Section 7: ITOLs Critical Success Failure Factors

If we assess the ITOL alliances against the key dimensions of success mentioned in Section 3.4, then we find the following:

7.1 Linking alliances with business strategy

As was discussed in Section 2.1, the lack of strategic awareness and the lack of practical experience of the business case for e-commerce are two of the major impediments to e-commerce take-up among SMEs. This was certainly evident among the ITOL projects studied where it was clear that strategy was a crucial foundation to the success of e-commerce collaboration.  This can be seen in the following quotes (Interview, 2001):

You have to have a specific budget with proper strategic planning (Interview, 2001).

...you need frameworks first [on] how to think about and around e-business. You need good processes...a set of road maps (Interview, 2001).

...a lot of stuff we've been doing has really been in the area of talking, thinking and strategic development, rather than actually building infrastructure and spending money on hardware or systems.... We think we would rather do this first and make sure that the vision and the plan are right.... We've taken two steps backwards and taken a lot more time to make sure there is clarity of vision. If we just regenerated and regurgitated all the stuff that has been done before, we'd just be another project on the books (Interview, 2001).

At present the alliance is purely information based - maybe in two years it will be b2b ... but the alliance is about image creation and working in local and international markets. ... The major focus of the alliance now is innovation, developing new products and new markets  - services and selling expertise (Interview, 2001).

Another key issue that emerged was the notion of meeting the needs of the industry, not just those of individual or groups of organisations. In many cases this reflected a real commitment to seeing an industry prosper and to assisting the broader Australian community. For example:

We were trying to find ways of minimising the paper warfare within the industry, to provide good management systems which would allow them to meet their regulatory compliance obligations more easily so that more resources could be put back to the delivery of care and to providing tools which enhance that too (Interview, 2001).

In one project involving partners who were also business competitors, the project team remarked (2001):

There was also an interesting blend in many projects of the philosophical and commercial rationales behind collaboration. The following gives a clear explanation:

7.2 Appropriate alliance preparation

Child stresses (2001, 284) "It is vital, when entering into any collaboration, to maintain clarity and realism in the commitments that partners promise to make to each other. ... as well as having mechanisms for resolving conflict in place from the very outset of the collaboration." This principle was not always adhered to in the projects investigated and sometimes led to disappointment, conflict, and a failure to achieve project objectives as was the case in one project: "we didn't get an adequate level of commitment from that key player. ... In fact it became a downhill fight ... we went through some pretty lean times in relation to it" (Interview, 2001).

Thus, a clear lesson from many projects was the importance of preparation. But for many this was certainly painstaking and time consuming as the following reflects: "...we realised we had to undergo ... quite a long period of education and business development.  ... There was probably a good eight months or nine months of that business development" (Interview, 2001).

In others, the lack of adequate groundwork resulted in significant delays in project implementation and the failure to deliver visible results caused disillusionment among partners and beneficiaries. One project team suggested that: "a supply chain audit and/or replacement of existing relationships needs to be conducted prior to implementing e-commerce" (Survey, 2001).

7.3 Precise outline of performance expectations, goals, responsibilities and rights

It is important to sort out the role of the consortium and to get it right: ensure there are committed people who would put in the money (Interview, 2001).

In some instances there was great clarity, both in preparation and in details of responsibilities and the like. For instance: "What I did before we even put the ITOL bid in [is that] I have on file a one pager that I had all sign that said 'I agree to participate fully, I understand etc. etc.' They all signed this before we ever went anywhere near putting in the ITOL application ... a full consortium agreement. ... So this makes it much easier because we have a common goal, the pathway is clear cut, we can see the end of the line" (Interview, 2001). In a similar vein, another project was designed with a "tight contract, all were in together, and [there was] a co-sharing of costs" (Interview, 2001).

Still another emphasised the need "to understand and establish the ground rules" between project management and beneficiaries. "What we've done is develop a document ... a participant agreement that establishes the ground rules so ... they know that they're getting, for example, three months of transactions free of charge. That's part of their coming on board and we let them understand the value proposition of it" (Interview, 2001).

However, overall, this was an area that could have been improved. As one interviewee (2001) put it: "Who was responsible for what was defined by lawyers but [there was] inadequate clarification of the roles of those involved." In fact, 63% of the survey respondents said they did not establish clear written agreements delineating each partner's roles and responsibilities. With only 26% of survey respondents saying they documented processes very well so that each partner was clear about its roles, responsibilities and benefits, one interviewee (2001) admitted that the "project would have benefited" if they had done so. [More recently, however, ITOL has made this a formal requirement so that when a project is successful in gaining funding, all major consortium members are required to be identified in the Funding Agreement to be signed with the Commonwealth, with their specific roles, responsibilities and benefits clearly spelled out.]

In yet others, participants recognised problems: "The environment has been so dynamic over the last 15 months, it has been one of the major failing, that we haven't clearly defined roles. This has, in fact, led to some of the delays that we have had in terms of finalising software deliverables and actually getting out to clients. Some of it has been from a client's perspective, some of it has been from ours" (Interview, 2001).

For another group, one of the key lessons emerging from the project was the need to work better on the role of the consortium, to get the group dynamics more effective, and to have each member understand what actual contribution they had to make. In some projects it was claimed that some "partners did little - they didn't want to get their hands dirty" (Interview, 2001).

7.4 Contribution of specific resources and strengths

Strength in numbers and expertise and avoiding duplication was an important issue underlying the ITOL collaboration ventures. There was also a philosophical concern with assisting small enterprise, especially the notion of independent retailers in Australia. For example: "You see, we are all faced with the same problem of trying to supplement and assist these small businesses that ... have enormous cash flow problems, limited capital input.... They are trying to exist as an individual business, but they need the safety of a collective group of like people, under a banner, that can give them economies of scale" (Interview, 2001).

A few project participants raised the issue of underpricing or not costing services and the problem that things that were provided for free were not valued and appreciated.  As one interviewee noted in hindsight: "people's perception of the value of something is clouded by how much they've had to pay for it.... It might have been a harder sell to get people to pay a subscription fee ... but we would have picked up people who genuinely wanted to take advantage of what the technology offered" (Interview, 2001).

7.5 Understanding time dimensions in the relationships

A clear issue of importance is the need to get enough organisations involved in collaborative projects to make them viable. Such was the case, for example in PeCC and in other ITOL projects like the Aged Care Online Portal Project, SuperEC and those involved with setting industry standards and improving supply chain management. This, coupled with the task of putting e-commerce high on the agenda of senior boards and executives, resulted in projects taking a "much longer timeframe than anticipated" (Interview, 2001).

Certainly it appeared that in some of the projects there had been a shift in thinking between grant application and grant receipt, including dealing with developments in technology. But pressure was not the answer: "Unless they're ready, you're beating your head against the brick wall. Because no matter how much the government or people ... push it, you can't make it happen quickly" (Interview, 2001).

The timeframe for decision-making was also a bone of contention for some: "A part of what you experience in this industry is that decision making times are incredibly long whether you are working with providers or consumer advocacy groups and there is little decision making which is done within a sense of urgency" (Interview, 2001). Or, for those projects involved with government agencies, there was a sense in which, while people understood that timing was critical, there was also acknowledgement that decision-making in government (Interviewee, 2001) "... moves very slowly - it is complex and political ... got to be in for the long haul."

While there was a lot of activity across the projects, there was concern over timing and success. For example: "So the actual e-commerce that is being conducted, particularly in regard to financial transactions, has not grown at the rate that we would have liked to have seen it. So we still have many concerns such as businesses seeing that they are getting value at the moment for the effort they are putting in ... I think the whole thing with the Internet is that it still has a problem with time..." (Interview, 2001). In the same vein, another project manager remarked: "... the only thing that makes us nervous now is the fact that e-commerce is not taking off nearly as fast as we hoped. This means that we may run into the challenge of people questioning what value they are getting out of it" (Interview, 2001).

7.6 Trust

As Judge and Ryman (2001, 75) stated: "... trust is an essential glue that holds strategic alliances together, but it is very difficult to develop and maintain." As was evident in the ITOL projects studied, trust between partners was important in ensuring success in the e-commerce collaborative venture.

The role of appropriate facilitation in some cases, especially in collaboration among competitors, was important, given that "there was obviously some degree of nervousness" (Interview, 2001). As an interviewee (2001) from one of the key success projects put it: "the human factors are binding - there was computer phobia and fear of giving away too much information: you need to build up the trust of members of each other - it is not an automatic or natural thing for people to do."

Moreover, the strength of the status quo meant a negotiating role was often required.

Surprisingly, in one project involved with data gathering and monitoring, it was pointed out that indeed "Confidentiality of data was not as big an issue because there was a global view of data" (Interview, 2001). On the other hand, one group felt that "What will hold that back is lack of trust with sending things electronically versus [sending] the wrong envelope in the mail" (Interview, 2001). Trust between project management and beneficiaries or clients was also seen as important as was in the case of a trade statistics data warehousing project.

Moreover, online security also seemed to affect uptake: "And the actual purchasing, there is still a lack of confidence in terms of the security; it's still difficult to assure people of the security of the transactions" (Interview, 2001). Or: "Because people didn't understand ... they were paranoid about someone else looking at their data" (Interview, 2001).

7.7 Top management and industry association support

The ITOL program acts as a lever by providing the impetus for change and articulating the value to business organisations in participating in business-to-business (B2B) e-commerce. ITOL seeks to bring organisations together through a competitive funding process to encourage, precipitate and accelerate a measurable improvement in B2B processes and services. ITOL seeks to provide a base level of support but expects industry to provide the major contribution in terms of leadership, commitment, funding and other resources. (NOIE, 2002a)

Top management support was seen as vital to the success of e-commerce collaborative ventures. As one project manager (Interview, 2001) said:

In contrast, the lack of interest by top management in the project has resulted in the failure of some projects. As one interviewee involved in a long-running project said (Interviewee, 2001): "It can't happen without management [support]...that's the impediment, the barrier is management."  In some cases, top management's insistence on clarifying legalities relating to the project has led to significant delays.

Support from industry associations, however, was clearly seen as a critical success factor for ITOL projects. "You really need to drive this commitment throughout the whole business rather than just those people who are intimately involved in it and that's a difficulty" (Interview, 2001). In the case of the SuperEC project, for example, buy-in from industry stakeholders was crucial to the smooth implementation of the project: "...industry bodies didn't see it [e-commerce] as their agenda.... But you have to keep it visible in front of people. Never have it as priority one because it will never survive. But not priority ten either. Let's have it roughly as middle priority" (Interview, 2001). In contrast, lack of industry support was a critical failure factor for numerous ITOL projects that were successful only during the pilot stage but never got fully commercialised.

Yet one project team raised the point that neither top management or industry support would suffice for success (Interview, 2001):

7.8 Social and people skills (including communication)

Communication processes were vital parts of potential success in the projects. For example: "All committees communicate via email ... but we do have face-to-face meetings every month. ... At the end of the day there is no alternative but to gather across the table and sort things out ..." (Interview, 2001).  Or: "... with technology ... at least you can be in touch with people, there is some stuff that needs to be done face-to-face. Some of our delays or misunderstandings - things that have taken us off on a tangent which have cost us money before we could get back on track - have actually been the result of trying to manage across a large business" (Interview, 2001).

For many projects, the more widespread use of email and advanced technology has greatly eased communication between consortium partners: "the thing we've got is flexibility because people talk with each other easily ... [via] email. We're now running board meetings externally. If there's anything that the steering committee believes should go up to the board outside a formal board meeting, we can do it by email or telephone" (Interview, 2001).

7.9 Partner compatibility

In some projects partners dropped out at various stages, often due to incompatibility or because of changing objectives or dysfunctional power plays. For instance: "... the first problem was one of governance. It was one of agenda and the question of why were these other organisations truly involved in this" (Interview, 2001).

One project leader said, "The biggest mistake was believing that the technology partner was the most critical player" (Interview, 2001). Notwithstanding the importance of technology partners, key to this project, and apparently to others, was the need to get the key industry bodies together and work successfully with them in collaboration.

7.10 Appropriate alliance structures and management systems

There was an array of approaches to managing collaboration. ....

In one long running alliance we find a clear procedure where members pay a percentage of payroll to the alliance per annum, have a governing board with three appointed and eight elected members. Meetings are held monthly and there are more meetings held by subcommittees involved with issues such as innovation, marketing, technological issues, and training and development.

7.11 Alliance leadership

Rather than having one organisation in the consortium leading per se, what was crucial in the projects investigated was the project manager position. Getting the right person for this position took much time for many projects but earlier ITOL lessons had shown the need for care in the appointment. As one interviewee (2001) put it: "We had difficulty identifying a Project Manager with the correct blend of technical and personal skills."

In the Water Industry Alliance, the role of the project manager was that of independent facilitator, a crucial one, described as follows: The puppet master for projects coming in, providing a social climate for networking with a soft landing; and hard-nosed facilitation when required for projects; and the portal for communication providing an environment for people to communicate" (Interview, 2001).

However, some project managers were frustrated by their inability to focus on the project per se because of other issues. For example: "... what kills the project in terms of its sustainability over the first five years, is that 50% or more of your time is spent managing people, that is very labour intensive. You cannot automate that ... Everybody wants to talk to me as the Project Manager ...  I'm running the bloody project ... and my time is expensive, you know" (Interview, 2001).

While the role of project manager was critical to success, it was also imperative for projects to have "champions of change" (Interview, 2001) among the beneficiary groups who could help motivate others to embrace e-commerce.

7.12 E-commerce readiness

E-commerce is not a panacea. There's always going to be issues and you have to keep on improving. You don't just put it in today and forget about it" (Interview, 2001).

Crucial also to the success of ITOL projects was the readiness of both consortium partners and target beneficiaries to embrace e-commerce - not only in terms of being prepared technologically but also in terms of having the right "attitude" (Survey, 2001) towards it. As one interviewee (2001) remarked, it is "a matter of getting your head around it."

Results from both the surveys and interviews reveal that: "... there's a big variation in what people think about e-commerce" (Interview, 2001). Moreover, the research results revealed that e-commerce was not seen as a priority by some of the target beneficiaries. Others commented that the lack of business and/or industry appreciation of what e-commerce has to offer resulted in delays in project implementation since there was more training and awareness-raising required than was originally anticipated. As one interviewee (2001) remarked: "For three to four years we fought an education battle to get people to take that first step" (Interview, 2001).

There was also an issue with what was perceived as the slow uptake by industry of e-commerce, explained by some as a result of a lack of standards and fragmentation: "... Just ask yourself, how are we going to make e-commerce work if 50-70 percent of the data is incompatible" (Interview, 2001).

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• Last modified: 6 February 2008, 10:34am