Section 6: Organisational Collaboration in ITOL Projects

Even though lack of a shared vision, commitment, and accountability disable e-business initiatives, the most prevalent leadership flaw is failing to nurture and manage the change that new economy business models create (Paul & Antonio, 2001, 39).

But my point is that competitive edge comes ... unless everybody is in there, in a collective way. ... when they start to network together, as businesses, then you'll get some advantage. And that's our philosophy. Our philosophy is not a commercial advantage, one group over another, because that will take you nowhere (Interview, 2001).

This has been a big thing because without partnership and collaboration, this whole thing would have died (Interview, 2001).

Clearly one of the strengths of the ITOL program comes from its insistence on projects being implemented by multi-partner alliances or consortiums. As the survey results showed, the majority (69%) believed project outcomes were better achieved because of collaboration and sharing of resources. Yet one interviewee (2001) emphasised the "complex matrix of collaboration". Notwithstanding such complexity, there is ample evidence from the research that real collaboration is occurring across the different ITOL projects. This includes examples of 'co-opetition' in such cases as:

• the National Tourism Data Warehouse project focussed on "taking a single view of Australian tourism to the world" (ITOL Peer Workshop, 29/3/01);
• the E-retailing project bringing independent retailers in Queensland together through a regional portal;
• the Pacstream project enabling a whole mass of small independent booksellers to deal electronically with large publishers; and
• the Office Products E-commerce Network (OPEN) project delivering e-commerce solutions for the office products industry.

There are also a number of ITOL projects wherein competitors are collaborating in an effort to establish standards for interoperability in the health, cabling, uniform supply, and superannuation industries.

Other positive experiences of 'co-opetition' are illustrated in the following remarks:

Certainly the rationale for organisations to collaborate was clear in the projects and in a broad sense, reflected in the following comment (Interview, 2001):

However, not surprisingly, there was also wariness about collaboration and resistance to the notion of the good of the whole. Reluctance to collaborate was evident in the following remarks:

6.1 The notion of community in ITOL projects

In some cases it was clear that the notion of a consortium took precedence over any notion of community. But there was also a sense that ITOL projects really did create a community. As one interviewee put it (2001): "We are a service provider to the community. We are actually creating the community. The community did not come out of its own awareness of self-need, it came out of a commercial organisation identifying that if you could do this properly, you would create a community and that community would be linked very strongly to whoever that service provider was."  This seems closer to a broader view of an e-community as "... a group of businesses with similar needs ... that shares end-to-end business services ... from a provider" (Mackie & Sutton, 1999, 5).

There were, however, diverse views on the notion of community. For instance, one project manager suggested that:

In the case of smartTEN (formerly known as simpleTEN), there was a clear community of interest among those involved in the uniform provision industry. SmartTEN is proving very successful in terms of management and collaboration.  This project, however, is possibly easier to manage as it is restricted in scope and works in a more predictable world (of uniform supply) than the broader one of the fashion industry per se.

Interestingly, the needs and education of the business community fed into those of the broader community:

ITOL portal projects were seen as enhancing the competence levels of local economies and communities so that they become strong enough to deal equitably in an increasingly open marketplace. This was consistent with the ITOL program's vision for portals to be used to open up regional communities to the rest of the world. As Hoffmann and Schlosser (2001, 376) stated: "Alliance competence, i.e. knowledge of how to forge and manage alliances, could provide SMEs with the capability to protect their independence while surviving in a tide of globalisation and rapid technological change." For it is not only about survival but also about learning and development, knowledge acquisition, innovation and imagination, and competitive dynamics (Hamel, 2000; Ordanini & Pol, 2001).

Certainly in some instances there was a real rationale for the projects residing in protection of regional communities. This is clearly seen in the following sentiments expressed by interviewees:

Yet, there were also some concerns expressed as to the real nature of the impact of e-commerce initiatives on the local communities. For example, a case was cited by interviewees (2001) where a major organisation started trading on the Internet and then found it did not need the local company because it could buy directly from capital cities and get expert advice online. Therefore:

One of the issues that keeps getting up on the table ... about e-commerce [is that] there's a real debate as to whether the e-commerce initiative would benefit our local community or not. In that the suppliers of products feel that it's helping them because it will help open them to the worldwide markets and they can be more efficient in the products that they can supply - you know, better quality products, better prices, all that sort of thing. But there are other people who believe that our major consumers who shop locally are going to be opened up to the market worldwide and start buying outside of the region. So ... our local consumers don't need the suppliers in that they can trade outside the region. ... And ... the bargaining power of customers has changed enormously now because there is ... information readily available (Interview, 2001).

6.2 People issues

And people are the core issues, no people no portal (Interview, 2001).

We underestimated the time needed to get acceptance and to get people to accept the system: we had to go out and hold people's hands (Interview, 2001).

We understand that it's ambitious, but we're talking about industry change that will span decades ... it's a generational change in the industry altogether (Interview, 2001).

The whole issue of dealing with the human dimensions of change management was one that emerged many times in the research data. The present findings support previous research studies (discussed in Section 3.2.2) that effective people management, especially during change processes, is crucial to alliance success.

Traditional resistance to change, especially in projects involving supplier resistance was an emerging issue: "Now the resistance to that change was absolutely phenomenal. Because we had people in those country areas that had never ever seen a computer, let alone knew how it operated. So you are trying to teach these people new skills, as well as putting that on top of their day-to-day operation" (Interview, 2001).

As one interviewee (2001) suggested: "Working jointly could revolutionize the way we do business but not all want this ... not the capabilities and skills and power and influence in offices involved. Often managers need to change the way they work in organisations and this is difficult." Moreover, comfort with the status quo was often an issue: "... when you're talking about agencies and regional areas who have become sort of comfortable with their procurement methods ... it's going to be difficult to get someone to change over and use e-commerce as a major tool" (Interview, 2001). Or for: "...managers who'd run organisations for a long time ... their sense of personal identity and who they are, is tied up in the way they've personalised their organisation. ... They own it as individuals. They have been there for so long. ... And so when I come along and say we now have got a best practice [solution] that will make your place run much better, it was emotionally threatening. And so they'd come up with the most ridiculous excuses why they shouldn't deploy it" (Interview, 2002).

Or: "You know, the secret handshake thing. There's a lot of that with the major organisations here ... I guess it was ... fear ... most of these men didn't know anything about computing or the Internet. ... they basically didn't have time or the desire to understand what this new IT business was all about. So trying to talk to them was trying to talk in a different language" (Interview, 2001).

Yet there was excitement at confronting the challenge of ongoing change: "... PeCC, ITOL and the whole e-commerce business are about facing and solving problems that nobody expected, that were never foreseen. And that is what this is all about - change management and coming up with solutions to problems that you didn't expect..." (Interview, 2001). Furthermore, "The whole thing with change management was helping businesses and people to understand that the communication environment that they were working in was changing so much. ... What they've found is that this month could be different in two months time so they needed to see it as a fluid thing rather than something that was finite. And getting that across to the community was the biggest challenge" (Interview, 2001).

But the real costs of change management, for some organisations, seemed overwhelming. As one interviewee put it (2001):

Because of the overheads of people management ... it was just an incredibly intensive process of managing the threat and ... the amount of reassurance, repetition and stroking was just overwhelming, just overwhelming. We could easily have spent half the budget just doing that. ... If we were to do it again and could have it properly funded, we would probably write in half our budget for this, what you might call ... people management stuff.

There was also some understanding of the need to establish credibility, "... to prove to them that it was better to work with us and their competitors and their trading partners in a collaborative form than it is to do it alone" (Interview, 2001). In fact, most (57%) survey respondents cited the need "to increase credibility" as the primary motive for undertaking the collaborative ITOL projects.

Moreover, the ability to demonstrate success was pivotal: "In the end, there's nothing like getting something up and running. No matter how small it is, it has to be there and it has to be something that is spectacular enough to generate interest. Once you're there, you're home - well, you're not home but you're well on your way" (Interview, 2001).

For those projects involved with e-procurement, major change with strategic intent was challenging. As one interviewee (2001) put it: "e-procurement is a difficult process. ...[It involves] changing the way people do things in their life. ... Technology management is behind change management and culture change."

The need to convince suppliers to join e-commerce project initiatives emerged in many of the projects as a critical challenge. Indeed one interviewee (2001) observed, "the most successful on-line model is driven by suppliers." Another indicated that their biggest challenge was trying "to convince participants that collaboration doesn't reduce competitive advantage" (Interview, 2001).

Another re-emerging theme was that take up of project innovations were often slow, especially in the public sector, because they were not regarded as top priority. Moreover, as one interviewee (2001) stated: "We have a sophisticated product and we need people who think about business in a sophisticated way to really use it."

Certainly, some projects were coming to the conclusion that there was no quick fix solution and that they had underestimated the time and resources required achieving their objectives. For instance (Interview, 2001): ...it's a cultural change. It's taken three years, and it's going to take a lot longer to really get it working. ... We do have a lot to do in this [education] area. It doesn't happen overnight.  ...we need to hand-feed them (Interview, 2001). Or: "...they were fearful [of change]...they knew they had to get information to be able to manage the rhetoric, but they never had enough knowledge to actually manage the change program" (Interview, 2001).

6.3 Process/strategy

Ideally, ITOL requires that grant applicants are clear on what they hope to achieve. Even before an application is lodged, the consortium must already do some groundwork to solicit industry-wide support and to encourage buy-in from target beneficiaries. However, as the research revealed, in many cases trying to tease out the real issues involved in appropriate collaboration proved very time consuming but crucial. For example (Interview, 2001):

Given that some projects may change shape in the course of implementation, it is vital for projects to insure that proposed directional changes are still in accordance with original ITOL program objectives.

In other projects there was a realisation that instead of targeting large numbers a better strategy may have been to select a few organisations and focus on them in terms of resource allocation.

6.4 Structure

As was discussed in Section 3.2.4, given that structure enables, constrains, and affects agenda setting, power dimensions, resource allocations, and outcomes, to be successful in e-commerce collaboration, one must have "the right corporate structure to deliver the value added services and/or products of e-commerce nature" (Interviews, 2001). As was evident in a number of ITOL projects, finding a suitable model proved difficult.

In the case, for example, of the Australian Automotive Network Exchange (AANX) Project, where there was competitive collaboration among automotive companies, the original structure was that of a collaborative group. This was later changed to a more business like foundation in terms of interactions with all the participants signing pilot agreements. But the link into the global industry that the project established complicated the structure furthermore. The project is using an extranet to bring in the global supply industry and has twice yearly meetings with steering groups. However, this is not as simple as it looks since there are structural and cultural differences given the American entity is a commercial one while others, including Australia, are non-commercial and run by industry associations.

Perhaps the model collaboration is that of the Water Industry Alliance in South Australia, which began initially as a cluster before becoming a larger alliance. Here there is a most interesting mix of government and private sector participants, where "the only way to work was to produce an alliance with an independent broker" (Interview, 2001). With 170 financial member companies and a preponderance of SMEs lacking export skills, the alliance has members collaborating and sharing resources and IP and joint bidding for projects to "provide integrated solutions" (Interview, 2001). It is claimed that the alliance is "... the only type in the world - a purely commercial cluster (not individual associations) and not technologically driven" (Interview, 2001).

Figure 9 below shows the various levels of networking and collaboration happening in this project. As the diagram shows, NOIE is the central facilitator (at Level 1) and, in the early stages of the project (grant application preparation and evaluation) is right at the centre of most activity. But later when the grant is approved, NOIE's involvement diminishes and its facilitation role is taken over by the project consortium (or the SA Water at Level 2). Finally, when different consortiums are formed and win projects, SA Water's role is reduced to what is essentially, a watching and monitoring brief.

Figure 9: Diagram showing evolution of ITOL project into multi-level alliances

Even with the Water Industry Alliance, success has not happened overnight and required: "... a softly, softly approach, encouraging people to talk to each other with little consortiums forming each day ... hoping it is because of a culture of alliance fostering ... network meetings help breakdown the worry of co-opetition ... . Cultural change has taken three years and there is more to come" (Interview, 2001).

There was also the need to understand better how to "Share a single system across many organisations" (ITOL Peer Workshop, 29/3/01).  As one interviewee noted:

The concept of hubs was also introduced. As one interviewee suggested about projects where there was a great deal of maturity in co-opetition: "PEG is a buying hub and OPEN is a selling hub and smartTEN is a buyer and seller hub" (Interview, 2001).

6.5 IT issues

In addition to change management, people/relationship and operational issues, survey respondents and interviewees cited several technology issues that impacted on the outcome of their collaborative ventures. These findings are consistent with those discussed in Section 2.1 as some of the reasons for the slow take-up of e-commerce among SMEs.

A major concern was the lack of ICT skills or technical knowledge, the low level of computer sophistication among SMEs, and the subsequent need for continuous skills training. "One of the things that we did from day one was to use the IT knowledge within the region to develop the portal project and what that has helped to do was to accelerate the growth of the local IT industry" (Interview, 2001).

Several projects also had to deal with the very basic problem of lack of appropriate software and/or hardware. According to some: "Technology did not perform as expected" (Interviews, 2001) or "Some members' hardware and software not up to scratch (Survey, 2001). In addition, one interview noted that: "...a lot of companies had to really review their whole hardware and software makeup. And we're not talking...ultra, ultra-sophistication, but it does require the use of a Pentium computer, which a lot of people don't have. They have the old 386's and 486's, and all the old hand-me-downs (Interview, 2001).

Technological issues related often to regional access. For example, an interview stressed the importance of: "... lobbying the State governments and to a lesser extent the federal government about equity and access aspects in the regional areas. If we can't insure that everyone in the regional areas have equal access, equal speed as part of services then it becomes very difficult to convince people in the small towns to embrace the technologies" (Interview, 2001). Or: "Beside bandwidth, the old problem ... the line speed, you know the size of the tubes that we've got ... there are still telecommunications issues such as bandwidth, poor connection, costs and those sorts of things" (Interview, 2001).

Several expressed disappointment over their experience with solution providers or software developers, highlighting the need for strategic advice on e-commerce, as reflected in the following:

There are some very indifferent sorts of solutions out there. Some contractors are absolutely making disasters. And the core SMEs are picking up the cost again and again (Interview, 2001).

There were a variety of perspectives with regards to the technological know-how of communities involved. And while many acknowledged that technological developments had the potential to assist in the more effective management and use of information, certainly there was a sense that there was a need to overcome the mistrust of technology and that a lot of learning had to go on. For example, one interviewee (2001) suggested: "I don't think 'understand' is the right word, I think it is probably 'appreciate'. They don't appreciate the real reason why - some people think it's an aberration, [and that eventually] it will go away." "But there is a phobia, and even though they've been doing it, a little bit of it for some time now, for the last six months, there still is a bit of a reluctance to move to the next level ... ." (Interview, 2001). These sentiments were echoed in the remarks of some others that, in underestimating the technology gap they had tried to achieve too much, too fast, and too soon.

On the other hand, there was a sense that "if you have the buyers committed to using it ... and increasingly dollars are being spent, over a period of time, then clearly the suppliers will have to go this way. I don't think it will be a take it or leave it situation" (Interview, 2001).

6.6 Learning and knowledge management

Learning from ITOL projects was regarded as especially crucial to SMEs in numerous ways, including affording showcases for Australian technology and know-how. For example, the Tasmania online logistics project has developed an electronic freight booking system and tracking platform for transport and logistics providers upon which they are now able to trade and expand their e-commerce activities.

The aim in some projects trying for prototype organisation systems was to be able to incorporate the best of diverse organisation learning and knowledge management:

Every organisational sector, over time, would operate identically. Now that has massive flow-on benefits in the long-term. That means people can share knowledge and we can embed their knowledge into the system. When you design a system like this under a shared services model, you can take the best ideas from every organisation and write them into the software and then when the people that came up with those ideas leave or die or get promoted or whatever, we've already captured their knowledge (Interview, 2001).

We are all in the same mess so let's all fix it up. ... We are all in a process together and no one knows all the answers (Interview, 2001).

There was some pressure for the use of information from ITOL projects to provide better industry data. Moreover, some regarded the real value of information as crucial: "whoever can capture the transactions has the power and has the ability to get the income streams that go along with it" (Interview, 2001)

It was clear that the learning opportunity afforded by the ITOL projects was vital, learning not only for participant organisations but also for whole communities, particularly regional ones. As one interviewee (2001) put it, the project was all about trying to "Facilitate a regional e-commerce approach using best practice e-commerce solutions."

Moreover, there was a real feeling that successes in the projects could translate as models across to other communities and other industries. In some cases, there were real efforts at mentoring occurring. One interviewee (2001) explained that:

Some research respondents expressed concern about duplication in the IT industry more broadly and in ITOL projects more specifically. For example: "... A lot of people are going out and reinventing the wheel, and doing the same thing, having the same problems and spending a lot of money in the process" (Interview, 2001). [On this issue, however, NOIE notes that it has funded similar projects in earlier rounds because each of the successful projects was selected on the basis of its own merit according to set criteria under highly competitive conditions. NOIE adds that it is all about funding quality projects and that for each round, it tries to get a good mix of medium-to-high risk plus medium-to-high gain projects.]

6.7 External threats to successful e-commerce collaboration

Of course it was the real fear of external e-commerce ventures badly affecting local industry that was a rationale for many entering into the collaborations. For example: "I guess our view has changed a little bit from being one of real commercial value to our existing strategic business, to being one of more of, I guess, a philanthropic attitude towards how we can protect those local economies. Knowing full well that if we can protect those local economies, we will do well ourselves.... So there has been a shift in thinking from one of a commercial value to now being one of a social issue ..." (Interview, 2001).

Some concern was also expressed that change was resisted because it was believed that the government's e-commerce strategy was really about cutting funding to non-profit organisations. This apparently led to a lot of resentment and there were attempts to derail the strategies being employed.

For others there was what was seen as external influences driving SME thought patterns, that SMEs were hard to move forward because, instead of strategic issues, they focused on day-to-day ones and failed to recognise the e-commerce imperative. As one interviewee (2001) noted: "It's a very demanding industry. ... And we have a very real problem of trying to get our people to do any more than they're doing because they're physically and mentally exhausted."

For a number of projects, especially those involving partners based outside the country, getting consensus on the legal bases of the collaboration delayed project implementation.