2

Background

The modern business environment is characterised by competing supply chains rather than competing organisations (Christopher, 1992)

The boundary between organizations and their supply-chain partners are becoming less distinct, and interdependencies between them are increasingly more important (Hagel, 1996)

Organisations should plan for the future by creating a domain into which new business processes, methods and models can be introduced (Heidegger, 1977)

3

Flexibility

Upton (1994) defines flexibility as “the ability to change or react with little penalty in time, effort, cost or performance”.Confusing and ambiguous term (Upton, 1995) Flexibility is an important factor for organisations to succeed in dynamic and uncertain environments (Koste and Malhotra, 1999; Dreyer and Grønhaug, 2003; Garavelli, 2003; Zhang et al., 2003) Flexibility is often achieved at a cost to efficiency as there are “set-up costs” that come through changing the organisational response to challenges in the environment.(Phillips and Tuladhar, 2000) While IT can promote organisational flexibility, the technology used to promote flexibility becomes harder to maintain over time and paradoxically may lead to decreased flexibility in the long run (Lucas and Olsen, 1994)Inflexible IS have acted as inhibitors of organisational flexibility (Allen and Boynton, 1991)Web services offer an organisation the possibility of low-cost connectivity across many technology platforms allowing businesses more flexibility. (Hagel and Seely-Brown, 2002)

4

Dimensions of Flexibility (Golden and Powell, 1997)

Focus – the area in which flexibility is created (Internal/External)

Temporal – length of time taken to respond to changes in the environment

Range – the degree to which a firm can adapt to foreseeable and unforeseeable changes

Intention – the degree to which a firm is proactive or reactive in the face of environmental changes

5

Web Services

Application-to-application transactions conducted via an Internet-based communication link (Aberdeen Group, 2002)

A piece of code is made available over the internet to a remote machine, providing access to its functionality without having to download or install the actual code (Fletcher and Waterhouse, 2002)

Web services perform functions, which can be anything from simple requests to complicated business processes (IBM Web Services Tutorial)

Improvements in…the speed of developing solutions, interoperability with existing systems, deploying mobile systems, security (Microsoft, 2002)

6

Web Services

By deploying a Web services platform, companies can

better manage the information they share internally and externallymake employees, customers, suppliers, and business partners more productive. be able to quickly create new business opportunities, establish effective partnerships,speed application integrationforge tight connections with their customers.

Unlike other ebusiness technologies, Web services provide complete platform independence, easing integration between systems as well as promoting interoperability. (IDC Report, 2002)

Web Services have been a victim of the “hype hurricane” (Manes, 2003)

7

Web Services Architecture

ServiceRegistry

ServiceProvider

ServiceRequestor

Find Publish

Bind (to protocol)

UDDISOAP / XML

WSDL

In a typical scenario, a provider hosts the implementation for a service. Providers define servicedescriptions for services and publish them to a registry. A requestor then uses a registry to find servicedescriptions for services they are interested in using. With the service description in hand, therequestor binds to a service (Power and Acton, 2002)

8

Value Configurations

Value Chain may be obsolete in the post-industrial economy (Van der Heijden, 1993) Value Chain framework proposed by Porter (1985) is best suited to describing the activities of a traditional manufacturing firm but is less appropriate when analyzing the activities of other types of organisations (Stabell and Fjeldstad, 1998)IT has been a facilitator of the emergence of these new organisational forms (Tapscott, 2000; Child and McGrath, 2001) Value Chain is just one of a possible three value configurations based on the work of Thompson’s (1967) interdependence view of the firm

Pooled Sequential Reciprocal

IOS Interdependencies (Kumar and Van Dissel, 1996)

9

Value Configurations

Technology Development

Netw ork Promotion and Infrastructure Management

Service Provisioning

Infrastructure Operation

Procurement

Human Resource Management

Firm Infrastructure

ProblemFinding andAcquisition

Execution

ProblemSolving

Control/Evaluation

Choice

Firm Infrastructure

Human Resource Management

Technology DevelopmentProcurement

InboundLogistics

Infrastructure

Human Resource Management

Technology

Procurement

Operations OutboundLogistics

Marketing& Sales Service

Margin

Value Network Value Shop

Value Chain

10

Chains, Shops and Networks

Value Chain Value Shop Value Network Value Creation Logic

Transformation of inputs into products

(Re)solving customer problems

Linking customers

Primary Technology

Long-linked Intensive Mediating

Primary activity categories

Inbound logistics Operations Outbound logistics Marketing Service

Problem-finding and acquisition Problem-solving Choice Execution Control/Evaluation

Network promotion and contract management Service provisioning Infrastructure operation

Main interactivity relationship logic

Sequential Cyclical, spiraling Simultaneous, parallel

Primary activity interdependence

Pooled Sequential

Pooled Sequential Reciprocal

Pooled Reciprocal

Key Cost drivers Scale Capacity utilization

Scale Capacity utilization

Key value drivers Reputation Scale Capacity utilization

Business value system structure

Interlinked chains Referred shops Layered and interconnected networks

11

Comparing Proprietary IOS and IOS based on Open Standards (Hagel, 2002; Estrem, 2003)

Interorganisational Systems and EDI

Characteristics of Web Services-based IOS

Dynamic Environment - Poorly suited to a complex and shifting web of relationships

Provide an environment that enables developers to rapidly design and develop applications

n2 integration problem Simplicity – reducing complexity at the end points of the connections makes it easier and less costly for new participants to establish connections.

Assume one decision maker has sufficient power to ensure that all the participants adopted a common technology infrastructure

Distributed centres of control – as number of business partners grows and as the range of relationships that each partner must support expands, the assumption of a single point of control and context become increasingly untenable

Costly to implement Flexible, low cost connections across applications Long lead times to deliver Loose coupling between client and server applications

that supports more dynamic and flexible integration of application modules

Concerns about lock-in Openness – a solid foundation of ubiquitous standards and protocols reduces concerns about lock-in

Diversity of proprietary information systems and lack of effective information technology standards have posed significant barriers to the effective integration of business processes within the enterprise and beyond the traditional boundaries of the business

Heterogeneity - Designed to leverage the standards based architecture of the Internet and World Wide Web to promote interoperation across a wide range of computing platforms

12

Previous Studies

Found that IOS can both enable and constrain flexibility (Golden and Powell, 1997)Focused on proprietary technologies (EDI)

Basing electronic networks on proprietary standards limits their reach to an exclusive set of organisations (Evans and Wurster, 2000)

Focused on traditional industries

Sequential relationships (Dyadic IOS)Value Chain Configuration (Manufacturing Orgs)

13

Research Gap (What’s new?)

New Technologies (Open Standards, WS)Other Value Configurations (Shop, Network)Other business interdependencies (pooled + reciprocal)

14

Research Objective + Questions

Objective

To explore how web services affect the ability of an interorganisational network to respond to changes in the business environment

Questions

How do web services affect the flexibility of a node to respond to changes in the interorganisational network and external environmentHow do web services affect the flexibility of Interorganisational networks of supply chain partners to respond to changes in the environment?

15

Unit of Analysis

A single firm is not a valid unit of analysis for IOIS research studies because the environment the firm operates in will also be affected by IOIS implementation (Kurnia and Johnston; 2000, 2002) Reimers et al. (2004) propose the Industry Segment Value System (ISVS) as the unit of analysis for IOIS studiesWhile an industry is defined in terms of products, industry segment is defined in terms of interactions among firms (Reimers et al., 2004)

16

ISVS (Reimers et al., 2004)

17

Choice of Cases

Focal Organisation with Horizontal and Vertical partnersDiversity of Value Configurations in the ISVS (chain, shop, network)Diversity of Supply Chain Interdependencies in the ISVS (sequential, pooled, reciprocal)Dynamic business environment3 Industry Segment Value Systems (ISVS)

TravelFinancial ServicesMobile Value-Web

18

Research Strategy

Case Studies of 3 ISVS’s

15-20 organisations in total

Semi-structured Interviews

Case Study Protocol

Assess Web Service Issues (internal + external)Assess Flexibility Issues (internal + supply chain)

19

Case Study Instrument

Preliminary Focal Orgs in each ISVS

Traventec (Travel)O2 (Mobile Services)Fexco (Financial Services)

Identify players (Horizontal and Vertical) in each ISVS

Identify and classify connections (type of interdependencies)

Applied at the level of the environmental change

Classify types of environmental changes

customer, competitor, supplier, government regulation etc.

Classify Importance of env change, impact of change + response timeDifference in flexibility before + after use of Web Service applications 3 ISVS – identify the players – identify and classify connections

20

Case Study Instrument

Identify + Bound ION

Identify environmental changes to which network has to respondIdentify elements of network affected by the response

Intra node

Categorised by activitiesCategorised by interdependencies

Inter node

Categorised by interorganisational activitiesCategorised by interorganisational interdependencies

Classify responses by flexibility dimensions (time, range, intention + focus)

Relate to inter + intra node changes

21

Potential Outcomes

Identify new WS-based IOS

Classification of WS

Measures of intra- and interorganisational flexibility

Reality-checking/hype-busting