IOIS Taxonomy and Examples: ICT Support for Inter-Organizational Cooperation

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A widely used approach to providing a taxonomy of collaborative systems is to distinguish them by when and where the interaction takes place (space/time taxonomy, see DeSanctis & Gallupe, 1987; Ellis, Gibbs, & Rein, 1991; Johansen, 1988). Apart from the space/time taxonomy, Ellis et al. (1991) described a taxonomy based on application functionality, and Coleman (1995) provided 12 categories of collaborative systems in the same domain. Kumar and van Dissel (1996) provided an alternative IOS typology based on the evolution of interdependencies between inter-organizational units, which is more relevant to this study. To examine such interdependencies, we take Thompson’s “interdependence” view of the organization. Thomson (1967) distinguished between three different ways in which the work of organizational subunits may be dependent on each other. Pooled dependency comes first, where the subunits may share and use common resources but are otherwise independent. In sequential dependency, various subunits work in series, where the output from one unit becomes input to another unit. Finally, in reciprocal dependency, subunits receive inputs from and provide output to others, usually interactively.

Kumar and van Dissel (1996) built upon Thomson’s notion of the association between technology and interdependence. In correspondence to the three types of inter-organizational interdependence, they suggested a three-part classification for IOISs: pooled information resource IOIS; value/supply-chain IOIS; and networked IOIS (see Figure 1). The first type, pooled information resource IOIS is an inter-organizational sharing of common IS/IT resources, as exemplified by Konsynski and McFarlan (1990). The basic ingredients of typical IS/IT resources shared in a pooled fashion include common databases, common communication networks, and common applications such as airline reservation systems (Copeland & McKenny, 1988). The high levels of structure in these systems come from commonly agreed-upon transaction standards. To this end, there is necessary demand for a high level of standardization and specification of the shared or pooled resources.

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Figure 1: A typology of inter-organizational information systems Source: Adapted from Kumar and van Dissel (1996).

The second type of IOIS, value/supply-chain IOIS, enables customer–supplier relationships and occurs as a consequence of these relationships along the value chain. Mannheim (1993) defined these systems as pipeline management systems. Furthermore, he noted that these systems are becoming strategic necessities rather than strategic advantages. Kumar and van Dissel (1996) added that structured sequential interactions could range from formal EDI-based orders and order tracking to database lookup of adjacent partners in the chain to anticipate customer needs. The most important motives behind these collaborations are the reduction of the uncertainties in the supply chain, e.g., cost and quality control, and cycle time.

The third type of IOIS, networked IOIS, operationalizes and implements reciprocal interdependencies among organizations participating in a network environment. In the network form, organizations are collaborating usually for a finite duration, and collaboration involves the development of specific target products or services. Networked IOISs include the use of e-mail, fax, and voice communication, and, at a more advanced level, shared screens, CAD/CASE data interchange, knowledge repositories, and computer-based systems for supporting collaborative work to co-ordinate inter-organizational partnerships. Information entities exchanged within the network arrangement are much less structured than in other IOIS types.

There are two dominant motives for the development of IOISs:

  • IOISs as enablers or core building blocks of innovative, networked business models (Riemer, Klein, & Gogolin, 2002). This reflects the earlier discourse about business network (re-)design (Kambil & Short, 1994), i.e., IOISs are used in new or transformed networks with new players or new roles (network management).

  • IOISs as enablers for the transformation of existing inter-organizational relations, earlier discussed as inter-organizational business process rede- sign (Klein & Schad, 1997) (inter-organizational network and processes).

Even more than ISs, IOISs are precarious arrangements that require careful management. Various scholars of the field have recognized specific management issues of IOIS:

  • Strategic underpinnings of IOIS: Strategic rationale (Johnston & Vitale, 1988)

  • Organizational drivers of IOIS development: ioBPR, BNR (Clark & Stoddard, 1996)

  • Understanding the economics of IOISs (e.g., Clemons, Reddi, & Row, 1994; Whinston, Stahl, & Choi, 1997)

  • Requirements engineering and systems design in an inter-organizational environment (Cavaye, 1995b)

  • Designing inter-organizational information flows and workflows ( sterle, Fleisch, & Alt, 2000)

  • Standardization or the use of de facto (semantic) standards or conventions (Buxmann, 1996)

  • IOIS adoption and acceptance (e.g., Iacovou & Benbasat, 1995; Eistert, 1996)

  • Reconfiguration of existing business relationships (Holland, 1995)

Faced with a plethora of different IOISs, we will present three cases, which are set in different industries and business environments and exhibit different strategic intentions, functional scopes, and properties. The common theme among these cases is ICT support for inter-organizational cooperation or collaboration. ICT is utilized as an infrastructure to facilitate information flows among the network partners, i.e., to share or exchange information, to provide access to information, and hence, to increase transparency throughout the network (across the chain).

DIMER: Web-based Project Collaboration in Construction Industry Consortia

DIMER, a construction company, is the prime contractor in a construction consortium. Dimer has adopted a Web-based collaboration platform in order to improve coordination of project work (in this case, the network’s mission concerns the construction of a new hospital wing), monitoring and reporting the progress of the construction project. A significant amount of information is exchanged between various parties in a construction project, such as drawings, ordering forms, progress reports, etc. Furthermore, multiple coordination and communication activities have to take place between project participants. The construction industry is divisive and fragmented. Poor communication and coordination often result in misunderstandings, misinterpretation, and ignorance of information that seriously affects the performance of a construction project in terms of quality, time, cost, and value, which may result in serious delays regarding project completion.

The construction consortium examined in the Greek construction industry is a temporary, project-driven organizational network. It consists of five geographically dispersed partners bound by contractual agreements (Technical and Financial Annexes). This case concerns collaborative technology mediation of complex processes (task allocation, time scheduling, coordination of the building process), of coordination among the multiple organizations (prime contractor, contractors, and their various subcontractors) participating in the consortium, and the creation of an emergent network information infrastructure.

The particular project work practices supported by the platform refer to the construction phase of a particular project. The construction phase typically is planned in more detail than any other construction project stage (design stage, bidding, etc.), but it often ends up being the most troublesome, particularly for the prime contractor. This is due, in part, to the high complexity and coordination difficulties that the prime contractor confronts with both contractors and subcontractors. It is very difficult from the prime contractor’s view, to monitor all the processes and the coordination activities that evolve during the construction process. Decision making and resolving conflicts demand a highly structured information environment, where the prime contractor can easily retrieve the information needed in order for critical and objective decisions to be made. Otherwise, an unstructured information environment might lead to false decisions due to an incomplete representation of the situation.

The complex nature of the construction phase requires extensive communication and collaboration among the various subcontractors. For example, the construction site manager communicates on a daily basis with the construction workflow supervisor and on a regular basis with the raw material supplier. Specific pieces of information such as shop drawings, approvals, change orders, inspection reports, and reviews augment the actual construction work. Management, in this case project management in a network setting, is required to meet tangible goals related directly to project performance (such as monitoring costs, assuring quality, meeting time schedules) as well as intangible goals such as establishing mutual trust and sharing a common vision. During the construction phase, efficient and effective collaboration among the network participants is crucial.

A Web-based Project Management Platform

In this context, the prime contractor decided to adopt a Web-based platform tailored to support the following project management tasks:

  • Project progress monitoring

  • Coordination of project activities

  • Project record keeping

  • Information sharing and exchange within the construction consortium

The system is comprised of a management platform available through the Internet, addressing the specific needs of the construction industry. It offers users instant information access via the Internet. It is an integrated management information system, while it also supports daily project operations and administration by providing a construction site diary and communication logs (create/ update project plan, timesheets), collaboration and communication (online meetings, videoconferencing, chatting, redlining), document workflow in real time for requests for information (RFIs), and task assignments to project members (permissions, authoring, logs, redlining). DIMER can be qualified as a pooled information resource IOIS. The introduction of the new information system posits new management challenges to be addressed concerning the handling and diffusion of information resources among the network nodes. A prerequisite for efficient and effective collaboration is the accurate and timely handling and monitoring of the exchanged information among the construction consortium and the management of the emerging information lattice. Internet-based systems provide the capabilities of sharing, diffusing, and managing information across time and space.

Causes of Failure

Nevertheless, the actual use of the system lasted only 8 months until its permanent abandonment. An analysis of causes of failure indicated that an information classification scheme was missing. The project manager could not find the information needed when needed (RFIs, progress reports, invoices, etc.). This problem occurred because the set of action plans describing the daily progress of work in the construction site corresponding to the planned level of resource usage for each task, work package, and work unit in the projects, was not embedded in the document management function. The collected information had been identified; it consisted of periodic progress reports, specification changes, and similar information. However, it had not been determined precisely which data should be collected and allocated to specific contractors. This fact caused an information overload, due to the ineffective organization of project documents, and led to situations where users received irrelevant information. Furthermore, the degree of detail that the exchanged reports entailed, both in the reports and in the input being solicited from the contractors, was unstructured. Consequently, the prime contractor claimed that the technology destabilized the current network strategy and created imbalances by failing to accomplish current needs. The introduction of the system also created new ambiguities in the existing work practices. Furthermore, frequent misunderstandings occurred among contractors and created distrust in the new technology. Hence, many preferred to use traditional media, e.g., fax instead of e-mail.

Lessons Learned

A dominant trend in inter-organizational collaboration is to increase the ease of accessing information resources resident in collaborating organizational nodes. Consequently, the need to create common information resources arises across network organizations. A common “vocabulary” presupposes that substantial data modeling has been carried out and that commonalities have been established by enforcing common information handling processes across the organizational network. Thus, this leads to the reorganization of work practices in a manner that exploits emergent, shared information infrastructures as a knowledge resource on a network level. To this end, a crucial dilemma emerges regarding the information infrastructure design and deployment: “Is one of the key goals of a shared or common ICT infrastructure in interfirm business networks to achieve common definitions and meanings of key information entities across the network, or rather flexibility needed in order to improve existing work practices?”

ONIA NET: Mediation Platform for Grocery Supply Chains

The improvement of operational efficiency through collaboration has been a motive for the formation (or reconfiguration) of inter-organizational relationships (Oliver, 1990). Nowadays, grocery supply chains contain numerous inefficiencies that exist in the collaboration with trading partners (e.g., high inventory levels, rush orders, unstable production plans, frequent changeovers of promotional plans, running out of stock, lack of accurate forecasts, inaccurate order plans, etc.). The common root of these problems is the limited availability of information resources on the supplier side or on the retailer side, often causing problems in the forecast and order-replenishment processes (Holland, 1995).

The ONIA NET Platform

ONIA NET is a business venture to develop and implement business solutions in the grocery retail industry. ONIA NET has formed an inter-organizational platform with a network mission to reduce the out-of-shelf problem, which is considered a major problem in the industry. In doing so, ONIA NET aggregates all the network-relevant information resources from the suppliers and the retail stores within the network. The chosen information infrastructure, a collaboration platform, is based on the essential information requirements of the trading partners and supports the specific network roles (salesman and store manager). In more detail, the collaboration platform offers tools (e.g., product assortment, product mix management for the store, order status tracking, management of the POS data, etc.) both to salesmen (supplier side) and to store managers (retailer side) in order to effectively collaborate throughout the order-replenishment process. Thus, the network linkage between the members of the network is mainly supported by a centralized system. However, the managers realized that the social ties between salesmen and store managers are very important (Anderson, 1985).

Suppliers and retail chains collaborate in the ONIA NET network at an inter- organizational level and share network-relevant information resources (e.g., catalog data, assortment data, daily point-of-sale data, order proposals, final orders sent by the buyer, information on order fulfillment, product out-of-shelf alerts, promotion and production plans) in order to achieve more efficient replenishment at the store level and thus to increase efficiency and effectiveness. ONIA NET can be qualified primarily as a supply-chain IOIS, however, as it spans across several supply chains, it also incorporates characteristics of pooled information resource IOISs.

ONIA NET has been initiated by three major suppliers (offering about 65,000 products/product codes) and one large retail chain (with 200 stores in South Eastern Europe). The business development plan of ONIA NET is to become the major transaction hub between suppliers and retailers in the region.

Empirical data gathered during trials of the ONIA NET operating model shows that the market mediation of ONIA NET has increased the effectiveness and efficiency of operations both for the supplier and for the retailer (e.g., decreased out-of-shelf and out-of-stock situations, more efficient inventory levels, etc.), and in this sense, the network mission has been achieved (Steinfield, 1986). During the successful operation, the value proposition of the network business model shifted and became broader:

  • To support all suppliers and retailers in the region, and

  • To expand collaboration along the supply chain.

Management Issues

The network business model of ONIA NET, however, raised a broad range of management issues at different networking levels (Huber, 1990). At the NIM level, the relation of information sharing to joint decision making between suppliers and retailers was examined. Moreover, the exploitation of the POS data forced the managers of ONIA NET to develop sales reports for nonparticipating suppliers of the network, which provided an updated and detailed view of the demand forces (the trading partners were also recipients of these reports). At a network organization level, the existence of commitment and mutual trust between the suppliers and retailers facilitated the adoption of the new working system. Nowadays, salesmen are working together in the office and they have the ability to exchange ideas, monitor market trends, and make recommendations to the store managers through the collaboration platform. However, the threat of the technological “substitution” of the existing social relationship between salesman and store manager forced the managers to maintain physical contact by asking the salesman to periodically visit the stores. The management idea was to sustain the social relationship and safeguard mutual trust. Finally, at the network strategy level, the existence of a new order-replenishment model did not affect the individual strategic missions of the organizations. However, managers expect that in the near future, competition will shift from a single firm to the network level, through the development of large collaborative supply chains.

Examining in more detail the NIM level of the ONIA NET setting, we argue that the efficient management of information resources reduces information asymmetries in the negotiation process, thus establishing a basis of trust for effective joint decision making in the order-replenishment process (Korezynski, 1994). The provision of timely and accurate information and the partners’ commitment to the ONIA NET network increased the efficiency of planning and decision making in the following categories:

  • Production plan decisions: The manufacturer’s production plan, i.e., the statement of its production rates, workforce levels and inventory holdings, is based on estimates of customer requirements and capacity limitations. The process of preparing production plans is dynamic in the ONIA NET setting, as aspects of the plan are updated when new information becomes available.

  • Resource planning decisions: The need for production resources depends on forecasts of retailer’s requests for products that the suppliers provide. The existence of daily up-to-date information resources improves the accuracy of the forecasting methods.

  • Forecasting demand management decisions: Sales forecasts are inputs for production plans, logistics plans, and budgets. Thus, it is legitimate to say that the forecasting process is the touchstone for the rest of the operating decisions. Therefore, it would be extremely valuable for retailers and suppliers to have information utilizing the existing forecasting models (or developing new models).

  • Marketing decisions: Measurement of the product’s profitability, regional clusters, customer groups, and order sizes is essential for all the participants in the network. This information helps management to determine whether any products and marketing activities should be expanded, reduced, or eliminated. In this respect, retailers and suppliers are interested in improving marketing efficiency regarding various marketing directions (e.g., target market, product assortment and procurement, promotion place, sales promotion efficiency).

Another important issue had been the provision of information resources to the managers and the determination of the required detail level (Garbe, 1998; Ives, Olson, & Baroudi, 1983). In the ONIA NET case, the network-relevant information resources were exploited in two ways:

  • Through the development and delivery of reports to managers, including all the required data on a weekly basis. These reports included information on sales by category, the daily ratio of sales for each product, sales of each retail store, etc. Moreover, the participants of the IOIS agreed to sell on- demand reports to nonmembers of the network.

  • The information resources will be the basis for the development of a management control system to monitor the efficiency and effectiveness of the IOIS setting.

In summary, the infrastructure of the IOIS facilitated the exchange of information resources, which helped to constitute and stabilize the network. However, the technical setup was supported by trust-building measures. The trust level was achieved through the nurturing of social relationships and the pooling and sharing of information resources.

TELCO: Customer Relations and E-Collaboration

As a major European vendor of PBXs (private branch exchanges), TELCO is facing a difficult market. While the complexity of PBX has increased in recent years, and all suppliers of PBX have to maintain extensive service networks, the customers tend to prefer arms-length relationships. At the same time, major innovations have initiated a transformation of the product market toward IP- based telecommunication solutions, which are becoming a core building block of customers’ e-business solutions. Hence, their existing core product base will change profoundly, and the systems integration and consulting segments of TELCO’s business are expected to grow.

Against this backdrop, TELCO’s sales organization is attempting to transform its market-like customer relations into collaborative relations. A cornerstone of this transformation process is the setting up of a collaboration platform in order to intensify the collaboration with key customers and to create more stable relationships. By introducing the platform, TELCO is pursuing three goals:

  • To improve the efficiency of service processes and to lower service costs,

  • To improve buyer–supplier coordination, and

  • To intensify the relationship with key customers through electronic communication and collaboration.

Hence, TELCO’s e-collaboration project is embedded in and instrumental for a broader customer-oriented strategy. In effect, TELCO is trying to transform existing practices of collaboration into new, computer-supported practices. The practices refer to inter-organizational processes, information flows, and media of collaboration between the TELCO sales and services organization and its customers. It is foreseen that for customer service requests or orders, an electronic service ticket will be created, which will be accessible to the customer and will document the status of the service delivery. It is expected that this transformation will yield higher efficiency and simultaneously closer customer relationships (performance). Like ONIA NET, the TELCO combines characteristics of a supply-chain IOIS with a pooled information resource IOIS.

The challenge for TELCO is to properly design the collaboration platform, the related services, and processes in order to make the new model of collaboration beneficial for customers and economically viable. A broad acceptance of the platform is a precondition for achieving TELCO’s internal efficiency goals. The following items were identified as major issues:

  • Requirements analysis and identification of value proposition (and incentives) for customers

  • Channel management and relationship impact of computer-mediated communication

  • Customization needs of services and architecture and integration options

Requirements Analysis and Value Propositions

The envisaged e-collaboration platform is an information and communication infrastructure to support (eventually) a wide range of collaboration partners, processes, instruments, and applications. The notion of infrastructure (or platform) encompasses a portfolio of applications. TELCO is facing the question of service design and the related selection of applications: which processes should be supported by the platform, what is the expected level of online support, which services will be available online only, is there a need for new services? Participatory requirements engineering, which in theory is expected to contribute to a higher level of acceptance (Cavaye, 1995b), is a politically sensitive process. While TELCO has to understand their customers’ needs and expectations, it must be careful not to raise expectations—especially with core customers—it later cannot or does not want to meet.

In order to facilitate the collaboration, more information (e.g., technical specifications) will be made available electronically which will enable the customers to take a more informed and active role in specifying service requests. It is foreseen that features like the service ticket will provide more transparency over the inter- organizational processes and will at the same time lower the administrative burden on both sides.

Efficiency gains (i.e., net benefits after considering the costs of setting up and maintaining the linkage) as a result of integration with TELCO are definitely incentives for the customers. Nevertheless, TELCO is facing an asymmetry of incentives: while for them the collaboration platform is core, for most of their customers it will only be of peripheral importance (Cox & Ghoneim, 1994). Hence, TELCO has to provide incentives for their customers in order to overcome the sponsor–adopter gap (Cavaye, 1995a).

Channel Management and Relationship Impact of Computer-mediated Communication

The e-collaboration platform will be embedded into an existing set of organizational rules and routines (practices). These practices will be complemented, transformed, and, to a limited degree, substituted. From the customer’s point of view, TELCO is adding a new communication and collaboration channel. Hence, the role and range of the new channel in relation to the existing channels (call center, service personnel) needs to be clearly positioned and communicated. It is necessary to get the right mix of online and offline activities (Gulati & Garino, 2000) and to coordinate and integrate offline and online activities carefully.

The introduction of the collaboration platform is expected to affect the division of labor among the participating companies as well as related roles and linkages. The initial focus is on improving or redesigning inter-organizational business processes (Clark & Stoddard, 1996). However, eventually, the network structure might be affected, e.g., if industry solutions can be developed or intermediaries are introduced or bypassed.

While TELCO is trying to transform existing arm’s length customer–buyer relationships into closer, more stable, collaborative relations, those closer relationships are, at the same time, a precondition for the successful implementation of an e-collaboration platform. Only if customers value the relationship and expect it to last will they be prepared to invest in this relationship and the accompanying technology, process transformation, and training (Clemons & Reddi, 1993).

Customization Needs Regarding Services, Architecture, and Integration Options

As the usage patterns and the internal organizational models for communication services vary a lot among different companies (e.g., in some cases there is a combined information and communication services unit, in others there is a clear distinction between the two), so do the needs for support. TELCO has to decide about technical (functional service portfolio, levels of standardization, platform concepts, etc.) and organizational aspects (organizational structures, responsibilities, work routines, etc.). A standardized set of applications has to be designed, from which customized portfolios of services and information will be derived. Furthermore, on an architecture level, TELCO’s clients are using different administrative systems and have different requirements for integration solutions. Some clients may want an interface to an ERP system, while others would go for a Web interface or Web services. Given the peripheral role of the collaboration platform for the customer’s business, they will expect TELCO to set or appropriate industry standards for service support and e-collaboration, in order to avoid a situation where the customers end up with a plethora of different, albeit useful, e-collaboration systems for different ICT vendors.

Because the organizational and technical perspectives are interdependent, it is advisable to design and specify both aspects simultaneously.

Lessons Learned

The TELCO example, which is in the configuration stage, shows the range and interdependence of design issues. The political dynamics at TELCO and in relation to their customers add to the complexity of the decision-making process. The case highlights the interdependence of IOISs and relationship issues. As technology is transforming existing practices and business relationships, the project needs to be strategically embedded, and the transformation of relationships has to be actively managed.

Summary of Case Descriptions

The three cases illustrating different development stages of an IOIS—configuration, operation/stabilization, transformation—are embedded in network settings. The introduction of IOISs in the three cases was meant to stabilize and intensify existing business relationships (TELCO), to improve the efficiency of collaboration and coordination (all cases), or to change the network structure by introducing a new intermediary (ONIA NET).

In order to discuss the identified challenges of managing an IOIS in a more systematic way, we will introduce the notion of NIM. However, the examples (and the understanding of IOISs we are elaborating) go beyond information management and require embedding into a broader network management framework.

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Inter-Organizational Information Systems in the Internet Age
Inter-Organizational Information Systems in the Internet Age
ISBN: 1591403189
EAN: 2147483647
Year: 2006
Pages: 148 © 2008-2017.
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