How IT Chain Collaboration Enables Dutch Governmental Organizations to Realize Innovation

14 november 2014
In dit artikel:

Dit artikel beschrijft een framework dat organisaties in een keten kan helpen om hun volwassenheid op het gebied van ketensamenwerking te bepalen en verbeteren. Immers, samenwerking in een informatieketen is vaak nog ingewikkelder dan samenwerking in een productieproces dat is gericht op het voortbrengen van fysieke goederen. Het raamwerk is gevalideerd op basis van een casusbeschrijving inzake de Loonaangifteketen van de Nederlandse Belastingdienst.

For joint innovation by multiple organizations, information exchange and collaboration between those parties is essential. Unfortunately, however, the collaborating parties often encounter difficulties in their cooperation. It is not trivial to agree on modus operandi and ways of information exchange. Well-defined and coordinated information exchange is particularly relevant in the public sector, where roles and responsibilities of organizations are formalized and collaborations are information intensive. For example, the Dutch government encourages the collaboration between organizations in the public sector to enable a sustainable economy and society. Innovation, in particular around chain collaboration, is a key driver for bringing down governmental and societal costs, such as administrative costs and implementation costs. Innovation further reduces complexity and enables the realization of benefits in both the public and private sector.

A recent and illustrative example is the cooperation between the Dutch Tax Department and the Dutch Employee Insurance Agency. Due to a change in legislation eight years ago, both organizations were forced to start cooperating and interacting much more closely than before. These departments were (and are) reporting to different ministries, had no central body of governance and overall responsibility was not unambiguously assigned. Due to different organizational cultures, processes and routines, different IT infrastructures and different IT capability maturities, this cooperation had a difficult start that initially focused only on providing basic information services to each other.

However, gradually this cooperation evolved and focus shifted from simple information provisioning within and between the individual organizations to improved cooperation and being able to jointly reduce costs, improve time to market and deliver value to the end users. This was, amongst others, enabled by a well-defined, implemented and managed end-to-end information chain. Further, the personal effort of individual persons in both organizations helped the chain collaboration to mature. Nowadays, information exchange and innovation in collaboration between organizations is faster and more reliable than it was eight years ago. Information also delivers more value to the chain by allowing the different partners in the chain to focus on realizing their individual objectives as well as shared objectives, minimizing cost and speeding up time to market/implementation.

In order to understand how the value of IT investments is realized for the information-enabled chain of collaborating organizations and to be able to improve the capability needed for doing so, a capability maturity framework was developed. The framework focuses on supporting multiple organizations in their cooperative and innovative efforts, in order to be able to realize the maximum embedded value of their IT investments in the shared value chain. The framework was validated in the described case. In this paper we first provide an overview of the challenges organizations encounter when collaborating, and then present the findings from the validation at the Dutch payroll tax return chain: we list the identified challenges of IT service chains, describe the IT Chain Collaboration Framework itself and present the validation results of the framework.

Please note that in this paper IT refers to information provisioning and not to the hard technology side of IT, such as IT infrastructures.

Cost and benefit management received the lowest scores on current maturity level

CHALLENGES – CURRENT UNDERSTANDING

Inter-organizational relationships and collaborations between organizations, e.g. in service value chains, have been studied extensively both from a management and social science point of view [RING94] [BERG11] [TJEM12].

The topic of IT governance has been extensively researched [BROW05]. The assessment of what IT contributes internally to an organization is described in several frameworks, such as IT-CMF [IVI14] and COBIT [ISAC14]. IT-CMF maps IT organizations onto a capability maturity curve based on empirically derived industry best practice across 33 different capabilities of IT management.

Despite the fact that the topics of IT management and collaboration management in value chains are extensively discussed in separate streams of literature, the combination of IT governance and management in service value chains is an underexposed subject in the literature. It is, however, a subject that becomes more and more important in today’s world where the services industry takes a structurally growing share of the market. In order to improve information provisioning and business value delivery to the entire service value chain, it is no longer sufficient to manage the internal IT organizations capability of each organization separate from the other organizations in the value chain. Managing the alignment of information provisioning processes between several chain partners is essential. Such an alignment between chain organizations asks for an additional set of collaboration capabilities, as the current set of critical capabilities focuses on internal IT management of one single organization and are less suitable to chain collaboration. These additional collaboration capabilities are not yet present in models or frameworks like the IT-CMF.

1 – Challenges of IT service chain collaborations

  • Drivers and goals are ambiguous

Organizations that collaborate in a value chain are likely to have different goals and drivers. Therefore, when it comes to decision making, not all organizations will opt for the same decisions in the value chain. As a result, sub-optimization is luring. Explicating the individual goals and defining a joint goal for the cooperation are important when steering the process [DANE06].

  • Governance is not a given

Most collaboration between different organizations that are organized in a service value chain does not have a (strict) line of command. Principally, decisions are governed by consensus and not by one individual organization having the power to make a decision. Agreements are based on trust in the other participating organizations. Often decisions are taken by individual organizations without prior discussion with chain partners, although the decision might impact other parties as well.

  • Uneven distribution of costs and benefits in a cooperation

Costs and benefits are not necessarily distributed evenly among all organizations in a cooperation. Benefits are less likely to be realized when the associated investments need to be made by a party that does not profit from these benefits. This is often the case when multiple organizations work together, both in value chains and service chains [ECKA12].

 

  • Information requirements must be aligned between organizations

It should be clear what the information requirements of the different organizations and the cooperation as a whole are and which information processes are used and needed to exchange information between organizations. Proper analysis is needed in the beginning phase of a cooperation when requirements are defined. Also this analysis needs to be repeated iteratively during the project to ensure that sufficient and the right information processes are in place.

  • Organizational and cultural differences have an impact on inter-organizational communication

It is key to the success of a cooperation to have a joint understanding of important terms and goals and to be able to align inter-organizational communication. Sectors can use domain-specific languages, and semantic understanding is often specific to national as well as organizational cultures [SCHE04]. Efficient collaboration requires the awareness of different cultural backgrounds [HOFS83] and if necessary the application of interventions to create an open and effective group culture [KEND04].

  • Dynamics of a cooperation makes it hard to address challenges

Cooperation between multiple organizations tends to be more dynamic than within single organizations, as the constellation of players and connections may change rapidly. Rapid changes in the project constellation will make it even harder to address all challenges listed in this section successfully. New partners entering the project might again have different goals and organizational cultures. Very dynamic constellations might also inhibit the development of trust between the different participating organizations [EDEL07].

  • Low willingness to share information

Some of the organizations in the value chain might be competitors. Competition is one of the factors that inhibit players to develop sufficient trust to share sensitive information, such as financial information [BOLT08]. Information sharing is necessary for cost and benefits management of IT service chain investments and thus important for all inter-organizational collaborations that require joint decision-making. Information sharing is easier when actors speak the same language and is more difficult in case of competing actors or other sensitive relations, e.g. between an organization and their customers [PARK96].

  • End-to-end information services are more complex in an inter-organizational collaboration than in a single organization, thus a holistic view on value is missing

In order to successfully cooperate in a service value chain a holistic understanding and alignment of the end-to-end information services are needed. Both the design and the operational control of the end-to-end IT services can be a challenge. Given that the service chain is highly dependent on end-to-end information services it is very important to create a holistic understanding of the information services in order to address this challenge successfully.

2 – the IT Chain Collaboration Framework

Capabilities

Our research shows that both technical and organizational capabilities are needed to address the eight challenges experienced in collaborations working together to innovate. In this section we will describe a framework consisting of six IT management capabilities that address the challenges present in service value chains introduced in the previous section. Capabilities as described in this paper are ‘… complex bundles of skills and accumulated knowledge, exercised through organizational processes, that enable firms to coordinate activities and make use of their assets’ [DAY94]. We focus on the capabilities on a strategic level that describe the ability to support the business goals of a company [LEE05]. Capabilities to leverage IT within a single organization are left out of scope. We defined the following six capabilities:

  • Chain IT goal planning.
  • Chain IT governance and leadership.
  • Inter-organizational relationship management.
  • Interoperability management.
  • End-to-end service management.
  • Cost and benefits management.

For each capability, capability building blocks, maturity levels and a questionnaire to assess the actual and desired maturity were developed in accordance with the IT-CMF methodology and toolbox format (see [IVI14]). We further developed, based on the input from experts, a set of (best) practices, outcomes and metrics (POMs) for each capability. These POMs allow us to not only use the framework as a measuring tool to assess the current maturity of a service value chain but to also deploy it as an intervention mechanism that is based on best practices and leads the way forward for the organizations in the service value chain.

Chain IT goal planning is the capability to produce a shared and aligned goal plan regarding the information chain. It takes into account the individual objectives of participating organizations and the purpose and processes of the service value chain as a whole, in order to formulate the objectives for the information chain. Chain IT goal planning further identifies opportunities and plans activities and projects to realize these objectives.

Chain IT governance and leadership is the capability which involves identifying, discussing, aligning and implementing the ‘rules of engagement’ (modus operandi) and the strategic positioning of all the involved stakeholders in the service value chain.

Inter-organizational relationship management is the capability to analyze, plan and enhance the relationships of IT and business departments between participating organizations in the service value chain. The objective is to build inter-organizational relationships based on mutual trust that can be used for optimizing the information chain.

Interoperability management is the capability to manage the information exchange between the involved parties in the service value chain. It ensures that the information chain is delivering value (adequate, reliable and meaningful information flow) to the business processes that it supports.

End-to-end service management is the capability which ensures the performance and reliability of the information chain, by aligning the service management processes of participating organizations. The information chain is built up of several services provided by the individual organizations that together provide the information needed in the service value chain. An end-to-end view on service management is required to optimize value delivery by the information chain.

Cost and benefits management is the capability of determining, calculating, analyzing, balancing and distributing costs and benefits of IT and IT investments among participating organizations in the service value chain. It boosts IT investments that are profitable for the service value chain as a whole, but not necessary for the individual organizations that carry the costs. Furthermore, this capability provides opportunities to include organizations in the service value chain that otherwise would not be involved because of a zero sum game.

Deployment approach

Next to the capabilities in our framework we have developed a deployment approach consisting of the following four steps. The approach is based on the IT-CMF deployment approach.

  1. Assessment of the current and targeted maturity level as well as the importance for each collaboration capability. This step is deployed by a detailed online survey.
  2. Conduct in-depth face-to-face interviews. While the survey is used to assess the maturity scores, the interviews serve to get more information about answers of individual survey participants and to validate the scaling used in our survey.
  3. Organize and conduct multiple workshops to discuss the outcomes of the survey and the interviews with a selected group of participants representing all organizations and management levels. Within these workshops between-group comparisons are used to discuss differences in maturity levels between groups and capabilities. Based on these discussions improvement areas (belonging to one or more capabilities) are specified and agreed upon.
  4. Organize and conduct a second set of workshops to jointly define concrete actions and steps in order to realize improvement in the before identified improvement areas.

3 – Validation

In order to validate both our framework and its deployment approach we conducted a case study of the information chain between the Dutch Tax Department and the Dutch Employee Insurance Agency in the payroll tax return chain (Dutch: Loonaangifteketen). The case study shows that one of the reasons why the collaboration ultimately is successful, is that both organizations recognize (and act accordingly) that chain IT collaboration need specific skills, efforts and capabilities, that go beyond those necessary for managing IT in a single organization. Based on interviews and workshops we conclude that deploying our IT collaboration capability framework and approach in the case study at hand resulted in the following benefits for both governmental organizations:

  • More visibility for specific subtopics related to IT chain collaboration within both chain organizations.
  • Better insights in joint goals of the collaboration.
  • Bringing people from different parts of both organizations together (in workshops) to discuss about their information provisioning and chain collaboration.
  • Detailed insights in the current capability maturity of both organizations. Differences between different organizations, domains and management levels have been identified and discussed in multiple workshops. We found that it was very valuable to have a broad representation of different management levels and business domains in the assessment, to account for differences in the interpretation of the scope of the study. Everyone answered the survey questions having his own paradigm about the collaboration in mind.
  • Detailed insights in the desired capability maturity of both organizations. The current and targeted maturity have been used, together with importance scores, as input for a gap analysis. Based on this analysis and insights from interviews, two capabilities have been identified as the focus for improvement areas. These capabilities are Chain IT goal planning and Cost and benefits management.
  • Identification of specific and supported improvement actions for the two selected capabilities.
  • The implementation of improvement actions will lead to improved controllability through increased transparency about costs and benefits of the collaboration.
  • The implementation of improvement actions will lead to improved joined decision making and will support both organizations to successfully obtain funding and have influence on proposed legislation were needed.

We expect that other governmental information chains can realize similar benefits when applying our framework and approach. Providing a framework that can be used as a measuring tool as well as an intervention proved to be of great value. As a measuring tool the framework can be used to assess and identify which chain capabilities have the biggest potential to deliver the largest improvement to the information chain. Such an assessment is based on: current maturity, desired maturity and the perceived importance of collaboration capability. Once this assessment is done, the deployment of the framework serves as an intervention to identify and implement specific and supported actions. These actions are based on best practices, outcomes, and metrics and help the partners in the collaboration to reach their desired collaboration capability maturity levels in their focus area.

The six capabilities of our framework help both case study organizations to reflect on their collaboration potential on a very detailed level. Our assessment of the maturity resulted in current and target maturity level scores for each of the six capabilities. We observe that the scores are quite balanced between the capabilities. On average the current maturity of our case study organizations was 2,7 and the targeted maturity 3,6 (see Figure 1). The two capabilities that were perceived as most important, namely inter-organizational relationship management and chain IT goal planning, also had the highest current maturity scores. This reflects the general feeling shared during the interviews and workshops that both organizations are in control of most aspects of their information chain collaboration. The organizations felt that most potential to improve the collaboration was possible when focusing on two of the six capabilities, namely: Chain IT goal planning and Cost and benefits management. The difference between the current and target maturity was the largest for these two capabilities.

With respect to Chain IT goal planning we found that the survey respondents of both organizations reported the highest current and target maturity for this capability. Insights from interviews show that currently plans are developed in cooperation; people trust each other and the processes are transparent. However, there is still room for improvement in the development of follow-up plans and in the communication about plans.

Cost and benefits management was the capability that got the least number of respondents in the online survey. It also received the lowest scores on current maturity level (See rightmost column in Figure 1). During the interviews and the workshops we learned that in the payroll tax return chain the cost-awareness has been growing in the last years. However, most benefits are realized outside of the collaboration by public and private organizations that benefit from cheaper and faster supply of information. Therefore, the interviewed stakeholders were less concerned about managing those benefits. Further, respondents reported difficulties in quantifying benefits, which was also named as a reason why benefits were often not taken into account when developing business cases. The respondents do however see the necessity to develop this capability in order to be able to balance the costs with the benefits in the future, no matter where in the information chain they are realized.

When conducting our case study, we observed very high commitment by the management and staff of both organizations. This was, among others, shown in high response rates for the survey and high presence of participants and management during interviews and workshops. The respondents reported that they felt that the capabilities had matured over the last eight years, since they started the intense information chain collaboration between the two Dutch governmental organizations.

The organizations involved in the case study benefited from this research as it helped them to gain a better understanding of their current maturity level. In addition, it gave them insights on how to improve their collaboration such that they are more able to fulfill their primary tasks in the future. The participants of the case study are much more aware ’why’ they are actually working together and what their cooperation should strive for. The assessment enabled the participating organizations to identify focus areas and make these topics discussable. During the last workshop, case study participants developed improvement actions and received practical guidelines and tips on how to implement these in order to improve the two capabilities with the biggest maturity gaps and highest scores on importance.

CONCLUSION

IT governance and management in service value chains is an underexposed subject in the literature. However, this subject is becoming more and more important in today’s world where the services industry takes a structurally growing share of the market. Automation and digitization is still becoming ever more important to fulfill business processes and organizations need to collaborate more than ever with other organizations in service value chains to reach their goals. However, such collaboration can be quite challenging. This paper identified several challenges that cooperating organizations face when they need to manage and steer the information chain. These are challenges that organizations typically do not encounter when managing and governing their own internal IT. In order to address these challenges we developed an IT chain collaboration framework that defines six capabilities that can help organizations to successfully cooperate in a service value chain. We deployed the capability framework in real life cases using a four-step approach consisting of a survey, interviews and two types of workshops. We validated our framework and deployment approach in a case study of the payroll tax return chain involving two Dutch governmental institutions.

the collaboration framework brings value and new insights

The case study shows that the collaboration framework brings value and new insights to the playing field of the case study organizations. Deploying the framework following our four-step approach makes the topic of IT chain collaboration specific, discussable and actionable on collaboration building block level. Our workshop-based approach helps to bring people from both organizations together.

The fact that the entire case study took place within six weeks shows that the framework can be applied efficiently and effectively. Such a short turnaround time results also in low deployment costs. However, it requires that the right people (experts) are invited to participate in the surveys and that high commitment and sponsorship of all relevant chain partners is present. Getting all relevant chain partners to agree on participating in a project where their collaboration capabilities are assessed and improvement actions are specified can be quite challenging and requires a minimum maturity level of all chain partners.

Further research is needed to account for differences between public and private organizations when deploying the capability framework. We found that especially the cost and benefits management capability needs to be fine-tuned to fit into the governmental organization context. The biggest difference with private service chains is by which stakeholders the benefits are realized. While in private service chains the benefits are typically realized by one or more collaboration partners, in public service chains the benefits are realized outside of the collaboration network, by the general public (private persons or organizations). This characteristic of public service chains needs to be considered when deploying the cost and benefits management capability.

ACKNOWLEDGEMENTS

We want to express our thanks to all survey and interview participants at the Dutch Tax Department (Belastingdienst) and the Dutch Employee Insurance Agency (UWV). We especially want to express our gratitude to Mart Driessen and Marcel van Raaij for their support in setting up and running the case study.

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Dr. S. (Silja) M. Eckartz, Drs. M. (Michel) F. Emde, A. (Bram) M. Spitzer MSc. en M. (Michiel) H.M. Stornebrink MSc.

Silja Eckartz is business consultant bij TNO op het gebied van IT besturing, semantische interoperabiliteit en waarde van IT. E-mail: silja.eckartz@tno.nl. Michel Emde is senior business consultant bij TNO op het gebied van IT besturing, IT strategie en waarde van IT. E-mail: michel.emde@tno.nl. Bram Spitzer is senior business consultant bij TNO op het gebied van servicemanagement. E-mail: bram.spitzer@tno.nl. Michiel Stornebrink is werkzaam bij TNO op het gebied van IT besturing en semantische interoperabiliteit. E-mail: michiel.stornebrink@tno.nl.