1 of 35 Networkability van Netwerken? Dr. Martin Smits Center for Research on Information Systems and Management (CRISM) School of Economics and Business Administration Bedrijvendag Gridforum – 25 juni 2007

2 of 35 Tilburg University

3 of 35 “Wat zou het mooi zijn als je de mogelijkheden van meerdere computers en de randapparatuur die daaraan verbonden is op een simpele manier kan ontsluiten?” “… zo eenvoudig als met een stekker stroom uit een stopcontact halen ….” (‘Wat is een GRID’, Foster en Kesselman, 1998)

4 of 35 Bediening via RT3? Signaal naar Aux? Voeding? Bediening via ipod? Belkin TuneCast™ Mobile FM Transmitter GRID: een zegen voor de consument? en…… Navigatie op postcode? Navteq? MagnetiMarelli?

5 of 35 Networkability van Netwerken? B2C → B2B Intro: –Netwerk –business bus –networkability –performance Voorbeelden: –Unitech netwerk –Aces Direct netwerk –Kantonal Bank netwerk En dan?

6 of 35 Take aways Succes van je bedrijf wordt bepaald door succes van het business netwerk. –Hoe ontwikkelt zich zo’n business netwerk? –Wat kun je daar als bedrijf aan doen? Succes business netwerk wordt bepaald door –Networkability (van Producten, Processen, Organisatie, IT) –IT investeringen: interne IT => IOSintern => IOSextern –Governance mechanismen in het business netwerk

7 of 35 Aandeel van de transactiekosten in US-BNP steeg van 25 % (1870) naar 55% (1970) en 60% (2000) [Wallis/North 1986; Mertens et al. 2000] Verklaring is de verticale differentiatie in veel industrieen [Corsten/Gabriel 2004, 23]

8 of 35 (1) Business Netwerk Drie of meer organisaties, onderling verbonden, zodanig dat een gezamenlijk doel kan worden gerealiseerd (Provan ea, 2007) – : 26 empirische “whole network” studies –Hoe ontwikkelen netwerken zich? –Hoe worden ze bestuurd? (netwerk governance?) –Hoe worden collectieve resultaten gerealiseerd? “teveel focus op 1 organisatie betekent het missen van succes uit collectief gedrag”

9 of 35 Firm 1 Firm aFirm b Firm cFirm N Whole Network; ‘Smart Business Network’ Netwerkorganisatie Firm performance Network performance IOS/ relationship

10 of 35 Veel voorbeelden van de behoefte aan efficiente netwerkvorming Opstarten samenwerking Entry barriers Beeindigen samenwerking Exit barriers Uitvoering samenwerking Stroomlijnen Transacties Netwerkvorming

11 of 35 Netwerkorganisatie en IT infrastructuur (2) Business Bus

12 of 35 Business Bus eService e.g. Credit rating e Service e.g. Bill presentation eService e.g. Directory service eService Product documentation Accessories Insurance Integrator e.g. Dealer Publish Garage Rent-a-car Customer e.g. Car owner Information Driver Police Configure Production planning Finance Payment... Producer e.g. Car manufacturer (2) Business Bus

13 of 35 (3) Networkability Networkability is an organization’s capability to... efficiently cooperate with internal and external partners Quickly establish, develop and dissolve IT-based business relationships (Wigand et al, 1997) Networkability bepaalt de efficientie van netwerkvorming door een individuele organisatie Process Product en Services (Modularization; digitization..) Proces (transparatie Conflict mgmnt) Information Systems (standaarden; integratie) Organization Structures (power distribution; granulariteit; etc) Employees (ability to.. acquire inf) [Oesterle, Alt, 2002]

14 of 35 Vier soorten netwerk-onderzoek (e.g.: Structuur, Processen, Relaties, Governance, IT gebruik, Business bus Networkability) (IT performance, business performance) Provan ea, 2007 Alt & Smits, 2007

15 of 35 Onderzoek naar Netwerken Wat gebeurt er met het netwerk als geheel? –Longitudinaal; vergelijkend; good cases Aandachtspunten: –Structuur: Positie van organisaties in het netwerk (centraal/ perifeer); Relaties (direct/ indirect) –Processen/ functioneren/ governance –Business Bus: IT, applicaties, standaarden –Networkability (product, proces, staf, IT) –Performance Wat betekent dit voor organisaties in het netwerk? En voor IT leveranciers…

16 of 35 Unitech

17 of 35 Unitech (in 2000: 360 fte, $ 170 m) ‘handheld scanners (ADC) for commercial logistics’ Apple HP ea (40) material suppliers in Taiwan sales, distribution Taiwanese customers design, production, sales, distribution BU1 BU2 design, production BU3 Sales, distribution USA China EMEA Japan

18 of 35 Material Supplier 1 Material Supplier 2 Intel NEC, Sony, Philips Material Supplier 3 Material Supplier N Unitech Taiwan R&D, Manufacturing Marketing, Sales > < < < < retailer Customers < 0 > = Netwerk structuur 1997

19 of 35 Material Supplier 1 Material Supplier 2 Material Supplier 3 Material Supplier N retailer Customers EMEA Unitech Taiwan R&D, Manuf Unitech Europe Sales, Distr Unitech Other branches Third party Solution Providers Taiwan 40 Third party Solution Providers Europe Intel NEC, Sony, Philips Netwerk structuur 2001

20 of 35 Material Supplier 1 Material Supplier 2 Material Supplier 3 Material Supplier N 10 System Integr retailer Customers In Europe Unitech Taiwan R&D, Manuf Unitech Europe Sales, Distr Unitech Other branches Third party Solution Providers Taiwan 7 Value Added Distri- butors Intel NEC, Sony, Philips Netwerk structuur 2007 retailer 65% 30% € 8 M/yr

21 of 35 Governance?

22 of 35 6 x governance & busformatie? Alignment a. IT infrastructure did not meet the business requirements. UT aimed to achieve better internal fit: business strategy (Da) affected the organizational structure (La), finally impacted IT applications (Ia). Alignment b. Strategies (Db) and SCM processes (Lb) of large UT-suppliers forced UT SCM to use on-line inquiries of inventories (Lb) and to implement application b, a web site (Ib) to support this. Alignment c. Business strategy in UT (Dc) drives IT strategy (Lc), impacting the ERP system and SCM in UT and UE (Ic). Alignment d. In order to achieve the new business strategy objectives (Dd), UE had to re-build the company structure (Ld), and acquire a proper (but simple) IT infrastructure (Id), to meet the basic requirements of internal control (Ld). Alignment e. UE decided to further develop its own IT infrastructure to enable downstream SCM by developing a simple web site (system e). UE strategy drives (De) UT SCM processes (Le), resulting in a website and influencing SCM in downstream partners (Ie). Alignment f. In 2003, UE decided to develop an ERP based on-line ordering system (system f) to improve process efficiency, accuracy of internal and external management reports and to provide online order fulfillment to regional partners (Df), influencing SCM and SC structure (intensify the linkages between the business processes and IT architecture) and a planned IT strategy (Lf), leading to the implementation of a website (If).

23 of 35 Networkability Scores Product Process Information SystemsOrganization Structures Employee UnitechTaiwan Unitech Europa Product Process Information SystemsOrganization Structures Employee UnitechTaiwan Unitech Europa

24 of 35 Unitech Netwerk Performance Business –Improved customer satisfaction (=> top 5) Rapid responses? swift repairs and upgrading More customer services, customized products, prices –Improved annual sales & revenues ( ?) –Inventories => 30% of sales (1000 products; 3000 spare parts) IT –No standards (ERPs Oracle en Navision) –Basic information sharing ( s) –Simpele web-portals en catalogues –Geen netwerk business bus

25 of 35 Bevindingen Unitech Case Complexe relatie tussen ‘structuur van netwerken’, ‘networkability van organisaties’ en ‘netwerk performance’ Aanwijzingen dat netwerk performance sterk kan verbeteren zonder substantiele networkability van IT … maar verdere ontwikkeling wordt belemmerd als IT networkability laag is …. (?)

26 of 35 ACES DIRECT

27 of 35 Aces Direct IT retail in Nederland OEMs Business client BB product specification services Icecat BB order processing services Onetrail 67 BB IT services IT companies BB lease services Lease Companies BB Physical distribution services DHL Microsoft HP Toshiba Aces Direct TechData IT retail markt (NL): € 2 mrd /jr AD 1-2% markt aandeel; 17 fte TD (NL) € 400 mln/yr Ingram Micro Copaco ECT Pluz SMEs

28 of 35 Networkability Scores

29 of 35 Bevindingen Aces Direct Netwerk Structuur van het netwerk –AD = focal actor, ketenverbreding –New ties with Camera and TV suppliers; leasing; maintenance… –#direct ties ↑ (7) & # indirect ties ↑ (>20) –Firm level = standardization of products, services, processes Netwerkprocessen –Shared objective: ‘fulfilling IT services’, varying per actor –Chain becomes Service network –Competition with other IT- retail networks (MISCO, price  quality) Business Performance –Fast growth in market “IT for SME in NL” –Customers evaluate overall AD performance; AD evaluates suppliers –Shared performance indicators? IT performance –Network level = several (vertical) 1:1 IOSs –National/ industry level = several N:1:M b-buses; product standards

30 of 35 Bevindingen Aces Direct Netwerk Ook hier complexe relaties tussen structuur, processen, networkability en performance Performance AD improved, due to (?) –Specific (vertical) IT investments within the network –Generic (horizontal) IT investments outside the network

31 of 35 Swiss banking Group of 24 cantonal banks in Switzerland founded in 1907 Total of 17‘000 employees 90% of revenues within Switzerland Large tradition of shared services, e.g. financial products, production centers Shared IT operations began in 1971 with RTC, followed by AGI in 1987 and Unicible in 1992

32 of 35 Eén network voor de cantonal bank group (1995) St. Gallen Thurgau Zurich Lucerne Bern Basel Jura Aargau Schwyz Nid & Obwalden Uri Wallis Neuenburg Schaffhausen Appenzell Glarus Graubunden Frbourg SWIFT RTC Business Bus centralized services (e.g. product data) Swisscanto Funds VESECA Credit Card Foreign Exchanges Reuters Bloomberg External services Internal services RTC ERP Business customers

33 of 35 Drie netwerken voor de cantonal bank group (2006) St. Gallen Thurgau Zurich Lucerne Bern Basel Jura Aargau Schwyz Nid & Obwalden Uri Wallis Neuenburg Schaffhausen Appenzell Glarus Graubunden Frbourg SWIFT Swisscanto Funds VESECA Credit Card Foreign Exchanges Reuters Bloomberg External services Internal servics FINOVA ERP RTC ERP AVALOQ ERP FINOVA ERP FINOVA Business Bus (Data en Process standards) AVALOQ Business Bus Business customers Challenges on network level Redundant services (e.g. product data service within each network) Platform-specific services (e.g. Avaloq-services not usable within RTC network) Sunk costs when banks change service providers RTC Business Bus

34 of 35 Bevindingen Swiss Banking Structuur –Clustervorming Networkability –Afname tussen de 3 groepen –Toename binnen 1 groep Business performance –Meer diensten (per netwerk) –Kostenstijging van services (minder economies of scale) IT performance –minder interoperability tussen de netwerken –Hogere IT kosten op netwerk niveau (3 verschillende platforms)

35 of 35 Conclusies literatuur & 3 cases Networkability = f(Product, Process, Org., Pers., en IT) Networkability(organisatie)  Networkability(netwerk) Cases: –Unitech: Netwerk Performance ↑ ook als NW IT = Maar voor meer performance is NW IT voorwaarde? –Aces Direct: Netwerk Performance ↑ ↑ als NW IT ↑ ↑ –Kantonnal Banken: Netwerk Performance ↓ als NW IT ↓ Maar misschien tzt per cluster NW IT ↑ ↑ en performance ↑ ↑ Governance van netwerk en IT –Vanuit focal actor perspectief (?) –Balans tussen interne IT, IT binnen netwerk en IT met andere netwerken

36 of 35

37 of Netwerkvorming in de bancaire sector: Swiss survey shows increasing outsourcing activities by 2010 ADMPayment execution SecuritiesLoans Value adding activities of banks (n=54) Degree of inhouse organization (n=54) Sales Competence centers Settlement Support

38 of 35 Networkability – design objects Products and services –Degrees of modularization/ specificity of adaptations/ multiple usability Processes –Transparency for partners/ openness of information exchange/ existence of conflict management system/ inter-organizational monitoring/ coordination scenarios Organization structure –Distribution of power/ homogeneity of organizational structures/ granularity and flexibility of organizational units/ ## internal&external partners Employees –Ability for personal networks/ ability to acquire information Culture –Distribution of benefits between the partners (reciprocity)/ intensity of exchange of knowledge and experiences/ lived openess/ dealing with trust Information Systems –Use of application and communication standards/ form of IT integration (EDI; remote login; security mechanisms & access rights