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In 1989, researchers at MIT’s Center for Information Systems refocused the issue of the organizational impact of information technology. After reviewing abundant theories that had been proposed, Rockart and Short (1989) argued that information technology’s most important role is permitting firms to manage organizational interdependence:
For more than two decades, the question of what impact information technology (IT) will have on business organizations has continued to puzzle academics and practitioners alike. Indeed, in an era when the business press has widely disseminated the idea that IT is changing the way business operates and the way they relate to customers and suppliers, the question of technology’s impact on the organization itself has gained renewed urgency. (p. 7)
We will argue here that information technology (IT) provides a new approach to one of management’s oldest organizational problems: that of effectively managing interdependence. Our fundamental thesis is that a firm’s ability to continuously improve the effectiveness of managing interdependence is the critical element in responding to new and pressing competitive forces.
Over the past two decades, the concept of the inter-organizational information system (IOIS) has emerged as a tool for achieving competitive advantages. The IOIS has been a major research topic. Many well-known examples of information systems that provide competitive advantages discussed in the literature (Porter & Millar, 1985) are those of IOISs. The purpose of this chapter is to provide readers with the foundational concepts and a brief overview of the IOIS literature. There are few guideposts that help students and researchers under- stand the current state of the IOIS, partly due to the fuzzy definitions of the IOIS and the complex and evolving nature of the IOIS information technology infrastructure. For example, private network-based traditional electronic data interchange (EDI) and Internet-based EDI are examples of IOIS technologies. To study Internet-based EDI, researchers and students also need to understand ongoing changes in foundational telecommunication technologies, standards for encapsulating messages, cheaper alternative message transport mechanisms created by combining the Web, XML, and Java, and other protocols. Ideally, a comprehensive literature survey should include all these topics. However, the breadth and depth of IOIS-related topics may make it almost impractical.
Nevertheless, there is a strong need for a survey of the literature in the IOIS area. Although the introductory chapter may not be a comprehensive literature survey, I hope that this will serve a purpose of guiding researchers and students to the exciting and expanding area of academic inquiry.
The critical component of an IOIS is, needless to say, the information systems component. To organize the vast amount of IOISs literature, the chapter presents the definition of an IOIS first and attempts to systematically classify the IOISs literature into several subspecialties. Throughout this book, the terms inter- organizational systems (IOSs) and inter-organizational information systems (IOISs) are used interchangeably.
An inter-organizational information system (IOIS) is a system that contains one or more other systems of trading partners. Each system has its own structures, subsystems, strategies, technologies, and goals. An IOIS is a supra-system that consists of information systems of trading partners. Each system pursues its own goal while pursuing the supra-system’s goals. An IOIS is built on the cooperative relationships among trading partners. While these two goals are consistent with each other, the cooperative relationships continue to exist and, consequently, so the IOIS exists, to achieve the goals of the supra-systems. The IOISs manage cooperative ventures between otherwise independent agents (Kumar & Van Dissel, 1996). The IOS-enabled partnerships and alliances make it possible to seek business opportunities via new organizational and market relationships.
We begin with the review of various definitions. In addition to inter-organizational systems, some other terminologies were suggested, including multiorganizational systems, inter-organizational information sharing systems, etc.
An IOS is “an automated information system shared by two or more companies” (Cash & Konsynski, 1985, p. 134).
The multiorganizational system is an information system that links one or more firms to their customers or their suppliers and facilitates the exchange of products and services (Bakos, 1991).
The essential requirement for an inter-organizational information sharing system is a computer-based, electronic link between the two organizations that automates some element of work, such as order editing, inventory status checking, or, minimally, transaction transfer, that would previously have been performed manually or through other media, such as the mail. (Barrett, 1986-1987, p.6)
An IOS is a network-based information system (IS) that extends beyond traditional enterprise boundaries. With an IOS permitting information access to other organizations, the organizational boundaries are redefined and extended to the extent that a firm’s value chain needs to be redesigned (Hong, 2002).
An IOS is the information and communication technology that transcends organizational boundaries (Applegate, McFarlan, & Mckenney, 1996; Cash & Konsynski, 1985; Kumar & Van Dissel, 1996).
According to Vlosky, Wilson, and Vlosky (1997, p. 75), the IOSs are “electronic buyer–seller information exchanges that are implemented to facilitate business transactions and increase efficiency, competitiveness and profitability for participating companies.”
Based on the reviews of several definitions, the IOIS is defined as follows:
An inter-organizational system (IOS) is an information and management system that transcends organizational boundaries via electronic linkages with its trading partners to share data, information, and business applications, provide the capabilities of electronic transactions including buying and selling goods and services, and facilitate communications and decision making for the purpose of increasing efficiency, effectiveness, competitiveness, and profitability for participating organizations. The electronic linkage is established by the Internet, extranets, intranets, groupware, electronic data interchange (EDI), workflow systems, mobile communication technologies, and other information and communication technologies.
The definition here is a broad one that encompasses systems that support supply chain management, electronic commerce, mobile commerce, and collaborative commerce activities. This book aims to provide readers with a framework for IOIS management (Figure 1), which is comprised of the management of the IOIS technology infrastructure and the ongoing process of IOIS analysis/planning, design, implementation, and evaluation.
Figure 1: IOIS management framework
One issue involved in this definition of an IOIS is the fuzzy distinction between the IOIS and electronic commerce (e-commerce). Electronic commerce is defined in Laudon and Laudon (2004) as follows:
The process of buying and selling goods and services electronically with computerized business transactions using the Internet, networks, and other digital technologies. It also encompasses activities supporting those market transactions, such as advertising, marketing, customer support, delivery and payment. (p. 24)
Other authors (Kalakota & Whinston, 1997; Turban, King, Lee, & Viehland, 2004) agreed on the narrow definition given above but expanded it by adding several more dimensions. For example, the expanded definition by Turban and others is reproduced here.
Electronic commerce (EC) can be defined from the following perspectives:
Communications - From a communications perspective, EC is the delivery of goods, services, information, or payments over computer networks or through any other electronic means.
Commercial (trading) - From a commercial perspective, EC provides the capability of buying and selling products, services, and information on the Internet and via other online services.
Business process - From a business process perspective, EC is doing business electronically by completing business processes over electronic networks, thereby substituting information for physical business processes (Weill & Vitale, 2001, p. 13).
Service - From a service perspective, EC is a tool that addresses the desire of governments, firms, consumers, and management to cut service costs while improving the quality of customer service and increasing the speed of service delivery.
Learning - From a learning perspective, EC is an enabler of online training and education in schools, universities, and other organizations, including businesses.
Collaborative - From a collaborative service perspective, EC is the framework for inter- and intraorganizational collaboration.
Community - From a community perspective, EC provides a gathering place where community members can learn, transact, and collaborate.
We believe that the broad definition of e-commerce may need to be reexamined. Perhaps, the definition is too extravagant to justify it. I can hardly agree with the notion that e-commerce is an enabler of online education at universities. There is no doubt that inter-organizational business activities have been and will continue to be further accelerated in the future. The research in this area will be further intensified. As an academic discipline becomes a coherent and substantive field, we need to build a cumulative research tradition in which definitions and concepts are shared (Keen, 1980). In doing so, consensus building is a first step among academics and practitioners in regard to definitions of the foundational terms and subspecialties to be researched in that field. As any academic discipline becomes a mature field of study, there should be a shared and agreed- upon set of definitions, topics, concepts, and subspecialties.
Supply chain management requires the extensive use of IOISs in the process of procuring raw materials, transforming them into intermediate and finished products, and distributing the finished products to retail outlets and customers. The IOISs help participating organizations in the supply chain forecast customer demand, plan production and inventory, track shipments, and communicate with trading partners.
The core of an IOIS is to support daily transactions of buying and selling by providing electronic catalogs and other databases on the Internet and electronic payment tools in a secure business environment. A recent innovative application of IOIS support is in the area of designing, developing, manufacturing, and managing products through their life cycles with trading partners collaboratively. This is an extended application of supply chain management of the IOIS and the CPFR (collaborative planning, forecasting, and replenishment) system. Developed in 1998, the CPFR system enables trading partners to improve business processes, customer service, and inventories. The growth of CPFR has created a demand for e-business software products to address and support collaborative commerce activities (Anonymous, 2002).
Collaborative commerce is the use of information technologies to manage product life cycle management (PLM), supplier relationship management (SRM), supply chain management (SCM), and customer relationship management (CRM), jointly by the collaborating organizations. Using workflow and other collaboration tools such as groupware, all key stakeholders can collaborate in the product life cycle, from inception (concept) through design, introduction of a salable item, and eventual product retirement (Brown & Sappenfield, 2003).
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