Xiang-Hua Lu ,*, Li-Hua Huang , Michael S.H. Heng
School of Management, Fudan University, Shanghai 200433, PR China
School of Computer and Information Science, University of South Australia,
Adelaide, SA, Australia
Accepted 1 June 2005
Available online 6 October 2005
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1.Introduction
2.Literature review
3.Research method
4.The inter-organizational information system
of Cisco and Xiao Tong
5.Critical success factors of the
inter-organizational information system
6.Conclusion
Appendix
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IT-based inter-organizational information
systems is a powerful strategic tool.
IOS is increasingly being used by Chinese
business firms to enhance their cooperation
with transnational corporations.
It is hoped that the findings provide some
insights for other corporations that want to
implement IOS in China.
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Rockart defines CSFs as those few key areas
of activity in which favorable results are
absolutely necessary for a particular company
to reach its goals. (things must go right)
An IOS differs from an internal distributed
information ：
◦ Allowing information to be send across
organizational boundaries trough communication
technology.
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The strategic value of IOS has been well
recognized for:
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Real-time interaction
Higher transaction accuracy
More efficient and quicker payments
Rapid response
Reduced search costs
Reduction in inventory and tighter links to customers
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The IOS system of Cisco and Xiao Tong is a
web-based B2B application using RosettaNet
standard. – The first successful IOS.
Web-based applications provide corporations
an opportunity to develop new communication
standards that can be used within an entire
industry and even across industries.
RosettaNet is a worldwide consortium of more
than 400 of the world’s leading electronic
components to create, implement and promote
this open e-business process standards.
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Look for the CSFs through a case study
research method for three reasons:
1.CSFs have been heavily used by IS research, but
mainly in intra-organizational information systems.
2.Much is known about the CSFs of information
systems,but CSFs specific to a given technology in a
given organization environment.
3.There are many successful cases RosettaNet-based
IOS, only one paper (Eric, 2002) focuses on CFSs.
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Groups the CSFs uncovered in our research
into three clusters, namely:
◦ The cluster of decision motivation.
◦ The cluster of implementation process.
◦ The cluster of infrastructure conditions.
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Include both web-based and non-web-based
IOSs.
◦ IOS share common features of other information
systbems, including common critical success
factors.
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One study identifies the following six characteristics of
inter-organization systems compared with gegernal IS :
◦ (1) They require partners which are willing, able and
ready to cooperate.
◦ (2) A key role for standards (e.g. data communications
protocols, company policies).
◦ (3) Third parties are often involved.
◦ (4) The work must be synchronized among partners.
◦ (5) Technical aspects are less important than the new
electronic relationships involved .
◦ (6) Efforts often cannot be secretive, i.e.IOS require more
openness especially when industry standards are
adopted.
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The most obvious feature of IOS : It involves
two or more parties being electronically
linked up for the purpose of conducting their
business activities.
Issues related to working partnership are
likely to feature prominently.
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The factors may be grouped broadly under
the following categories:
1. Psychological perception by organizational
players — trust, motivation and consensus.
2. Organizational preparation and response—
cross-organizational team, preparation and
coordination, project management and
maintenance and BPR.
3. IS/IT infrastructure
4. Industry standard.
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Trust
The most critical factor for sustained
business relationships and that it needs to be
nurtured between partners for successful IOS
implementation.
Unless two companies feel that their relations
are so interdependent that there are
operational savings and benefits from the
IOS, they are unlikely to bear the cost in
implementing IOS
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Motivation
In order to compete in the global market at
the level of supply chain
Cost down and to get faster response time so
as to enhance its comprehensive competition.
Consensus on IOS mission
The shared vision of IOS between both sides
is a vital element for IOS success.
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Cross-organizational team
A dedicated cross-functional team with the
appropriate skills and executive support.
Preparation and coordination
Effective communications
Project management and maintenance
A detailed project plan and effective
communication
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BPR
Refining and re-engineering business
processes.
To achieve seamless integration of key
processes.
Establish smooth exchange of data and
information between themselves
The potential value of IOS is realized only
when it is fully integrated with the other
internal information systems.
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IS/IT infrastructure
The capability of the legacy systems and IT
infrastructure affects to a significant of
implementing IOS and reaping the benefits.
Industry standard.
Shared standard
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Interview with core personnel
◦ 5 senior managers:
 CEO.CIO of Xiao Tong
 IT Director from the IT vendor
 2 Senior managers of Cisco
◦ 5 heads of departments that were affected by IOS.
◦ 6 employees
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satisfaction evaluation survey
◦ Find out the differences before and after the IOS
implementation.
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Use the simple framework developed in
Section 2 as a basis for structured interview,
inviting them to comment on the findings
based on literature research.
Every formal interview, either face to-face or
through telephone.
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Designed a structured satisfaction evaluation
questionnaire to record the difference before
and after the IOS implementation.
The aim was to obtain some quantitative data
as well as more information on corporation
background and the degree of
implementation success.
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Need to employ a set of criteria to reach this
conclusion.
Satisfaction-based evaluation is one efficient
and simple supplementary method that can
be used in IOS effectiveness evaluation.
The satisfaction evaluation of the
stakeholders is as important to judge the
project’s success or failure.
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The satisfaction evaluation of the
stakeholders is as important as other
objective methods employed to judge the
project’s success or failure.
Demonstrate the success of this case both
from the calculated effectiveness and
satisfaction evaluation of internal staffs of
Xiao Tong.
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Case Background
The IOS of Cisco and Xiao Tong
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Part
Part
Part
Part
Part
I : Production information updating
II :MLC integration
III : Submitting PO
IV : PO status updating
V : Invoice pre-check in
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Cisco Company, one of the biggest network
equipment providers, experienced its
toughest years ever in 2001 and 2002.
Cisco was embarking on cost-saving, cutting
down the manufacturing cost and sales cost
◦ These traditional ways had reached the point
where there was little left to be gained.
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Gain competitive advantage through value
generation-Internet enabled.
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Cisco began to promote their B2B plan:
integration of its commerce site and
customers’ back-end systems through a
combination of off-the-shelf software and
RosettaNet standards.
Xiao Tong was founded in 1990.
One of Cisco’s four first-tier distributors in
China.
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The revenue of Cisco in China’s network
products market：
◦ 6% of the whole global market revenue.
◦ Xiao Tong was responsible for 11.8% of Cisco’s
revenue in China.
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For Xiao Tong, Cisco was its biggest supplier,
about 60% of its transaction was related to
Cisco’s products.
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The first successful one that strictly conforms
toXML protocol and e-Business RosettaNet
standard in China.
The business processes were mainly related
to Purchase Order (PO) execution between
Cisco and Xiao Tong, including product
information update, product configuration,
PO submission, PO status update and invoice
pre-check-in, respectively
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Deliver part numbers and price information to
Xiao Tong's ERP system.
Verify the data integrity of Xiao Tong's PO
(purchase order)/SO (sales order) entry.
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Removed the need to do configuration check
in Cisco Connect Online (CCO).
Any salesperson or other staffs who had the
right to configure could just do it in their own
ERP system.
In the old process, the time spent on the
transfer was much more than the time of
configuration.
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Xiao Tong could submit PO in its own ERP
system instead of on CCO.
Old process: the staff in Xiao Tong’s product
planning department had to visit CCO to do
configuration, and then submitted PO on CCO,
followed by retyping PO data in their own ER
The new process removed the work of
retyping the same set of data in ERP system
and CCO, which would reduce typing errors
and processing time.
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It provided the possibility to the product
planning department and the distribution
division to check the status of PO.
Instead of checking PO status on CCO or
calling Cisco by phone, they could now check
their status in Xiao Tong's own ERP system.
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All the information in Cisco's commercial
invoice would be sent to Xiao Tong through
this process.
Xiao Tong could know the shipping schedule
precisely, which makes it feasible for Xiao
Tong to do sufficient preparations for the
incoming goods.
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They could scan in all products according to
the serial numbers without error when
products arrive.
Could have the accurate information for every
product in its warehouse.
They could make smart payment schedule.
The cycle from SO to PO in new process had
been reduced time to 2.5 days.
Cost saving was the equivalent of US$ 33,000
annually.
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Xiao Tong could get data related to its sales
activities more quickly, more accurately and
more integrally than ever before.
The managers expressed satisfaction with the
IOSs support of their ability to improve
decision making, as indicated in the pre-IOS
figure of 3.00 to post-IOS figure of 4.33
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Three clusters:
◦ Decision motivation
◦ Implementation process
◦ Infrastructure conditions
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CSF1: strong motivation was essential to gain
and thereby guaranteed the commitment
from partners
CISCO:
The motivation of Cisco was mainly based on
long-term strategy.
In order to compete in the global market at
the level of supply chain
Organizational underpinning of its very
strong commitment in this project
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Xiao Tong:
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1.The pressure from Cisco was the main reason.
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2.capital arrangements proposed by Cisco:
◦ (1) Certain sales profit rebate in the first 2 years after
implementation of IOS.
◦ (2) Cisco covered all software cost for Xiao Tong,
amounting to about US$ 350,000.
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CSF2: shared motivation and vision
Need communication to reach consensus on
the vision - Top managers of Xiao Tong and
Cisco had a discussion about the blueprint
and objectives of IOS.
The shared vision of IOS among all
stakeholders would reduce the divergences of
opinion in the implementation process and in
turn lowered the risk and shorten the period
of IOS project.
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CSF3: cross-organizational implementation
team
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The implementation team for the IOS in this
case consisted of three parties.
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Four sub-teams were built.
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management team
business team
technical team
partner team
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CSF4: high integration with internal
information systems
If no way to integrate IOS with internal
information system
=the value of IOS would be greatly diminished.
Value created by IOS, was the direct reflection
of the internal operation performance
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CSF5: inter-organizational business process
re-engineering
1. adjustment of process.
Ex: post-sales service
2. new form of cooperation between two
firms.
Ex. Production Configure
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CSF6: advanced legacy information system
and infrastructure
Cisco has mature infrastructure and adequate
capability.
Xiao Tong’s ERP modules had covered almost
every aspect of its operations, such as
procurement, finance management, order
management, logistics and inventory
management.
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CSF7: shared industry standard
It makes sense for them to select the same
standards when they are going to implement
IOS.
RosettaNet Partner Interface Processes (PIPs)
define business processes between supply
chain partners
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Organizations using the IOS must :
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1.derive benefits from the system.
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2.must be able to co-operate with each other.
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3.must perceive their business relationship as
interdependence.
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The seven CSFs of inter-organization
information system
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Uses a case study method to examine the
success story of the IOS of Cisco and Xiao
Tong in China.
Identifying seven critical success factors
which are grouped into three clusters
Offering some guidelines for corporations
that consider IOS adoption with partners,
especially for those which want to cooperate
with Chinese business firms.
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limitations
The seven factors might not be complete
since it is a single case based study.
With more and more IOS cases, the list of
factors can be modified.
Different countries have different cultures,
business practices and business institutions.
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Whether the CSFs of IOS of companies
operating in China can apply to those
operating in other countries remains to be
tested.
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