

First, according to political organization theory, standardization of datadefinitions and data standards may be geared to the requirements of someorganizations participating in an information system, but not necessarily to therequirements of all organizations. Integration, according to political organiza-tion theory, may be used to protect control and surveillance in informationtechnology.

Second, according to economic organization theory, standardization ofdata definitions and data standards can be conceived as a mitigation of propertyrights with respect to the information system. Participants are less inclined toinvest in the system and to enhance the information system with cost-saving orquality-enhancing features, and eventually such a diminishment of incentivesresults in less profitable, less functional and even less viable interorganizationalinformation systems. A typical symptom of lack of incentives is poor dataquality, resulting from underinvestment in human and technical capital.

In general, based on the alternative views on information management, itis possible to hypothesize that if organizations want to preserve access toinformation resources, they should avoid excessive resource dependence,underinvestment by any of the participating organizations’ members, andunintended interorganizational surveillance and control. In order to do this, anappropriate ownership structure and configuration of the interorganizationalinformation system (in terms of economic property rights) must be decidedupon.

Following the line of reasoning set out in the previous sections, wehypothesize that in the absence of indispensability and complementarity ofinformation assets, organizations will opt for dis-integrated interorganizationalinformation systems where possible, ensuring the exertion of property rightswith respect to the interorganizational information systems (or parts of these)



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

ANALYSIS OF ADVERSARIALDEVELOPMENT PROCESSES

Method of AnalysisIn 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 InformationSystem is analyzed below.

Before moving on to the case study, however, a brief note on researchmethods is appropriate. The case study employs a qualitative and diverse setof methods including interviews with information managers, system developers,administrators and users of information systems, observations, and documentanalysis. Although this chapter draws principally from the case study presentedhere, it has also been informed by two other case studies in the Dutch socialsecurity and fiscal policy sector that were undertaken in the course of a largerresearch project (Homburg, 1999). Finally, we would like to remark thatstatistical generalization is, of course, not applicable here. The case study ispresented here to illustrate and analytically generalize novel theoretical ideas (atthe cornerstones of information management theory, political organizationtheory, and property rights theory) that may be applied in varying contexts.

Case Study: Research Information SystemsActors, Interests, and Objectives

In The Netherlands, an organizational network exists that consists ofpublicly or partially publicly financed research institutes. Traditionally, theMinistry of Education (or, more specifically, the Directorate of Higher Educa-tion and Scientific Research) is an important player in the field, that financiallysupports the research institutes and universities. The universities cooperate and

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participate in an interest association, the Association of Universities in TheNetherlands (VSNU). The Royal Dutch Academy of Sciences (KNAW) is theinterest association of the other research institutes.

For a couple of years, the funding of institutes has taken a course from ahierarchical system in the direction of a market-oriented system, in whichinstitutes have a greater amount of autonomy. In the years before 1985, theinformation was sometimes used against them in cutback operations and theinstitutes, especially the universities, feared that these cutback operationswould continue, inspired by the information they supplied. In this case, theinterest association of the Dutch universities presented its own informationpolicy 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 communityis the exchange of information on research activities. Registration of researchactivities was requested in order to inform businesses, social organizations,international research organizations, and government of the research projectsthat were being conducted by universities and research institutes. The impor-tance of this kind of exposure of research activities, both nationally as well asinternationally, is widely shared among the various participating organizationsin the research community.

Development of Data Model and Control over the Information SystemIn order to accomplish this kind of exposure of research activities, in 1988,

The Netherlands Bureau of Research Information (NBOI) was founded (thisorganization was renamed Netherlands Institute for Scientific Information[NIWI] in 1997), among other things, to design and develop a NationalResearch Database (NOD), which was also to be owned and maintained bythis organization. The Ministry assumed that with the establishment of theNOD, with which the research institutes had agreed in principle, the universitieswere obliged to submit research information to the NOD. The VSNU, on theother hand, assumed that an obligation existed only if there was not a singletrace of doubt as to (1) the method of submission of information, and (2) whatorganizations should eventually receive the information. In practice, the asso-ciation wanted to postpone its commitment to the agreement until the results ofthe expected evaluation of the NOD were available and until its own investiga-tion of the possibility of alternative approaches, in line with its own informationpolicy statements, had been completed. The VSNU demanded completefreedom with respect to technical and organizational aspects, so that it is



possible for them to align completely with their own information and manage-ment policies. In the mean time, there was a lot of quarrel over the questionsof who should provide the research information and who should contribute tothe costs of the NOD. The latter question proved to be especially importantbecause 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 day-to-day use of the NOD. Furthermore, a problem faced in the NOD initiative isthat, of the fourteen universities, only eight have a contract with the databaseowner for electronic data interchange and, therefore, the filling of the databasefalls short of expectations.

In response to these developments, and, according to some stakeholders,out of sheer aggravation, the VSNU developed the CombiFormat data modelto be used as a basis for several research information systems that areinterconnected and separately owned by research institutes or groups ofresearch institutes. In 1997, the CombiFormat was accepted and implementedby ten of the fourteen universities (Advantage, 1997) that had either developeda research information system (in Dutch: OZIS or OIS) themselves or hadbought an existing system that had been developed by another researchinstitute. Although the federation of OIS/OZIS systems technically resembledthe NOD database (in terms of design methodology, database technology,etc.), there was one crucial difference—the participating organizations wereexplicitly granted ownership of their OIS or OZIS systems, which, for instance,allowed them to adapt and modify the underlying data model, and, moreimportantly, allowed the research institutes (being owners) ultimately toexclude access to their data in case there was a suspicion of use that had notbeen agreed upon beforehand (e.g., in contingencies that had not been agreedupon in interchange agreements or other contracts with other research insti-tutes, universities, the Ministry, NBOI/NIWI, etc.).

In the following period, two competing interorganizational informationsystems existed. However, nearly all stakeholders agreed that this situation ofcompeting interorganizational information systems was not desirable and twoexpert opinions were requested. In both reports, the necessity of a centraldatabase is questioned. In general, both expert consultations resulted insupport for the CombiFormat initiative and the OIS/OZIS systems over theNOD database. After an initial period of polarization, the VSNU, researchinstitutes, and universities, as well as the NBOI/NIWI, supported the conclu-sions 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 notexclude the possibility that, over a certain period of time, an alternative of

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decentralized data storage would predominate. They noticed that the core ofthe report implies a changed role of the NOD, with a more important role forthe decentralized input of data by the institutes who are responsible for theresearch activities.

Indeed, the role of the NIWI changed from being a source of data (throughthe NOD) to an organization that focuses on quality assurance and the active(international) marketing of the research information owned by the researchinstitutes and universities. Furthermore, the NOD itself, as an informationsystem, is transformed from being a “pure” database to an information systemwith a variety of functions, of which the most important one is the referral toOIS/OZIS system using a thesaurus of search terms and indices. This is inaccordance with the participating organizations’ preference for a coordinatingand referring function for the NIWI.

Reflection on Research Information Systems CaseIn 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 informationtechnology. 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 lightof the political and economic theories explained earlier in this chapter, this ishardly a stunning revelation, but it is a point worth reiterating, as it is notapparent from the information systems literature.

In the Research Information Systems case, it turned out that two rivalinformation systems were developed, each tailored to the interests of specificstakeholders. The initiative to develop alternative information systems can notonly be interpreted as a sign of “sheer aggravation,” but also as an attempt todevelop an information system with more intense incentives to register informa-tion. It is noteworthy to emphasize here that the crucial difference between therival information systems was not so much the technology nor the level ofstandardization as such (the CombiFormat data model, of course, was a defacto standard). More likely, the difference has to be sought in the dispersionof property rights. In the OIS/OZIS information systems, participating insti-tutes were explicitly granted the right to eventually adapt the data model tolocal needs and to ultimately be able to exclude others from access to thedatabases should there be suspicion of power abuse. Given the fact that theparticipating institutes were granted a high level of autonomy, the OIS/OZIS



information systems provided them with far more intensive incentives toperform well on their maintenance of registration of research projects than thecentralized NOD system did.

Another striking observation is that the Research Information SystemsCase shows a very intriguing process of decision making in which, at variousmoments in time, specific actors were mobilized to take part in the decisionmaking with respect to specific issues, whereas, at other moments in time, thesespecific actors seem to leave. This notion opens up avenues for yet another viewon information management, namely, that of decision making with respect toinformation systems as a struggle that takes place in various rounds and invarious arenas. In this respect, the emergence of arenas in which issues arediscussed is not a feature of project management; these arenas were notidentified beforehand, and the solutions to the wicked problems were achievedby coupling issues from various arenas at strategic moments in time (e.g., thecoupling of legal issues with issues regarding system and data management canbe characterized as making use of windows of opportunity rather than ofdeliberate, prespecified choices).

The management challenges of information systems development as themanagement of stakeholders in arenas is highlighted in the next section.

ON THE STAKEHOLDERS:ARENAS AND DECISION MAKING IN

INFORMATION MANAGEMENTWe have seen that organizational political and economic logic can result in

very sensitive decision-making processes regarding the development ofinterorganizational information systems. In many cases, the development ofinterorganizational information systems is characterized by complex decision-making processes, in which various actors participate in various round andarenas.

In the literature on complex decision making, there seems to be anincreased appreciation for specific techniques that are expected to be able tobetter fit the dynamics and nature of networks and interorganizational relation-ships than traditional information management approaches do, namely, processmanagement techniques or stakeholder management approaches. Whereastraditional methods seems to focus on the step-by-step integration of variousdata sources and coding schemes as the backbone of any information system,so, in the context of the decision-making process, stakeholder- or process-

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management techniques focus on the processual aspects: what kind of interac-tion between stakeholders has to be organized, what arenas (in which specificissues are discussed and disputed) can be discerned, and how can blockadesand hindrances in these processes be avoided through mediation, generation oftrust, and mediation procedures that are designed to deal with conflicts amongactors? In short, political behavior is not seen as aberrant or subversive, but asreality. Developing complex information systems is a complex decision-makingprocess that requires interaction between actors with varying objectives andinterests.

Crucial to such a notion of managing complex decision-making processesis the element of risk in terms of policy windows or windows of opportunitiesas perceived by the parties involved. In stakeholder management, an explicitrole of the information manager is to have a sharp eye for policy windows asrandom events, as these events provide the opportunity to couple decisionmaking in various arenas. In doing so, it is very likely that solutions can bereached that are impossible to accomplish using regular, traditional system-development approaches.

In the development of the Dutch Vehicle Registrations, the concept ofstakeholder management proved to be of vital importance for the eventualsuccess of the system. The registration was initiated in 1981 and eventually putto use in 1995. The goal of the registration was to identify owners of licensedvehicles and vessels. Uses are to be found in the fields of taxation, liability,criminal prosecution, traffic safety projects, and environmental policy. Becauseof this wide variety of uses, many parties were involved in the development ofthe register: the Ministries of the Interior, Economic Affairs, Finance, Justiceand Transport, Public Works, and Water Management. Furthermore, theDutch Center for Vehicle Technology and Information and the Central TrafficPolice 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 itselfwas carried out by a Project Organization, and involved not only the develop-ment of the system in a technical sense, but also required several changes inlegislation. The intended system owner was the Center for Vehicle Technologyand Information. As a consequence, this organization was transformed from arelatively technically oriented expertise center to an information-service pro-vider for many governmental organizations, which, in this specific case, alsoinvolved the transfer of various tasks to this organization.

Many discussions took place in the Project Organization, as a result ofwhich the Project Organization’s composition changed repeatedly. At the same



time, a new piece of legislation (WVW: Wegenverkeerswet, Act on Roads andTraffic) was put into place that affected the functional requirements of theregister.

In reconstructing the decision-making process, it is striking that threearenas could be discerned: one in which the system was designed, one in whichdata ownership issues were discussed, and a legislative arena in which changesin legislation were prepared. These arenas did not exactly match with the(sub)project that had been identified beforehand; moreover, issues concerningthe system, data ownership, and legal issues evolved at more than one momentin 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 dataownership issues and legal issues. Eventually, it has been decided to attributedata management issues related to general data (in terms of procedures forgathering, registration, manipulation, and dispersion of data) to the Center forVehicle Technology and Information, issues related to specific data to variousministries, and system management responsibilities (system development,maintenance, educating personnel, and the like) to the Center for VehicleTechnology and Information. In such a way, a division of tasks could beconceived that was, technologically speaking, intrinsically complex but more orless compatible with the institutional diversity of interests.

CONCLUSIONIn this chapter, we have analyzed traditional and alternative views on

information management, and, more specifically, their respective ability to dealwith complex organizational and interorganizational settings in which actorswith varying interests are trying to develop a common interorganizationalinformation system.

In practice, it is often assumed that traditional information systems devel-opment methodologies emphasizing integration are helpful in designing andimplementing interorganizational information systems in these situations. How-ever, by using a political economy point of view on exchanging information innetworks of organizations, it is possible to conclude that information systemdevelopment is a very sensitive subject that is not easily handled by usingtraditional techniques. In the decision-making processes, the influences of thenotions of incentives, underinvestment, and attempts to avoid surveillance andcontrol are clearly observable.

The sensitivity of the subject can be explained by the fact that developingand implementing information systems often implies standardization in some

300 Homburg


form, and standardization may amplify existing dependencies among organiza-tions or mitigate incentives to perform well. Consequently, participants are lessinclined to invest in the system and to enhance the information system with cost-saving or quality-enhancing features; eventually, such a diminishment of incen-tives results in less profitable, less functional and even less viable interorganizationalinformation systems. In practice, data wars have been observed that wereassociated with the specific nature and dynamics of organizational-politicalprocesses.

The Research Information Systems case showed how a first attempt todevelop an information system failed because its ownership structure did notmatch organizational and political requirements (in terms of autonomy of theparticipating institutes, incentives, and the like). An initiative to set up an initiallycompeting information system with a more decentralized structure(CombiFormat), however, eventually replaced the NOD as theinterorganizational information system to be used in the research community torecord 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 conse-quences of ownership are more important in explaining the success of aninformation system than purely technical variables (like technical performance)are and supports the hypothesis mentioned in our summary of the line ofreasoning of economic and political organization theory.

All this does not imply that complex information systems are not manage-able. Actual information management practices do not necessarily have tosurrender to power plays and clashes of interests between actors from diverseorganizations. In fact, two solutions seem to emerge from the theoretical andempirical evidence presented in this chapter.

First, it seems there is little support for the intuitive logic, indicating that amaximum level of information systems’ integration is preferable from a manage-ment point of view. In many cases, complex information systems to which largenumbers of organizations contribute do not necessitate an overarching archi-tecture to ensure integration. In the “traditional” information systems literature,the architecture is a more or less fully developed conceptual scheme for aninformation system or interorganizational information systems in terms of datastructures and data definitions. Recent literature in the field of process manage-ment and stakeholder management proposes a different connotation of archi-tecture, namely, a set of agreements on how various stakeholders or actors cancommunicate. It is stated in terms of high-level protocols and conventions,



aimed at the generation of trust and continuation of discussions and debatesabout specific (but related) issues in terms of legislative topics, informationsystem 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 thatcan be used to settle disputes) may be far more fruitful for complex decision-making processes regarding information system development than traditionalmethods that emphasize step-by-step refinement of mere content (develop-ment of integrated data models).

Of course, it should be stressed that the particular strategies employed bythe organizations and actors in the network described in the case study are notsuggested to be the most common or important ones. Still, these strategies wereencompassed in the framework and may well arise in comparable situations.

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Aldrich, H.E. (1979). Organizations and environments. Englewood Cliffs:Prentice-Hall.

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Bakos, J.Y. & Nault, B. (1997). Ownership and investment in electronicnetworks. Information System Research, 8(4), 321-341.

Bensaou, B. (1997). Interorganizational cooperation: The role of informationtechnology: An empirical comparison of US & Japanese supplier rela-tions. Information Systems Research, 8(2), 107-124.

Beynon-Davies, P. (1994). Information management in the British NationalHealth Service: The pragmatics of strategic data planning. InternationalJournal of Information Management, 14(2), 84-94.

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Goodhue, D.L., Wybo, M.D., & Kirsch, L.J. (1992). The impact of dataintegration on the costs and benefits of information systems. MIS Quar-terly, 16(3), 293-311.

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Homburg, V.M.F. (1999). The political economy of information manage-ment. Groningen, The Netherlands: SOM.

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304 About the Editor


About the Editor

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

About the Authors 305


About the Authors

Jonathan Barham is a finance/accounting professional with 10 years ofprofessional experience and is currently employed by Hotels.com. He re-ceived his BBA in accounting from the University of Texas at Arlington in 1996and his MBA in e-commerce from the University of Dallas in 2001.

Bendik Bygstad earned a Master of Sociology degree from the University ofOslo. 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 (Nor-way), pursuing a Ph.D. in Information Systems. His main research interest is therelationship between SW development processes and organizational change.Other research interests include actor-network theory, and the implementationof CRM and Knowledge Management systems.

Maria Manuela Cunha is currently an assistant professor in the School ofManagement at the Polytechnic Institute of Cávado and Ave (Portugal). Sheholds a DiplEng in the field of systems and informatics engineering, an MSc inthe field of information society and a DSc in the field of virtual enterprises, allfrom the University of Minho. She is the director of the Department ofInformatics and teaches subjects related to information technologies andsystems to undergraduate and post-graduated students. She supervises severalPh.D. projects in the domain of virtual enterprises. Her scientific and engineer-ing interests are electronic business, agile and virtual enterprises, and informa-tion 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, collabora-tive process modeling, awareness modeling, and conceptual modeling. Farhadis the creator of the awareness net modeling language for representation ofcontextual knowledge in collaborative business processes. He is a member of

306 About the Authors


editorial board of four academic/research journals, the leader of the Knowl-edge Management Research Group at the SISTM, and has numerous publica-tions in this field.

Douglas Havelka is an assistant professor of Management InformationSystems in the Richard T. Farmer School of Business Administration at MiamiUniversity (USA). He earned a Ph.D. in MIS from Texas Tech University.Professor Havelka is a CPA, and prior to joining Miami University’s facultywas a project manager for industry standards at AT&T. He is also a graduateof 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 Nether-lands). In 1999, he received his Ph.D. in management and organization sciencefrom Groningen University. His thesis dealt with the organizational-politicalaspects of information management. Currently, his research interests include e-government, complex decision making regarding information systems andutilization of knowledge by governmental agencies. Homburg publishes regu-larly in international journals, including Knowledge, Technology & Policy;Information Policy and is co-editor of the book The Information Ecologyof E-Government (IOS Press, 2004).

Thomas Kalling received his Ph.D. in economics in 2000 and is currentlyassociate 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 ComputerScience and Administrative Studies at the University of Winnipeg (Canada). Hehas a varied academic, professional, and personal interest background thatcomprises mathematics, statistics, computer science, management science,accounting, information systems, personality psychology, holistic health, spiri-tual development, and education. He has taught at the undergraduate, graduate,and continuing education university levels and has delivered short courses forgovernment and a community college. A member of the Association forPsychological Type, Eugene has carried out research and consulting onapplying the Myers-Briggs Personality Type in IT organizations, on stress in theIT profession, and on IT education. He has also developed a workshop on



“Personal Wellness for the IS Professional.” He was also a co-creator of an “ITWellness Web site,” currently at http://itwellness.ncf.ca/. Eugene has co-authored a book on Xbase Programming and has also carried out considerableeditorial work. Currently, he is interested in stress management and personalgrowth in the IT field and has lectured internationally on this topic. He can becontacted at [email protected].

After graduation from the Faculty of Mechanical Engineering of the TechnicalUniversity of Košice (Slovakia), Imrich Kiss started research on progressivemetal cutting parameters of machining technology. Later, he designed andimplemented automated production systems and the application of robotizedcells. He obtained his Ph.D. in the field of robotics. His inaugural habilitationwork analyzed the application of logistics in supply and distribution processes.He edited one monograph, three textbooks, and various articles for interna-tional journals. At the present time, he works as an associate professor at theDepartment of Design, Transport, and Logistics of the Technical University ofKošice.

Michael S. McCurdy currently works as a strategic marketing principal forSabre Airline Solutions (a Sabre Holdings Company) where he is responsiblefor maintaining and communicating the new brand launch, the value propositionmessaging and preparing the 3-year strategic plan for the organization. Michaelhas also served in the capacity of a business tools automation in global salessupport and business solutions manager in the product marketing area. Prior toSabre, Michael held positions at Volvo Finance North America as a risk analystand at TIG Insurance (formerly Transamerica) as a statistical analyst. Michaelearned his MBA from the University of Dallas and attended Dallas BaptistUniversity where he earned his BBA with a double major in MIS andManagement.

Vladimír Modrák is an associate professor of manufacturing engineering andhead of the Department of Management and Environmentalism at the Facultyof Manufacturing Technologies, Technical University of Košice (Slovakia). Heobtained a Ph.D. in manufacturing technology, and his research interestsinclude business process management, logistics and quality management. Dr.Modrák has also been active as a visiting lecturer in quality management at theUniversity of Applied Science Wildau, Germany, and he discoursed for lessonson business process management and business process reengineering at theUniversity of Perugia, Italy. He has also acted as Vice-Editor-in- Chief of aSlovak journal, Manufacturing Engineering.

308 About the Authors


Pegi Proffitt is a veteran technology professional with more than 20 yearsexperience in sales and marketing, business development and process planningat Texas Instruments and Nortel Networks, in addition to two technologyventures. Pegi’s expertise includes incorporating technology into educationenvironments as well as working with large telecommunications customers oneCommerce planning and implementation. Pegi holds a B.S. from WaylandBaptist University and an MBA in e-commerce from the University of Dallas.

Goran D. Putnik received his DiplEng, MSc and DSc. from the BelgradeUniversity, both MSc and DSc in the domain of intelligent manufacturingsystems. His current position is associate professor in the Department ofProduction and Systems Engineering, University of Minho (Portugal). He isalso the deputy director of the Centre for Production Systems Engineering(CESP), the director of the master and postgraduate course on CIM, andresponsible for the Laboratory for Virtual Enterprises (LABVE). His scientificand engineering interests are production systems and enterprises design andcontrol theory and implementations including distributed, agile and virtualenterprises. He is also supervising a number of Ph.D. projects.

Mahesh S. Raisinghani, is an associate professor of information systems atTexas Woman’s University’s School of Management (USA). Dr. Raisinghaniwas the recipient of the 1999 UD Presidential Award and the 2001 KingHaggar Award for excellence in teaching, research and service. His previouspublications have appeared in Information and Management, InformationResources Management Journal, Journal of Global IT Management,Journal of E-Commerce Research, Information Strategy: An Executive’sJournal, Journal of IT Theory and Applications, Enterprise SystemsJournal, Journal of Computer Information Systems, and InternationalJournal of Information Management, among others. He serves as anassociate editor and on the editorial review board of leading informationsystems/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 theWorld, Who’s Who Among America’s Teachers and Who’s Who in Infor-mation Technology.

Michael Schellenberg is head of consultancy for a multinational telecommu-nication company in Europe. He holds a BSc in electronics and communicationsengineering from the Geneva School of Engineering and an MBA fromBradford University (UK). Michael spent his career in IT communication



working for several companies including Alcatel and Equant in U.S., TheNetherlands, and Switzerland, where he held various management roles withstrong team cross-border requirements of knowledge and information sharing.Michael specialized in Knowledge Management as part of his MBA studies andworked actively on a complete KM readiness assessed for his organization.

W. A. Taylor is associate dean of research and full professor of informationsystems at the Bradford School of Management (UK), where he teachescourses in information and knowledge management. He holds a BSc inelectronics and computer systems, an MSc in industrial engineering, and aPh.D. in knowledge-based systems, all from The Queen’s University of Belfast.Andrew spent several years working in manufacturing, public utilities, andgovernment agencies before returning to academia in 1984. He has publishedmore than 100 articles and books on his research interests in knowledge-basedsystems, Knowledge Management, organizational information systems andperformance improvement. He acts as a consultant to many multinationalcompanies and government departments. He is a chartered engineer, and aFellow of the Institution of Electrical Engineers and the Institute of QualityAssurance.

Dongsong Zhang is an assistant professor in the Department of InformationSystems at University of Maryland, Baltimore County (USA). He received hisPh.D. in management information systems from the University of Arizona. Hisresearch interests include Web-based learning, mobile computing, computer-mediated communication, and data mining. His work has been published inCommunications of the ACM, IEEE Transactions on Multimedia, IEEETransactions on Systems, Man, and Cybernetics, Communications of theAIS, Journal of the American Society for Information Science and Tech-nology, among others.

Lina Zhou is an assistant professor in the Department of Information Systemsat University of Maryland, Baltimore County (USA). She received her Ph.D.in computer science from Peking University. Her research interests centeraround 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 Com-munication, IEEE Transactions on Systems, Man, and Cybernetics, amongothers.

310 Index


Index

A

a priori theory 147“A-list” customers 85A/V E (agile/virtual enterprise) 26, 41

organizational paradigm 30integration 26model 26, 27project 40reconfigurability 30requirement 30

access points (APs) 268actors’ behavior 76actual awareness 221adaptor-innovator 190advanced distributed learning (ADL)245adversarial development processes293agility forum 29“authentic inner power” 205awareness

gap 226levels 221net 218

B

Bangemann Commission 63box-structured methods 4Bricolage 150British National Health Service (NHS)288broker 36business

administration 173alignment 26, 28, 43models 27process reengineering (BPR) 79strategy 93transaction lifecycle 79

Business-to-Business (B2B) 116,132Business-to-Consumer (B2C) 116Business-to-Employee (B2E) 116,132

C

causal reasoning 147, 157change management 88

Index 311


techniques 76checks and balances 70citizen-oriented electronic government70classic public administration paradigm60client 41

entity 37referrals 288

cognition intelligence 189cognitive

function 189mapping 4perspective 162

Cognitive Style in IT 191collaboration diagram 225collaborative

business processes 215, 224learning environment 234process 221semantic concepts 215task 220

communication, cooperation, andcoordination (3Cs) 217competitive

advantage iv, 144, 145, 149in synergy 29

necessity 145competitiveness 26computer aided software engineering(CASE) 192continual flows 256continual material flows 257core competence theory 29“core competencies” 134“core rigidities” 134correlational reasoning 147corruption 56critical success factors (CSF) 82

CRMproject management 88projects 76systems 76

cross-case analysis 134customer 37

information 79orientation 70relationship management (CRM) 76, 77, 127satisfaction 127system 83

D

Danish vision of e-government 64Danish vision of the position of thecitizen 65DARPA Agent Markup Language(DAML) 246data

analysis 6procedures 99

modeling 177quality 76

decision making 115deduction 157delivery management 127demand-pull 96democratic antecedents 60dependent variables 241deregulated government 56dialogue marketing 76direct marketing (DM) 85direction of redesign 60distance learning 235“DP professional” 174drift view 89Dutch view on electronic government65

312 Index


E

e-business initiatives 115, 116e-classroom 238e-commerce initiatives 60e-government 55

defined 57implementation 70initiatives 62policies 55

e-learners 233e-learning 232, 234

environment 232system (LBA) 234

efficiency of government operations55electronic data interchange (EDI) 263electronic marketplaces 33“Elephant Method” 85emergent resource managementframework 144emergent theory 154emerging organizational models 28emotional intelligence (EI) 173, 197emotional literacy 173, 174emotionally intelligent IT organization173employee attitudes 93empowerment 56Enneagram System of Personalities184enterprise

information management (EIM) 129resource planning (ERP) 128, 144, 145, 192, 221self-service (ESS) 131systems management (ESM) 129

“entrepreneurial government” 56

ERP Systems 144European Article Numbering (EAN)system 266European E-Government Initiatives63European Union E-Governmentpolicies 63explanatory power 153explicit knowledge 116eXtensible Markup Language (XML)244extension points (EPs) 268extraversion 175, 177

F

face-to-face relationships 96feeling 176, 178financial commitments 162firm-external factors 146flatter organizations 56flexible government 56focus groups 4focused market of resources 40formality 227foundational intelligence 193fourth-party logistics (4PL) 260frequency range 267full-time equivalents (FTEs) 153“fundamental rethinking” 134

G

global organizations 115goal congruence 12granularity 228graphical user interfaces (GUIs) 122grounded theory 4

Index 313


H

high-level group on the informationsociety 63high-touch collaborative technology97human

consciousness 193resources strategy 27response 115

I

implementation strategy 27independent variable 241inductive technology 268industrial

enterprise 77rganisation 146

informationand communication technologies(ICTs) 27, 55, 57, 251,infrastructure 93, 98, 100management 285, 287, 290requirements 1, 4

determination (IRD) 1determination quality 1

resource professional 174sources 101strategy, 27system(s) 27, 173

development 5, 285technology (IT) 1

users 1infrastructure resource planning (IRP)128“inner core” 205Institute of Technology (TI) in Oslo78Instructional Management Systems(IMS) 245

instrument development 98integrated logistical management 260integration 153interaction sequence diagram 225interactive

e-classroom 238multimedia 232

internaldistribution 156, 159

of resources 149knowledge synergies 76

Internal Revenue Services 66introversion 175, 177intuition 176, 177IRD process 2

quality 2irreversibility 162IT

management 173professionals 1researchers 1

J

“joined-up government” 66joint application development (JAD)5judging 176, 178just-in-time (JIT) concept 257

K

key success factors 144Kirton Adaptation-Innovation Inven-tory (KAI) 190knowledge

barriers 149construction 232infusion 148initiatives 120landscape 28

314 Index


KnowledgeManagement 93, 96, 115representation (KR) 216sharing 103sharing

culture 98requirements 215

-based organization 77-management

infrastructure 93strategy 93

-sharingculture 93, 99methods 98, 101requirements 215

L

LBA system 238training 241

learningby asking (LBA) 233content 233effectiveness 232loops 150material 234objects metadata (LOM) 245

legal protection 159lightweight directory access pro(LDAP) 123line of reasoning 292logistic center services 271logistical center (LC) 269longitudinal organisational processes150LTSC 233

M

mainframe computers 122

managementcommitment 11factors 10techniques 77

managerialattention 163freedom 56implications 144

manifestation of e-government 55market 37

alignment 44, 45government 56opportunities 27process 76project 88

Market of Resources 26, 27Concept 36Entities and Relationships 41

metadata specification standards 244metrics 2multimedia

content 232in distance learning 235-based e-learning 236

systems 232technology 236

municipal e-government initiatives 55Myers-Briggs

in IT 176Personality Type 175Type Indicator (MBTI) 176

N

national and supranational policy levels55National Performance Review (NPR)62National Research Database (NOD)294

Index 315


network structures 28networking 28, 31“new public management” (NPM) 56nominal group technique (NGT) 5, 6Norwegian non-profit organization 78“not-invented-here” syndrome 96

O

object modeling, 177off-the-shelf portal technology 132one product integrated manufacturing(OPIM) 29online lecture session 241ontology 120

interchange language (OIL) 246Web language (OWL) 246

operations 42optoelectronic technology 266organization

configuration manager 36development 82factors 11

organizationalchange 27dynamics 36experiment 76practices 93readiness 93structure 29

overall cost management 260overarching process 154

P

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

personnel factors 14pervading properties 162petri nets 225political economy of informationmanagement 285political

legitimacy 288view on information management

288portal implementation 133post-merger environment 93post-test 241pre-test 241process

factors 12management techniques 297structure 37

product/service and operationsalignment 44, 47production flow management 256products 42project managers 1property rights theory 290protection of privacy 70psychological robustness 197public

administration 55sector organizations 69

Q

qualitative scenarios 4

R

radio frequencyidentification (RFID) 267technology 267

RCA “production” framework 5“re-engineering,” 56real-time microactions 77, 88

316 Index


“reality” 55reconfigurability dynamics 28, 30recursive construct 30red tape 55“reinvention” 56relationship marketing 79relevance 154required awareness 221requirements capture and analysis(RCA) process 5research

information system 285setting 97

resource 30description framework (RDF) 245development 148identification 147managment processes 146Protection 146, 148-based view (RBV) 145providers 42providers 30

alignment 44, 47selection process 41

responsiveness 33revenue cycle management (RCM)128“rhetorics” 55role artefacts 220

S

sample selection 97SCA Packaging (SCAP) 170scoping 13scriptiveness and fitness 229“self-centred close-enterprises” 29self-paced learning 234

semanticconfusion 12structuring 4

Semantic Web 244sensing 176, 177service delivery 55social

setting 76-technical

field 173system design 4

software engineering 82“spiritual empowerment,” 203stakeholder management 69

approaches 297state administration 56storage and transport management260strategic

alignment 26, 27, 109processes 144

structured task 219, 225supply

chain management (SCM) 251management 260

systems development 3

T

tacit knowledge 116task

artefact 220dependency 221

technicalfactors 13drift iii, 76

technologicaldrift 77resources 115

Telecom Reform Act of 1996 94

Index 317


telecommunications company (TC)130telematic technology 269“The Supply Chain PartnershipProject” 254thinking 176, 178third party logistics (3PL) 260top management involvement 163traditional

classroom learning 234linkage 27public administration 56

transaction costs 32“true self” 205

U

UK vision of the citizens 64United Kingdom 63United States 62Usage 161user involvement 5

participation 5perspective 1-oriented model 9

V

value added networks (VAN) 263virtual

classroom 236enterprise 29

integration 26, 28, 33factory 28logistic centers 256organizations 56

virtuality 36

W

ways of perceiving 176Web-based applications 33

western public bureaucracies 56work-time savings 264World Bank 120

Y

Y2K-compliance problems 145

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