Orchestration in ICTenabled Business Networks: A Case in the Repairs Industry

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Orchestration in ICT-enabled Business Networks A
Case in the Repairs Industry
Juan Rodon, Xavier Busquets and Ellen
Christiaanse Department of Information
Systems ESADE Business School Barcelona
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Research problem objectives

• Context
• Industry repairs and emergency services industry
  
• Focal firm eRepairs
• Suppliers trade professionals
• Customers end customers, corporate clients
• Dilemma
• Which actions and decisions does the network
  orchestrator make during the design and operation
  of ICT-enabled BNs?
• How do these actions impact the BN?
• Objectives
• Explore existing and new functions attributed to
  orchestrators in ICT-enabled business networks
• Examine the effects of orchestrators actions and
  decisions on the network of relationships and the
  performance.

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Concepts

• Business network (BN)
• set of inter-organizational relationships
  between the focal actor and interdependent
  external actors closely linked and working
  cooperatively together to fill customer orders
  (Delporte-Verneiren et al. 2004).
• Orchestrator
• A firm or set of firms in the BN, which
  coordinates the activities of a wide array of
  partner companies and relates them effectively
  (Hinterhuber 2002)

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Orchestrator

• Orchestrators functions
• As architects, they define the objectives and
  designate the partners that will be part of the
  network (Chandrashekar et al. 1999 Christiaanse
  et al. 2000 Hinterhuber 2002).
• As judges, they define and defense the expected
  performance standards for BN members (Hinterhuber
  2002).
• As developers, they nurture and develop the
  physical and intellectual assets of the BN. This
  includes developing the competencies and
  capabilities of partner companies (Hinterhuber
  2002).
• As leaders, they solicit voluntary participation
  and reward performance (Chandrashekar et al.
  1999 Hinterhuber 2002).

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Gap in the literature

• The literature on BN orchestration has not paid
  much attention with Vervest (2005) and Österle
  (2001) being exceptions- to the role of ICT in
  the design and operation of BNs.

A function that specifically concerns the
management of the ICT infrastructure that
supports the interactions between members is
missing. (Integrator function)
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The integrator function

• The integrator function refers to the
  exploitation of ICT to structure and integrate
  the BN members, and to the promotion of different
  patterns of ICT use among members.
• structuring task encompasses the definition and
  sequencing of the activities in the BN
  (Christiaanse et al. 2000) and the organization
  of the dependencies between the tasks of network
  members (Österle et al. 2001). The orchestrator
  is expected to structure the BN so that
  information is transferred to the members that
  need it.
• the integration of the BN refers to the
  ICT-enabled operation and interaction of BN
  members as a unified system. This encompasses
  four levels of integration ICT, data, process
  and business
• regarding the ICT use we distinguish between two
  complementary patterns exploitation and
  exploration (March 1991 Subramani 2004)

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Case study

• Data collection research setting
• in-depth interviews, internal documents, teaching
  cases, and press articles.
• Focused on events, decisions, changes, and roles
  in the BN during the period 1999-2004.
• Repair Management Service (RMS)
• Unit of analysis
• Focal firm (eRepairs) and its relationship with
  trade professionals (vertical cooperation along
  the value chain).

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Characteristics of the service (RMS)

• Intangibility
• Interactivity simultaneity
• Variety/ Heterogeneity
• Dependence on information

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RMS before 2000

• Nationwide network of trade professionals
  (self-employed)
• RMS was an entry door for trade professionals to
  the market
• Trade professionals could work for other
  customers
• Call centre managing incoming and outgoing calls
• Each claim originated between 3 and 4 phone calls
• ICT was basically used for
• Balancing number of calls taken by phone
  operators
• Measure call average time
• Digital processing technology (i.e. scanners, bar
  codes, CD-ROMs, et) to minimize the use of paper

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Redesign of the BN (after 2000)

• Situation by 2000
• Increase in the number of customers
• Lack of automation in the process
• Quality problems
• Non-scalability of the technological
  infrastructure
• Decisions and actions
• Designed a seamless, unique ICT-enabled process
  consisting of four steps
• Redefined the relationship with the trade
  professionals

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Process steps of RMS after 2000
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Orchestrator functions

• Architect
• eRepairs defined the profile for the trade
  professionals, the objectives (i.e. in terms of
  performance, its measurement and its
  compensation), and the rules (i.e. exclusivity)
  that trade professionals should satisfy.
• Judge
• eRepairs established a SLA with both end
  customers and corporate clients, and contracted a
  certifying company to audit the quality of the
  service
• Leader
• eRepairs offered them the possibility to join the
  BN and be franchised. Trade professionals were
  free to accept, but if they did then they had to
  follow the rules established in the BN by
  eRepairs.
• Developer
• eRepairs provided trade professionals with
  support in the daily management of their
  administrative operations, equipped them with the
  necessary ICT resources.

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Integrator

• The new computer system embeds the coordination
  of the repair process
• Flows of information, services, physical products
  and revenues
• ICT used for automation and control
• Exceptions
• Focus on the core competence (focus on the
  repair)
• Centralization of the management of the process
  and the information
• Information is given to the one that needs it in
  order to make the decision
• More visibility over relationships
• capacity, availability, status of a repair,
  revenues, etc
• Depersonalization of the communication process
• More real-time information and intense
  communication but less human intervention

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Integrator ICT uses

• Patterns of ICT use

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Discussion

• Changes in the relationship
• Level of lock-in, threat of oportunistic behavior
  of trade professionals, shift in the degree of
  interdependence in favor of eRepairs
• Changes in the performance of the BN
• Operational efficiency and Effectiveness
• Three remarks
• Accessibility of information (Österle et al.
  2001)
• Level of integration
• Purpose of ICT use exploitation and exploration
• Confirmation
• Performance as a multilevel and multifaceted
  (i.e. effectiveness, operational efficiency,
  flexibility) concept (Beamon 1999 Straub et al.
  2004)
• Direct/first order effects vs. Indirect/second
  order effects (Mukopadhyay et al. 2002).

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Conclusions future research

• Contributions
• change in the interdependence between BN partners
  through the use of ICT
• impact of ICT-enabled integration on
• the existing inter-firm relationships
• the communication, coordination and control
  processes
• the efficiency and effectiveness of the BN.
• Development of the integrator function (Österle
  et al. 2001 Vervest et al. 2005)
• Future research
• Need to conceptualize IOIS integration explore
  how it unfolds over time
• Explore relationship between IOIS integration and
  performance outcomes