Plugging into Strategic Partnerships: The Critical IS Connection

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IN TODAY’S COMPETITIVE WORLD, the effective use of information technology (IT) as an element of a competitive strategy is critical. In the literature there are numerous examples of how organizations have used information technology to build and sustain new relationships with suppliers or customers and, as a result, have achieved a significant competitive advantage.1 A common theme in these examples is the use of information technology to improve coordination of the activities across organizations that are critical to delivering goods and services to a market.

However, it is often noted that these organizations did not gain their advantage by virtue of the information technology alone. Foremost McKesson radically changed both its internal operations and its relationships with customers in an effort to gain a competitive advantage over large, integrated pharmaceutical companies.2 Rockart and Short argue that effective internal integration across value-added functions is a key to interorganizational information systems (IS) implementation.3 Others have noted that the use of information technology linkages between organizations may only “speed up the mess” if a fundamental restructuring of the nature of work in organizations is not achieved.4,5

To the extent that these observations are correct, senior managers must now learn to integrate information technology into every aspect of their organizations.6 One approach to achieving this level of integration has been to decentralize the information systems organization, placing the responsibility for management of the IS function directly under the general manager of strategic business units. Yet this decentralization in itself does not remove the need for effective coordination across the information systems community. In fact, such decentralization may increase the cost of coordination for critical infrastructure components such as telecommunications or data resource management.7

Further, while there are many examples of how investments in technology yielded significant competitive advantage, there are also many examples where such investments resulted in no measurable impact.8 In many cases, this failure appears to stem not from an inappropriate vision but from the inability of the organization to integrate the use and the management of the technology infrastructure into the mainstream of the firm. One key element of a solution to this management challenge is to build a partnership between IS organizations and line managers. Rockart and Short argue that, while there is a fundamental role for line managers in providing leadership in and commitment to the use of information technology, IT managers also play an essential role: to manage the information technology infrastructure; to understand an emerging and dynamic technology marketplace; and to change the work processes associated with the development, implementation, and operations of information systems. In short, effective delivery of information systems products and services requires an effective partnership between the two major actors concerned with systems.9

This paper explores the concept of building partnership as a management strategy. Regardless of how decentralized the IS function is, there is a critical need to build an effective working relationship between line managers and information systems managers and specialists. While some may envision the day when information systems specialists are not required, the increasing complexity of the technology infrastructure suggests that this functional area will not soon disappear. Consequently, senior management must encourage effective working relationships between information technology personnel and line managers to achieve maximum value from their investments.

In many ways, the need for cooperation among all those involved is not new. Strategies for managing the development and operations of information technology are often grounded in participatory decision-making/problem-solving theory.10 Kling argues that a social-political perspective provides an important paradigm for understanding the effective management of information technology.11 Similarly, Markus and Pfeffer argue that any theoretical perspective for managing information technology should also acknowledge the importance of power and influence.12

In a similar vein, corporate strategy researchers have focused on the concept of partnership as a general management strategy. While their focus is often external (across organizational boundaries), the term partnership is used to describe a working relationship that reflects a long-term commitment, a sense of mutual cooperation, shared risk and benefits, and other qualities consistent with concepts and theories of participatory decision making.13

This paper presents the results of research that provide a basis for developing a descriptive model of partnership. Executive interviews that focus both on management relationships with external organizations as well as on relationships between information systems executives and line executives provide the data to develop this model.

The Partnership Concept

The partnership concept rests on the notion that performance can be significantly improved through joint, mutually dependent action. A study of the use of value-added partnerships as a competitive strategy by Italian firms shows how these firms achieve superior performance by working closely together to manage the flow of goods and services along the entire value chain for an industry. These authors also note that information technology increases the opportunities to use cooperative strategies to reduce costs or improve performance in many different markets.14

And yet it has been argued that the “natural” motivation of two independent organizations is to self-maximize and that a necessary condition to moving away from this focus on self-interest is a belief that the exchange relationship is long term. Effective cooperation requires an explicit “tit-for-tat” process that clearly penalizes a party for non-cooperative behavior.15 Stern and Reve approach partnerships from a similar perspective: They depict such exchange relationships both in terms of the rational, economic motive of the parties and the social-political processes reflected in the working relationship.16

Other researchers note a distinction between a “transactional style of relationship” and a “partnership style of relationship.” The former is an arm’s length relationship in which the rules of the game are well specified and the failure to deliver on commitments by either party can be resolved through litigation. In contrast, the requirements of a partnership-style relationship include risk sharing, the need to view the relationship as a series of exchanges without a definite endpoint, and the need to establish a range of mechanisms to monitor and execute the operations of the partnership. In essence, this model of partnership considers the need for a long-term foundation as well as tactical means to achieve effective operational performance.17

We build on these research efforts by exploring two dimensions of partnership-style relationships:

  • Partnership in Context (PIC). Partnership in context is defined as the degree to which the partners believe that the partnership will be sustained over time. This dimension looks at the key factors that establish the participants’ belief in the longevity, stability, and interdependence of the relationship.
  • Partnership in Action (PIA). Partnership in action is defined as the ability of the partners to influence policies and decisions that affect the operational performance of the partnership. This dimension looks at the key factors that create the day-today working relationship.

In this research, we develop a model of partnership based on structured interviews with executives. We focus both on relationships between companies and on the internal relationship between the line organizations and the information systems function. While we recognize that differences may exist in the nature of external partnerships as compared to internal, cross-functional partnerships, adapting an external market model offers a useful mechanism for exploring the concept of partnership between line managers and information systems managers.

A Model of Partnership

In developing the model of partnership, we conducted a series of interviews with senior line executives currently managing partnership-style relationships with customers or suppliers as well as with executives involved in internal line-IS relationships. A total of twenty-eight interviews were conducted. Seventeen focused on external partnerships; the remaining eleven explored the relationship between information technology and line managers.

Each interview followed a structured format. Executives were asked to describe actual exchange relationships with customers or suppliers that they considered to be examples (critical incidents) of effective partnership relationships. Then, three general questions based on partnership in context and partnership in action were posed:

  • What are the factors or elements of this relationship that contribute to its effective execution on a day-to-day, week-to-week basis (PIA)?
  • What are the factors or elements of this relationship that lead you to believe that it will be sustained over time (PIC)?
  • What are the actions that you took or are taking to build or sustain this working relationship?

The order of the first two questions was randomized across subjects. As might be expected, the responses to these questions often overlapped. That is, in discussion of partnership operations, executives would often begin to talk about why they believed that this partnership would have a long-term effect. The interviewer made no attempt to constrain these comments. Each interview lasted approximately one hour.

The same interview structure was used for managers focusing on the internal line-IS relationship. In this context, the anchoring concept involved a description of the current working relationship between the IS function and the line function. We asked the same three general questions.

In addition to individual interviews, we presented the partnership model in two focus-group sessions with executive teams. We wanted the model to be critically examined so that possible enhancements could surface.

In the following section we describe six determinants of partnership (three for each dimension) that emerged from these interviews. In each case we describe the determinant from the external partnership perspective. Later we will discuss the implications for the line-IS partnership that resulted from the internal partnership interviews, as well as specific actions to build and sustain partnership relationships. Figure 1 illustrates the six determinants.

Partnership in Context

Mutual Benefits.

A common theme emerging in every interview was the need for the mutual benefit of the partners. One executive defined partnership as “a working relationship in which members of the partnership receive benefits that could not be achieved through independent action.”

The executives argued that it was not sufficient to have a general feeling that the partnership added value. Rather, effective partnerships require explicit articulation and agreement upon the benefits accrued by each member of the partnership.

Several types of benefits surfaced repeatedly during the interviews and focus-group sessions. The primary benefit was financial returns directly attributable to actions taken by the partnership. In general, these returns were related either to increased revenues through market access or to reduced cost resulting from the increased efficiency of transactions between partners. For example, executives often cited the use of electronic data interchange (EDI) to better coordinate the actions of a firm and supplier as a mechanism by which costs could be reduced or new markets accessed.

A second benefit was process or product innovations. A consistent theme found across the interviews was the ability of the partnership to pool expertise, market knowledge, and process knowledge in a way that enabled the partnership to innovate and, ultimately, to translate these innovations into products or services.

The third type of benefit was risk sharing. The executives argued that partnerships enable each of the firms to pool risk, therefore resulting in an increased willingness to take risk. Further, they believed that the partnership was better able to respond to environmental uncertainty. One executive, for example, described how the close relationship with key distributors enabled the firm to respond more quickly to the new product introductions of their competitors.

Finally, a fourth category was the ability to create a positive working environment. This benefit, while clearly intangible, was stressed by most executives. They highlighted both the improved quality of worklife for their employees and the reduced level of conflict with their partners. Several executives argued that this extended benefit was a key driver for improved productivity and innovation.

The partnership model shown in Figure 1 incorporates mutual benefits as a determinant of partnership in context. One executive’s statement sums it up: “Why do I think it will last? Because we both have something to gain.”

Commitment.

All the executives agreed that commitment among the members of the partnership was a major contributor to their belief that the relationship would be sustained. Three major indicators of commitment were identified: shared goals, incentive systems, and contracts.

Every executive pinpointed shared goals as a major indicator of a commitment. Common goal structures could sustain the partnership when expected benefit flows were not realized. Further, shared goals, they argued, provide a common ground from which to negotiate solutions in areas where goals conflicted. This seemed particularly critical when members of a partnership included potential competitors.

Closely related to the concept of shared goals was that of incentive systems within the organization. In general, the executives argued that the existence of appropriate incentive systems that reinforced the goal structure of the partnership was a significant indicator of commitment. One executive described a partnership that required a focus on quality rather than volume as a measure of distribution effectiveness. A major goal of this partnership was that all materials be delivered undamaged. The producing organization had to restructure the incentive and compensation system in each stage of its distribution system to ensure that quality would be rewarded and recognized. In essence, the executives argued, the existence of an appropriately designed and visible incentive system aligned with the goal structure of the partnership reflected commitment to the working relationship itself and, hence, increased the belief that the partnership would be sustained.

Finally, the executives said that contracts played an important role in a partnership, though they provided only a general sense of the partnership responsibilities. Each executive noted that contracts were often ineffective as an enforcement mechanism. They attributed this to the complexity and ambiguity of the working relationship, which could not be defined in terms of explicit conditions. They claimed, however, that the process of negotiating a contract helped to clarify expected benefits and identify shared goals. Several of the executives also pointed out that, while the contract became increasingly less specific over time, it was an important symbol.

Predisposition.

The third major determinant of partnership in context is predisposition: an existing predilection in favor of the partnership. Interviewees described two indicators of predisposition: trust and existing attitudes and assumptions.

Every executive emphasized that his or her belief in the ability to sustain the partnership ultimately translated into a sense of trust between members of the partnership. When interviewees were asked to expand upon their concept of trust, the two common enablers were the existence of an explicit track record with members of the partnership, and personal relationships. An existing track record indicated the extent to which members had made commitments and delivered on them. In addition, building trust required members to allow their failures to surface as well as to highlight those commitments achieved. In this sense, the executives stated, a trust relationship was built by creating open communication between members of the partnership. Similarly, each executive emphasized the need to develop personal relationships at all levels of the organization. As one executive said, “You must have the ability to bypass the organization and go directly to someone you know will listen and act.”

A second indicator of predisposition was the existing attitudes and assumptions of partnership members. Many of the executives said that the attitudes of management toward cooperative relationships played a major part in their ability to sustain partnerships over time. Several stated that these attitudes could be traced to underlying assumptions about the nature of competition in their industry. That is, as executives began to believe that strategic partnerships were going to be a major element of competitive strategy, their attitudes toward the benefits of cooperative relationships improved.

Partnership in Action

The executives we interviewed also focused on the determinants of the effective execution of a partnership, partnership in action. There were three determinants of PIA.

Shared Knowledge.

One major determinant of PIA was the extent of knowledge shared between members of the partnership. For example, one executive described a partnership relationship with a Japanese organization. The Japanese management team developed a job description for key roles in fifteen-minute segments for twenty-four hours a day, seven days a week. They argued that an in-depth understanding of key roles was vital to the effective working partnership. A second example, also involving a partnership negotiation with Japanese organization, had U.S. managers sending workers to Japan for four to six weeks to help them better understand the culture of Japanese organizations. This type of example was used by all the executives to illustrate the importance of shared knowledge—of the environment, the culture, and the work processes. As one executive stated, “If we don’t understand how they work, we cannot effectively influence them in critical areas.”

Mutual Dependency on Distinctive Competencies and Resources.

It is not surprising that resource dependency was highlighted by every executive who discussed partnership in action. Many commented that a prime difficulty in establishing partnerships was learning to manage an environment in which the other partner held all the cards in a critical part of the business. One manager argued:

Just-in-time inventory management is absolutely critical to our manufacturing strategy. And yet we depend on our relationship with our carrier to make our just-in-time inventory system work. They have the trucks, the distribution system, and, increasingly, the logistics management skills. It took our company a long time to become comfortable with an environment in which there was such a critical dependency.

It was interesting to note that the executives included market knowledge, management skills, and experience along with product attributes as types of resources to which the other partner might lay sole (or almost total) claim.

This need to depend upon a partner’s specific managerial knowledge or capabilities was highlighted by many examples. A typical one was described like this:

Although I could replace the revenue stream provided by my customer, I could never replace their knowledge of how to work with my organization. They have customized their usage system in such a way that my margins are higher with that customer than in any other part of my business. If I lose that business partner, I could replace the revenue stream, but I could never replace the margins.

One might suspect that specific investments that customize a usage system would lock in a customer, thereby shifting power to the supplier. In this case, however, the executive argued that the customization translated directly into reduced supplier costs and thus generated a mutual dependency rather than an asymmetric dependency. If the partnership failed, each member of the partnership lost. As a result, each member’s influence over key policies and decisions increased.

Organizational Linkage.

A final determinant highlighted by executives was a need for organizational process linkage. Three types of linkage were identified: physical process integration, information integration, and social networks.

Process integration is the intertwining of the actions and activities of organizations. Executives described using their partner’s facilities to store inventories, or their partner’s human resources to establish and manage quality in a business process that crossed organizational boundaries. Joint planning processes were often used to illustrate one aspect of a successful partnership.

The executives noted many examples of information integration in which an exchange of information enabled the organizations to better plan or execute their own internal business processes. Of course, EDI examples were most prevalent. However, the need to exchange monitoring information was also highlighted. One executive stated, “you know they’re serious about partnership when they’re willing to share real costs.” Thus, we see an extended notion of electronic integration, in which information exchange goes beyond transaction automation through better and more effective information sharing.

Finally, personal relationships were again cited as a major mechanism for creating organizational linkages. Each of the executives highlighted the importance of establishing personal relationships at all levels of the organization. They stressed that it is not sufficient for senior managers to have personal relationships. Rather, middle managers must establish relationships, and the relationships must be reflected in the actual business processes that are critical to the partnership. As one executive said, “It is often the personal relationships built between organizations that enable you to manage across the rough spots.”

Implications for Line-IS Relationships

Interestingly, but perhaps not surprisingly, the same dimensions emerged in general line executives and in those focusing on the internal line-IS partnership, although the attributes in each dimension differed somewhat. In this section we will describe how the dimensions of the partnership model apply to line-IS relationships.

Line-IS Partnership in Context

Mutual Benefits.

Executives who focused on internal line-IS partnership raised the concept of benefits but initially appeared to have difficulty articulating a notion of mutual benefit. To many the internal partnership was viewed as having a single type of benefit: achieving the goals or objectives of the firm. The IS organization was viewed strictly as a service organization providing support and resources to line management in their pursuit of business objectives. However, as the executives discussed this in the context of effective working relationships, three major categories of shared benefits surfaced: financial contribution, operations efficiency, and quality of worklife.

The ability to articulate the financial contribution that the IS function made to achieving business objectives was consistently raised as an important factor in sustaining effective line-IS partnerships. Executives stated that the measures were difficult to negotiate but, when established, helped to create an environment where information systems could be viewed as an equal partner.

A second element emphasized operations efficiency for both the line and the IS organization. Effective partnerships enabled the firms to redesign development, implementation, and maintenance of a wide range of IS products and services. The emphasis was on opportunities to reduce head count, to improve quality and timeliness of system development projects, and to reduce redundancy in work specialties.

Finally, a third component related to quality of worklife. Corporate executives argued that an improved working relationship, as measured by indicators such as job satisfaction, was an important complement to the financial perspective. Further, the potential for cross-training or opportunities for individuals to expand their job in interesting and career-enhancing ways was often cited as a positive benefit resulting from effective partnerships.

Commitment.

The concept of commitment as a major element of partnership in context surfaced here as well. However, the executives believed that gaining commitment from people in different functional or business divisions was a significant challenge. They described the same major indicators of commitment: shared goals, incentive systems, and contracts.

Shared goals and related incentive systems provided a means to establish an explicit commitment among members in a partnership relationship. Many executives highlighted their current practices for generating shared goals for major projects. They also stressed the importance of changing performance measures from traditional IS measures that reflected efficient operations of the technology to ones that emphasized business impacts. For example, one executive noted that ineffective pricing schemes for IS services led line organizations to use services that were not critical to the emerging business strategy. IS resources, therefore, were not effectively channeled in part because of a poorly designed incentive structure.

In the area of contracts, several executives pointed to their use of formal service-level contracts between IS and line organizations. In a fashion quite similar to the externally oriented interviews, they described how the nature of a partnership could not be specified in terms of explicit contingencies. As such, the commitment reflected by service-level contracts was often symbolic of a deeper working relationship. One executive expanded on this point by illustrating how easy it was to create a “safe” service-level contract. He argued, “The real importance of such contracts is to ensure that everyone is committed to an effective working relationship.”

Predisposition.

Trust and existing attitudes surfaced as major predisposing elements in sustaining an effective partnership. Several executives executives attributed the lack of trust between IS and line managers to their inability to develop a workable partnership. One executive noted that his company had developed a process for selecting both the line and IS managers: “We choose people who have an existing positive personal relationship.” This strategy was adopted in an attempt to increase the trust between IS and line organizations.

The issue of existing assumptions was highlighted specifically with regard to “attitudes toward technology” on the line side of the partnership. The executives argued that the line’s predisposition for partnership was indicated by positive attitudes toward technology, belief in the strategic role of technology, and assumptions about technological trends in the industry. In a similar manner, interest in business operations and results, rather than simply in technology, significantly predisposed IT people toward partnership with the line.

Line and IS Partnership in Action

  • Shared Knowledge. As in external partnerships, the requirement for shared knowledge was consistently highlighted as a key to effective working relationships between line and IS organizations. Each executive underlined the need for effective education and work experience from both a technology and a business perspective. One executive said, “What we must have is mutual understanding of both technology and business practices if we’re going to be able to make key decisions jointly.” That is, this executive rejected the notion that an effective partnership could be achieved via translation. It was not sufficient to translate the language of technology into business terms (or vice versa). Rather, each partner had to develop an appreciation and understanding of the other’s task environment.
  • Mutual Dependency on Distinctive Competencies and Resources. The executives supplied many examples that reflected mutual dependencies on resources such as skilled personnel, management time, or physical assets. In essence, these dependencies were created through definition of roles, responsibility, and authority. Perhaps of most interest was a focus on the need for the partners to accept a dependence on each other’s skills in crucial areas of the business. A prime example of this centered on the effective management of data. In several instances, executives argued that data could not be managed if it was viewed as being owned exclusively by either IS or the line. Rather, both line organizations and IS organizations brought to bear critical skills, experience, and assets that were necessary to manage data across the corporation. Ownership of data standards and accountability for integrity of data were used to illustrate the need for line control of the data. Yet managing large databases required skills and specialized assets that often were best supplied by the IS organization. As one executive stated, “We’ve tried it centralized, we’ve tried it decentralized. I believe the only solution is to recognize that both line and IS have unique skills, all of which are needed to manage data.” The key issue, he asserted, was the need to negotiate and clearly establish roles and responsibilities.
  • Organizational Linkage. The requirements to intertwine organizational processes, to exchange information, and to build personal relationships were also highlighted in the discussions of internal processes. One executive stated, “My measure of partnership is whether or not one of my people is in the room when a key decision is made.” He was arguing that for key management processes (i.e., planning and control), the information systems organization must be part of the decision-making process. Of course, this process of organizational linkage needs to be bidirectional. Line executives expressed a desire to have more involvement in IS decisions that concern technology standards and technology direction. Similar emphasis was placed on the role of information exchange (i.e., providing accurate price and cost information for IS services) and the need for good personal working relationships.

Actions to Build and Sustain Partnerships

Each executive was asked to illustrate specific actions taken with the express purpose of building or sustaining the partnership. Table 1 summarizes the action items gleaned during the interview process.

Education.

Specific actions taken to educate members of the partnership were identified by every interviewee; three general concepts emerged. First, there was a focus on skills transfer and training. That is, each interviewee identified the need for members of the partnership to be trained in those task-related activities in which high inter-dependency existed. Joint training programs were often developed and taught jointly by members of the partnership.

The second major educational concept was the need for general education that spanned the partnership. The interviewees believed it was necessary for individuals to understand the key concepts and skills of other members of the partnership. One example often mentioned was the need for the information systems expert to be given a general business education. And in every instance those interviewed from both the IS and the line organizations argued that line managers needed to be educated in the essential concepts and critical issues relating to the technology.

Finally, a third element of education was related to social or cultural education. One IS executive discussed the need for her people to interact directly with the company’s customers. “We must have a better understanding of pressures faced by our sales-force if we are going to be effective in supporting them.” In many instances, cross-training or short-term assignments were used to develop cultural appreciation of the partner’s work environment. One executive said, “I make sure my people have a personal work experience as a means to understand our key partners.”

As suggested above, the executives believed that shared knowledge was a critical element in the ability to participate in and influence policies and decisions that affected the partnership. In every instance, the executives could point to specific programs and budgetary commitments as an indication that education aimed at improving shared knowledge was occurring. In many cases, the executives felt that a secondary impact of education was predisposition. However, they quickly conceded that such education programs reflected long-term strategies for affecting existing attitudes.

Joint Planning.

The second major activity set emphasized by the executives was joint planning. This involved far more than exchange of planning-related information, such as a manufacturer providing a distributor with a production schedule. Rather, managers discussed an ongoing, iterative planning process that reflected both strategic thinking and the translation of that strategy into action plans.

The executives identified at least three major impacts of the planning process. First, planning was a primary mechanism for negotiating and agreeing upon mutual benefits. Second, planning was a primary mechanism for creating a common goal set. Finally, many of the executives viewed the planning process (including assumption surfacing and testing) as a form of education. As such, it had a major impact on the ability to create a shared knowledge base.

The mechanisms used to implement joint planning processes varied. In most cases, these processes reflected a multilevel commitment. In addition to those people directly involved, a task force or committee of senior-level managers sponsored the planning process and, ultimately, made final judgments regarding appropriate goals and commitments. This task force was also the mechanism that ensured top management commitment.

Another mechanism involved the participation of key members in the organization. In almost every case, the executives emphasized a decrease in reliance on professional planners for creating and implementing plans. Rather, they saw the planning process as an active, dynamic process that involved the individuals who would be working together. In some cases, the executives described a planning process that involved the exchange of personnel or collocation of key members of the organization.

Planning became a process in which the organizations both solved problems of immediate concern and positioned themselves to deal with long-term organizational change. In this sense, the joint planning process became a key organizational linkage. As we will discuss in the next section, the planning and monitoring became intertwined.

Measurement and Control.

A third major action centered on identifying and creating appropriate measures to monitor activities and judge performance. In each case, the ability of the partnership to design and implement the measurement and control systems was viewed as necessary to building and sustaining the partnerships. This activity had a wide impact on the partnership setting and reflected a key organizational linkage. The organizations, through the design of a joint control system, provided a mechanism for enabling process integration, in some cases without the need for physical collocation.

The actions taken to develop a monitoring process seemed to emphasize three concepts. The first was the design of compatible incentive systems to reflect joint commitment. A line-IS partnership example similar to the one mentioned earlier involved performance measures that reflected the quality of the task completed rather than the transaction volume achieved.

The second focus was on the need for effective benchmarking at the initial stages of partnership development in both external relationships and the line-IS partnerships. One executive said, “We all agreed on benefits, but as we sat in the room, we each had very different concepts of current performance. Had we not benchmarked the key business processes, we could not have implemented our solutions and, in the minds of some, the benefits would not have appeared.” This focus on benchmarking is a key element in many strategies for implementing quality control and continuous improvement processes. It is, in effect, an attempt to achieve a common understanding of the partnership and to ground the measures used by the partnership in the actual experiences of the organization.

Finally, there was a major emphasis on the actual design and implementation of the information systems necessary to provide operations and performance data. In many cases, the design required substantial investment by the partnership; the executives argued that these information systems were critical to building and sustaining the partnership. For example, many executives noted that the trust relationship was directly related to track record: “If the organizations do not have an acceptable information system that monitors performance and provides track records on commitment and activities of the partnership, the trust relationship will always be in question.”

The ability to define and implement an acceptable measurement and control system was a major strategy used by the organization to affect predisposition, mutual benefits, and commitment. The executives argued that the ability to share data concerning critical processes affecting the partnership established the foundation for believing that the partnership would be sustained.

Effective Use of Teams.

The fourth major area discussed by the executives was the effective use of cross-functional teams. Cross-functional teams provided three significant contributions to effective partnership. First, the ability to effectively intertwine and create linkages between the organizations required multiple disciplines and extensive knowledge of the organizational processes. As such, the partnership had to have access to individuals from manufacturing, distribution, engineering, or sales (or systems analysis, data modeling, or telecommunications) to deal with problems, to plan effectively, and to make day-to-day decisions relating to the performance of the partnership. Cross-functional teams provided a means to access and coordinate this diverse knowledge.

The second major contribution of cross-functional teams related to social networks. Every executive discussed the centrality of personal relationships in the effective operations of a partnership. These social networks had to span both functional areas and the hierarchy in the firm. They provided the ability to network quickly with those members of the organization who had to participate in or support the actions taken by the partnership. For example, one manager described a major crisis that involved an unexpected price increase by the supplier partner that had a fundamental impact on the benefit flow for the partnership:

If we did not have a team that could effectively network across both organizations to quickly involve key decision makers in adjusting the price strategy, the partnership would likely have failed. It was not an issue of knowledge, but of the ability of the cross-functional team to get personal access to people who had the power to influence the pricing decision.

Finally, the third major contribution of cross-functional teams was stability. Many executives pointed out that both their organizational structures and the work assignments of key employees were quite dynamic. They argued that the use of cross-functional teams was a mechanism to create a stable organizational form. One executive described sustaining the half-life of a cross-functional team for strategic partnerships: They would not remove members from the team if doing so reduced the average level of tenure below a critical point. The need for stability, they argued, was multifold. The team not only had to be able to build and sustain personal working relationships, but it also had to develop an organizational memory. Many of the executives pointed out that if the relationships and individuals involved in managing a partnership changed constantly, the ability to bring past discussions and commitments to bear on a current decision was at risk.

Multilevel Human Resource Strategy.

A key issue identified by most executives we interviewed was the need to establish partnerships at multiple levels of the firm. Actions to build partnership (education, joint planning, measurement and control, and team building) should address all levels of the firm. Interestingly, most executives said that strategic partnerships were fairly easy to form and sustain at the senior and operational levels of the firm. However, the ability to establish an effective partnership relationship between middle managers across organizations or across functions provided a most difficult challenge. They concluded that a multilevel human resource strategy was required— one that would direct partnership-building actions across levels as well as coordinate the selection and assignment of key personnel. For example, as described previously, one firm addressed the issue of predisposition by establishing an executive team with an existing trusting relationship. Many executives indicated that their human resource strategy was a key element in establishing shared knowledge, organizational linkage, and improved predisposition at all levels of the firm.

Technology.

Finally, a key action that emerged throughout the interviews was the use of technology necessary to build and sustain partnership relationships. Each executive talked about the cost of coordination for partnerships. Information technology holds the potential to reduce the costs significantly. In some cases, the existence of an information system was considered the primary asset that a member brought to the partnership. It provided the mechanism by which interorganizational processes were created, for example, EDI. It was also viewed as a key element supporting joint planning processes and increasing the effectiveness and efficiency of teamwork. For example, many executives talked about the need to have the ability to create and circulate position statements quickly in an environment in which face-to-face meetings were difficult to schedule. One executive suggested:

We must change how long it takes us to think strategically, lb do that, we need the technology that enables us to examine the competitive environment, think about it effectively, and come to some decisions. That kind of partnership requires significant information technology support.

Conclusion

This research has provided a descriptive model of the concept of partnership. The model was developed from both an external partnership perspective and from the perspective of an internal relationship between the information systems and the line organizations. This work builds upon two dimensions of partnership: the need to influence key decisions and policies and the belief that the partnership is a long-term relationship. Results suggest that the general model described here can be an effective means to describe and explore the line-IS partnership.

Two general observations resulting from this research are worth mentioning. First, all of the executives noted that while partnership is a concept easily invoked, it is very difficult to actually make it work. As suggested by the model discussion herein, the effective management of a partnership implies significant costs.

Second, many of the executives noted that a “partnership” relationship is not always appropriate. They argued a transactionlike relationship or a value-added service relationship are certainly viable options. The critical thing is to understand the characteristics of a current relationship and have the capacity to change it if necessary. All agreed that an inherently bad and surprisingly common situation is to believe a partnership exists when, in fact, the relationship is a transaction. This mismatch results in misappropriation of resources and creation of expectations that can seldom be met.

Current research focuses on defining adequate measures for the determinants of partnership. A measurement model can establish those indicators that will reliably reflect the status of a partnership. Ultimately, the measures of partnership must be related to performance of the firm, and that will require understanding and assessing the value of the partnership’s benefit stream.

Some benefits achieved through partnerships may be unanticipated. Therefore, longitudinal studies of partnership should be conducted to assess how these relationships affect the participating organizations.

References

1. J.I. Cash, Jr., and B.R. Konsynski, “IS Redraws Competitive Boundaries,” Harvard Business Review, March–April 1985, pp. 134–142;

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2. R. Johnston and P.R. Lawrence, “Beyond Vertical Integration— The Rise of Value-Adding Partnership,” Harvard Business Review, July–August 1988, pp. 94–101.

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Acknowledgments

This research was supported by a grant from the IBM Corporation. The author wishes to acknowledge the contributions of Christine V. Bullen and Jay G. Cooprider.

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Comment (1)
kasu sreelekha
May I know,where actually these business strategies get affected by means of technologies?