020-0216
Performance Evaluation of Integrated Information System across the Value Chain
Rupak Rauniar, University of Houston- Victoria, Department of Management, School of Business, 3007 North Ben Wilson, Victoria, TX 77901, , 713 436 3677
Greg Rawski, Department of Management, University of Evansville, 1800 Lincoln Ave. - Evansville, Indiana 47722, , 419 270 2300
Dewaynna Cates, Department of Management and Marketing, Prairie View A&M University, P.O. Box 519, MS 2315, Prairie View,TX 77446, , 936 261 9203
POMS 22nd Annual Conference
Reno, Nevada, U.S.A.
April 29 to May 2, 2011
Performance Evaluation of Integrated Information System across the Value Chain
Rupak Rauniar, University of Houston- Victoria, Department of Management, School of Business, 3007 North Ben Wilson, Victoria, TX 77901, , 713 436 3677
Greg Rawski, Department of Management, University of Evansville, 1800 Lincoln Ave. - Evansville, Indiana 47722, , 419 270 2300
Dewaynna Cates, Department of Management and Marketing, Prairie View A&M University, P.O. Box 519, MS 2315, Prairie View,TX 77446, , 936 261 9203
Abstract: Companies implementing web-based information technology integrated with the supply chain create electronic buyer-seller information exchanges and business transactions that increase efficiency, competitiveness and profitability across the value chain. However, the effectiveness of such integrated, web-based information system across the supply chain requires performance evaluation of the system from the perspective of multi-firms and multi-users. The field research described in this paper would be carried out using survey data to be collected from the users of student loan information system across the value chain of student loan industry. As such, the study will focus its primary investigation across the value chain of a service based industry. We will use DeLone and McLean’s e-commerce success framework that, unlike their earlier yet very popular general model on information system performance, has not been subject of much empirical studies. As such the current research is first of its kind to study the performance of strategically important complex information system across the upstream and downstream users that includes students, colleges and universities, intermediaries, and the government.
Keywords: supply chain, e-commerce, performance evaluation
INTRODUCTION
Literatures in supply chain (or value-chain) continue to validate the claim of importance of buyer-seller relationship and information sharing to for improved business performance of the channel partners (Dwyer, Schurr and Oh, 1987; Heide and John, 1990; Han, 1992; Han and Wilson 1993; Mummalaneni and Wilson, 1991; McIvor et al., 2000). Several past studies have suggested that structural and infrastructural improvements in the buyer-seller relationship and real time information sharing can lead to improved supply chain performance (for example, Henderson and Venkataraman , 1993; Ho,1996; Love, 1996; Brown and Eisenhardt, 1998; Huang and Mak, 2000; Jayaram et al.,2000; Lau and Lee, 2000; Perry and Sohal, 2000; Motwani et al.,2000; Al-Mashari and Zairi , 2000; Cheng et al.,2001; etc.).
With the continued downward pressure on cost and improved performance of information technology related hardware and software, the focus in supply chain performance management has shifted from engineering efficient manufacturing processes to the coordination of activities in supply chain networks through information sharing using information technologies (Tan et al. 2000). Besides the flow of material and services in the downstream supply chain, information has become an essential unit of exchange leading to competitive advantage (Vargo and Lusch 2004) and wealth creation for businesses (Achrol 1991). Information system has a pivotal role to play in improving communication and co-ordination by acting as an enabler (Love, 1996). Past studies have documented the benefits derived from real-time information sharing systems and technologies such as electronic data interchange or EDI (Hoogeweegen et al., 1998), value added network or VAN (Bartholomew, 1997), and radio frequency identification or RFID ( Ribiero, Scavarda and Batalha, 2008), etc. An integrated information system enables channel partner to readily share operational and tactical data such electronic orders, supply and demand forecast, etc., thus enabling increased and improved coordination and collaboration among the channel partners (Kumar, 2001).
The integration of the various automated information processing and decision support systems to form broader systems (De Meyer and Ferdows, 1985) in a supply chain is desirable. Seidmann and Sundararajan (1998) argue that the integrated information system with channel partners can lead potential benefits at transactional, operational, and strategic levels. Current supply chain management practices emphasize the overall and long-term benefit of all parties on the chain through co-operation and information sharing through information technology enabled supply chain (Motwani et al., 2000). According to Gunasekaran and Ngai (2004), an integrated information system that allows information sharing for various value-adding activities along the supply chain is the nerve-system of effective supply chain. It is no surprise that organizations with successful information system usage have realized the value of a free flow of information between individuals and groups (Harper and Utley, 2001) resulting in lower total transaction costs, higher order fulfillment rates, shorter order cycle times, and more accurate demand forecasting that impacts overall business performance.
Armstrong and Hagel (1996) argue that there is beginning of an evolution in supply chain towards online business communities that are internet and world wide web based. In a web-enabled business transactions, or e-commerce (Van Slyke et al., 2004; Devaraj, Krajewski and Wei, 2007), consumers (individual end-customers or business buyers) get information and purchase products or services using internet technology (Olson and Olson, 2000; Pavlou and Fygenson, 2006). Web-based integrated supply chain information system increases the richness of communications among the channel partners through greater interactivity between the firm and the customer and helps businesses to meet the challenges of business activities (Watson et al., 1998; Graham and Hardaker, 2000; Gunasekaran and Ngai, 2004; Devaraj, Krajewski and Wei, 2007; etc).
However, management needs to understand that the superior supply chain performance is not going to be achieved because of investments and diffusion of web-based integrated information system into supply chain processes and functions alone. To fully realize the impact of such integrated system on business performance, the insight and ability of the end users to create the economic value and competitive advantage (Stewart et al, 2003) is very important. Resistance to technology has been widely studied in the areas of human behavior (such as, theory of reasoned action by Ajzen and Fishbein (1975, 1980), theory of planned behavior by Ajzen (1985) and Bandura (1986), technology acceptance model by Davis 1989)) and organizational development and change management literatures (such as transition cycle by Ross (1969), ADKAR model by Prosci (1998), and force field model by Lewin (1943)). These and other studies point out that the benefit from a tool or technology cannot be realized until it is actually accepted and correctly used by the “critical mass” and that different people react differently when introduced to new tools and technologies. According to Grudin (1988), collaborative application, such as integrated supply chain information system, is likely to fail if the work people need to put into the application exceeds the perceived value of the benefits from using such applications.
These and other research points out that the concept of end-user satisfaction of system usage (Doll and Torkzadeh, 1988; DeLone and McLean, 1992) is critical in determining return from the investment on such complex and, integrated system. When making investments on a new or make further improvements on the existing information systems, businesses need to be able to pinpoint the salient characteristics that will impact system usage, user satisfaction, and overall benefits derived from investing in such systems.
The empirical context of this study is the evaluation of web-based information system from the supply-chain wide end-users perspective in a service supply chain operations. Specifically, we use student loan industry, a service sector industry in the US, to collect data from the various users of this integrated web-based information system.
RESEARCH MODEL AND PROPOSITIONS
Historically, the financial aid process started with a thick packet of papers called the Free Application for Student Aid, or the FAFSA. Loan applicants filled out the complicated forms and sent them to the Education Department’s Office of Student Financial Assistance (SFA). The agency processed the forms and then sent the applicant a promissory note. After signing loan papers, the students received funds to attend school. SFA introduced the online FAFSA, a move that is increasingly popular with the generation of students accustomed to surfing the World Wide Web. The process further improved in June 2001, when SFA introduced a system enabling students to electronically sign their loan documents without ever touching a sheet of paper (Dean, 2002). The entire process is cheaper, quicker and easier. Officials have estimated that they will save as much as $35 on each application received online. This amounts to huge savings for organizations in the industry considering that in 2005, federal loans constituted 47%, 61.3 billion dollars, of the total aid to graduate and undergraduate students (College Board, 2005).
Considering the inter-organizational collaboration in the student loan industry, the industry supply chain is comprised of lenders, loan servicers, collectors, schools, secondary markets, guarantee agencies, and other organizations that share data and exchange information regarding students’ enrollment in postsecondary institutions and eligibility for loans. Organizations in this industry must create and maintain a synergistic and integrated relationship among trading partners in supply and distribution channels with the common shared objective of delivering student loans to the students/schools in the specified amounts for the specified school enrollment periods. This is made possible by sharing, accessing, and analysing real-time information which facilitates collaboration between trading partners in this supply chain, thus making the supply chain more efficient. The development of technology and e-commerce in the student loan industry is an industry-wide initiative to facilitate the exchange of information, therefore, research evaluating such business-critical systems in this industry is not only important, but is also very timely.
The importance of online system performance for its users as a determinant to e-commerce success has been an active topic in the area of information systems. It has led to the development of several instruments and theoretical models grounded in well-established theories such as the end-user customer satisfaction (EUCS) model developed by Doll and Torkzadeh (1988) and the Information Systems Success Model (ISSM) developed by DeLone and McLean (1992). These models are very popular and have been frequently used in empirical studies to test the performance of information-based systems and applications (Somers et al., 2003). Despite the popularity of web-based integrated information systems, it is surprising to note there have been very few attempts on empirically validating and testing models of such information system success (Brown and Jayakody, 2008; April and Pather, 2008). As DeLone and McLean (1992) pointed out, if information system research is to make a contribution to the world of practice, a well-defined outcome measure (or measures) is essential.
The DeLone and McLean Information Systems Success Model (1992) is generally accepted as one of the most comprehensive IS assessment models available in the IS literature (Myers et al, , 1997; Bown and Jayakody, 2008). It was developed to identify critical information systems success factors (DeLone and McLean, 1992). Research prior to the presentation of the DeLone and McLean model had inconsistently addressed different aspects of information system success, making comparisons difficult. The model was revised in 2003 and extended to the application of e-commerce in 2004 (DeLone and McLean, 2003; 2004). DeLone and McLean (2004) proposed that the new model be used to measure the ultimate impact of e-commerce on a single user, a group of users, an organization, or an entire industry. We extend the web-based integrated supply chain information system success measurement of a service based industry to the performance evaluation of the updated DeLone and McLean’s e-commerce model (DeLone and McLean, 2004), in which DeLone and McLean applied new metrics in consideration of the differences between information technology and e-commerce.
DeLone and McLean (2004) reviewed articles on e-commerce and Electronic Data Interchange (EDI) in academic and trade journals (1996–2002) and found many existing measures of e-commerce success. All the proposed measures can be classified under the six dimensions of the new model. According to DeLone and McLean (2004), these dimensions can be applied to the e-commerce environment as follows:
• System Quality measures the desired performance characteristics of an e-commerce system. These characteristics include factors such as reliability, adaptability, ease of use, and response time.
• Information Quality captures the e-commerce content issue. It measures the quality of the information produced through the e-commerce system. Accuracy of information, ease of understanding, relevance, and data security are important factors to consider.
• Service Quality, the overall support delivered by the service provider, applies regardless of whether the support is delivered by the IS department or a new organizational unit or is outsourced to an internet service provider. Assurance, empathy, system security, and service responsiveness are considered as service quality measures.
• System Use measures everything from a visit to a website and navigation within the site to information retrieval and execution of a transaction.
• User Satisfaction is an important means of measuring customers’ opinions of an e-commerce system and should cover the entire customer experience cycle from information retrieval through purchase, payment, receipt, and service.
As recommended by DeLone and McLean (2004), we propose that the model depicted in Figure 1 may be used to measure the integrated web-based information system success as perceived by consumers in the student loan industry.
Figure 1: DeLone and McLean E-Commerce Success Model
The propositions of this study correspond to the model in Figure 1:
PropositionsP1 / Information Quality in the student loan value chain system is positively related to System Use.
P2 / Information Quality in the student loan value chain system is positively related to User Satisfaction.
P3 / System Quality of the student loan value chain system is positively related to System Use.
P4 / System Quality of the student loan value chain system is positively related to User Satisfaction.
P5 / Service Quality of the student loan value chain system is positively related to System Use.
P6 / Service Quality of the student loan value chain system is positively related to User Satisfaction.
P7A / System Use of the student loan value chain system is positively related to User Satisfaction.
P7B / User Satisfaction of the student loan value chain system is positively related to System Use.
P8 / System Use of the student loan value chain system is positively related to Net Benefits.
P9 / User Satisfaction of the student loan value chain system is positively correlated to Net Benefits.
Table 1: Propositions for the proposed study