INTRODUCTION
The use of Internet technologies and particularly portal technologies facilitate the creation of networks of relationships within the supply chain that provide organizations with access to key strategic resources that could not have been otherwise obtained (Venkatraman, 2000). As a result, portals appear to play a significant role in the business-to-business (B2B) arena. Even before the advent of the Internet, the use of information technology (IT) has been claimed to lead to a tighter coupling between buyer and supplier organizations (Malone, Yates, & Benjamin, 1987), allowing business partners to integrate theirvarious business processes and enabling the formation of vast networks of intra- and inter-organisational relationships (Venkatraman, 1991). Nevertheless, such claimed integration effects require interoperability between IT systems, which can not be achieved in the absence of common IT standards or at least common IT infrastructure.
This article focuses on the development and implementation of a standardised Internet technology project—a supplier portal—in the automotive industry. The aim of the study is to unveil the factors that have led the decision to adopt the standardised technology, and have shaped the development and implementation process. The case explores the standardisation process in its social context and identifies and discusses the factors that shape the development and implementation of the standards.
BACKGROUND
Inter-organisational systems (IOS), as they are adopted in the automotive industry, refer to the computer and telecommunications infrastructure developed, operated and/or used by two or more firms for the purpose of exchanging information that support a business application or process. These firms are suppliers and customers in the same value chain, or strategic partners or even competitors in the same or related market (Cunnigham & Tynan, 1993; Li & Williams, 1999, p. 2). Through IOS, the business partners arrange routine business transactions. Information is exchanged over communication networks using prearranged formats. In the past, IOS were delivered on proprietary communication links. Today, many IOS have moved to the Internet (Turban & Lee, 2000).
One of the most prominent types of contemporary IOS are portals (Turban, Lee, King, & Chung, 2000). A portal is defined as a linked electronic platform with a single point of entry, independent of time and space that enables collaboration through access to multiple sources of information. One of the most common forms of portals are business portals that focus on business partners, for example, providing suppliers with information and/or access to the buyer’s internal systems (Sadtler, Ganci, Griffith, Hu, & Marhas, 2004). Often, such portals are initiated by large buyers to facilitate the interaction with their network of suppliers, for example, General Electric’s Trading Process Network and Boeing’s PART marketplace (Turban et al., 2000).
In the automotive industry, original equipment manufacturers (OEMs) adopt portal technology to link internal systems and applications with external systems of suppliers in order to increase effectiveness and efficiency of inner- and inter-organisational processes. Nevertheless, such industry links require interoperability between IT systems which cannot be achieved in the absence of common IT standards. In the broad sense, a standard can be defined as “a set of specifications to which all elements of product, processes, formats, or procedures under its jurisdiction must conform” (Tassey, 2000, p. 588). David and Steinmueller (1994) differentiate between four categories of standards: reference standards, minimum quality standards, technical interface design standards, and compatibility standards. Compatibility standards are addressed in relation with network information and communication technololgies (ICTs). They enable data exchange between components within a particular system or between different inter-organisational information systems.
Generally, technical standards play a crucial role in shaping not only the future form of the technology (Williams, Graham, & Spinardi, 1993) but also nature and functioning of an organisation and the relationships between organisations (Tapscot, 1995). Some technologies are complex to configure and adapt for use in different contexts. Additionally, implementations are approached differently by developers and users. To reconcile their differences, intermediaries are needed who shape a basic technology provided by the suppliers and configure different technological components from a variety of suppliers to meet the users’ needs. In this process, universal technical knowledge and local knowledge of the organisational and cultural context of use are combined by all the actors, such as intermediaries, IT developers, and end users within adopting organisations.
Economic research on standardisation assumes that the actors involved in the standard setting process are seeking only economic benefits. According to Schmidt and Werle (1998), the economic studies concentrate on the choices being made by actors only on the basis of their payoffs, where these payoffs represent economic returns (Besen & Farrell, 1994). The social processes underlying these choices, such as the balance of power and the level of trust, and the influence of the wider institutional context, which explain why such committees are organised, how actors are enrolled and the range of factors that shape their technological choices are not included in the economic model. To address these shortcomings of the economic approach, standardisation researchers have drawn from theories born in sociology, in particular institutional theory and social shaping of technology (SST). SST has been developed during the 1980s as a new approach to study the development of technology, and in particular information technology. The SST perspective arises from a shift in social and economic research on technology that explores and analyses both the content of technologies and the processes of innovation (Gerst & Bun-duchi, 2004; Bijker & Law, 1992; Williams & Edge, 1996). It has emerged through a critique of the dominant rhetoric of technological determinism which portrayed technology as a vehicle for achieving organisational change, without taking into consideration the difficulties in implementing technologies, as well as their frequent failures to deliver predicted and desired outcomes.
Though often portrayed as a narrow technical matter, standard setting is a complex social process, shaped by an array of factors and representing embodiments of social relationships between the actors. The locales in which standardisation (standards development and implementation) take place are populated by different kinds of actors—differing widely in their expertise, context, commitments, and perceived interests include: software providers, business consultants, technical experts, market intermediaries, and their suppliers. Often the same actors or actors from the same industry/sector are involved in competing standard setting processes; for example, suppliers often have to accommodate different customers with different standard requirements.
A number of researchers have applied the SST perspective to reveal the factors that have shaped EDI development and implementation. For example, Graham, Spinardi, Williams, and Webster (1995) found that the formation of social networks is crucial in shaping the EDI process as they allow the collective benefits of the users involved to be understood and the necessary resources to be coordinated between the participants. With the arrival of Internet technologies and XML standards, research in this area has focused on the mixed sociotechnical nature of XML standard development process (Egyedi, 2001) and on the socioeconomic factors that shape the development of XML standards, in particular industry sectors such as the IT industry (Graham, Pollock, Smart, & Williams, 2003).
In the next section, the development and implementation of supplier portals in the automotive industry are discussed as part of a case study. The empirical research follows a single case study research designbased on qualitative research. Data are collected through a questionnaire sent to the portal users, direct observation, and extensive secondary data research. A mixture of quantitative and qualitative methods (Miles & Huberman, 1994) is used to analyse the data.
PORTALS IN THE AUTOMOTIVE INDUSTRY
Driven by challenges such as shorter product life cycles, increasing cost pressure in stagnant markets, and higher complexity of the electronics embedded in modules and systems, OEMs will gradually increase the outsourcing of manufacturing within the next 10 years (McKinsey, 2003). The supplier community is characterised by small and medium-sized enterprises (SMEs) and is also undergoing strong shifts as the result of these pressures. Increasingly, platforms and model varieties require advanced deals and project management capabilities which means that in terms of innovation management, suppliers have to be able to provide leading-edge technology and efficient simultaneous engineering processes. This change affects primarily the tier-1 suppliers who are taking over systems integration responsibility and management of the supply chain from the OEMs.
Each OEM has an extensive network of suppliers and they, in turn, frequently supply more than one OEM. In this situation, bilateral standardisation of the complex processes and technology to enable the cooperation between OEMs and suppliers and between different suppliers is less than effective.
The pressure for collaboration enforced integration that shifted the emphasis from “stand-alone” initiatives to integrated solutions. Examples include electronic collaboration projects, the integration of engineering processes, and electronic catalogue projects to present product and service data. Such Internet-based applications are adopted not only to achieve operational effectiveness by reducing coordination costs and transaction risks (Koch & Gerst, 2003), but also to improve communication and information presentation. These projects had reduced costs and shortened throughput times to some extent, but the companies aimed at an all-out effort to press forward inter-organisational collaboration with suppliers on a global basis. The vision was that such collaboration should include the integration of individual projects in the business units as well as the integration of company-specific applications into one global supplier portal with one single point of entry (Gerst & Bunduchi, 2004).
The automotive industry has been one of the earliest and most enthusiastic adopters of supplier portals. A supplier portal allows to integrate content, applications, and processes between an OEM and its suppliers in order to:
• Improve communication and collaboration between OEM and suppliers
• Provide real-time access to information held in disparate systems
• Personalise each user interaction and provide a unified window into a companies’ business
• Integrate and access relevant data, applications and business processes
Two alternatives of strategic network design are dominating the current automotive portal scene: either companies decide to build up their own private portal (proprietary approach) in order to create a network with their supply base, for example, VW Group or Toyota, or companies decide to work with electronic markets such as Covisint or SupplyOn to deploy portals, for example, DaimlerChrysler, Ford, and so forth.
The decision to integrate business partners with portals involves a strategic decision whether (1) to implement and customise off-the-shelf systems related to proprietary processes, which means to stick to the “homemade” processes and systems or (2) to implement standardised technology giving industry-standards solutions that use XML standards to exchange data and messages, that supports standardised business processes. Mostly, decisions to implement one of the two alternatives are directed by a cost-benefit analysis. The implementation of alternative (2) was expected to lead to economies-of-scale in the business areas where standardised business processes could be implemented.
In 1999, the Internet hub Covisint1 (connectivity, visibility, integration) was founded by a number of large OEMs such as DaimlerChrysler, Ford, and General Motors and software companies such as Oracle and Commerce One. The aim of Covisint was to connect the automotive industry to a global exchange marketplace with the offer of one single point of entry. It thus aimed to represent a de-facto industry standard. Standardisation was achieved across a range of functionalities that Covisint offered, for example, the portal service. It allowed for the uniform personalised access from any location, single sign-on (SSO) including authentication and authorisation, portal administration with registration, and integration with existing IT infrastructure and through diverse interaction channels (e.g., integration in backend systems).
In the founding companies, the development process of supplier portals was characterised by an iterative approach. In a first instance, standards development was related to the “best practices consortium approach” in the industry and had been worked out by a limited number of specialists from the OEMs that were involved in Covisint. All companies were very interested in taking the most benefit out of Covisint, and were highly motivated to develop standard processes which later could be implemented in their own organisations. In a later stage, this small group approach to standard development had been replaced by a consortium of the Covisint stakeholders. Additionally, industry experts of associations were invited to presentations and workshops to contribute to the standards development. In a second phase, in order to increase legitimacy among suppliers, they were included in the process. However, participation in the consortium was closely controlled, and the working procedures were less rather than more transparent and open. The restrictions in participation, the lack of transparency and openness regarding the work within the consortium could be explained by the desire of the OEMs to achieve the initial goal of a standardised industry solution (Gerst & Bunduchi, 2004).
Therefore, despite the acclaimed aim of Covisint to address cost and risks reduction within the entire industry, the development stage included the requirements and visions of only a limited number of OEMs. As a result, by and large suppliers’ requirements were neither part of the “Covisint vision” nor included into the development of the standardised technology. Additionally, because of the organisational and technological difficulties to integrate the often divergent OEMs’ business requirements within a standardised approach, the benefits of adhering to the standardised processes involved in using the portal were not directly evident to potential supplier users.
The main goal of the portal was to provide each supplier user with a personalised and integrated view of corporate information and applications. Therefore, one of the first deliverables was the design of the user interface (UI) of the supplier portal accompanied by the corresponding structure of subsequent pages and the navigation path through them. The user interface design and navigation should make use of already existing portlets2 similar to the existing employee portal. A key point in this early stage was already the design of Web pages that should correctly reflect the corporate identity (CI) guidelines of the organisation. The layout approach which had to take into consideration the CI guidelines of the different participating companies for the supplier portal Web pages was technically not feasible with the portal technology that Covisint provided. Due to security concerns, the integration level of portlets chosen did not allow much integration of the already existing portlets. Therefore, the goal to provide real-time content collided with security concerns. Unfortunately, most of the companies already had implemented a companywide content management system different from the one Covisint was offering.
Another key challenge was the integration of the portal architecture and functionality in the existing corporate IT infrastructure. The SSO functionality which enabled the access to different information sources and applications with only one log-in and password, was difficult to implement in the overall IT infrastructure. Closely linked to that, difficulties appeared to integrate the portal authorisation system3 and the effort to implement authorisation processes for some of the applications. The same issue appeared for the user data management because user data was stored in different databases and needed to be integrated in one single database to be efficiently used in the portal.
The overall inconsistent strategy of the OEMs in what concerned the implementation of the e-collaboration tools significantly affected the suppliers’ negative perception of portals in general. Whereas some of the OEMs preferred the standardised industry solutions, others such as the VWGroup, voted for the in-house option. Additionally, Covisint was not able to clearly work out the benefits for suppliers and their distribution. As one result, a number of large tier-1 suppliers founded another e-marketplace called SupplyOn which became one of the major competitors in the field.
FUTURE TRENDS
The adoption of portal technologies in and between companies is still attractive for organisations despite the challenges mentioned in the case study. In addition, technological innovations such as radio frequency identification (RFID) open up new chances to improve collaborationbetween OEMs and suppliers and increase integration of different systems.
CONCLUSION
Although supplier portals are excellent tools to support inter-organisational collaboration, this case study has shown that the challenges are not technically driven but rooted in organisational and cultural circumstances. Even with the existence of advanced technology such as portals, the cooperation between different players, even in the same sector, remains a challenge. Development and implementation of portals during the 1980s, with the implementation of EDI, is hampered by a lack of trust and the exercise of power of one actor (OEM) over the other (supplier). For historic reasons, suppliers in most cases mistrust OEMs and experience each initiative from their part as an additional burden with additional cost. The power relationships among OEMs and their suppliers depend on the context in which the relationship is enacted. Contextual factors such as the position of the OEM, its suppliers in the automotive market and the nature of the materials and services purchased, affect the ability of the OEMs to influence the decisions and actions of its suppliers (Gerst & Bunduchi, 2005).
KEY TERMS
Collaboration (in Networks, Collaborative Networks): Co-action of OEM and suppliers, act of working jointly. Many relationships between all the actors in the automotive sector cooperating by using IT.
Inter-Organizational Systems (IOS): Refers to the computer and telecommunications infrastructure developed, operated and/or used by two or more firms for the purpose of exchanging information that support a business application or process.
Original Equipment Manufacturer (OEM): In the automotive industry, one can differentiate between the first equipment manufacturers, the so-called original equipment manufacturer (OEMs) and the aftermarket (Adolphs, 1996).
Portals: A portal is defined as a linked electronic platform with a single point of entry, independent of time and space that enables collaboration through access to multiple sources of information.
Social Shaping of Technology (SST): The SST perspective arises from a shift in social and economic research on technology that explores and analyzes both the content of technologies and the processes of innovation.
Standard: In the broad sense, a standard can be defined as “a set of specifications to which all elements of product, processes, formats, or procedures under its jurisdiction must conform” (Tassey, 2000, p. 588).
Standardization: Process of standards development and implementation
