Description
In this paper, we propose a two-step framework to advance our knowledge of how to identify and evaluate opportunities presented by emerging information technologies (IT).
785
15
th
Bled Electronic Commerce Conference
eReality: Constructing the eEconomy
Bled, Slovenia, June 17 - 19, 2002
Assessing the Value of Emerging Technologies:
The Case of Mobile Technologies to Enhance
Business-To-Business Applications
Judith Gebauer
University of Illinois at Urbana-Champaign, United States
[email protected]
Michael J. Shaw
University of Illinois at Urbana-Champaign, United States
[email protected]
Kexin Zhao
University of Illinois at Urbana-Champaign, United States
[email protected]
Abstract
In this paper, we propose a two-step framework to advance our knowledge of how
to identify and evaluate opportunities presented by emerging information
technologies (IT). As a first step, we match the features and limits of the IT
innovation with the requirements of the application areas in question, typically on
the business process level. As a second step, we sketch out guidelines to evaluate
these windows of opportunity in a quantitative way. To further explain the
framework and showcase its applicability, we provide a proof-of-concept case
study, reporting on the application of wireless technologies to enhance an
electronic procurement application at Motorola, Inc.
Judith Gebauer, Michael J. Shaw, Kexin Zhao
786
1. Introduction
Despite a wealth of research on the impact and value of information technology (IT)
investments, poor estimations of the impact and value of new technologies still tend
to be the norm rather than the exception. Bill Gates is said to have observed, “The
impact of technology is generally overestimated in three years and underestimated
in 10 years.” The recent phenomenon of over inflated stock prices of companies
that were somehow based on or connected with emerging Internet technologies
constitute a clear indicator for such a development. Ever since the so-called
Internet-bubble burst stripping many investors of their money, employees of their
jobs, and entrepreneurs of their companies, market observers have been searching to
discover the “next big thing.” Mobile technologies are one of the areas that have
received particular attention, and chances are that the circle of
overestimation/underestimation is just beginning anew.
Rather than providing an overview of usage scenarios for mobile technologies in
organizations (see for example Tarasewich et al. 2002 for such an overview), we
intend to develop a more general, structured framework of how to assess the value
of emerging technologies. We propose a two-staged model that can help identify
application areas for emerging technologies and allow for a realistic evaluation of
their economic benefits. With our framework, we hope to contribute to breaking the
circle of overestimation/underestimation of the value of new technologies, as well
as to provide a tool that can ultimately help business managers deploy IT in a more
targeted way.
The structure of the paper is as follows. We begin with an overview of earlier
research on IT value, and point out missing elements to identify and assess the
opportunities for the application of an emerging technology. We then propose a
framework to close the gap, and demonstrate its applicability with a real-life case,
the use of wireless technology to enhance an electronic procurement system.
Finally, we point out a number of issues that need to be addressed in further studies
to complete the framework.
2. Literature Review
Much research has been undertaken to assess the value and impact of information
technology (IT) and the investments that are necessary for its deployment.
Mirroring the fact that this topic is very rich and multi-faceted, a number of areas
have been at the focus of attention. One stream of research discusses the advantages
and disadvantages of evaluating IT investments at different levels, such as the
economy and industry level (Loveman 1994), firm level (Mahmood & Mann 1993),
process level (Mooney et al. 1996) and from the perspective of the individual
(Davis 1989). Others emphasize the importance of including complementary factors
and taking a holistic approach, versus isolating the impacts of technology and
Assessing the Value of Emerging Technologies: The Case of Mobile Technologies…
787
focusing on IT alone (Teece 1987, Barua et al. 2001). Similarly, there is a
distinction between tangible benefits and intangible factors (Brynjolfsson & Hitt
1996). Finally, several researchers have pointed out the relevance of expected and
potential value versus realized impacts, which takes into consideration possible
inhibitors of IT success (Davern & Kauffman 2000, Chircu & Kauffman 2000).
There seems to be some consensus that, ideally, the assessment of IT impact and
value should be at the level of the implementation (Barua et al. 1995), and that it is
desirable to take into consideration as many contingency factors as possible, be they
related directly or indirectly to the IT system of study (Mooney et al. 1996). Given
the complexities of organizational structures and interrelated factors it comes at no
surprise that such a comprehensive approach is a very difficult undertaking and has
to be based on a clear understanding of the technologies, of the areas of application
and of their, often unanticipated, implications and consequences. As a result, the
use of some of the more sophisticated methods to evaluate IT might be problematic
in the context of innovative IT applications, as the assessment of the value and
further reaching impacts require a certain learning process to have taken place.
One additional point is worth mentioning. With the exception of Bennett & Weill
(1997) who explored different uses of electronic messaging infrastructures, very
little attention has been paid to the question of how to identify areas of application
for emerging technologies and the related question of how to select starting points
of deployment.
3. Evaluation Framework
Our quest to identify and evaluate areas of application for a specific, emerging
technology can draw on previous research to assess IT value. Significant gaps
remain, though, which can for the most part be attributed to different research
perspectives.
First, much of the earlier research described above has essentially focused on the
question of whether or not to deploy IT at all. We would rather like to address the
question, however, what type of IT to select in a particular situation. Moreover, we
are interested in identifying areas of application for a specific type of technology,
which reverses the research perspective to some extent. Our focus is relevant for IT
managers who observe the emergence of IT innovations, as has been the case
frequently, in particular in recent years.
In order to “catch the boat” and benefit from new technologies, but at the same time
avoid the development and deployment of expensive, yet useless toys, a careful
assessment of the opportunities and limits is essential. So, we propose a two-staged
model to answer the questions of “What are possible areas of deployment for a
specific technology?” and “Where should we start?” The two-staged model is
depicted in Figure 1.
Judith Gebauer, Michael J. Shaw, Kexin Zhao
788
As a first step, we need to find out about the characteristics of the new technology,
and where it could be applied within the organization. We chose to conduct a
qualitative analysis to match the characteristics of the emerging technology with
respect to its potentials and limits with the requirements of the organization and
underlying processes. In line with the postulation to perform an assessment of IT
value at the level of the actual implementation, we focus our attention on the level
of the business process. The results of this first step are termed “Windows of
Opportunity” and serve as the input for the second part of the analysis.
As a second step of our framework, we need to answer the questions of “how much
can be gained from the new technology“ and “whether an organization should
invest in it.“ Consequently, a quantitative element is added to the analysis. For each
of the windows of opportunity that were identified during the first part, situation
and context-specific variables would have to be evaluated. The result is a measure
of economic value that will help a manager identify the areas where the deployment
of the new technology promises to be most beneficial.
Technology
Organization and
Process
Characteristics
(Qualitative)
Economic
Value
! Basis for
decision
Situation and
Context-Specific
Variables
(Quantitative)
Step 1:
Identify areas
of application
Step 2:
Determine
costs and
benefits
Windows of
opportunity
Match
Evaluate
Technology
Organization and
Process
Characteristics
(Qualitative)
Economic
Value
! Basis for
decision
Situation and
Context-Specific
Variables
(Quantitative)
Step 1:
Identify areas
of application
Step 2:
Determine
costs and
benefits
Windows of
opportunity
Match
Evaluate
Figure 1: Evaluation Framework (Overview)
The consideration of context and situation-specific variables is essentially in line
with the postulation of assessing the value of IT holistically, that is, viewing
technology embedded into a larger system. Accounting for the fact that we want to
develop a framework that is most of all applicable to emerging technologies, the
assessment of complementary factors receives comparatively less emphasis, though,
reflecting the early position on the learning curve. We also want to point out that
the result of our second stage, the economic value of a technology, to some extent is
Assessing the Value of Emerging Technologies: The Case of Mobile Technologies…
789
in line with the notion of potential or expected value, the significance of which has
been pointed out by Davern, Kauffman (2000), and Chircu and Kauffman (2000).
In the next sections, we use the proof of concept model to explain the model in
more detail.
4. Proof of Concept
We will now elaborate further on the evaluation framework and demonstrate its
applicability to wireless technologies to enhance business-oriented electronic
commerce applications. Despite our narrow focus to demonstrate the concept, we
see the framework to be applicable on a broader basis, beyond procurement
processes and possibly also beyond wireless applications.
Our proof of concept is based on a project that we conducted in collaboration with
Motorola, Inc., where the successful implementation of an electronic procurement
system lead to considerations to enhance its functionality and reach with the
application of emerging, wireless technologies. Such a step would allow managers,
for example, to perform the approval of requisitions, especially urgent ones, with a
two-way pager or cell phone. Further cycle time reductions and increased
productivity beyond what has already been achieved with the electronic
procurement solution are the expected results.
The application of electronic commerce technologies to support business processes
within and between organizations has brought numerous benefits, including
transaction cost and cycle time reductions, improved data transparency, and
streamlined processes (Saloner, Spence 2002). One area that has gained significant
attention is the use of Internet-based applications to support and automate non-
production procurement processes (Fitzgerald 2000). During the late 1990s, a
number of organizations started to implement applications that would allow
employees to order operational supplies from their desktops without having to go
through the central purchasing department or to fill out a large number of paper
forms. Purchasing requests are submitted electronically by an end-user, routed
automatically for approval according to organization-internal business rules, to
automatically result in a purchase order that is then sent to a supplier for fulfillment.
To date, most implementations have been undertaken in large organizations,
involving hundreds, often thousands of users, and large numbers of suppliers and
business rules. Reported results are typically significant although they do not come
easy, given the complexity of most projects often leading to unanticipated hurdles.
Some of the limitations that remain can be attributed to the technology that is being
used, rather than organizational issues, and could possibly be resolved by enhancing
the current solutions with appropriate technologies. Traditionally, business
applications are accessed from workstations or personal computers stationed in a
corporate or home office. Situations where employees are away from their desks
Judith Gebauer, Michael J. Shaw, Kexin Zhao
790
without access to a computer or dialup connection, e.g., while traveling, typically
also preclude access to these applications. As a result, email-messages, notifications
and requests, e.g., to approve a purchasing requisition, are delayed until desktop
access is regained. The implications in terms of cost and productivity losses can be
significant and possibly ripple through larger parts of the organization.
Consider the case where the purchase of a computer for a new hire is delayed
because the approval manager has left for an offsite meeting and is, thus, away from
his desk and out of reach. For such situations, increasing the accessibility of the
applications beyond desktop computers could prove beneficial. Wireless
technologies feature just the required functionality as they could provide an
additional access channel. Using an Internet-enabled cellular phone or handheld
device, users would log into the application by using a personal ID, and then
navigate through a simplified menu by using the keypad of the device and perform
the required tasks from (almost) anywhere at any time.
The areas of application need to be assessed carefully, however. Wireless
technologies cannot be seen as a panacea or full substitute to “traditional” electronic
commerce systems, as they have their own limitations, while at the same time
requiring significant investments.
4.1 Technology Assessment – Identification of Opportunities
In order to identify areas of application for wireless technologies, we need to obtain
a good understanding of the business requirements, as well as of the opportunities
presented by the emerging technologies. In the following, we first describe a typical
business-to-business electronic commerce application, as it is represented by
Motorola’s electronic procurement system. A brief outline of the major components
is followed by a discussion of the benefits and limits of the system. Second, we turn
to emerging, wireless technologies, and provide an overview of the possible
benefits and limits, as they are relevant in the context of our representative
electronic commerce system.
4.1.1 Benefits and Limits of Electronic Procurement Applications
In 1997, Motorola embarked on a major project to improve the organization of its
non-production procurement processes on a corporate level. At the time, non-
production procurement at Motorola was highly decentralized with diverse business
routines and multiple procedures throughout the different parts of the corporation,
resulting in a situation where the company was not really able to take advantage of
its combined annual non-production spend of several billion dollars. In addition,
most processes were paper-based resulting in long cycle times, frequent errors, and
costly double-data entries.
Assessing the Value of Emerging Technologies: The Case of Mobile Technologies…
791
The efforts to re-organize the process concentrated on three, closely interrelated
areas. On the one hand, the project team started to apply strategic sourcing concepts
as they are typically used in strategic, production-oriented procurement to the non-
production area. Commodity managers were appointed to analyze purchasing
patterns within and across organizational units, to assess supplier performance, and
to identify opportunities for corporate-wide supplier contracts. On the other hand,
the project team made an effort to streamline business procedures and establish
corporate wide standards, in particular for approval routines. The third element of
the integrated approach was the application of an electronic commerce system to
automate standard buying processes and to capture corporate procurement
information. The system provides a browser interface to employees and enables
them to purchase items from pre-defined electronic catalogs and have their requests
routed to higher-level managers for approval according to built-in business rules.
Approved requests automatically generate purchase orders that are sent out to the
suppliers. Figure 2 provides an overview of the system architecture.
In combination with the organizational changes, the IT-system provides a number
of benefits. For once, it frees purchasing personnel from routine, operational tasks,
as end-users can now perform purchasing requests directly from their desktops,
instead of submitting forms to the purchasing group. Instead of a procurement
manager, it is the system that checks for compliance with corporate buying
standards and automatically notifies approval managers, and other areas involved
such as receiving, and accounting personnel. As a result from channeling the users
to preferred suppliers, purchases under pre-negotiated contracts have increased
resulting in an overall higher leverage of Motorola’s buying power, as well as
improved availability of items. The centralized system also facilitates the analysis
of spending patterns and supplier performance on a corporate-wide basis, in ways
that were not feasible before. In addition, the elimination of paper-based procedures
resulted in a reduction of cycle-time from weeks to a few days.
Motorola’s electronic procurement system is comparable to many projects initiated
elsewhere, mostly in larger corporations, throughout the late 1990s, in terms of
scope and benefits, but also in terms of complications. Similar to the experiences at
other organizations, the implementation of a centralized front-end application at
Motorola turned out to be quite complex, as were the changes that this
implementation brought with it. In order to establish corporate wide standards and
business routines a heterogeneous set of systems and procedures had to be
integrated. Technical hurdles had to be overcome, such as the integration of
supplier data into a single, aggregated online catalog or linking the desktop-
application with backend enterprise data systems. Organizational challenges
included end-user training, as well as convincing managers that they had to give up
“their” suppliers and oftentimes long-established business routines.
Judith Gebauer, Michael J. Shaw, Kexin Zhao
792
Treasury
Human
Resources
Electronic
Procurement
Application (Ariba)
Electronic
Procurement
Application (Ariba)
Buyers
Users
Financial
Shared Services
(FSS)
• Vendor master
• Accounts payable
• Fixed assets
• General ledger
• Authorization list
• Employee information
• Exchange rates
Suppliers
• Orders
• Catalogs
• Invoices
Receiver
Treasury
Human
Resources
Electronic
Procurement
Application (Ariba)
Electronic
Procurement
Application (Ariba)
Buyers
Users
Financial
Shared Services
(FSS)
• Vendor master
• Accounts payable
• Fixed assets
• General ledger
• Authorization list
• Employee information
• Exchange rates
Suppliers
• Orders
• Catalogs
• Invoices
• Orders
• Catalogs
• Invoices
Receiver Receiver
Figure 2: Architecture of Motorola’s Integrated Electronic Procurement System
One challenge that can possibly be addressed with wireless technologies is system
access (Figure 3). The project team feels that significant inefficiencies are still part
of the process. Examples include delays in the approval process when a manager in
charge is out of the office and cannot access the procurement application from a
desktop computer, or urgent requests for equipment as they might occur out in the
field when a trip to the next hardware store is significantly shorter and more
convenient than returning to the office and booting a desktop machine. Increasing
the reach of the application to include mobile access promises productivity
improvements through further cycle time reductions, and increases of overall
system usage and process compliance.
Assessing the Value of Emerging Technologies: The Case of Mobile Technologies…
793
IP
-
Supplier
Gateway
B2B Server
User
Buyer
IP Network
Wireless
Network
IP
-
Supplier
Gateway
B2B Server
User
Buyer
IP Network
Wireless
Network
Figure 3: Infrastructure to Enable Wireless Access to Business Applications
4.1.2 Benefits and Limits of Wireless Technologies in Business-
to-Business Settings
To this date, it is unclear what impact wireless technology will have on business
processes and organizations. Although the penetration of wireless devices,
including cellular phones, two-way pagers, PDAs and other handheld devices, is
already quite impressive and continues to grow (see text box below), the number of
commercial applications is low, and most of the usage occurs on an individual level.
Wireless Penetration:
• An estimated 108 million mobile phones in the U.S. as of the end of 2000,
with another 25 million expected by the end of 2001. (source: Morgan
Stanley, January 2001)
• Currently 12 million data-enabled phones available in the U.S., with 112
million expected by the end of 2004 (source: IDC, Phone.com, December
2000)
• 1.3 billion wireless data subscribers worldwide in next four years (source:
Cahners In-Stat, September 2000)
• 18 million PDAs and mobile phones bundled with J2ME will be sold by end of
calendar year 2001 (source: Sun Microsystems)
• By 2003, more than a billion cellular subscribers are expected to create a $83
billion marketplace for wireless services (source: Yankee Group, February
2000)
Judith Gebauer, Michael J. Shaw, Kexin Zhao
794
In other words, wireless devices (in particular cellular phones) are most often used
for inter-personal communication, replacing a regular telephone, rather than to
access information systems or to transmit data, which would be comparable to using
a personal computer. A number of applications are available, though, as cellular
phones and two-way pagers provide access to stock market data, and allow trading
assets, checking weather reports, purchasing theater tickets, or sending short
messages to other phones and computers. Using an Internet-enabled cellular phone
or handheld device, users log into an application by using a personal ID, and then
navigate through a simplified menu by using the keypad of the device.
To this date, however, and particular when comparing the situation in the United
States to Japan or even Europe, the volume of data traffic over cellular devices is
only a fraction of voice traffic, and, again, for the most part concentrated on
personal and consumer-oriented applications. When it comes to business-oriented
mobile applications, most organizations are still waiting for the “killer-application”
that would propel the use of wireless technology, similar to the way that email or
the World Wide Web helped spread the Internet.
Returning to our two-step approach to assess the application for mobile commerce
in inter-organizational settings (see Figure 1), we want to single out the
idiosyncrasies of the new technology in relation to traditional electronic commerce
systems. What makes mobile applications special? How is the new technology
similar and how is it different from the technology used in “traditional” business-
oriented electronic commerce systems? What are possible areas of application?
Similar to other innovations, we expect opportunities to complement existing
systems, rather than to substitute them, at least in the shorter term.
The opportunities provided by wireless devices, as compared to stationary
computers and wired laptops include: wider reach of business applications as access
is not confined to an office or desk; faster access to applications in cases where
booting up a computer takes a long time; and advantages from integrating data and
voice communication into one device. In addition, the simplicity of the devices and
the fact that “they are not a computer,” might increase acceptance where employees
feel uncomfortable with using a regular desktop PC. At the same time, wireless
devices are typically also cheaper than regular computers.
Limits of the technology restrict the complexity of the information that can be
displayed, which often results in complicated usage procedures and deep navigation
structures. Reasons for these limits are small screens, limited graphical
functionality, and a comparatively small number of keys. Further limits restrict the
amount of data that can be processed wirelessly: limited bandwidth and
performance, restricted signal availability, and limited on-device storage space.
Unresolved security and standardization issues, as well as per-minute, and often
very complex, fee structures that are different from how Internet-access is typically
priced, can pose additional hurdles.
Assessing the Value of Emerging Technologies: The Case of Mobile Technologies…
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4.1.3 Windows of Opportunities
Based on these opportunities and limits, we recommend their use in situations and
processes that are characterized by one or several of the following statements:
• Task is urgent and typically triggered by notification (push, rather than pull)
• Task is a simple transaction or routine process
• Task is a simple decision process, where the amount of information to be
processed is limited
• Requirement to navigate through application menu structure is low and the
task does not require the use of multiple applications or databases
• Communication process does not require access to large files or complex
graphics
• Situation allows or even requires to combine both voice and data
communication
• Data security is not a major issue
After having identified the general areas of application for wireless access, we
break down the processes in question, to identify specific subtasks that are suited
for full or partial support. The appendix provides an example of how this
breakdown could be done, focusing on a request for approval.
In procurement, wireless systems could provide full support for the following
processes:
• Creation and submission of simple purchase requests
• Processing of simple approval requests
• Delegation of approval authority
• Status checks (tracking) of orders and shipments
• Delivery confirmation (receiving) and payment release
Additional areas of application can be identified if we include situations where
wireless technology provides a complement rather than a complete substitute to
perform a task with a wired application. In such situations, mobile commerce
supports a task partially and enables a manager to “do something” until desktop
access is regained. An approval manager, for example, who is unwilling to delegate
general approval authority while away from the office, could review a complex
request briefly on a high level, and then hand over approval rights to a trusted
colleague on an ad hoc-basis, together with detailed instructions, given over the
phone. Complex decisions that are as such too complex to be performed with a
handheld device only could be performed in part, e.g., by contacting sources of
information to confirm supplier quotes, and by doing or delegating “as much as
Judith Gebauer, Michael J. Shaw, Kexin Zhao
796
possible” while on the road. In such situations, access to information of how to
contact colleagues and fellow employees, business partners, and third parties, and
how to access additional data sources proves essential. The biggest advantage of the
wireless systems is probably their ability to integrate data with voice
communication into one device.
In this context, the task of identifying opportunities for wireless-commerce
opportunities can be facilitated if we include additional parameters into the analysis,
such as product complexity, the degree of organizational centralization and vertical
integration, as well as user characteristics and external pressures. All other things
equal, we assume that:
• Procurement processes of complex products lend themselves to partial support
by wireless applications, while the procurement of simple products can more
often be supported in full.
• Decentralized organizations and constructs of virtual organization where
independent units collaborate on a specific project, typically feature more
situations where requests are urgent, and manager are out of the office,
compared to centralized organization structures.
• Organizational groups that are familiar with the use of technology, in
particular wireless devices, will be more comfortable with using wireless
applications in new contexts, and acceptance levels will be higher than in
organizations where users are not very technology savvy.
• External pressure, e.g. in very competitive markets and fast changing business
environments, will increase the need to improve productivity, and thus create
an environment that is favorable for the application of wireless applications to
enhance existing systems.
Assessing the Value of Emerging Technologies: The Case of Mobile Technologies…
797
Mobile Technology:
+ Reach - Small Screen
+ Fast access - Limited graphics
+ Integrate Data - Few keys
and Voice - Bandwidth/
+ Simplicity Performance
+ Cost (vs. PC) - Signal Availability
- On-device storage
- Security, standards
Organization and Process
Characteristics (Qualitative):
• Tasks structured vs. unstructured
• Organizational structure centralized vs.
decentralized
• Product characteristics simple vs. complex
• Routine processes vs. single instance
• Operational processes vs. managerial
decision making
• Level of uncertainty and repeatedness
• Level of IT skills of the users
• External pressure
Windows of opportunity:
• Task is urgent & trig-
gered by notification
• Simple transaction
• Simple decision
making process
• Low value goods
• Limited information
to be processed
• Does not need mult.
data sources
• Opportunity to com-
bine voice and data
• Security not too import.
" "" "Create simple
purchasing requisition
" "" "Simple approval
"Delegation of authority
"Tracking
"Receiving
"Payment release
Match
(full
support,
partial
support)
Mobile Technology:
+ Reach - Small Screen
+ Fast access - Limited graphics
+ Integrate Data - Few keys
and Voice - Bandwidth/
+ Simplicity Performance
+ Cost (vs. PC) - Signal Availability
- On-device storage
- Security, standards
Organization and Process
Characteristics (Qualitative):
• Tasks structured vs. unstructured
• Organizational structure centralized vs.
decentralized
• Product characteristics simple vs. complex
• Routine processes vs. single instance
• Operational processes vs. managerial
decision making
• Level of uncertainty and repeatedness
• Level of IT skills of the users
• External pressure
Windows of opportunity:
• Task is urgent & trig-
gered by notification
• Simple transaction
• Simple decision
making process
• Low value goods
• Limited information
to be processed
• Does not need mult.
data sources
• Opportunity to com-
bine voice and data
• Security not too import.
" "" "Create simple
purchasing requisition
" "" "Simple approval
"Delegation of authority
"Tracking
"Receiving
"Payment release
Match
(full
support,
partial
support)
Figure 4: Step 1: Identify Windows of Opportunity for Wireless Technologies to
Support Purchasing Processes
The list is not exhaustive, but can serve as a good start (Figure 4 summarizes our
findings). Our understanding about the opportunities and limits of wireless devices
allows us to analyze individual business processes and their subtasks and to address
the question of how well they could be supported by wireless applications, either in
part or to full extent.
4.2 Evaluating the Opportunities
The guidelines that we introduced help identify situations where the application of
wireless technologies is potentially beneficial. In other words, they help to
determine which processes and sub-tasks, product categories, and organizational
groups are the best candidates for full or partial support by wireless applications.
After having identified such opportunities, an economic evaluation has to be
performed to quantify the benefits and efforts to implement the solution.
Quantifiable parameters include user characteristics, such as frequency of system
use, time spent out of the office, and urgency.
• Frequency of system use. If a user accesses the electronic procurement solution
only very infrequently, there is probably no need to extend the wireless
Judith Gebauer, Michael J. Shaw, Kexin Zhao
798
solution to him or her. Denying wireless (and therefore continuous) access to
frequent users, however, might result in significant delays in situations where
the capacity of the individual to process requests is reached during peak
periods. The application of queuing models as they are used elsewhere to
optimize manufacturing schedules, can help demonstrate these effects clearly,
and provide evidence for the benefits of smoothing out the peaks. In this case,
frequency of use corresponds with the number of tasks in a queue.
• Percentage of time spent out of reach of traditional applications. The
percentage of time that a user is out of reach for traditional applications can be
interpreted as delays in the queue, if we assume that during this time, no
requests are being processed. We would assume that, other things equal, only
users that spent a significant amount of time out of their offices would qualify
for the use of the wireless solution. Otherwise the investments required to
equip these users with an additional access channel will be hard to justify.
• Percentage of requests (or tasks) that can be considered urgent. Urgency is
another factor that we want to consider, although it is somewhat harder to
quantify than frequency and out-of-office time. A possible proxy for urgency
is the loss in productivity that occurs elsewhere in the organization if a request
is not processed promptly (e.g., a new hire sits idle without office desktop).
Another consequence would be the fines that have to be paid if projects are not
completed in time.
The parameters can be considered as mutually enforcing. In cases where two or
even all three factors are high (e.g., high frequency of system use and significant
out-of-office time), we will probably more often be able to justify the application of
wireless access on economic grounds (reduced cycle time, increased productivity),
than if only one variable is high.
Assessing the Value of Emerging Technologies: The Case of Mobile Technologies…
799
Windows of opportunity:
" "" "Create simple purchasing
requisition
"Simple approval
"Delegation of authority
"Tracking
"Receiving
"Payment release
Situation-specific variables
• Frequency of system use
(number of requests in queue)
• Percentage of time spent without
system access
(out-of-office time)
• Percentage of urgent tasks
(calculate opportunity costs,
impact on productivity per
occurrence)
Quantify the opportunity
using queuing models,
and other techniques to
calculate return on
investment
"Basis for decision
Evaluate
Windows of opportunity:
" "" "Create simple purchasing
requisition
"Simple approval
"Delegation of authority
"Tracking
"Receiving
"Payment release
Situation-specific variables
• Frequency of system use
(number of requests in queue)
• Percentage of time spent without
system access
(out-of-office time)
• Percentage of urgent tasks
(calculate opportunity costs,
impact on productivity per
occurrence)
Quantify the opportunity
using queuing models,
and other techniques to
calculate return on
investment
"Basis for decision
Evaluate
Figure 5: Step 2: Evaluate M-Commerce Opportunities
In addition and to ease the task of quantifying the variables somewhat, we can also
relate the quantitative variables with some of the qualitative characteristics that we
derived earlier to gain insight regarding the potential benefits. Figure 5 depicts an
example, pairing process complexity and out-of-office time. Interesting areas for
mobile commerce would be sections II and IV, while section I is probably less
relevant.
Additional parameters can play a role, depending on the individual implementation
or application. Given the limitations of a wireless device, for example, the menu
structure and tasks that can be performed with it will have to be kept simple, as
pointed out above. As a result, we expect situations where the task to approve a
purchasing request can actually be performed faster than by using a traditional,
desktop-based system. On the other hand, however, the use of an addition channel
and new device will probably require significant user training and a new support
infrastructure focused on wireless access to applications.
Figure 6 summarizes the variables that we considered relevant to evaluate the
application of mobile commerce to support business processes.
Judith Gebauer, Michael J. Shaw, Kexin Zhao
800
P
R
O
C
E
S
S
C
O
M
P
L
E
X
S
I
T
Y
H
I
G
H
L
O
W
PERCENTAGE OF USER
OUT OF OFFICE
LOW
HIGH
USAGE OF m-COMMERCE
IV
HIGH
III
LOW
I
VERY
LOW
II
MEDIUM
Figure 6: Process Complexity vs. Out of Office Time
5. Outlook
So far, our project has resulted in an “educated guess” about the parameters and
issues that are relevant to assess the benefits of wireless solutions to improve
business processes. Our considerations are based on input that we received from the
project team of one company and on the application of our own knowledge on
electronic procurement applications, organizational processes and wireless
technologies. Our area of interest has been very narrow, as we focused on the well-
structured family of non-production procurement processes and on the extension of
so-called desktop procurement systems with wireless access. While our analysis has
not brought about novel areas scenarios of application for wireless technologies
(and did not intend to), it is novel in its attempt of identifying the opportunities for
wireless technologies in a more structured way than has been done in the past, and
in providing a basis for a realistic evaluation of these opportunities.
More work is necessary, though, to refine the tool and finally apply it in a real-life
setting. Many questions remain open. Did we include the right parameters? Which
parameters did we omit that should have been included? How relevant are our
results? How valid is our underlying conceptual model? How applicable are our
considerations to different processes, situations, and other technologies?
During the next phases of the research project, we plan to validate our preliminary
findings with the corporate partner. We also plan to refine and test the tool by
collecting real-life data in the form of user interviews and actual system usage.
Simulations based on the statistical data will help us test the applicability of
queuing models in this context. Finally, we hope to be able to peg a number with
Assessing the Value of Emerging Technologies: The Case of Mobile Technologies…
801
respect to the economic benefits of the solutions in the case of a specific
corporation.
Our project will bring us closer to answering a question, such as “what makes a
technology special and how should we manage it? In this case, we looked at
wireless applications and their role to ultimately enable ubiquitous commerce.
References
Barua, A., P. Konana, A.B. Whinston, & F. Yin (2001). Driving E-Business
Excellence, Sloan Management Review 43 (1), 36-44.
Barua, A., C. H. Kriebel, & T. Mukhopadhyay (1995). IT and business value: an
analytic and empirical investigation, Information System Research 6 (1), 3-
23.
Bennett, M. & P. Weill (1997). Exploring the use of electronic messaging
infrastructure: the case of a telecommunications firm, Strategic
Information Systems 6, 7-34.
Brynjolfsson, E. & L. Hitt (1996). Paradox lost? Firm-level evidence of the returns
to information system spending, Management Science 42, 541-558.
Chircu, A. M. & R. J. Kauffman (2000). Limits to Value in Electronic Commerce-
Related Information Technology Investments, Journal of Management
Information Systems 17 (1), 61-82.
Davern, M. J. & R. J. Kauffman (2000). Discovering potential and realizing value
from information technology, Journal of Management Information Systems
16 (4), 121-143.
Davis, F. D. (1989). Perceived usefulness, perceived ease of use, and user
acceptance of information technology, MIS Quarterly 13 (3), 319-341.
Fitzgerald, K. R. (2000). Big buyers jump on the Internet, Purchasing 128 (4,
supp.), S7-S16.
Mahmood, M. & G. M. Mann (1993). Measuring the Organizational Impact of
Information Technology Investment, Journal of Management Information
Systems 10 (1), 92-122.
Mooney, J. G., V. Gurbaxani, & K. L. Kraemer (1996). A Process Oriented
Framework for Assessing the Business Value of Information Technology,
Database Advances in Information Systems 27 (2), 68-81.
Saloner, G. & Spence, A. M. (2002). Creating and Capturing Value; Perspectives
and Cases on Electronic Commerce, John Wiley & Sons.
Tarasewich, P., Nickerson R.C., & Walkention, M (2002). Issues in Mobile E-
Commerce, Communications of the Association for Information Systems
Volumn 8, 41-64.
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802
Teece, D. J. (1987). Profiting from technological innovation: implications for
integration, collaboration, licensing and public policy. In Teece, D. J. (ed.),
The Competitive Challenge, New York, NY: Harper & Row, 185-219.
Appendix
In the following, we describe our concept of analyzing a business process to answer
the question of how well it can be supported by wireless applications. We use the
process “approval of a purchasing request” to demonstrate the concept, rather than
to provide a full analysis, which would have to be validated in a real-life setting.
In a first step, we break down a process into subtasks and depict the
interrelationships with a flow chart (Appendix-Figure 1).
Appendix-Figure 1: Break-Down of Approval Process into Subtasks
Requisition
Generation
Check supplier info
via papre work
Access to
computer?
Wait
Deny requisition
Notification
(ViaEmail)
Note 1
NO
Delegate?
YES
Note 2
Catalog item?
Evaluate supplier
candidates
Contact suppliers
(phone,fax,email)
Identify the
supplier
Add the new
item to catalog
Requisition
Clear?
NO
YES
NO
YES
Contact requestor
(phone, email)
Receive confirmation from
requestor (phone, email)
NO
Supplier's
info clear?
YES
Contact supplier
(phone, email,fax)
Receive confirmation from
supplier (phone, email,fax)
NO
Financial
info clear?
Check
requestor's info
Check
supplier's info
Check finance
info(budget etc.)
Check finance info
in other systems
Contact finance/
accounting dept
(phone, email,fax)
Contact purchase
dept (phone,
email,fax)
Receive confirmation info
(phone, email,fax)
NO
Additional
info needed?
Note 3
Check other
info
Check other info
in other systems
Check other
info via paper
work
Contace related
persons
(phone, email)
Receive confirmation
info (phone, email,fax)
YES
YES
Approve?
Next approver
needed?
NO
YES
NO
YES
Purchase Order
NO YES
N
O
T
E
4
Confirm quote
with the supplier
Note: Standard flowcharting symbols are used in this diagram.
Wireless Process:
Assessing the Value of Emerging Technologies: The Case of Mobile Technologies…
803
We then analyze each subtask according to its ability to be supported in part or fully
by wireless technology (Appendix-Table 1).
Appendix-Table 1: Subtask Analysis
Task Medium Volume of Data Structured Level Decision Complexity Mobile Sup
Notification Email/Phone Low High No Full
Delegation Email/Phone Medium High Low Full
Check requestor's info EP Low High Low Full
Check supplier's info via EP EP Low High Low Full
Check financial information (1) EP Low High Medium Full
Deny EP Low High Low Full
Approve EP Low High Low Full
Contact supplier Phone/Email/Fax Low to high Low Low Partial (phone, sim
Contact requestor Phone/Email Low to high Low Medium Partial (phone, sim
Receive confirm form requestor Phone/Email Low to high Low Low Partial (phone, sim
Contact purchase dept Phone/Email Low to high Low Medium Partial (phone, sim
Receive confirm form supplier Phone/Email/Fax Medium Medium Medium Partial (phone, sim
Contact finance/accounting dept Phone/Email Medium Low Medium Partial (phone, sim
Check supplier's info via paper work Paper High Low High Non
Evaluation supplier candidate EP/paper High High High Non
Identify the supplier —— High Low High Non
Confirm quote with the supplier Email/Fax/Paper High High High Non
Add new item to the catalog EP High High Low Non
The criteria we use to perform this analysis include: the communication medium
that has been used traditionally (email, phone, paper, face to face), volume of data
required to perform the task (high, medium, low), level of task structure (high,
medium, low), and decision complexity (high, medium, low). Our decision criteria
are depicted in Appendix-Figure 2).
Judith Gebauer, Michael J. Shaw, Kexin Zhao
804
Appendix-Figure 2: Suggested Framework to Identify Tasks That Can Be
Supported With Mobile Commerce (MC)
MC Support Task
Non-MC Support Task
Only need
phone media
Media: other
system/paper
Long information
YES
NO
YES
NO
NO
YES
Tasks
Full support can be given in cases where the traditional medium of communication
is email or phone, the volume of data required to perform the process is low, the
level of structure is high, and the complexity of the decision is low. Partial support
is possible for subtasks that are traditionally done by email, phone, or fax, and
where the complexity of the decision is low to medium, and the complexity of the
decision is low to medium. Tasks that traditionally rely on large volumes of data to
be processed, use paper forms to transfer information, and involve complex
decisions might not be suited well for wireless support.
Finer breakdown schemes might be adequate to analyze an individual situation.
Additional of criteria to be considered include characteristics of the products in
question (complexity and value), the underlying organizational structure
(centralized vs. decentralized), and some characteristics of the potential user groups
(e.g., IT skills). As mentioned in the text, environmental factors might also play a
role, such as market pressure, uncertainty, or the regulative structure.
doc_803960855.pdf
In this paper, we propose a two-step framework to advance our knowledge of how to identify and evaluate opportunities presented by emerging information technologies (IT).
785
15
th
Bled Electronic Commerce Conference
eReality: Constructing the eEconomy
Bled, Slovenia, June 17 - 19, 2002
Assessing the Value of Emerging Technologies:
The Case of Mobile Technologies to Enhance
Business-To-Business Applications
Judith Gebauer
University of Illinois at Urbana-Champaign, United States
[email protected]
Michael J. Shaw
University of Illinois at Urbana-Champaign, United States
[email protected]
Kexin Zhao
University of Illinois at Urbana-Champaign, United States
[email protected]
Abstract
In this paper, we propose a two-step framework to advance our knowledge of how
to identify and evaluate opportunities presented by emerging information
technologies (IT). As a first step, we match the features and limits of the IT
innovation with the requirements of the application areas in question, typically on
the business process level. As a second step, we sketch out guidelines to evaluate
these windows of opportunity in a quantitative way. To further explain the
framework and showcase its applicability, we provide a proof-of-concept case
study, reporting on the application of wireless technologies to enhance an
electronic procurement application at Motorola, Inc.
Judith Gebauer, Michael J. Shaw, Kexin Zhao
786
1. Introduction
Despite a wealth of research on the impact and value of information technology (IT)
investments, poor estimations of the impact and value of new technologies still tend
to be the norm rather than the exception. Bill Gates is said to have observed, “The
impact of technology is generally overestimated in three years and underestimated
in 10 years.” The recent phenomenon of over inflated stock prices of companies
that were somehow based on or connected with emerging Internet technologies
constitute a clear indicator for such a development. Ever since the so-called
Internet-bubble burst stripping many investors of their money, employees of their
jobs, and entrepreneurs of their companies, market observers have been searching to
discover the “next big thing.” Mobile technologies are one of the areas that have
received particular attention, and chances are that the circle of
overestimation/underestimation is just beginning anew.
Rather than providing an overview of usage scenarios for mobile technologies in
organizations (see for example Tarasewich et al. 2002 for such an overview), we
intend to develop a more general, structured framework of how to assess the value
of emerging technologies. We propose a two-staged model that can help identify
application areas for emerging technologies and allow for a realistic evaluation of
their economic benefits. With our framework, we hope to contribute to breaking the
circle of overestimation/underestimation of the value of new technologies, as well
as to provide a tool that can ultimately help business managers deploy IT in a more
targeted way.
The structure of the paper is as follows. We begin with an overview of earlier
research on IT value, and point out missing elements to identify and assess the
opportunities for the application of an emerging technology. We then propose a
framework to close the gap, and demonstrate its applicability with a real-life case,
the use of wireless technology to enhance an electronic procurement system.
Finally, we point out a number of issues that need to be addressed in further studies
to complete the framework.
2. Literature Review
Much research has been undertaken to assess the value and impact of information
technology (IT) and the investments that are necessary for its deployment.
Mirroring the fact that this topic is very rich and multi-faceted, a number of areas
have been at the focus of attention. One stream of research discusses the advantages
and disadvantages of evaluating IT investments at different levels, such as the
economy and industry level (Loveman 1994), firm level (Mahmood & Mann 1993),
process level (Mooney et al. 1996) and from the perspective of the individual
(Davis 1989). Others emphasize the importance of including complementary factors
and taking a holistic approach, versus isolating the impacts of technology and
Assessing the Value of Emerging Technologies: The Case of Mobile Technologies…
787
focusing on IT alone (Teece 1987, Barua et al. 2001). Similarly, there is a
distinction between tangible benefits and intangible factors (Brynjolfsson & Hitt
1996). Finally, several researchers have pointed out the relevance of expected and
potential value versus realized impacts, which takes into consideration possible
inhibitors of IT success (Davern & Kauffman 2000, Chircu & Kauffman 2000).
There seems to be some consensus that, ideally, the assessment of IT impact and
value should be at the level of the implementation (Barua et al. 1995), and that it is
desirable to take into consideration as many contingency factors as possible, be they
related directly or indirectly to the IT system of study (Mooney et al. 1996). Given
the complexities of organizational structures and interrelated factors it comes at no
surprise that such a comprehensive approach is a very difficult undertaking and has
to be based on a clear understanding of the technologies, of the areas of application
and of their, often unanticipated, implications and consequences. As a result, the
use of some of the more sophisticated methods to evaluate IT might be problematic
in the context of innovative IT applications, as the assessment of the value and
further reaching impacts require a certain learning process to have taken place.
One additional point is worth mentioning. With the exception of Bennett & Weill
(1997) who explored different uses of electronic messaging infrastructures, very
little attention has been paid to the question of how to identify areas of application
for emerging technologies and the related question of how to select starting points
of deployment.
3. Evaluation Framework
Our quest to identify and evaluate areas of application for a specific, emerging
technology can draw on previous research to assess IT value. Significant gaps
remain, though, which can for the most part be attributed to different research
perspectives.
First, much of the earlier research described above has essentially focused on the
question of whether or not to deploy IT at all. We would rather like to address the
question, however, what type of IT to select in a particular situation. Moreover, we
are interested in identifying areas of application for a specific type of technology,
which reverses the research perspective to some extent. Our focus is relevant for IT
managers who observe the emergence of IT innovations, as has been the case
frequently, in particular in recent years.
In order to “catch the boat” and benefit from new technologies, but at the same time
avoid the development and deployment of expensive, yet useless toys, a careful
assessment of the opportunities and limits is essential. So, we propose a two-staged
model to answer the questions of “What are possible areas of deployment for a
specific technology?” and “Where should we start?” The two-staged model is
depicted in Figure 1.
Judith Gebauer, Michael J. Shaw, Kexin Zhao
788
As a first step, we need to find out about the characteristics of the new technology,
and where it could be applied within the organization. We chose to conduct a
qualitative analysis to match the characteristics of the emerging technology with
respect to its potentials and limits with the requirements of the organization and
underlying processes. In line with the postulation to perform an assessment of IT
value at the level of the actual implementation, we focus our attention on the level
of the business process. The results of this first step are termed “Windows of
Opportunity” and serve as the input for the second part of the analysis.
As a second step of our framework, we need to answer the questions of “how much
can be gained from the new technology“ and “whether an organization should
invest in it.“ Consequently, a quantitative element is added to the analysis. For each
of the windows of opportunity that were identified during the first part, situation
and context-specific variables would have to be evaluated. The result is a measure
of economic value that will help a manager identify the areas where the deployment
of the new technology promises to be most beneficial.
Technology
Organization and
Process
Characteristics
(Qualitative)
Economic
Value
! Basis for
decision
Situation and
Context-Specific
Variables
(Quantitative)
Step 1:
Identify areas
of application
Step 2:
Determine
costs and
benefits
Windows of
opportunity
Match
Evaluate
Technology
Organization and
Process
Characteristics
(Qualitative)
Economic
Value
! Basis for
decision
Situation and
Context-Specific
Variables
(Quantitative)
Step 1:
Identify areas
of application
Step 2:
Determine
costs and
benefits
Windows of
opportunity
Match
Evaluate
Figure 1: Evaluation Framework (Overview)
The consideration of context and situation-specific variables is essentially in line
with the postulation of assessing the value of IT holistically, that is, viewing
technology embedded into a larger system. Accounting for the fact that we want to
develop a framework that is most of all applicable to emerging technologies, the
assessment of complementary factors receives comparatively less emphasis, though,
reflecting the early position on the learning curve. We also want to point out that
the result of our second stage, the economic value of a technology, to some extent is
Assessing the Value of Emerging Technologies: The Case of Mobile Technologies…
789
in line with the notion of potential or expected value, the significance of which has
been pointed out by Davern, Kauffman (2000), and Chircu and Kauffman (2000).
In the next sections, we use the proof of concept model to explain the model in
more detail.
4. Proof of Concept
We will now elaborate further on the evaluation framework and demonstrate its
applicability to wireless technologies to enhance business-oriented electronic
commerce applications. Despite our narrow focus to demonstrate the concept, we
see the framework to be applicable on a broader basis, beyond procurement
processes and possibly also beyond wireless applications.
Our proof of concept is based on a project that we conducted in collaboration with
Motorola, Inc., where the successful implementation of an electronic procurement
system lead to considerations to enhance its functionality and reach with the
application of emerging, wireless technologies. Such a step would allow managers,
for example, to perform the approval of requisitions, especially urgent ones, with a
two-way pager or cell phone. Further cycle time reductions and increased
productivity beyond what has already been achieved with the electronic
procurement solution are the expected results.
The application of electronic commerce technologies to support business processes
within and between organizations has brought numerous benefits, including
transaction cost and cycle time reductions, improved data transparency, and
streamlined processes (Saloner, Spence 2002). One area that has gained significant
attention is the use of Internet-based applications to support and automate non-
production procurement processes (Fitzgerald 2000). During the late 1990s, a
number of organizations started to implement applications that would allow
employees to order operational supplies from their desktops without having to go
through the central purchasing department or to fill out a large number of paper
forms. Purchasing requests are submitted electronically by an end-user, routed
automatically for approval according to organization-internal business rules, to
automatically result in a purchase order that is then sent to a supplier for fulfillment.
To date, most implementations have been undertaken in large organizations,
involving hundreds, often thousands of users, and large numbers of suppliers and
business rules. Reported results are typically significant although they do not come
easy, given the complexity of most projects often leading to unanticipated hurdles.
Some of the limitations that remain can be attributed to the technology that is being
used, rather than organizational issues, and could possibly be resolved by enhancing
the current solutions with appropriate technologies. Traditionally, business
applications are accessed from workstations or personal computers stationed in a
corporate or home office. Situations where employees are away from their desks
Judith Gebauer, Michael J. Shaw, Kexin Zhao
790
without access to a computer or dialup connection, e.g., while traveling, typically
also preclude access to these applications. As a result, email-messages, notifications
and requests, e.g., to approve a purchasing requisition, are delayed until desktop
access is regained. The implications in terms of cost and productivity losses can be
significant and possibly ripple through larger parts of the organization.
Consider the case where the purchase of a computer for a new hire is delayed
because the approval manager has left for an offsite meeting and is, thus, away from
his desk and out of reach. For such situations, increasing the accessibility of the
applications beyond desktop computers could prove beneficial. Wireless
technologies feature just the required functionality as they could provide an
additional access channel. Using an Internet-enabled cellular phone or handheld
device, users would log into the application by using a personal ID, and then
navigate through a simplified menu by using the keypad of the device and perform
the required tasks from (almost) anywhere at any time.
The areas of application need to be assessed carefully, however. Wireless
technologies cannot be seen as a panacea or full substitute to “traditional” electronic
commerce systems, as they have their own limitations, while at the same time
requiring significant investments.
4.1 Technology Assessment – Identification of Opportunities
In order to identify areas of application for wireless technologies, we need to obtain
a good understanding of the business requirements, as well as of the opportunities
presented by the emerging technologies. In the following, we first describe a typical
business-to-business electronic commerce application, as it is represented by
Motorola’s electronic procurement system. A brief outline of the major components
is followed by a discussion of the benefits and limits of the system. Second, we turn
to emerging, wireless technologies, and provide an overview of the possible
benefits and limits, as they are relevant in the context of our representative
electronic commerce system.
4.1.1 Benefits and Limits of Electronic Procurement Applications
In 1997, Motorola embarked on a major project to improve the organization of its
non-production procurement processes on a corporate level. At the time, non-
production procurement at Motorola was highly decentralized with diverse business
routines and multiple procedures throughout the different parts of the corporation,
resulting in a situation where the company was not really able to take advantage of
its combined annual non-production spend of several billion dollars. In addition,
most processes were paper-based resulting in long cycle times, frequent errors, and
costly double-data entries.
Assessing the Value of Emerging Technologies: The Case of Mobile Technologies…
791
The efforts to re-organize the process concentrated on three, closely interrelated
areas. On the one hand, the project team started to apply strategic sourcing concepts
as they are typically used in strategic, production-oriented procurement to the non-
production area. Commodity managers were appointed to analyze purchasing
patterns within and across organizational units, to assess supplier performance, and
to identify opportunities for corporate-wide supplier contracts. On the other hand,
the project team made an effort to streamline business procedures and establish
corporate wide standards, in particular for approval routines. The third element of
the integrated approach was the application of an electronic commerce system to
automate standard buying processes and to capture corporate procurement
information. The system provides a browser interface to employees and enables
them to purchase items from pre-defined electronic catalogs and have their requests
routed to higher-level managers for approval according to built-in business rules.
Approved requests automatically generate purchase orders that are sent out to the
suppliers. Figure 2 provides an overview of the system architecture.
In combination with the organizational changes, the IT-system provides a number
of benefits. For once, it frees purchasing personnel from routine, operational tasks,
as end-users can now perform purchasing requests directly from their desktops,
instead of submitting forms to the purchasing group. Instead of a procurement
manager, it is the system that checks for compliance with corporate buying
standards and automatically notifies approval managers, and other areas involved
such as receiving, and accounting personnel. As a result from channeling the users
to preferred suppliers, purchases under pre-negotiated contracts have increased
resulting in an overall higher leverage of Motorola’s buying power, as well as
improved availability of items. The centralized system also facilitates the analysis
of spending patterns and supplier performance on a corporate-wide basis, in ways
that were not feasible before. In addition, the elimination of paper-based procedures
resulted in a reduction of cycle-time from weeks to a few days.
Motorola’s electronic procurement system is comparable to many projects initiated
elsewhere, mostly in larger corporations, throughout the late 1990s, in terms of
scope and benefits, but also in terms of complications. Similar to the experiences at
other organizations, the implementation of a centralized front-end application at
Motorola turned out to be quite complex, as were the changes that this
implementation brought with it. In order to establish corporate wide standards and
business routines a heterogeneous set of systems and procedures had to be
integrated. Technical hurdles had to be overcome, such as the integration of
supplier data into a single, aggregated online catalog or linking the desktop-
application with backend enterprise data systems. Organizational challenges
included end-user training, as well as convincing managers that they had to give up
“their” suppliers and oftentimes long-established business routines.
Judith Gebauer, Michael J. Shaw, Kexin Zhao
792
Treasury
Human
Resources
Electronic
Procurement
Application (Ariba)
Electronic
Procurement
Application (Ariba)
Buyers
Users
Financial
Shared Services
(FSS)
• Vendor master
• Accounts payable
• Fixed assets
• General ledger
• Authorization list
• Employee information
• Exchange rates
Suppliers
• Orders
• Catalogs
• Invoices
Receiver
Treasury
Human
Resources
Electronic
Procurement
Application (Ariba)
Electronic
Procurement
Application (Ariba)
Buyers
Users
Financial
Shared Services
(FSS)
• Vendor master
• Accounts payable
• Fixed assets
• General ledger
• Authorization list
• Employee information
• Exchange rates
Suppliers
• Orders
• Catalogs
• Invoices
• Orders
• Catalogs
• Invoices
Receiver Receiver
Figure 2: Architecture of Motorola’s Integrated Electronic Procurement System
One challenge that can possibly be addressed with wireless technologies is system
access (Figure 3). The project team feels that significant inefficiencies are still part
of the process. Examples include delays in the approval process when a manager in
charge is out of the office and cannot access the procurement application from a
desktop computer, or urgent requests for equipment as they might occur out in the
field when a trip to the next hardware store is significantly shorter and more
convenient than returning to the office and booting a desktop machine. Increasing
the reach of the application to include mobile access promises productivity
improvements through further cycle time reductions, and increases of overall
system usage and process compliance.
Assessing the Value of Emerging Technologies: The Case of Mobile Technologies…
793
IP
-
Supplier
Gateway
B2B Server
User
Buyer
IP Network
Wireless
Network
IP
-
Supplier
Gateway
B2B Server
User
Buyer
IP Network
Wireless
Network
Figure 3: Infrastructure to Enable Wireless Access to Business Applications
4.1.2 Benefits and Limits of Wireless Technologies in Business-
to-Business Settings
To this date, it is unclear what impact wireless technology will have on business
processes and organizations. Although the penetration of wireless devices,
including cellular phones, two-way pagers, PDAs and other handheld devices, is
already quite impressive and continues to grow (see text box below), the number of
commercial applications is low, and most of the usage occurs on an individual level.
Wireless Penetration:
• An estimated 108 million mobile phones in the U.S. as of the end of 2000,
with another 25 million expected by the end of 2001. (source: Morgan
Stanley, January 2001)
• Currently 12 million data-enabled phones available in the U.S., with 112
million expected by the end of 2004 (source: IDC, Phone.com, December
2000)
• 1.3 billion wireless data subscribers worldwide in next four years (source:
Cahners In-Stat, September 2000)
• 18 million PDAs and mobile phones bundled with J2ME will be sold by end of
calendar year 2001 (source: Sun Microsystems)
• By 2003, more than a billion cellular subscribers are expected to create a $83
billion marketplace for wireless services (source: Yankee Group, February
2000)
Judith Gebauer, Michael J. Shaw, Kexin Zhao
794
In other words, wireless devices (in particular cellular phones) are most often used
for inter-personal communication, replacing a regular telephone, rather than to
access information systems or to transmit data, which would be comparable to using
a personal computer. A number of applications are available, though, as cellular
phones and two-way pagers provide access to stock market data, and allow trading
assets, checking weather reports, purchasing theater tickets, or sending short
messages to other phones and computers. Using an Internet-enabled cellular phone
or handheld device, users log into an application by using a personal ID, and then
navigate through a simplified menu by using the keypad of the device.
To this date, however, and particular when comparing the situation in the United
States to Japan or even Europe, the volume of data traffic over cellular devices is
only a fraction of voice traffic, and, again, for the most part concentrated on
personal and consumer-oriented applications. When it comes to business-oriented
mobile applications, most organizations are still waiting for the “killer-application”
that would propel the use of wireless technology, similar to the way that email or
the World Wide Web helped spread the Internet.
Returning to our two-step approach to assess the application for mobile commerce
in inter-organizational settings (see Figure 1), we want to single out the
idiosyncrasies of the new technology in relation to traditional electronic commerce
systems. What makes mobile applications special? How is the new technology
similar and how is it different from the technology used in “traditional” business-
oriented electronic commerce systems? What are possible areas of application?
Similar to other innovations, we expect opportunities to complement existing
systems, rather than to substitute them, at least in the shorter term.
The opportunities provided by wireless devices, as compared to stationary
computers and wired laptops include: wider reach of business applications as access
is not confined to an office or desk; faster access to applications in cases where
booting up a computer takes a long time; and advantages from integrating data and
voice communication into one device. In addition, the simplicity of the devices and
the fact that “they are not a computer,” might increase acceptance where employees
feel uncomfortable with using a regular desktop PC. At the same time, wireless
devices are typically also cheaper than regular computers.
Limits of the technology restrict the complexity of the information that can be
displayed, which often results in complicated usage procedures and deep navigation
structures. Reasons for these limits are small screens, limited graphical
functionality, and a comparatively small number of keys. Further limits restrict the
amount of data that can be processed wirelessly: limited bandwidth and
performance, restricted signal availability, and limited on-device storage space.
Unresolved security and standardization issues, as well as per-minute, and often
very complex, fee structures that are different from how Internet-access is typically
priced, can pose additional hurdles.
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4.1.3 Windows of Opportunities
Based on these opportunities and limits, we recommend their use in situations and
processes that are characterized by one or several of the following statements:
• Task is urgent and typically triggered by notification (push, rather than pull)
• Task is a simple transaction or routine process
• Task is a simple decision process, where the amount of information to be
processed is limited
• Requirement to navigate through application menu structure is low and the
task does not require the use of multiple applications or databases
• Communication process does not require access to large files or complex
graphics
• Situation allows or even requires to combine both voice and data
communication
• Data security is not a major issue
After having identified the general areas of application for wireless access, we
break down the processes in question, to identify specific subtasks that are suited
for full or partial support. The appendix provides an example of how this
breakdown could be done, focusing on a request for approval.
In procurement, wireless systems could provide full support for the following
processes:
• Creation and submission of simple purchase requests
• Processing of simple approval requests
• Delegation of approval authority
• Status checks (tracking) of orders and shipments
• Delivery confirmation (receiving) and payment release
Additional areas of application can be identified if we include situations where
wireless technology provides a complement rather than a complete substitute to
perform a task with a wired application. In such situations, mobile commerce
supports a task partially and enables a manager to “do something” until desktop
access is regained. An approval manager, for example, who is unwilling to delegate
general approval authority while away from the office, could review a complex
request briefly on a high level, and then hand over approval rights to a trusted
colleague on an ad hoc-basis, together with detailed instructions, given over the
phone. Complex decisions that are as such too complex to be performed with a
handheld device only could be performed in part, e.g., by contacting sources of
information to confirm supplier quotes, and by doing or delegating “as much as
Judith Gebauer, Michael J. Shaw, Kexin Zhao
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possible” while on the road. In such situations, access to information of how to
contact colleagues and fellow employees, business partners, and third parties, and
how to access additional data sources proves essential. The biggest advantage of the
wireless systems is probably their ability to integrate data with voice
communication into one device.
In this context, the task of identifying opportunities for wireless-commerce
opportunities can be facilitated if we include additional parameters into the analysis,
such as product complexity, the degree of organizational centralization and vertical
integration, as well as user characteristics and external pressures. All other things
equal, we assume that:
• Procurement processes of complex products lend themselves to partial support
by wireless applications, while the procurement of simple products can more
often be supported in full.
• Decentralized organizations and constructs of virtual organization where
independent units collaborate on a specific project, typically feature more
situations where requests are urgent, and manager are out of the office,
compared to centralized organization structures.
• Organizational groups that are familiar with the use of technology, in
particular wireless devices, will be more comfortable with using wireless
applications in new contexts, and acceptance levels will be higher than in
organizations where users are not very technology savvy.
• External pressure, e.g. in very competitive markets and fast changing business
environments, will increase the need to improve productivity, and thus create
an environment that is favorable for the application of wireless applications to
enhance existing systems.
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Mobile Technology:
+ Reach - Small Screen
+ Fast access - Limited graphics
+ Integrate Data - Few keys
and Voice - Bandwidth/
+ Simplicity Performance
+ Cost (vs. PC) - Signal Availability
- On-device storage
- Security, standards
Organization and Process
Characteristics (Qualitative):
• Tasks structured vs. unstructured
• Organizational structure centralized vs.
decentralized
• Product characteristics simple vs. complex
• Routine processes vs. single instance
• Operational processes vs. managerial
decision making
• Level of uncertainty and repeatedness
• Level of IT skills of the users
• External pressure
Windows of opportunity:
• Task is urgent & trig-
gered by notification
• Simple transaction
• Simple decision
making process
• Low value goods
• Limited information
to be processed
• Does not need mult.
data sources
• Opportunity to com-
bine voice and data
• Security not too import.
" "" "Create simple
purchasing requisition
" "" "Simple approval
"Delegation of authority
"Tracking
"Receiving
"Payment release
Match
(full
support,
partial
support)
Mobile Technology:
+ Reach - Small Screen
+ Fast access - Limited graphics
+ Integrate Data - Few keys
and Voice - Bandwidth/
+ Simplicity Performance
+ Cost (vs. PC) - Signal Availability
- On-device storage
- Security, standards
Organization and Process
Characteristics (Qualitative):
• Tasks structured vs. unstructured
• Organizational structure centralized vs.
decentralized
• Product characteristics simple vs. complex
• Routine processes vs. single instance
• Operational processes vs. managerial
decision making
• Level of uncertainty and repeatedness
• Level of IT skills of the users
• External pressure
Windows of opportunity:
• Task is urgent & trig-
gered by notification
• Simple transaction
• Simple decision
making process
• Low value goods
• Limited information
to be processed
• Does not need mult.
data sources
• Opportunity to com-
bine voice and data
• Security not too import.
" "" "Create simple
purchasing requisition
" "" "Simple approval
"Delegation of authority
"Tracking
"Receiving
"Payment release
Match
(full
support,
partial
support)
Figure 4: Step 1: Identify Windows of Opportunity for Wireless Technologies to
Support Purchasing Processes
The list is not exhaustive, but can serve as a good start (Figure 4 summarizes our
findings). Our understanding about the opportunities and limits of wireless devices
allows us to analyze individual business processes and their subtasks and to address
the question of how well they could be supported by wireless applications, either in
part or to full extent.
4.2 Evaluating the Opportunities
The guidelines that we introduced help identify situations where the application of
wireless technologies is potentially beneficial. In other words, they help to
determine which processes and sub-tasks, product categories, and organizational
groups are the best candidates for full or partial support by wireless applications.
After having identified such opportunities, an economic evaluation has to be
performed to quantify the benefits and efforts to implement the solution.
Quantifiable parameters include user characteristics, such as frequency of system
use, time spent out of the office, and urgency.
• Frequency of system use. If a user accesses the electronic procurement solution
only very infrequently, there is probably no need to extend the wireless
Judith Gebauer, Michael J. Shaw, Kexin Zhao
798
solution to him or her. Denying wireless (and therefore continuous) access to
frequent users, however, might result in significant delays in situations where
the capacity of the individual to process requests is reached during peak
periods. The application of queuing models as they are used elsewhere to
optimize manufacturing schedules, can help demonstrate these effects clearly,
and provide evidence for the benefits of smoothing out the peaks. In this case,
frequency of use corresponds with the number of tasks in a queue.
• Percentage of time spent out of reach of traditional applications. The
percentage of time that a user is out of reach for traditional applications can be
interpreted as delays in the queue, if we assume that during this time, no
requests are being processed. We would assume that, other things equal, only
users that spent a significant amount of time out of their offices would qualify
for the use of the wireless solution. Otherwise the investments required to
equip these users with an additional access channel will be hard to justify.
• Percentage of requests (or tasks) that can be considered urgent. Urgency is
another factor that we want to consider, although it is somewhat harder to
quantify than frequency and out-of-office time. A possible proxy for urgency
is the loss in productivity that occurs elsewhere in the organization if a request
is not processed promptly (e.g., a new hire sits idle without office desktop).
Another consequence would be the fines that have to be paid if projects are not
completed in time.
The parameters can be considered as mutually enforcing. In cases where two or
even all three factors are high (e.g., high frequency of system use and significant
out-of-office time), we will probably more often be able to justify the application of
wireless access on economic grounds (reduced cycle time, increased productivity),
than if only one variable is high.
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Windows of opportunity:
" "" "Create simple purchasing
requisition
"Simple approval
"Delegation of authority
"Tracking
"Receiving
"Payment release
Situation-specific variables
• Frequency of system use
(number of requests in queue)
• Percentage of time spent without
system access
(out-of-office time)
• Percentage of urgent tasks
(calculate opportunity costs,
impact on productivity per
occurrence)
Quantify the opportunity
using queuing models,
and other techniques to
calculate return on
investment
"Basis for decision
Evaluate
Windows of opportunity:
" "" "Create simple purchasing
requisition
"Simple approval
"Delegation of authority
"Tracking
"Receiving
"Payment release
Situation-specific variables
• Frequency of system use
(number of requests in queue)
• Percentage of time spent without
system access
(out-of-office time)
• Percentage of urgent tasks
(calculate opportunity costs,
impact on productivity per
occurrence)
Quantify the opportunity
using queuing models,
and other techniques to
calculate return on
investment
"Basis for decision
Evaluate
Figure 5: Step 2: Evaluate M-Commerce Opportunities
In addition and to ease the task of quantifying the variables somewhat, we can also
relate the quantitative variables with some of the qualitative characteristics that we
derived earlier to gain insight regarding the potential benefits. Figure 5 depicts an
example, pairing process complexity and out-of-office time. Interesting areas for
mobile commerce would be sections II and IV, while section I is probably less
relevant.
Additional parameters can play a role, depending on the individual implementation
or application. Given the limitations of a wireless device, for example, the menu
structure and tasks that can be performed with it will have to be kept simple, as
pointed out above. As a result, we expect situations where the task to approve a
purchasing request can actually be performed faster than by using a traditional,
desktop-based system. On the other hand, however, the use of an addition channel
and new device will probably require significant user training and a new support
infrastructure focused on wireless access to applications.
Figure 6 summarizes the variables that we considered relevant to evaluate the
application of mobile commerce to support business processes.
Judith Gebauer, Michael J. Shaw, Kexin Zhao
800
P
R
O
C
E
S
S
C
O
M
P
L
E
X
S
I
T
Y
H
I
G
H
L
O
W
PERCENTAGE OF USER
OUT OF OFFICE
LOW
HIGH
USAGE OF m-COMMERCE
IV
HIGH
III
LOW
I
VERY
LOW
II
MEDIUM
Figure 6: Process Complexity vs. Out of Office Time
5. Outlook
So far, our project has resulted in an “educated guess” about the parameters and
issues that are relevant to assess the benefits of wireless solutions to improve
business processes. Our considerations are based on input that we received from the
project team of one company and on the application of our own knowledge on
electronic procurement applications, organizational processes and wireless
technologies. Our area of interest has been very narrow, as we focused on the well-
structured family of non-production procurement processes and on the extension of
so-called desktop procurement systems with wireless access. While our analysis has
not brought about novel areas scenarios of application for wireless technologies
(and did not intend to), it is novel in its attempt of identifying the opportunities for
wireless technologies in a more structured way than has been done in the past, and
in providing a basis for a realistic evaluation of these opportunities.
More work is necessary, though, to refine the tool and finally apply it in a real-life
setting. Many questions remain open. Did we include the right parameters? Which
parameters did we omit that should have been included? How relevant are our
results? How valid is our underlying conceptual model? How applicable are our
considerations to different processes, situations, and other technologies?
During the next phases of the research project, we plan to validate our preliminary
findings with the corporate partner. We also plan to refine and test the tool by
collecting real-life data in the form of user interviews and actual system usage.
Simulations based on the statistical data will help us test the applicability of
queuing models in this context. Finally, we hope to be able to peg a number with
Assessing the Value of Emerging Technologies: The Case of Mobile Technologies…
801
respect to the economic benefits of the solutions in the case of a specific
corporation.
Our project will bring us closer to answering a question, such as “what makes a
technology special and how should we manage it? In this case, we looked at
wireless applications and their role to ultimately enable ubiquitous commerce.
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Appendix
In the following, we describe our concept of analyzing a business process to answer
the question of how well it can be supported by wireless applications. We use the
process “approval of a purchasing request” to demonstrate the concept, rather than
to provide a full analysis, which would have to be validated in a real-life setting.
In a first step, we break down a process into subtasks and depict the
interrelationships with a flow chart (Appendix-Figure 1).
Appendix-Figure 1: Break-Down of Approval Process into Subtasks
Requisition
Generation
Check supplier info
via papre work
Access to
computer?
Wait
Deny requisition
Notification
(ViaEmail)
Note 1
NO
Delegate?
YES
Note 2
Catalog item?
Evaluate supplier
candidates
Contact suppliers
(phone,fax,email)
Identify the
supplier
Add the new
item to catalog
Requisition
Clear?
NO
YES
NO
YES
Contact requestor
(phone, email)
Receive confirmation from
requestor (phone, email)
NO
Supplier's
info clear?
YES
Contact supplier
(phone, email,fax)
Receive confirmation from
supplier (phone, email,fax)
NO
Financial
info clear?
Check
requestor's info
Check
supplier's info
Check finance
info(budget etc.)
Check finance info
in other systems
Contact finance/
accounting dept
(phone, email,fax)
Contact purchase
dept (phone,
email,fax)
Receive confirmation info
(phone, email,fax)
NO
Additional
info needed?
Note 3
Check other
info
Check other info
in other systems
Check other
info via paper
work
Contace related
persons
(phone, email)
Receive confirmation
info (phone, email,fax)
YES
YES
Approve?
Next approver
needed?
NO
YES
NO
YES
Purchase Order
NO YES
N
O
T
E
4
Confirm quote
with the supplier
Note: Standard flowcharting symbols are used in this diagram.
Wireless Process:
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803
We then analyze each subtask according to its ability to be supported in part or fully
by wireless technology (Appendix-Table 1).
Appendix-Table 1: Subtask Analysis
Task Medium Volume of Data Structured Level Decision Complexity Mobile Sup
Notification Email/Phone Low High No Full
Delegation Email/Phone Medium High Low Full
Check requestor's info EP Low High Low Full
Check supplier's info via EP EP Low High Low Full
Check financial information (1) EP Low High Medium Full
Deny EP Low High Low Full
Approve EP Low High Low Full
Contact supplier Phone/Email/Fax Low to high Low Low Partial (phone, sim
Contact requestor Phone/Email Low to high Low Medium Partial (phone, sim
Receive confirm form requestor Phone/Email Low to high Low Low Partial (phone, sim
Contact purchase dept Phone/Email Low to high Low Medium Partial (phone, sim
Receive confirm form supplier Phone/Email/Fax Medium Medium Medium Partial (phone, sim
Contact finance/accounting dept Phone/Email Medium Low Medium Partial (phone, sim
Check supplier's info via paper work Paper High Low High Non
Evaluation supplier candidate EP/paper High High High Non
Identify the supplier —— High Low High Non
Confirm quote with the supplier Email/Fax/Paper High High High Non
Add new item to the catalog EP High High Low Non
The criteria we use to perform this analysis include: the communication medium
that has been used traditionally (email, phone, paper, face to face), volume of data
required to perform the task (high, medium, low), level of task structure (high,
medium, low), and decision complexity (high, medium, low). Our decision criteria
are depicted in Appendix-Figure 2).
Judith Gebauer, Michael J. Shaw, Kexin Zhao
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Appendix-Figure 2: Suggested Framework to Identify Tasks That Can Be
Supported With Mobile Commerce (MC)
MC Support Task
Non-MC Support Task
Only need
phone media
Media: other
system/paper
Long information
YES
NO
YES
NO
NO
YES
Tasks
Full support can be given in cases where the traditional medium of communication
is email or phone, the volume of data required to perform the process is low, the
level of structure is high, and the complexity of the decision is low. Partial support
is possible for subtasks that are traditionally done by email, phone, or fax, and
where the complexity of the decision is low to medium, and the complexity of the
decision is low to medium. Tasks that traditionally rely on large volumes of data to
be processed, use paper forms to transfer information, and involve complex
decisions might not be suited well for wireless support.
Finer breakdown schemes might be adequate to analyze an individual situation.
Additional of criteria to be considered include characteristics of the products in
question (complexity and value), the underlying organizational structure
(centralized vs. decentralized), and some characteristics of the potential user groups
(e.g., IT skills). As mentioned in the text, environmental factors might also play a
role, such as market pressure, uncertainty, or the regulative structure.
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