Managing Technological Innovation - Assignment Example

Assignment Your section/ December 24, 2009 What level of organizational cohesion and complexity is necessary to consider industry partnerships? Industry partnerships or strategic alliances are depended upon the resource base, strategic needs or social opportunities. For organizations to align together there are certain cohesion factors and complexities that need to be taken care of. But more than that change in market and social factors are the reasons for initiative of industry partnership. Partnerships are formed when organizations are in susceptible strategic situation either because of competition in the emerging market or being present in highly competitive industry or even due to the attempt of revolutionary specialized approach. Industry partnerships also come in shape when organizations are socially robust, having a strong backbone of top executives with respect to size, presence and connections (Kathleen M. Eisenhardt & Claudia Bird Schoonhoven, 1996). To be specific, there are three major aspects of partnerships: foundation, formation, and structural preferences. The ‘foundation’ for partnership implies to the likelihood of organizations to add value to the overall business by their shared resources. When we say ‘formations’, it refers to properties such as limitation of convenience and commutability. By structural preferences we mean the types of ventures, which can be equity joint ventures, minority equity alliances, bilateral contract-based alliances, and unilateral contract-based alliances (T. K. Das & Bing-Sheng Teng, 2000). All above reflects to organizational cohesion and complexity present in partnerships, which eventually demonstrates the performance of individual partners. Here are few basic characteristics to consider before setting industry partnership: The core competencies and competitive advantages Current and projected influences on the industry and the competitive environment Current and future constraints on resources and operations Possibilities, probabilities, and capabilities in the organization today Previously pursued opportunities that did and didn’t work Changes required in organizations Current financial position which includes debt, equity, cash, etc. Current relationships with revenue, gross margin, profit margin, etc 2- How do partnerships affect organizational performance? Strategic business partnerships enable organizations to achieve competitive advantage through access to shared resources. These shared resources may be based on potential markets, technology, capital, or human resources. As organizations have to input less individually, their goals are more focused thus leading to improved performance. Partnering organizations share their limited resources and business responsibilities as per the availability and expertise to expedite the process. It’s best to focus one’s resources on what they do the best and partner for the rest. Mostly those companies agree to work together which have same goal but lack in certain areas, let it be budgets, human resources, or technical expertise yet having same set of goals or share same purpose of existence. A research company Trendsetter Barometer, PWC states that “nearly 2/3 of fast-growing companies are involves in strategic alliances. In average, each fast-growing company is engaged in 5 different types of strategic alliances may it be related to joint marketing & promotion, joint selling or distribution, technology licenses, R&D contracts, design collaborations, production arrangements, business expansion or outsourcing”, (Alex Horbász, 2003). However, if goals and objectives differ, or are not agreed upon before signing the partnership contract, organizations can counter a declining effect in the overall performance. Instead of achieving synergies, organizations can see their worst nightmare, even leading to complete shutdown. 3- Are efficiencies gained through partnerships in the pursuit of strategic organizational objectives? One of the most demanding features of partnership, regardless of its size or business is of detecting the best organizational objectives based on which, form correct strategy for achieving them. It’s essential that all the parties forming the partnership agree to objectives and goals decided initially to avoid contradictions later. It’s best to avoid unclear goals such as need to increase turnover, adding capital, or progress rapidly and be clear to the business intentions. Efficiencies are gained if objectives are SMART; specific, measurable, achievable, relative and time bound. Research proves that no matter how stable two organizations are, if they are not clear about their end results or the purpose of partnership, they may not grow if not fall. Organizations can have incredible benefits for the participants involved in the strategic partnership such as broadening prospect, offering social support, sharing financial risks, and expanding major organizational competencies when struggling with strategic complexities (Charles Kerns, 2009). Sadly, a lot of partnerships do not work out just because partners are incapable of resolving their differences. Such a situation would not occur if partners invest their time in solving the issues on common grounds earlier at the stage, saving their valuable relationships. Businesses can be improved by identifying the benefits, responsibilities, and interests of partners. There are four main benefits for organizations. They can reach out to masses, explore new markets and distribution channels, broaden the line by obtaining complementary items, and benefit from cost advantage due to expansion. W4: 1- Based on your own experience, what are some of the complexities of measuring ROI in an inter-organizational systems implementation? In the past couple of years, numerous organizations have implemented inter-organizational systems in alliance with their suppliers and customers. The specific potential of these systems differ from one organization to another, but, in essence, these systems are designed to support organizations in sharing information and integrating key business processes across organizations including procurement, sales, and billing. However, calculation of revenue and profit in inter-organizational systems is usually costly and complicated because of having multiple cost centers for different divisions. Measuring ROI is like solving a puzzle which is dependent upon many pieces to be placed together at the right spot. It’s not as simple as climbing a ladder; there are factors like costs, returns, and benefits that need to be measured separately and collectively. To calculate the return, organizations need to sum up all the financial benefit achieved from a project or a program and subtract is from the total investment made for that project or program. The revenues, benefits, and costs can be anticipated over multiple years time span to achieve present value for future returns or a countable payback period for investment made (Anthony M. Cresswell, 2004). Forming a perceptive of how such systems are implemented and how to manage the process involved in it is therefore significant both theoretically and practically. Absence of understanding the inter-organizational systems can lead to redundant tasks, thus leading to delay in work and mismanagement of budgets. This makes the measurement of ROI complicated, as cost would be formed from more than one places for the same task. System should be able to communicate with other internal systems, examining information and process requirements, conducting a financial assessment, and selecting a specific technical solution. 2- What are the major services offered by IS service providers in the customization of inter-organizational IS implementations? Information systems are at the core of the business environment, for those organizations which want to grow with Information Technology. It helps in optimizing operations, collaborating with business partners, servicing of employees, handling complex and integrated infrastructure and applications. IS service provider’s offer their services to organizations that need better integration and management of their IT environment in addition to their non-IT missions. According to Laudon, K.C in one of her books, some of the major services offered by IS service providers in the customization of inter-organizational IS implementation are management of date warehouses, enterprise resource planning, enterprise systems, expert systems, global information system, office automation, and geographic information system (Laudon, K.C, 1988). Data warehousing is a repository of an organizations electronically stored data, designed to assist in reporting and analysis procedure. IS service providers provide the services of maintaining and managing the data storage repository on behalf of the customers through the business intelligence tools, and data extracting and transforming tools? Enterprise Resource Planning and enterprise systems are there to take care of the information and data of a business or organization by connecting to repositories (Esteves, J., and Pastor, J, 2008). An expert system also known as artificial intelligence system works as a substitution to human expertise. IS service provider provides such systems to clarify uncertainties to problems. Similarly office automation services involve machines to resolve problems automatically in the absence of humans. Other services also include publishing of data over the internet which includes forming manuals and documents, website designing, and graphic designing. This involves developing and publishing data on the web openly distributed to viewers having intranet access. IS service providers also conduct independent IS audits and provide recommendations for building up strategies and ways of ensuring smooth operations. Inter-organizational information systems implementation is a fairly new concept introduced to work on the inter-organizational relationships. IS systems are not only technical solutions to improve communication across organizations, but they also supports and enable cooperation among departments. The success or failure of these systems can have severe effects on cooperative relationships. 3- What three characteristics are most common in failed ERP implementations? ERP systems are quiet complex and need thorough analysis during the planning process, depending on the size of the implementation. Even those implementations that are industry specific, are designed for a sizeable audience expecting to progress by following a template of best business practices which come through initial analysis phase. However, ERP system often fails to achieve its targeted results due to the unwillingness to change by people who have a deep interest in the existing processes. This leads to replication of those processes causing additional cost. This, sequentially, can result in redundant manual tasks and concerns of software maintenance, which minimize the original advantages of the software. When making the ERP software selection, one needs to examine the processes encoded in the software. If an agreement is not done to represent the company’s best practices based on the chosen processes, then even the right solution will lead to failed ERP implementation. Second characteristic for failed ERP implementation system is miscalculation of time and cost that would occur during the development or deployment phase. At the time of structuring estimated schedule, many companies tie their hands by under-funding their efforts and resources that would be involved in the project, or by limiting the scope through unrealistic project schedules. Variations of the amount of outside consulting that may be required and the geographical diversification of the company are often skipped leading to failed ERP implementations. Third characteristic for ERP system failure is the lack of training and education provided to the implementers as well as end-users. Initial training provided by the software vendor is necessary for success of ERP implementations. Companies fail to understand the importance of having working knowledge with end users for the selected software package to feel confident when performing their jobs. Such trainings are regularly required throughout the project, with special concentration during the weeks just prior to implementation. 4- What are three commonly used software modules in ERP systems? A number of research based studies show that approximately 70% of Fortune 1000 companies use an ERP system, including small to medium sized businesses. Statistics indicate that the ERP market has grown to $50 billion since the end of the 1990s. But not all the modules of ERP systems can be implemented by all organizations which select to go for the change. As mostly the ERP system is implemented in the manufacturing and industrial sectors, which have quiet complex processes, three software modules that make up an important part of Enterprise Resource Planning system are commonly used. These are logistics, finance & accounting, and human resources. These modules are important because they allow organizations to achieve additional expertise in the areas of production and order processing. Finance & accounting is one of those modules which is adopted by nearly all companies, regardless of its size; others like marketing and manufacturing are less required by organizations. Modules like manufacturing would not be needed in a services or accounting industry. Some organizations do not adapt few modules also because of their currently running systems which are stable and convenient to use since the more the modules implemented, the greater the implementation, deployment and maintenance cost and risk (Esteves, J., and Pastor, J., 2008). 5- What are three common international issues in inter-organizational ERP implementations? Implementation of ERP internationally gives rise to further complexity to the already complex system of ERP. When we talk about global ERP implementation, few more dimensions are supposed to be looked into to avoid failure in the implementation. As per the research based on both primary and secondary means, Department of Industrial Management, Comprehensive Research Center, Chung-Hua University, Taiwan have examined the market and concluded that major issue is the ‘national differences’ of ERP team and the organizations for which the implementation is carried out. When we say national differences, we mean the difference in the language, culture, politics, government regulations, management style, and labor skills of different countries (Chwen Sheu, Bongsug Chae and C.-L.Chen-Lung Yang, 2004). Difference in language can cause miscommunication between the teams, similarly having different culture and management style can affect the motivation level of the project team. Politics and government regulations often affect the timelines causing delay in the actual time as compared to estimated one. These effects if taken care of can facilitate organizations to proactively plan their project budgets and schedules. Further issues are caused by technical factors, such as business process reengineering, customization, federalism, outsourcing pattern, and supply chain. International ERP implementation in interorganizations fundamentally transforms the organizational information systems, which are already complicated. This requires vigilant planning of implementing ERP systems internationally. Issues are also caused if leadership and planning committee is weak in managing its labor internationally. There are certain factors which highlight the downfall or failure of the ERP implantation project held internationally. Organizations having close communication style do not allow ideas and suggestions by the team. The lack of communication leads employees to unclear purpose of the ERP implementation. Such organizations are less open to change management and employees are not encouraged to share their concerns about the ERP implementation. Employees do not consider themselves as valuable resources for the organization thus leading to employee disloyalty and failure in correct implementation process. Above are the three common international issues in inter-organizational ERP implementations worldwide. References Kathleen M. Eisenhardt & Claudia Bird Schoonhoven (1996). Organization Science Vol. 7, No. 2, Department of Industrial Engineering and Engineering Management, Stanford University, Stanford, California 94305. Retrieved December 19, 2009, from http://orgsci.journal.informs.org/cgi/content/abstract/7/2/136 T. K. Das & Bing-Sheng Teng, (2000). A Resource-Based Theory of Strategic Alliances, Journal of Management, Vol. 26, No. 1. pp. 31-61. Retrieved December 19, 2009, from http://www.citeulike.org/user/prod/article/4077620 Alex Horbász, (2003). Partnering for Growth CEO Perspectives [Electronic Version] Ontario Leading Growth Firm, 6. Retrieved on December 19, 2009, from http://www.ontariocanada.com/ontcan/1medt/smallbiz/sb_downloads/we_report_partneringforgrowth.pdf Charles Kerns, 2009. Preserve and Strengthen a Business Partnership, [Electronic Version] Graziadio Business Report-A Journal of Relevant Information and Analysis. Retrieved on December 19, 2009, from http://gbr.pepperdine.edu/994/partners.html Anthony M. Cresswell, 2004. Return on Investment In Information Technology: A Guide for Managers, Center for Technology in Government [Electronic Version]. Retrieved on December 20, 2009, from http://www.ctg.albany.edu/publications/guides/roi/roi.pdf Laudon, K.C. and Laudon, J.P. Management Information Systems, (2nd edition), Macmillan, 1988. Esteves, J., and Pastor, J., (2008). Enterprise Resource Planning Systems Research: An Annotated Bibliography, Communications of AIS, 7(8) pp. 2-54. Haag, S., Cummings, M., & Phillips, A. (2005). Management information systems for the information age (6th ed.).New York: McGraw-Hill. Chwen Sheu, Bongsug Chae and C.-L.Chen-Lung Yang, 2004. National differences and ERP implementation: issues and challenges, Volume 32, Issue 5, Pages 361-371. Katz, R. (2003). The human side of managing technological innovation (2nd ed.). New York: Oxford University Press. Sumner, M. (2005). Enterprise resource planning. Upper Saddle River: Pearson Galliers, R. D., & Leidner, D. E. (2003). Strategic information management: Challenges and strategies in managing information systems (3rd ed.). Elsevier. Ettlie, J., & Pavlou, P. (2006, May). Technology-based new product development partnerships. Decision Sciences, 37(2), 117. Read More