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mophe

Mar 1, 2008

Research Papers / The role of IT architecture in mergers and acquisitions - term paper review [NEW]

Can you kindly help review the term paper included below and suggest possible areas for improvement.

Thank you

The role of IT architecture in mergers and acquisitions

Introduction

A lot of organisations nowadays use mergers and acquisitions as a major strategy for business growth and continuity.The key principle behind a merger or acquisition is to create shareholder value over and above that of the sum of the two companies (Investopedia, 2008). It is assumed that two companies together are more valuable than two separate companies. Companies usually consider this option during periods of difficulty and target companies will often agree to be purchased when they know they cannot survive alone. Strong companies seek to buy other companies to create a more competitive, cost-efficient company. The companies will come together hoping to gain a greater market share or to achieve greater efficiency.

A merger is said to occur when two firms, often of about the same size, agree to go forward as a single new company rather than remain separately owned and operated (Investopedia, 2008). Investopedia (2008)) also defines an acquisition as a process in which one company takes over another and clearly established itself as the new owner. From a legal point of view, the target company ceases to exist, the buyer "swallows" the business and the buyer's stock continues to be traded. Whether the process is called a merger or an acquisition ultimately depends on whether the purchase is friendly or hostile and how it is announced. In other words, the real difference lies in how the purchase is communicated to and received by the target company's board of directors, employees and shareholders.

IT architecture can play an enabling role in the process by speeding up the integration of business processes and IT systems in the organisations involved. This can be achieved with careful and detailed planning before and during the merger or acquisition. This paper aims to explore/understand the role of IT architecture in mergers and acquisitions by answering the following questions.

o What issues are at the forefront for companies involved in mergers or acquisitions nowadays?

o What problems exist that need to be solved?

o How can effective IT architecture assist in resolving these problems?

The Burning Issues

Dedicated management staff are constantly on the lookout for companies they can merge with or acquire. Little thought is given to the integration of the merging firms' business process and systems at the initial stages. The emphasis at this point is on share prices, balance sheet size, profits, products' range, market dominance, position in the market and potential costs savings from the merger or acquisition. This last position (i.e. potential cost savings) is particularly important and be greatly enhanced when the business processes and IT systems of organisations involved in mergers or acquisitions are effectively streamlined and integrated to remove duplication and maximise existing resources.

The role of IT architecture in all of these is to ensure that an organisation's IT resources are able to support its present business needs as well as projected future expectations.

For most medium-sized and large organisations, business processes are heavily dependent on IT systems which are either developed internally or purchased from third party vendors. Applications such as Enterprise Resource Planning, Customer Relationship Management, Supply Chain Management systems are now de-facto IT components in most organisations. Local area networks and wide area networks are also essential especially when they have large branch networks with offices in different parts of the world.

Organisations involved in mergers and acquisitions usually have cost savings as one of the desired outcomes of the process. When the organisation involved belong to the same industry (e.g. the banking industry), there is a need to reduce the back office costs (e.g. call centres) of the combined entity (McGinn, 2008). Other expectations include expected savings in infrastructure and headcount with the combined IT entity being expected to deliver improved performance that adequately supports the business requirements after the merger or acquisitions (Siemens, 2004).

Business executives also try to minimise the impact of the merger or acquisition on the day-to-day operations of the resultant organisation(s) from the process so that business processes/functions are not adversely affected, down-times are not experienced and customers are not inconvenienced (Siemens, 2004). Apart from people, IT infrastructure is the largest investment for most organisations and is a critical strategic asset for improvement (Worthen, 2002). An organisation's merger and acquisition intent (to increase scale, expand breadth or drive efficiencies) will determine the IT requirements for the resultant organisation(s) (Cullen, 2006).

The management staff responsible for the IT resources of an organisation (usually called a Chief Technology Officer (CTO)) has a duty to aid the decision making process of the management by providing the following information.

o A detailed and objective assessment of the organisation's existing IT assets, plan, status and processes

o Additional IT costs that will be incurred in the merger or acquisition process to achieve the desired transformation

Existing Problems

(Bargh, 2007) cites business reports as estimating that between fifty to seventy percent of mergers and acquisition fail. Cultural differences between the companies and an inability to combine two or more cultures are cause problems. The other major issue is the integration of IT processes and systems between the organisations

A recent research sponsored by Informatica and conducted by Bloor Research cited in McGinn (2008), revealed that in the first three months following a merger or acquisition, preparation of consolidated financial reports is difficult in most organisations since integration of processes and systems would not have been achieved. Additionally, integration efforts/activities were reported as lasting for up to two years and more in some organisations while yet another category of organisations could not even predict/indicate when they expect to conclude IT systems integration. (Cullen, 2006) points out that all the above-mentioned situations arise as a result of the following

o Poor documentation of systems, lack of metadata, diverse and uncontrolled data sources and poor data quality

o The IT department/staff are usually not properly consulted before and during the merger or acquisition

o Scalability and flexibility issues concerning the IT infrastructure of the organisations involved in the merger or acquisition process

o Under-estimation of the work that needs to be done in IT integration

o Duplicate application systems and twice as much infrastructure

o Vendors taking advantage of the IT pressures mergers and acquisitions place on organisations

o IT being regarded as a cost centre/ support service rather than a driver and enabler of an organisations corporate strategy

IT Architecture To The Rescue

A CTO and an IT architect (could be a staff or consultant) should have a seat at the due diligence table from the onset of the merger or acquisition process. (Guest, 2006) has indicated that an IT architect involved in this process must possess five core skills to function effectively. These are an appreciation of the IT environment where is working, an understanding of the business/technology strategy, design skills necessary for creating solutions, quality attributes that cut across every technology solution and human dynamics. These skills will be especially useful in a merger or acquisition by enabling him provide a detailed map of the IT infrastructure and capabilities of the organisations involved in the proposed merger or acquisition which can then be presented to the business executives involved in the process (Boomer, 2006).

This should be followed by planning to determine which systems to keep, what data is important and how much integration is actually needed before the organisations are technically joined (Boomer, 2006). Boomer (2006) further points out that the base technology of an organisation considering a merger or acquisition in which it will be the dominant partner should be good, scalable and flexible to meet the expansion requirements of the organisation. Worthen (2002) opines that transition teams should be established in the organisations involved in the process to investigate and discover the following.

1. Hardware
The age, brand, model and configuration of key hardware elements in both organisations should be evaluated. A "rip and replace" approach whereby minimum components belonging to the weaker organisation in the process are retained is least costly in the long run.

2. Application software
Greater efficiencies are achieved when applications are standardised across both organisations. This means one ERP system, one mail system and one document management system amongst others. Key considerations will include data conversion from a replaced system to the new one and backward compatibility. This means a few machines might need to be kept with the old application installed to look back to prior years' data if all data is not converted to the new system.

3. Network architecture
This refers to the use of remote access technologies such as Citrix to access application servers. If one of the organisations involved in the merger or acquisition is not conversant with these technologies and the other party is, there will be significant reconfiguration and training issues. While running a centralised application has its own set of licensing issues, significant savings can still be made on hardware expense at remote office locations.

4. Physical Location and Communication Issues
For customer-facing online applications such as Internet banking or e-retailing systems, a merger or acquisition could mean an increase in the number of customers (from different parts of the world) accessing the application from previous levels. Additional servers will required to re-distribute the workload and content management systems may also be needed to redistribute/re-route Internet traffic across specified geographical lines so that response times/rates are maintained.

Carrying out the above-mentioned assessments serves a dual purpose. Firstly, it provides an accurate report on the acquiring organisation's IT environment while building a case for required improvements. Secondly, it provides information on the acquired organisation's IT assets along with the development of an integration strategy with detailed timelines and estimated costs (Cullen, 2006). In carrying out all these assessments, it is essential that an IT architect looks for pointers that suggest that integration will be harder than expected or budgeted for (Boomer, 2006).

The desired result of either a merger or acquisition integration is to have an IT operation that is effective for both internal users and external customers. Usability, functionality and providing the required data output are out important elements of IT systems and quality assurance must be continually carried so that problems are corrected as quickly as possible in the early stages when they are less costly (Bargh, 2007)

Case Study (Waste Management USA)

The implications of not carrying out an IT due diligence and having a poor IT architecture were felt in the 1998 acquisition of Waste Management by USA Waste for $20 billion. The combined entity kept the Waste Management name. Neither organisation's IT architecture was scalable so the combined entity was saddled with over three hundred AS400 mainframes which could not be integrated.

The organisation experienced a significant loss of revenues and almost came to a standstill. The situation deteriorated progressively and culminated with the replacement of the senior management team in 1999. In 2000, Waste Management deployed a new IT architecture and for the first time developed an acquisition strategy that matched its IT capabilities. This new architecture has allowed the organisation to quickly absorb subsequently acquired organisations.

Conclusion

IT architecture is no longer just a blueprint of IT systems and infrastructure but has other aspects that are related to the business-technology alignment (Lee, 2007). IT architecture has become an inseparable part of an organisation's overall strategy. All relevant stakeholders involved in a merger or acquisition process will do well to understand how IT architecture fits within the overall organisational strategy. Decisions about IT issues in the organisations involved in the process should not be driven by a feature-by-feature comparison of the IT components in the respective organisations as the shortest path to synergies maybe to use as little as possible from an acquired firm (Cullen, 2006).

Mergers and acquisitions can expose existing inadequacies in an organisation's IT architecture. These inadequacies should be addressed and resolved before the organisation decides to embark on a merger or acquisition. Generally, the larger the organisations involved in a merger or acquisition, the greater the risks and problems of IT integration. A decision has to be made about which organisation's IT architecture is best suited for overall adoption in the combined entity. If both organisations do not have suitable IT architectures, the merger or acquisition may be temporarily placed on hold so that the appropriate architecture can be deployed in the selected organisation after which the merger or acquisition process can continue. It would be quite risky to have a merger or acquisition run concurrently with the implementation of a new base IT architecture. Rather what should happen during the post-merger or acquisition phase is integration of systems, applications and databases through interfaces to the base architecture.

The use of external consultants/vendors such as IBM or Microsoft may also be considered in building, unifying or integrating the IT architecture of the organisations involved in a merger or acquisition. Outsourcing of the IT integration function can reduce some of the pressures faced management teams especially when such projects require objectivity which may be difficult to source from either of the organisations involved in the merger or acquisition(Bargh, 2007).This will allow business executives focus on the expansion and continuity of their areas of core competence (McGinn, 2008). From an IT perspective, mergers and acquisitions can be smoothly implemented with the desired gains quickly achieved. This would however entail careful and detailed planning which must begin early in the process.

mophe

Mar 10, 2008

Book Reports / Essay on Strategy and Information Technology Management [7]

hello,

I have to write an essay with the following title "In the context of strategic planning of information systems and technology, discuss critically the relevance of resource-based perspective, including the concepts of core competencies and distinctive capabilities". Can you kindly provide a guideline as to how the essay should be structured?

Thanks

mophe

Apr 10, 2008

Book Reports / Essay on Strategy and Information Technology Management [7]

Hello,

I would appreciate your help in reviewing the attached coursework which I wrote using the suggestions you offered.

Thanks

A CRITICAL REVIEW OF NICHOLAS CARR'S "IT DOESN'T MATTER"

STUDENT 1D: 07066996
Brief outline for this coursework

Nicholas Carr's article "IT doesn't matter" (2003) still continues to be controversial even though it was published five years ago. Even now, it is still hard to find people who either agree or disagree with his views in their entirety. Most of his critics concur with him to the extent that IT has become ubiquitous but think his article was faulty since it emphasised the possession of IT rather than its utilisation and management.

This paper begins by reviewing Carr's article and summarising it. It goes on to examine the strengths and weakness of the article and also documents the arguments of his critics, both those in support and against his article. The paper concludes by not totally agreeing with Carr's generic statement that "IT doesn't matter" and articulates the areas of concurrence and divergence. It is the view of this author that IT can still be a source of competitive advantage to an organisation if it is aligned with the organisation's business strategy and the right management, staff and culture are in place to exploit and leverage on the IT assets.

Introduction

Carr's article can be summarised as follows.

o IT is now ubiquitous and essentially a commodity required for day-to-day running of businesses

o Due to this ubiquity, IT can no longer offer significant competitive advantages to organisations since it is readily available to all

o Organisations should therefore reduce their investments in IT by being followers and not leaders

o Organisations should focus more on the vulnerabilities/risks of their IT investments.

Interestingly Carr is not the first person to question the impact and contribution of IT on the performance and bottom-line of organisations. Indeed the Nobel Prize laureate Robert Solow (1987) also generated a lot of interest when he commented that there was no way to prove that technology had an influence on organisational productivity. He arrived at this conclusion by looking at industry statistics and by comparing IT-intensive organisations to those that were not. He realised that the organisations that had large IT investments in previous years did not increase in productivity in any measurable way over those that did not.

But technology is not something that always has an immediate effect or works right away thereby improving productivity in a fantastic way (Dans, 2003). Recent documented experiences with IT investments have shown that they can be hard to implement, may require big changes in training, mentality and even complete redesign of processes in order to generate profits.

Strengths of Carr's arguments

Carr's definition of IT focuses mainly on the technology component for which the three technology laws apply (Metcalf's law, Moore's law and Gilder's law). Carr's arguments on the development of proprietary systems by organisations no longer being advantageous also holds true to the extent that unless it is a core competence of the organisation, it may be better to buy IT as an off the shelf solution. Grant (2003) supports Carr's position in this regard by pointing out that an organisation that develops a proprietary technology to create differentiation and barriers to entry for competitors may not realise any long-term advantage due to the increasing ubiquity of IT.

The emergence of IT use in organisations was in the areas of production efficiencies, rapid information exchange and meaningful staff reductions. Smith, (2004), points out that IT used in this way provided a competitive advantage for the early adopters but this is no longer the case as the use of IT in this manner has become the norm in most organisations. Figure 1 shows the change in the level of competitive advantage enjoyed by early adopters over a period of time. Early adopters have already reaped the majority of the advantages offered by IT as shown in Figure 2

Figure 1: Poisson distribution for competitive advantage (Kimber, 2005)

Figure 2: S-curve of ubiquity vs. Z-curve of advantage (Carr, 2004)
Basic transaction processing has crossed the second knee in the S curve and is a mature technology around the world. Powerful computing and communications technologies are accessible to most organisations and skilled personnel required for implementation and maintenance are also available (Smith, 2004). Therefore the use of IT in back office applications such as transaction processing may have lost its power in providing any type of advantage.

The growth in outsourcing of IT supports Carr's view of it being a commodity. Any operation/function that is outsourced is one not considered strategic by an organisation (Bannister and Remenyi, 2005). The power of most PCs today is more than enough to meet existing organisational needs. The same holds true for software with organisations becoming increasingly reluctant to pay for upgrades and waiting longer to do so (Bannister and Remenyi, 2005). All these support Carr's views that the first mover advantage offered by IT is rapidly declining.

Buttressing Carr's opinions, Grover (2003) makes it clear that any IT value created through improvements in productivity can be quickly lost if the IT involved becomes a competitive necessity for the industry.

Weaknesses of Carr's arguments

The applicability of Moore's law to the software aspect of IT is questionable and his suggestion that organisations compel vendors to stop making constant upgrades to their solutions seems far fetched. Carr's concept of IT does not take into cognisance the value of organisations having the right information at the right time. Having a superior IT platform can enable the flow and availability of superior information. While IT resources may have shifted from being a proprietary to a purchased good that levelled the playing field, the opportunities that are available for customising even off the shelf IT solutions can prove to be a source of differentiation for an organisation (Tapscott, 2004).

For instance, different organisations may all buy the same SAP ERP software but not all will customise and use it in the same way. Carr argues that the availability of web services means competitors will be able to reproduce technology innovations easily but he fails to realise that web services also means organisations are able to create software faster (Tapscott, 2004). For example, Amazon and eBay do not have proprietary terminals in the homes or offices of their users but their competitors have not caught up with them because most of their users are locked in by the power of their software application and business models. Their proprietary resource in this instance is the resilient power of their IT-enabled relationships.

Carr fails to understand the role IT can play in the development of business models though he agrees that business models can be a source of competitive advantage (Tapscott, 2004). The impact is particularly felt with the emergence of business webs that allow organisations focus on their areas of core competence while partnering in the other areas. This is a business model that is greatly facilitated by IT. For some IT, it may make sense just to be a follower and achieve competitive parity while in others, an organisation should try to be a leader though not necessarily a big spender. And with technologies like service oriented architecture (SOA) and intelligent information networks, being a leader in IT innovation and usage no longer needs to be costly for an organisation (Tapscott, 2004).

IT as a commodity
Carr's views of IT as a commodity suggests that IT systems , services and suppliers can be quickly changed without a major loss of functionality and productivity thereby implying that switching costs are minimal and frictionless (Grant,2003). Research and practitioner literature have however discussed many failed IT projects that were due to inappropriate sourcing decisions. Organisations still battle with understanding the technologies they are acquiring, their suitability and how to measure their contribution to the organisation's bottom line (Scott and Vessey, 2002).

While some of Carr's views can be understood in the context of North American and Western European organisations, the situation in developing countries is quite different with a lot of them still grappling with the provision of basic IT infrastructure to support business activity. The ubiquity that Carr refers to is therefore clearly not global (Grant, 2003). Regarding IT as a commodity implies that very little change is expected in that industry in the future. However, the IT industry over the last couple of years has been characterised by radical shifts happening in innovations in hardware, software and communications technologies (Grant, 2003).

The strategic value of IT can be understood using the dynamic capabilities perspective (Teece and Pisano, 1994; Teece et al, 1997; Eisenhardt and Martin, 2000). In attempting to explain how organisations acquire and sustain entrepreneurial rent and competitive advantage, these researchers argued that strategic advantages depend on the ability of an organisation to effectively adapt, configure and manipulate resources and dynamic capabilities to address the requirements generated by increasingly dynamic and unpredictable environmental conditions rather than residing in the just the possession of valuable resources and capabilities assembled by the organisation.

Unsuitability of Carr's analogies
The comparison of IT with railroads does not seem a suitable analogy because the speed and reliability of railroads has not significantly changed in the last 100 years unlike computers and communication technologies that are getting faster, more reliable, easier to manage and more flexible (Bannister and Remenyi, 2005). Additionally, rail systems are still capital intensive unlike IT systems that which are usually just capital intensive in the initial stages. The comparison of IT with electricity seems to be a better analogy if it is examined in the context of pure processing power or bandwidth. But with electricity, it is what you can do with it that really matters which is exactly the same case with IT. All of Carr's analogies however do not explain the software component of IT.

The different types of strategic value accruable from the use of IT
The strategic value of IT as discussed by Bannister and Remenyi (2005) is summarized below.

Strategic value as fundamental to an organisation's business/industry: Most organisations cannot function without IT. IT is now a norm and not an exception for the daily running of organisations. Examples of industries heavily dependent on IT are the financial services and airline industries.

Strategic value as long-term vale: IT has short life cycles, but the embedded knowledge is usually cumulative. This has a long-term impact which is usually difficult to measure.

Strategic value as a platform for change: IT can provide a basis for change of direction. Organisations like Boeing have used IT to change the way they do business (Tapscott and Williams, 2006). Another example is the Lyons Tea Company (Ferry, 2004).

Strategic value as necessary for survival: IT is becoming increasingly compulsory in some industries. For instance, no bank can operate without the use of IT. The online retailing sector is another example where IT is becoming the status quo.

Strategic value as a platform for innovation: This is an area that Carr overlooked in his article. Drawing from his analogy of IT and electricity, it is obvious that the main benefits of electricity do not accrue from how it is distributed or stored but from the variety of things it can be used to power (televisions, radios, cookers, washing machines, e.t.c). The advent of electricity led to the production of these devices and spawned whole new industries. This same view is what Carr should have extended to IT.

Strategic value as a first mover: This is one of the thrusts of Carr's article and in this case being a follower rather than a leader in adopting some types of IT can actually be beneficial for an organisation because it can gain from the best practices built into the IT solution based on lessons learnt from early adopters of that IT.

Strategic value as incremental improvement: Ciborra (2004) indicates that long-term sustainable competitive advantage does not come from technology breakthroughs but from the different ways of doing things better through a process of continual improvement. This is the underlying principles of the Kaizen and lean manufacturing techniques which Japanese automakers pioneered in the early 1990s. Organisations should be on the lookout for small ways in which they can use IT to make themselves a little better rather than waiting for the next big thing from IT vendors.

Figure 3 shows how these strategic values of IT are changing and Carr enjoys some concurrence in the decline in the strategic value as a first mover and for long-term delivery. But some of the other forms are maintaining a steady state with some actually increasing with time (i.e. incremental improvement and platform for innovation). This analysis shows that while Carr may have been right in his attack against traditional justification of IT as giving strategic value through competitive advantage delivered through radical differentiation and/or cost, he ignored the other types of strategic value delivered by IT (Bannister and Remenyi, 2005).

Figure 3: Change in strategic importance of IT (Bannister and Remenyi, 2005)

Business Process Re-engineering
The current wave of business process re-engineering is IT enabled. With the use of tools that are radically different from the traditional systems which are the basis of Carr's arguments, dynamic organisations are now able to model many of their business processes digitally. This moves the use of IT away from being data-centric to being process-centric. The advantages of using IT for process-centric functions are significantly greater than when it is used for data-centric functions.

An organisation's position in an industry by a competitor can be threatened if the latter is more insightful, more connected to its customers and quicker to deliver solutions. All these can be achieved by a competitor who uses its IT resources in a more superior manner than others. Therefore copying the portfolio of a business rival may provide competitive parity but not advantage (Davies, 2008). IT is becoming a factor in innovation and growth and organisations that do not rise to using it for than cost-cutting, efficiency enhancing and process improving are the ones not likely to obtain any significant benefits from using IT.

IT alignment with business strategy
The work of Henderson and Venkatraman (1993) indicates that the lack of functional alignment between the business and IT strategies of organisations is the main reason for their inability to realise value from their IT investments. The discrepancy in IT management is further exacerbated because technological aspects of IT management have been overemphasised to the detriment of information management. Henderson's and Venkatraman's strategic alignment model contains four inter-related domains that are relevant to the alignment of IT. These are

1. Business strategy
2. IT strategy
3. Organisational infrastructure and processes
4. IT infrastructure and processes.

Ehrenhard at al (2006) however refine this model by arguing that the IT strategy domain can be subsumed into the business strategy domain leading to the model becoming triangular and not rectangular as shown in figure 4. They call this new model 'the process alignment model' and it their view that it supports the traditional perspective in which business strategy is the driver and the focus of the IT staff is on strategy execution.

Figure 4: Modification of the Strategic Alignment Model to the Process Alignment Model (Henderson and Venkatraman, 1993; Ehrenhard at al, 2006)

IT offers capabilities of exploitation and capabilities of exploration. By using it for exploitation, an organisation gains greater outputs or lowers inputs for productivity gains. Using it for exploration however means increasing the intelligence of the organisation on the feasible set of opportunities using IT which senses the environment, enable tacit knowledge exchange and facilitates the interactions required for new innovations. Mata et al (1995) point out that the conversion of valuable but ubiquitous IT assets to capabilities of exploitation and exploration creates heterogeneity across firms and this can be a source of competitive advantage. This view also conform to Soh's and Markus' (1995) process theory synthesis which is illustrated in figure 5 below.

Figure 5: How IT creates business value (Soh and Markus, 1995)
Categorisation of IT investments
The nature of IT investments can be explained using the tri-core model proposed by Swanson (1994) which demonstrates the three levels of innovation in IT. This is shown in Figure 5. The first which is the most internal one is called the technical core. Innovations at this level affect only the way technical tasks are performed (e.g. operating system migration, a new database or a revamped architecture). The second layer is the administrative core and innovations in this layer affect the way administrative tasks are carried out in an organisation. Examples include ERP packages. The third layer is the business core and it allows innovations that change the nature of the business. An example of this is Amazon's collection of opinions from customers, making them available to other potential customers and thereby creating an information product that improves its online value proposition.

Figure 6: A tri-core representation of IT/IS innovations in organisations (Swanson, 1994)

Organisations may of course interpret IT investments as belonging to different layers other than Swanson's categorisation. While on organisation may implement e-commerce as a way of reducing administrative tasks with key customers thereby placing it in layer 2, another organisation may consider e-commerce as a means of accessing new markets and customers thereby placing it in layer 3 because of its strategic context (Dans, 2003). Common sense dictates that Carr's suggestions on how organisations should manage their IT investments are applicable mainly to the first layer and to some extent the second layer. Business and IT executives must be able to discern which investments fall into each layer so that some can be treated as 'pure efficiency' (layer 1 and part of layer 2) and others as 'the name of the game' (predominantly layer 3 but may contain some parts of layer 2) (Dans, 2003).

Conclusion

Carr's article succeeds in bringing to the front burner the fact that IT investments are an important area for organisations and that not all IT investments should be automatically embarked upon. Also, the vulnerabilities/risks of an organisation's IT-enabled relationships (internally and externally) must be carefully managed. However, if organisations adopt Carr's suggestions in their entirety, stagnation will occur further eroding their market share and fortunes.

Competitive advantage from possession of IT should no longer be the justification for making IT investments. Rather, adding value to the organisation should be the new rationale. Organisations must determine whether they have the desire or capability to use IT for creative advantage and decide which IT investments can help realise that goal.

Value creation using IT does not occur by simply having the best technology available in the market. Organisations have to be able to assemble, motivate and deploy knowledgeable and competent managers, technical specialists and users who , working together are able to craft and execute innovative strategies and tactics in applying and exploiting the deployed IT. The value of IT lies more in its use than its possession.

The effect of people and organisational culture must be placed in proper perspective. This will explain why although two organisations may have the same IT assets, one still performs better than the other. IT-enabled relationships and processes such as SCM, JIT are widely used in most organisations yet some still continue to outperform their counterparts. In the auto industry for instance, the Japanese manufactures (famous for their origination of JIT, lean manufacturing and kaizen principles) are still ahead of the North American and European counterparts despite the fact that they are all basically using the same IT resources.

Organisations must realise that simply playing the technology card is no longer enough to ensure competitive advantage. Competitive advantage is achieved through the application of innovative, creative and imaginative procedures, processes and practices that can differentiate an organisation from its competitors. IT can play an important role but only to the extent to which it supports the organisation's innovation, creativity and imagination. As Ciborra (2004) and Curley (2004) have pointed out, the problems relating to the use of IT strategically, maybe in the deficits of imagination by CIOs and CEOs rather than in inherent limits in the technology itself. IT will really matter in future as an accelerator of innovation and appropriate use of IT will require considerable complementary investment in people, process, culture and support.

IT will definitely matter not when you just own it, but when an organisation has forward thinking, innovative/creative personnel who constantly come up with new ways of taking their organisation to greater heights and know how to use IT to realise this objective.

References
Bannister, F. and Remenyi, D. (2005) "Why IT Continues to Matter: Reflections on Strategic Value of IT" The Electronic Journal Information Systems Evaluation, Vol.8, No. 3, pp: 159-168

Carr, N. (2003) "IT Doesn't Matter" Harvard Business Review, Vol. May, pp: 41-49

Carr, N. (2004) "Does IT Matter? Information Technology and the Corrosion of Competitive Advantage" Boston: Harvard Business School Press

Ciborra, C. (2004) "The Labyrinths of Information", UK: Oxford University Press

Curley, M. (2004) "Managing Information Technology for Business Value" USA: Intel Press

Dans, E. (2003) "IT does matter" European Business Forum, Vol.16, pp: 2-5

Davies, C. (2008) "IT: Determining Competitive Advantage"

Ehrenhard, M., Aydin, M. and Fairchild, A. (2006) "From Square to Triangle: Realigning the Alignment Model"

Eisenhardt, K. and Martin, J. (2000) "Dynamic Capabilities: What are they?" Strategic Management Journal, Vol. 21, pp: 1105-1121

Ferry, G. (2004) "A Computer Called Leo", London: Perennial Books

Grant, G. (2003) "What Really Matters About IT?"

Grover, V. (2003) "Information Technology Can Be Made To Matter: The Importance of E-Collaboration Research"

Henderson, J., and Venkatraman, N. (1993) "Strategic Alignment: Leveraging Information Technology for Transforming Organisations" IBM Systems Journal, Vol. 32, pp: 4-16

Kimber, T. (2005) Professor's website at State University of New York.

Mata, F., Fuerst, W., and Barney, J. (1995) "Information technology and sustained competitive advantage: A resource-based analysis". MIS Quarterly, Vol. 19, No. 4, pp: 487-505

Scott, J. and Vessey, I. (2002) "Managing Risks in Enterprise Systems Implementations", Communications of the ACM, Vol.45, No.4, pp: 74-81

Smith, R. (2004) "How Long Does IT Matter?"

Soh, C. and Markus, M. (1995) "How IT creates business value: A process theory synthesis" in Proceedings of the 16th Annual International Conference on Information Systems, Amsterdam, The Netherlands, December, pp: 29-41.

Solow, R. (1987) "We'd better watch out", New York Times Book Review (12th July)

Swanson, E. (1994) "Information Systems Innovation among Organisations" Management Science, Vol. 40, No.9, pp: 1069-1092

Tapscott, D. (2004) "The Engine That Drives Success: the best companies have the best business models because they have the best IT strategies"

Tapscott, D. and Williams, A. (2006) "Wikinomics: How Mass Collaboration Changes Everything" London: Atlantic Books

Teece, D and Pisano, G. (1994) "The dynamic capabilities of firms: An introduction". Industrial and Corporate Change, Vol. 3, No.3, pp: 537-556

Teece, D., Pisano, G. and Shuen, A. (1997) "Dynamic Capabilities and Strategic Management" Strategic Management Journal, Vol.18, No.7, pp; 509-533

mophe

Apr 11, 2008

Book Reports / Essay on Strategy and Information Technology Management [7]

As always Sarah, you are a star!.

But do you think I was critical enough in my review? Did my conclusion strongly reflect my position on Carr's article?

mophe

Jun 1, 2008

Writing Feedback / Qualitative research methods coursework review [NEW]

Hello,

Can you kindly help me review my attached coursework. The question for the assignment is shown below

Question
Choose 2 qualitative research approaches and critically consider the potential appropriateness for studying a topic area of your choice. For each method you can consider

1. its benefits & challenges
2. how it can be put to practice with quality
3. what skills and approaches are required of the reseacher
4. what types of information and understanding will be provided
5. what are its limitations
6. the ethical issues involved

The best assignments will set their discussion in the context of broader reseach perspectives as covered during the course. You can also consider how the 2 methods chosen night complement each other.

Answer

BACKGROUND INFORMATION

My dissertation entails the development of an effective e-commerce strategy for the UK Meteorological Office. To successfully achieve this, I will be evaluating the flow and direction of information between MET office's business development/client services staff and the organisation's corporate customers and the interpretation of this information by MET office's information technology (IT) staff. To explore the MET office's e-commerce antecedents, trends, issues as well as tease out the implications of its current and proposed strategies, I will carry out a qualitative research using two methods which I think are most suitable; (1) Focus groups and (2) One-to-one qualitative interviewing.

The origins of focus groups can be traced to market research though it is increasingly being used in politics, I will use focus groups to get the responses of the staff of MET office' corporate customers (akin to a consumer panel forum). This is required to assess/determine their satisfaction with MET office's product offerings, customer service delivery and website usability. One-to-one in-depth qualitative interviews will be used with the client services staff, client services mangers and IT managers of the MET office to get their responses on how customers' needs are interpreted, articulated and satisfied. One-to-one interviews is preferable for the MET office staff because since the MET office is the sponsor of the research, its staff will likely be more comfortable giving their views in private rather than in the presence of their colleagues; possibly due to fear of reprisal effects if they have unpopular views. While the focus groups sessions for staff of MET office's corporate customers will be held at a neutral location arguable to all participants, it is very likely that the one-to-one interviews for MET office staff will be held within the MET office.

FOCUS GROUPS

Benefits and challenges

A focus group is a group interview which has as its emphasis, a particular issue, product, service or topic and involves the need for interactive discussion among participants (Carson et al, 2001). The participants are selected due to certain characteristics they share which relate to the topic being discussed and they are encouraged to discuss/share their points of view without any pressure to reach a consensus (Krueger and Casey, 2002). The presence of several participants allows a wider range of view points to emerge and for participants to respond to these views (Saunders et al, 2007; Bryman and Bell, 2003). The use of focus groups is also an efficient way to interview more individuals than would be otherwise possible through one-to-one interviews. (Saunders et al, 2007; Marshall and Rossman, 1999).

The method of focus group interviews is socially oriented since the atmosphere in which participants are studied is more natural than what obtains in artificial experimental circumstances and more relaxed than the exposure of a one-to-one interview (Marshall and Rossman , 1999). The moderator or facilitator can flexibly explore unanticipated issues as they emerge in the discussion.

The downsides of focus groups include the following.
- Loss of control by researcher over proceedings: There can be time wastage when irrelevant issues are discussed by participants .Unlike in one-to-one interviews, a delicate balance has to be maintained as to how involved a moderator should be and how far a set of questions/prompts should influence the conduct of a focus group. (Bryman and Bell, 2003; Marshall and Rossman, 1999).

- Difficulty in data analysis: Focus groups typically generate large amounts of data quickly. Audio recordings are prone to inaudible elements which affects transcription. Establishing an analytic framework that incorporates both the themes in what people say and patterns of interaction is usually quite challenging.

- Organisational difficulties: The researcher has to secure the agreement of people to participate in his/her study and also persuade them to turn up at a particular time. Inducements such as refund of transport expenses and provision of lunch are usually employed but at times, participants still fail to show up (Bryman and Bell, 2003). There are also logistical challenges pertaining to the availability of special room arrangements and audiovisual aids (Marshall and Rossman, 1999).

- Transcription difficulties: Recordings are usually more time consuming to transcribe than those of individual interviews due to variations in voice pitch and the need to take into account who says what (Bryman and Bell, 2003).

- Problems of group effect: The well known experiments of Asch (1951) showed that an emerging group view may lead to the suppression of as perfectly legitimate perspective held by just one individual. Evidence also points to the fact that as a group comes to share a particular point of view, its members begin to think uncritically about it and develop an almost irrational attachment to it (Janis, 1982). Some participants may be more dominant and vocal than others and the moderator has to encourage involvement by all participants to maintain the interviews exploratory purpose

- Inappropriate circumstances: There are circumstances when focus groups may not be ideal since they could cause discomfort among participants (Madris, 2000). Individual interviews are better in such situations.

Researcher skills

The skill of the interviewer both as initiator and facilitator is very important. In focus group interviews, this role is called a moderator. Ideally, a researcher should be able to establish and create rapport between participants before the discussion takes off. Additionally, the researcher must possess executive skills which make participants confident in him/her and allow him/her guide the direction of the conversation. The researcher must be able to create a supportive environment, ask focused questions, and encourage the discussion and expression of different opinions and viewpoints (Marshall and Rossman, 1999)

The researcher must be able to keep the group within the boundaries of the topic being discussed. Additionally, he/he must generate sufficient interest in the topic and encourage discussion whilst not leading the group towards certain opinions (Saunders et al, 2007).The researcher must allow the discussion to flow freely while also intervening to bring out salient issues especially when the participants do not do so (Bryman and Bell, 2003).

ONE-TO-ONE INTERVIEWING

Benefits and challenges

Qualitative interviewing tends to be flexible thereby allowing the researcher to respond to the direction in which the interviewee takes the interview and perhaps adjust the areas of interest in the research based on significant issues that emerge in the course of the interview (Bryman and Bell, 2003). Qualitative interviews also allow for an interviewee to be interviewed more than once and immediate follow up and clarification is possible.

I would be using individual unstructured interviews (in-depth interviews) with the involved MET office staff since this is an exploratory study that aims to understand the reasons for the decision/actions that my interviewees have taken (or will take), or to understand the reasons for their attitudes and opinions. Although there might not be any pre-determined list/sequence of questions to ask the interviewee during such interviews, an interviewer needs to be clear about which aspect(s) he/she wants to explore. In in-depth interviewing, the interviewee can freely talk about events, behaviour and beliefs related to the research topic. This makes this method non-directive (Saunders et al, 2007). The use of in-depth interviews allows for an opportunity to probe answers so that interviewees can explain or build on their responses. This is important if a researcher is adopting an interpretivist epistemological orientation where he/she needs to understand the meanings interviewers ascribe to various phenomena

However since interviews involve personal interaction, the co-operation of the interviewee is very essential. An interviewee may be uncomfortable discussing all the interviewer hopes to explore and have reasons to be economical with the truth. Additionally, an interviewer may be unskilled in asking the types of questions that should elicit long narratives from the interviewee (Marshall and Rossman, 2006). The interviewer may also not properly understand responses to the questions or various parts of the conversation.

One of the drawbacks of qualitative interviewing is that since the interview data consists solely of verbal statements and or talk, it is subject to fabrications, deceptions, exaggerations and distortions that can characterise any conversation (Taylor and Bogdan, 1984). While an interviewee's verbal account may shed more light on their thought process, there might be variations in what they say and what they actually do. Secondly, since interviews are situational, an interviewer must not assume that what an interviewee says in an interview is what that person says or believes in other situations. Thirdly, since interviewers do not directly observe people in their everyday lives as part of their research, they might not understand many of the contextual perspectives in which they are interested (Taylor and Bogdan, 1984).

Researcher Skills

According to (Marshall and Rossman, 2006), an interviewer should have superb listening skills and be skilful at personal interaction, question framing and gentle probing for elaboration where necessary. An interviewer must be able to really listen to what people are saying whether or not the interview is being recorded (Mason, 2002). It is essential that a good balance be struck between talking and listening. Interviewers will also do well to observe and pick up verbal and non-verbal cues about the social situation, its visual and spatial dynamics and the mood of the interviewee. The interviewer must be accomplished in notes taking and/or using a recorder.

Taylor and Bogdan (1984) suggests the following attitudes on the part of an interviewer

- Being non-judgmental
- Letting people talk
- Paying attention
- Being sensitive
- Ability to probe
- Ability to crosscheck
Kvale's (1996) ten criteria of a successful interviewer are shown in the figure 1 below. Bryman and Bell (2003) have added two more criteria.

Figure 1: Qualification criteria of an interviewer (Bryman and Bell, 2003)

THE PHILOSOPHY OF MY RESEARCH METHODOLOGY

Ontology
The ontological approach for this research will be subjectivism which means social entities are considered as social constructions built up from the perceptions and consequent actions of social actors (Saunders et al, 2007). This position is also frequently referred to as constructionism. This constructionist view is that social phenomena are created from the perceptions and consequent actions of social actors (Bryman and Bell, 2003). Constructionism asserts that social phenomena and their meanings are continuously being achieved by social actors.

Remenyi et al (1998) stress that it is imperative to study "the details of the situation to understand the reality or perhaps a reality working behind them". Constructionism is allied with the epistemological position of interpretivism which stresses the necessity of exploring the subjective meanings motivating the actions of social actors so that a researcher can understand these actions (Saunders et al, 2007).

Epistemology

The epistemology for this research is interpretivism. Interpretivism is an epistemological perspective that advocates the necessity of researchers understanding the differences between humans in their role as social actors (Saunders et al, 2007). This perspective requires a researcher to adopt an empathetic stance, thereby challenging researchers to go into the world of their research subjects and understand the world from their point of view (Saunders et al, 2007).

This approach is being taken because the subject matter in social sciences (i.e. people and their institutions) is different from that of the natural sciences; a reasoning not shared by the proponents and users of positivism (Bryman and Bell, 2003). Interpretivism allows the study of the social world using a different logic of research procedure, one that reflects the distinctiveness of humans as against the natural order. One of the key concepts that has aided the popularity and acceptance of interpretivism is phenomenology; a philosophy that is concerned with the question of how people make sense of the world around them and the methods through which a researcher should set aside pre-conceptions in his/her understanding of that world (Bryman and Bell, 2003). The intellectual heritage of interpretivism includes Weber's notion of Versehen (Weber, 1947), the hermeneutic-phenomenological tradition (Schutz, 1962; Hughes, 1990) and symbolic interactionism (Blumer, 1962; Hammersley, 1989; Collins, 1994).

Methodology

The components of the methodology for my research are captured in figure 2 below.

Aim Invention

Starting point Meanings

Design Reflexivity

Techniques Conversation

Analysis/interpretation Sense-making

Figure 2: Methodology components (Adapted from Easterby-Smith et al, 2002)

SAMPLING

The sampling method for this research will be purposive. While this is a non-probability sampling technique, it will allow me use my judgement select participants that best enable me answer my research questions and meet my objectives. This type of sampling is usually used when working with very small samples and a researcher wishes to select cases that are particularly informative (Saunders et al, 2007) This aligns perfectly with my grounded theory strategy. I will be adopting Strauss' model of the grounded theory approach because I believe my role as a researcher is an integral part of the research process and my own pre-conceptions are inevitable. As such, I will actively interrogate the data to elicit theories. The approach to the research will be flexible relying on insights from many sources (Strauss, 1987; Strauss and Corbin, 1998). The grounded theory approach also means both in-depth individual interviews and focus group sessions will be done until theoretical saturation is achieved (i.e. no new data is being obtained from research participants).

ENSURING QUALITY

The quality of this research will be established through its validity, reliability and generalisability. From the constructionism perspective, this means the research must satisfactorily meet these key conditions (Easterby-Smith et al, 2002)

Validity: The study must clearly gain access to the experience of those in the research setting

Reliability: There must be transparency in how sense is made from the raw data

Genaralisability: The concepts and constructs derived from this study should have relevance to other settings.

ETHICAL CONSIDERATIONS

In carrying out my research, I would be guided by Diener and Crandall's (1978) framework (found in Bryman and Bell (2003) by ensuring that

- There is no harm to participants
- Participants give their informed consent to take part in the research
- The privacy of my participants will not be invaded/violated in any way
- The participants will not be deceived about any area of the research.

I will bear in mind the above-mentioned and the following ethical issues as highlighted by Saunders et al (2007)

- Voluntary nature of participation and the right to withdraw partially or completely from the process
- Maintenance of the confidentiality of data provided by individuals or identifiable participants and their anonymity.
- Reaction of the participants to the way in which I seek to collect data, including embarrassment, discomfort, pain and harm
- Effects on participants of the way, in which I use, analyse and report my data, in particular the avoidance of embarrassment, stress, discomfort, pain or harm.

- My behaviour and objectivity as a researcher (self reflexivity)

mophe

Aug 6, 2008

Dissertations / E-Commerce Strategies - Chapter One of my dissertation [NEW]

Hello,

I have just started writing my M.Sc dissertation and would appreciate your comments about my first chapter.

Thanks

1.0 Introduction
This research has been prompted by a group-based project which entailed the articulation of an electronic commerce (e-commerce) strategy for the Met Office. The Met Office is the UK government organisation saddled with the provision of weather information, data and services to individuals and organisations alike.

E-commerce is the exchange of goods, information, products/services and or payments between an organisation and its various stakeholders through the use of Internet technologies. While a majority of private organisations have achieved some measure of success with their e-commerce operations, most government organisations are yet to successfully deploy e-commerce especially for revenue generation purposes (West, 2007). This research therefore seeks to discover the factors inhibiting e-commerce in government organisations as well as propose a suitable e-commerce model that can assist government organisations generate revenues from their e-commerce channels.

Within the mainstream theoretical and empirical e-commerce literature, research about e-commerce has dwelt largely on private organisations and where it has been discussed in the context of government organisations, it has focused on electronic government (e-government) as a channel for providing services (such as tax payments, registrations for driver's licence, passports, social security, e.t.c) with the emphasis being on service delivery and not revenue generation. However, there exists some government owned organisations that provide services different to the ones earlier mentioned and have financial targets set for them to achieve. The UK Meteorological Office (Met Office) is one of such organisations. As a government owned weather services information provider, the Met Office is saddled with the provision of accurate weather information to businesses individuals alike.

The Internet channel is yet to become a revenue generating medium for most government organisations due to some challenges which they are experiencing. There is however insufficient literature relating to the revenue generating applications of e-commerce in government organisations. Existing business models such as those of Hofacker (2000), Hanson (2000) and Hoffman (1995) amongst others are basically suitable for private organisations and have been difficult to utilise in government organisations. The development and adaptation of a suitable e-commerce model can greatly facilitate assist government organisations such as the Met Office to leverage on the Internet as a medium for the provision delivering their services to businesses and individuals in a revenue generating manner.

This research utilises the Met Office as a case study in evaluating e-commerce strategies in government organisations. A review of various e-commerce models will be undertaken and a suitable one will be adapted to the Met Office scenario (Chan and Swatnaman, 1999; Hofacker, 2000, Hanson, 2000).

1.1 Research aims and Objectives
The aim of this study is to evaluate the e-commerce strategies in government organisations in particular the Met Office. The following specific objectives will be addressed.

1) To determine the factors inhibiting successful/profitable e-commerce deployment in government organisations.

2) To analyse the various e-models employed by different organisations

3) To discuss and adapt the electronic commerce component model (ECCM) to the Met Office case.

4) To explore how government organisations can achieve the revenue generation objective of their e-commerce strategy using the adapted ECCM model.

1.2 Research Questions

1. What are the factors inhibiting successful/profitable e-commerce deployment in government organisations?

2. How can government organisations achieve the revenue generation objective of their e-commerce strategy?

1.3 Research Context

Figure 1: Research Context
The research is a case study and as such will incorporate an exploratory approach in the phenomenon because it aims to determine the present facts as well as facts that are not yet explored about the phenomenon (Yin, 2003). Exploratory research using an interpretive/constructionist approach will enable the study to look at the problem in both descriptive and exploratory manner. It will look into the problem by exploring the views of different sets of respondents, as well as by exploring different literatures related with the study.

For this study, primary research and secondary research will be used. The primary source of data will be obtained from the semi-structured interviews and teleconferences held with the Met Office staff regarding the experiences with e-commerce initiatives. Secondary sources of data will consist of Met Office published articles, Met Office website, websites of other weather service providers, books, journals and related studies on e-commerce and e-government.

1.4 Research Ethics
In accordance with the ethical guidelines put forward by Saunders et al. (2007), the personal details of the interviewees will be kept confidential. In addition, all details collected both from the organisation and individuals interviewed will be used exclusively for the purpose of this research alone.

1.5 Significance of the Research
The significance of this work is premised on three main reasons. First, as identified by Damanpour (2001), in launching e-commerce initiatives, organisations are increasingly focusing on how these initiatives advance the organisation's overall business strategy - whether it improves customer satisfaction, increases brand awareness or opens up new revenue channels. This fact was also buttressed by authors such as Ho (1997) and Ruppel et al. (2003). Government organisations too cannot afford to be left out of the race and must start aligning their actions in this direction hence the opportunity arises for the writer to suggest a model.

Secondly, Gil-Garcia and Pardo (2005) argue that the key challenges for IT initiatives in government organisations are information/data, information technology, organisational/managerial, legal/regulatory and institutional/environmental challenges. Executives and managers in government organisations therefore need a practical yet theoretically sound model to guide their actions when contemplating e-commerce initiatives. Given this very pertinent observation, the writer hopes that the proposed model will provide a solution for this scenario.

Lastly, beyond its academic value, the writer hopes that executives and managers working in the Met Office in particular and government organisations in general will find the suggested model simple, practical and easy to use when deploying their e-commerce initiatives.

1.6 Structure of the Dissertation.
The remaining part of this dissertation is structured as follows.

Chapter Two (Literature Review): This section provides an overview of e-commerce in general, analyses various e-commerce models, discusses the factors affecting e-commerce in government organisations, evaluates the role of ICT in e-commerce and concludes with a discussion on the suitability of the ECCM.

Chapter Three (Research Methodology and Design): This section provides an introduction to the methodology and research designed used for this dissertation. It goes on to discuss the research paradigm as well as the data collection and analysis techniques used for this research.

Chapter Four (Data Analysis and Interpretation): This section introduces the organisational background of the Met Office, explores the adaptability of the ECCM to the Met Office case and goes on to analyse the responses of interviewees.

Chapter Five (General Discussion and Conclusion): This concluding part of the dissertation discusses the research implications of this dissertation on e-commerce initiatives in government organisations. It also contains the constraints and limitations of the research as well as the academic reflections of the writer regarding this research."