供应链管理原版文章连载27个pdf文章satisficing dependent customers-on the power of suppliers in it systems integration supply chains_W

1、IntroductionSatisficing dependent customers: on the power of suppliers in IT systems integration supply chainsIn this article the role of satisficing end customers by suppliers in a relatively superior position of power is explained. The article shows that many participants in the multitude of suppl

2、y chains that must be brought together by IT systems integrators achieve above normal levels of profitability at the expense of the end customer. While some suppliers ? especially in the hardware supply chains ? appear to achieve lower margins, the research indicates that even in highly con- tested

3、markets suppliers can achieve above normal profit rates. These returns appear to be based primarily on buyer ignorance and information asymmetry vis-a? -vis suppliers.Paul IrelandPaul Ireland is a Research Fellow at the Centre for Business Strategy and Procurement, Birmingham BusinessSchool, Univers

4、ity of Birmingham, Birmingham, UK.Background to the IT systems integration supply chainsThe total UK computer market was estimated to be worth approximately ?31.72bn in 1996 with computer services accounting for 31 per cent of this figure. The dramatic growth in the proportion of total IT spend acco

5、unted for by services is accounted for, in part, by the key engine for market expansion ? outsourcing. Outsourcing revenues have risen by 202 per cent between 1993 and 1997 (Key Note, 1997a).The key factors persuading organisations to outsource their IT operations include:Supply chain, Value chain,

6、Information technology,Systems integrationProvides both a descriptive and an analytical under- standing of the supply chain for IT systems integration. It explains which firms in the chain have power and how this impacts upon value appropriation. The article is structured around three parts. The fir

7、st is adescriptive mapping of the supply chain based on the key functional stages. The second is a descriptive mapping of the corresponding value chain based on the revenues and gross profit margins typically being earned at each functional stage. The final section contains a discussion of thestruct

8、ures ofpower andthecompetitivedynamics, and by extension the appropriation of value, in the chain. Buyer ignorance and information asymmetries are identified as the key factors in this case that determinesthe appropriation of value.more flexible access to rapidly increasing computing power;cost redu

9、ctions from rationalising hard- ware, software and personnel, especially in highly decentralised environments; shared risk, through financial penalties imposed on the service provider if service level qualities fall below predefined stan- dards;increased access to emerging innovative technological s

10、olutions and technical ex- pertise from suppliers; andthe potential to solve problems associated with upgrading and maintenance of le- gacy systems.The current issue and full text archive of this journal is available at.The information technology industry is char- acteri

11、sed by the following major supply chains: hardware; software; services andpersonnel. These supply chains display sig- nificant overlap but the detailed analysis presented will seek to clarify the inherentSupply Chain Management: An International Journal Volume 4 . Number 4 . 1999 . pp. 184?191# MCB

12、University Press . ISSN 1359-8546184Electronic accessAbstractKeywordsThe authorSatisficing dependent customersSupply Chain Management: An International Journal Volume 4 . Number 4 . 1999 . 184?191Paul Irelandcomplexities and diversities between the diverse product and service offerings in the contex

13、t of systems integration.Systems integration is just one option available for large organisations when con- sidering the alternatives for the sourcing of their information technology requirements. In addition to internal provision, external sour- cing of IT can take many forms and cover many activit

14、ies. The different types ofservice may include: systems integration; facilities management; transitional outsourcing; shared service; remote computing option; and total outsourcing (Pilz, 1993). Without a systems integration capability, however, the organisa- tion will have independent systems that

15、could result in duplication of, or gaps between, management information systems. The result is that the organisation is unable to present a consistent business interface to its users and customers.The continuum of alternative sourcing arrangements available, as indicated in Figure 1, highlights the

16、need for any client to have a strategic understanding of its information processing requirements, combined withan understanding of the criticality of IT to this processing. In addition, the end customer also needs to understand the implications ofexternally sourcing its IT requirements. In- appropri

17、ate sourcing may lead to the loss of control of important supply chain resources that prevents the end customer being a price setter and value appropriator in its primary supply chain. As a result, it is essential that end customers undertake a thorough and robust review of the IT sourcing decision.

18、Such a review should ensure a sound business decision that avoids the creation of supply dependencies by keeping alternatives open at acceptable switching costs. One might also expect that a robust review methodology would allow for buyer control over the profits generated in IT sourcing. As we shal

19、l see, this is inherently difficult in this supply and value chain.Supply chain mapping in IT systems integrationOne of the most important IT outsourcing decisions revolves around systems integration. This is because there is a need for the flow of business information in a format that can be proces

20、sed in a compatible way, on both inter- and intra-organisational networks. SystemsFigure 1.The segmentation of the UK computer services market185Satisficing dependent customersSupply Chain Management: An International Journal Volume 4 . Number 4 . 1999 . 184?191Paul Irelandintegration has also grown

21、 in importance due to the movement towards client server tech- nology, which has increased the need to design and construct total client IT systems, or to integrate mainframe and mini-computer systems with end-user personal computer networks.There is intense competition within thissupply market. Thi

22、s has been driven by a continuous round of supply innovation that is focused on meeting the functional require- ments of the end customer, but in such a way that any supply offering is highly valued and can be premium priced. Given this environ- ment, and with the processing of information of fundam

23、ental importance to the strategy formulation and operation of large organisa- tions, it is somewhat surprising that few firms appear to have robust methodologies to assist in the making of appropriate sourcing deci- sions. Such methodologies would first need to map both the supply and value chains f

24、or systems integration. The primary supply chain for systems integration is shown in Figure 2.include 2,380 companies registered at Com- panies House (excluding holding companies that do not generally trade). The addition of the public sector ? central and local govern- ment, NHS trusts, etc. ? woul

25、d bring this figure to approximately 3,000 potential end users. The major players do not consider the 19,500 medium-sized businesses and 2.5 million small businesses, at present, as po- tential customers for turnkey systems integration projects. The current view is that such customers are probably b

26、etter served if they install industry standard packages rather than create their own bespoke systems.Systems integratorsIt is not possible to quantify exactly the number of systems integration firms that exist within the 50,000 UK companies currently operating in the computing services sector. The c

27、omplexity stems from the fact that these companies, operating within many of the IT supply chains, make a varying percentage of their turnover from systems integration.Other services that contribute to the revenue generation of these firms may include: facil- ities management; hardware and software

28、support and maintenance; training; and con- sultancy services.Of the 50,000 companies operating in the computing services sector, ten companies account for 40 per cent of UK systems integration revenues. These ten companies, in current order of business turnover, are as follows: EDS; IBM; ICL; Sema;

29、 Andersen Consulting; Computer Sciences Corporation; Cap Gemini UK (Hoskyns); GEC-Marconi; Microsoft UK; and Oracle UK1. This demonstrates that the marketplace is highly contested and that while there are manyKey stages in the supply chainEach of the key functional stages in the systems integration

30、supply chain is described below.The end customerThe number of actual and potential end customers for systems integration is difficult to quantify precisely. End customers of complex systems integration are confined to large organisations. If large firms are taken as those with 500 or more employees,

31、 this wouldFigure 2. Key stages in systems integration supply chain186Satisficing dependent customersSupply Chain Management: An International Journal Volume 4 . Number 4 . 1999 . 184?191Paul Irelandplayers, there are also many hundreds of small systems integrators (Key Note, 1997a).The structure of

32、 the market for systems integration is constantly changing, due to acquisitions and an increase in the number of vendors. The costs of entry can be high, due to the need for significant capital require- ments and the need for a reputation and credibility for the successful implementation of business

33、 solutions. Despite this, the mar- ketplace is attractive for new entrants, due to the high level of achievable profits, the rapidly expanding market opportunities and the fact that efficient information processing is be- coming increasingly critical for business success in the Internet age. This ha

34、s prompted many organisations to seek to find ways to overcome existing entry barriers.outsourcing and systems integration custo- mers. Such firms faced lower entry barriers but had to overcome the anxiety of end customers who thought that they were still in the hardware market. A characteristic of

35、the nature of demand is that the solutions are technically complex and that end customers do not fully understand the technology and are not in a position to exert effective control over what they are purchasing. It should be noted that, to be successful, systems integra- tors will not automatically

36、 sell their own hardware per se.The hardware supply chains are highly dependent on the supply of components. With these components accounting for a significant proportion of costs and the secur- ity of timely supply being critical, there exists a considerable amount of vertical integration within th

37、e supply chains. The considerable change experienced by the numerous IT supply chains and the players within them has perhaps been most prominent within the hardware supply chains. Figure 3 highlights how the industry has developed and the major forces that have driven these changes.HardwareManageme

38、nt information processing hard- ware and associated maintenance accounts for approximately a third of the ?32bn computer market in the UK (Key Note, 1997b). The sector includes computers (varying in size from large mainframes and enterprise servers to workstations and perso- nal computers), peripher

39、als, printers and other input/output devices and storage de- vices of all types.There are conflicting pressures on the numerous hardware supply chains. Personal computers form the largest and most dynamic sector of the market. Like peripherals, which form the next largest sector, PCs are a maturing

40、market and the cost of the hardware is decreasing rapidly. Firms such as IBM, Compaq, Fujitsu and Toshiba in PCs and Hewlett-Packard, Seagate and Canon (in addition to IBM) in peripherals are facing increased competition predicated on price. Without the explosion in sales this would have led to a de

41、crease in the overall value of the hardware market. The fact that hardware is becoming more of a commodity in certain areas has provided less scope for the major players to premium price.It is for this reason that existing hardware manufacturers and service providers have focused on more profitable

42、systems integra- tion services as an addition to (or replacement of) the traditional manufacture of hardware. The troubles faced by IBM and others forced them to find related businesses, such as outsourcing, and adopt strategies that were aimed at turning their existing client baseintoSoftwareThe UK

43、 software market was worth ?4.87bn in 1997 (Key Note, 1998). This market accounts for 17.9 per cent of the western European software market and approximately 6 per cent of the global market. Recent growth has been fuelled by the movement away from customised bespoke applications towards packaged sof

44、tware and high demand for PC software packages.The UK computer software market can be segmented by either the type of software offering (systems software, applications soft- ware or application tools) or the nature of the revenue stream for the supplying organisation (dependent on the type of licenc

45、e). Applica- tions software is consistently the largest sector of the market (48 per cent in 1997), but there has been a shift towards application tools (25 per cent) away from systems software (27 per cent). This move from customised applica- tions running on proprietary mainframes and minicomputer

46、s towards generic software is because more firms are adopting client-server solutions.The software market is very diverse, with even the largest players only accountable for 10 per cent of the market. IBM is the largest company in the UK software market followed187Satisficing dependent customersSupp

47、ly Chain Management: An International Journal Volume 4 . Number 4 . 1999 . 184?191Paul IrelandFigure 3. The forces that have developed and evolved the IT systems integration supply chainsby Microsoft. Apart from Microsoft, the majority of software organisations tend to be vertically integrated in bo

48、th software devel- opment and hardware manufacturing.Outside of the mainframe market, where IBM is the dominant player and where proprietary operating systems are the norm, the operating system market divides into two groups, consisting of Microsoft and all others.The packaged generic software indus

49、try ischaracterised by extremely rapid technologi- cal change, which requires constant attention to the marketplace to monitor software technology trends, shifts in consumer demand and rapid product innovation.The pace of change has recently becomeeven greater, due to the surge of interest in the In

50、ternet, other forms of online services, server-based networking, and new program- ming languages, such as Java.Major marketing and research and devel-opment resources are therefore required by the organisations to sustain and generate customer demand. The costs of the compa- nies operating at this s

51、tage of the supply chain are mainly attributable to the labour costs of the software authors.The analysis presented later considersbusiness software products within the supply chain. Like systems integration generally, analysis of customised bespoke software is made difficult because of the project

52、nature of the one-off, ad hoc and technically uncertain expenditure.Consultancy organisationsInformation technology is the major sector in the management consultancy market in terms of value. This is because IT assignments tend to be more costly, due to the length of time required to complete projec

53、ts. The structure of the IT consultancy market is changing rapidly, due to entry by an increasing number of organisations who are developing more sophisticatedsupplystrategies centredaround the creation of client lock-in, through permanent dependencies and high switching costs. The market is highly

54、contested. The principal consultancy providers come from IT companies, IT-specific consultancies, aswell as from accountancy-based and other more general consultancies.The IT management consultancy sectorcan be divided into three: consultancy; systems development; and facilities manage- ment. Althou

55、gh these are categorised as separate activities, there are cases when the operation within one sector leads to work within another.In the context of management consultancy, facilities management refers to the manage- ment of a firms computer facilities by an external third party. As IT has developed

56、 technically and become more specialised, an increasing number of organisations have decided to outsource the management ofthis function to an external company. Through their understanding of the numerous IT supply chains, several of the leading consul- tancies, such as Andersen Consulting, have188S

57、atisficing dependent customersSupply Chain Management: An International Journal Volume 4 . Number 4 . 1999 . 184?191Paul Irelandtargeted this sector aggressively. At the same time, the growth in this sector has also encouraged mainline IT hardware and soft- ware companies to expand into consulting.

58、The main attraction of this sector to the consultancies is that it provides a more regular, process-like stream of revenue, unlike traditional consultancy with its inevitably intermittent and project-specific demand characteristics.software and consultancy, all of which had to be integrated to deliver the solution as partially specified by the end customer. The project included many of the major firms in the IT industry supply chains.The profit margins for each of the upstream suppliers have been calculated