Xiang-Hua Lu ,*, Li-Hua Huang , Michael S.H. Heng School of Management, Fudan University, Shanghai 200433, PR China

School of Computer and Information Science, University of South Australia, Adelaide, SA, AustraliaAccepted 1 June 2005

Available online 6 October 2005

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1.Introduction 2.Literature review 3.Research method 4.The inter-organizational information system

of Cisco and Xiao Tong 5.Critical success factors of the

inter-organizational information system

6.Conclusion Appendix

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IT-based inter-organizational information systems is a powerful strategic tool.

IOS is increasingly being used by Chinese business firms to enhance their cooperation with transnational corporations.

It is hoped that the findings provide some insights for other corporations that want to implement IOS in China.

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Rockart defines CSFs as those few key areas of activity in which favorable results are

absolutely necessary for a particular company to reach its goals. (things must go right)

An IOS differs from an internal distributed information ：◦ Allowing information to be send across

organizational boundaries trough communication technology.

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The strategic value of IOS has been well recognized for:

◦ Real-time interaction◦ Higher transaction accuracy ◦ More efficient and quicker payments ◦ Rapid response◦ Reduced search costs ◦ Reduction in inventory and tighter links to

customers

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The IOS system of Cisco and Xiao Tong is a web-based B2B application using RosettaNet standard. – The first successful IOS.

Web-based applications provide corporations an opportunity to develop new communication standards that can be used within an entire industry and even across industries.

RosettaNet is a worldwide consortium of more than 400 of the world’s leading electronic components to create, implement and promote this open e-business process standards.

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Look for the CSFs through a case study research method for three reasons:

1.CSFs have been heavily used by IS research, but mainly in intra-organizational information systems.

2.Much is known about the CSFs of information systems,but CSFs specific to a given technology in a given organization environment.

3.There are many successful cases RosettaNet-based IOS, only one paper (Eric, 2002) focuses on CFSs.

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Groups the CSFs uncovered in our research into three clusters, namely:

◦ The cluster of decision motivation.◦ The cluster of implementation process.◦ The cluster of infrastructure conditions.

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Include both web-based and non-web-based IOSs.◦ IOS share common features of other information

systbems, including common critical success factors.

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One study identifies the following six characteristics of inter-organization systems compared with gegernal IS :◦ (1) They require partners which are willing, able and

ready to cooperate.◦ (2) A key role for standards (e.g. data communications

protocols, company policies).◦ (3) Third parties are often involved.◦ (4) The work must be synchronized among partners.◦ (5) Technical aspects are less important than the new

electronic relationships involved .◦ (6) Efforts often cannot be secretive, i.e.IOS require more

openness especially when industry standards are adopted.

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The most obvious feature of IOS : It involves two or more parties being electronically linked up for the purpose of conducting their business activities.

Issues related to working partnership are likely to feature prominently.

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The factors may be grouped broadly under the following categories:

1.Psychological perception by organizational players — trust, motivation and consensus.

2.Organizational preparation and response—cross-organizational team, preparation and coordination, project management and maintenance and BPR.

3.IS/IT infrastructure4.Industry standard.

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Trust• The most critical factor for sustained

business relationships and that it needs to be nurtured between partners for successful IOS implementation.

• Unless two companies feel that their relations are so interdependent that there are operational savings and benefits from the IOS, they are unlikely to bear the cost in implementing IOS

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Motivation• In order to compete in the global market at

the level of supply chain• Cost down and to get faster response time

so as to enhance its comprehensive competition.

Consensus on IOS mission• The shared vision of IOS between both sides

is a vital element for IOS success.

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Cross-organizational team• A dedicated cross-functional team with the

appropriate skills and executive support. Preparation and coordination• Effective communications Project management and maintenance• A detailed project plan and effective

communication

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BPR• Refining and re-engineering business

processes.• To achieve seamless integration of key

processes.• Establish smooth exchange of data and

information between themselves• The potential value of IOS is realized only

when it is fully integrated with the other internal information systems.

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IS/IT infrastructure• The capability of the legacy systems and IT

infrastructure affects to a significant of implementing IOS and reaping the benefits.

Industry standard.• Shared standard

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Interview with core personnel◦ 5 senior managers:

CEO.CIO of Xiao Tong IT Director from the IT vendor 2 Senior managers of Cisco

◦ 5 heads of departments that were affected by IOS.

◦ 6 employees

satisfaction evaluation survey◦ Find out the differences before and after the IOS

implementation.

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Use the simple framework developed in Section 2 as a basis for structured interview, inviting them to comment on the findings based on literature research.

Every formal interview, either face to-face or through telephone.

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Designed a structured satisfaction evaluation questionnaire to record the difference before and after the IOS implementation.

The aim was to obtain some quantitative data as well as more information on corporation background and the degree of implementation success.

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Need to employ a set of criteria to reach this conclusion.

Satisfaction-based evaluation is one efficient and simple supplementary method that can be used in IOS effectiveness evaluation.

The satisfaction evaluation of the stakeholders is as important to judge the project’s success or failure.

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The satisfaction evaluation of the stakeholders is as important as other objective methods employed to judge the project’s success or failure.

Demonstrate the success of this case both from the calculated effectiveness and satisfaction evaluation of internal staffs of Xiao Tong.

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Case Background The IOS of Cisco and Xiao Tong

◦ Part I : Production information updating◦ Part II :MLC integration◦ Part III : Submitting PO◦ Part IV : PO status updating◦ Part V : Invoice pre-check in

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Cisco Company, one of the biggest network equipment providers, experienced its toughest years ever in 2001 and 2002.

Cisco was embarking on cost-saving, cutting down the manufacturing cost and sales cost◦ These traditional ways had reached the point

where there was little left to be gained. Gain competitive advantage through value

generation-Internet enabled.

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Cisco began to promote their B2B plan: integration of its commerce site and customers’ back-end systems through a combination of off-the-shelf software and RosettaNet standards.

Xiao Tong was founded in 1990. One of Cisco’s four first-tier distributors in

China.

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The revenue of Cisco in China’s network products market ：◦ 6% of the whole global market revenue.◦ Xiao Tong was responsible for 11.8% of Cisco’s

revenue in China. For Xiao Tong, Cisco was its biggest

supplier, about 60% of its transaction was related to Cisco’s products.

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The first successful one that strictly conforms toXML protocol and e-Business RosettaNet standard in China.

The business processes were mainly related to Purchase Order (PO) execution between Cisco and Xiao Tong, including product information update, product configuration, PO submission, PO status update and invoice pre-check-in, respectively

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Deliver part numbers and price information to Xiao Tong's ERP system.

Verify the data integrity of Xiao Tong's PO (purchase order)/SO (sales order) entry.

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Removed the need to do configuration check in Cisco Connect Online (CCO).

Any salesperson or other staffs who had the right to configure could just do it in their own ERP system.

In the old process, the time spent on the transfer was much more than the time of configuration.

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Xiao Tong could submit PO in its own ERP system instead of on CCO.

Old process: the staff in Xiao Tong’s product planning department had to visit CCO to do configuration, and then submitted PO on CCO, followed by retyping PO data in their own ER

The new process removed the work of retyping the same set of data in ERP system and CCO, which would reduce typing errors and processing time.

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It provided the possibility to the product planning department and the distribution division to check the status of PO.

Instead of checking PO status on CCO or calling Cisco by phone, they could now check their status in Xiao Tong's own ERP system.

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All the information in Cisco's commercial invoice would be sent to Xiao Tong through this process.

Xiao Tong could know the shipping schedule precisely, which makes it feasible for Xiao Tong to do sufficient preparations for the incoming goods.

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They could scan in all products according to the serial numbers without error when products arrive.

Could have the accurate information for every product in its warehouse.

They could make smart payment schedule. The cycle from SO to PO in new process had

been reduced time to 2.5 days. Cost saving was the equivalent of US$

33,000 annually.

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Xiao Tong could get data related to its sales activities more quickly, more accurately and more integrally than ever before.

The managers expressed satisfaction with the IOSs support of their ability to improve decision making, as indicated in the pre-IOS figure of 3.00 to post-IOS figure of 4.33

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Three clusters:

◦Decision motivation

◦Implementation process

◦Infrastructure conditions

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CSF1: strong motivation was essential to gain and thereby guaranteed the commitment from partners

CISCO: The motivation of Cisco was mainly based

on long-term strategy. In order to compete in the global market at

the level of supply chain Organizational underpinning of its very

strong commitment in this project

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Xiao Tong:

1.The pressure from Cisco was the main reason.

2.capital arrangements proposed by Cisco:◦ (1) Certain sales profit rebate in the first 2 years

after implementation of IOS.◦ (2) Cisco covered all software cost for Xiao Tong,

amounting to about US$ 350,000.

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CSF2: shared motivation and vision

Need communication to reach consensus on the vision - Top managers of Xiao Tong and Cisco had a discussion about the blueprint and objectives of IOS.

The shared vision of IOS among all stakeholders would reduce the divergences of opinion in the implementation process and in turn lowered the risk and shorten the period of IOS project.

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CSF3: cross-organizational implementation team

The implementation team for the IOS in this case consisted of three parties.

Four sub-teams were built.◦ management team◦ business team◦ technical team ◦ partner team

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CSF4: high integration with internal information systems

If no way to integrate IOS with internal information system =the value of IOS would be greatly diminished.

Value created by IOS, was the direct reflection of the internal operation performance

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CSF5: inter-organizational business process re-engineering

1. adjustment of process. Ex: post-sales service

2. new form of cooperation between two firms.

Ex. Production Configure

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CSF6: advanced legacy information system and infrastructure

Cisco has mature infrastructure and adequate capability.

Xiao Tong’s ERP modules had covered almost every aspect of its operations, such as procurement, finance management, order management, logistics and inventory management.

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CSF7: shared industry standard

It makes sense for them to select the same standards when they are going to implement IOS.

RosettaNet Partner Interface Processes (PIPs) define business processes between supply chain partners

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Organizations using the IOS must :

1.derive benefits from the system.

2.must be able to co-operate with each other.

3.must perceive their business relationship as interdependence.

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The seven CSFs of inter-organization information system

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Uses a case study method to examine the success story of the IOS of Cisco and Xiao Tong in China.

Identifying seven critical success factors which are grouped into three clusters

Offering some guidelines for corporations that consider IOS adoption with partners, especially for those which want to cooperate with Chinese business firms.

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limitations The seven factors might not be complete

since it is a single case based study. With more and more IOS cases, the list of

factors can be modified. Different countries have different cultures,

business practices and business institutions.

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Whether the CSFs of IOS of companies operating in China can apply to those operating in other countries remains to be tested.

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