企業電子化在供應鏈整合所扮演之角色 - 政大學術集成

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(1)國立政治大學企業管理研究所(MBA 學位學程). 碩士學位論文. 企業電子化在供應鏈整合所扮演之角色 The Research on the Role of E-business in Supply Chain Integration. 指導教授 : 李易諭博士研究生 : 吳佳蓉. 中華民國一零六年七月.

(2) Acknowledgement I would like to take this opportunity to express my heartfelt gratitude towards my academic advisor, Professor Lee Yih-Yuh, for accepting me into his group in the first place, also for his invaluable guidance, understanding and patience during my tenure. I am sure not many graduate students are given the opportunity to develop their own ideas and individuality. But he has given me intellectual freedom in my work while continuously engaging me in new ideas. It was a very rewarding experience to work with such independence, while still ensuring a high quality of work in all my endeavors. Also, the results that were described in this study would not have been accomplished without the help and support of an EMBA senior in introducing me to industry experts and companies that were willing to contribute and give valuable insights to my research. He was also an extremely reliable source of practical knowledge, and my immense gratitude also goes to him. Finally, I want to acknowledge beloved friends and family who were my pillar of strength and main support system during my time here. I am forever grateful for my parents and older sister, who constantly shower me with love and endless support. Most importantly, they never give up upon me. I want to dedicate this thesis as a small token of gratitude to the sacrifices my parents have made to ensure I receive a good education and become a better person in life.. i.

(3) Abstract With the globalization of businesses and growing international competition, the importance of supply chain integration is increasingly being recognized by practitioners and academics over the last decade. Despite major investments in the supply chain, companies are still struggling with integration problems that prevent the enterprise from optimizing intra- and inter-enterprise operational efficiency. This has urged the researcher to investigate the emerging e-business solutions that are considered as the most compelling enabler for supply chain integration. Therefore, this study focuses on the developments in e-business adoption and deployment in facilitating supply chain integration. The qualitative research approach is adopted to investigate and analyze companies in Taiwan that managed to translate e-business concepts into effective supply chain integration practice. In order to give a better understanding of the potential role of e-business in enhancing supply chain integration, the study identifies existing integration problems and possible solutions achieved from the adoption of e-business solutions. The insights provide valuable information and practical guidelines to e-business strategy for successful supply chain integration.. Keywords: Supply Chain Integration, E-business solutions. ii.

(4) Table of Contents 1. INTRODUCTION ..................................................................................................... 1 1.1 Background and Motivation.............................................................................................1 1.2 Problem Statement and Research Objective ................................................................3 1.3 Research Process ..............................................................................................................4 1.4 Structure of the Study ......................................................................................................5. 2. LITERATURE REVIEW .......................................................................................... 6 2.1 Supply Chain Integration (SCI) Concept .........................................................................6 2.2 E-business and SCI ........................................................................................................10 2.3 E-business Tools and Methods.......................................................................................13 2.4 Performance Measurement.............................................................................................15 2.5 Implementation Success Factors ....................................................................................19. 3. RESEARCH METHODOLOGY............................................................................. 21 3.1 Research Method............................................................................................................21 3.2 Research Framework......................................................................................................22 3.3 Sampling Procedures......................................................................................................23 3.4 Data Collection ..............................................................................................................24 3.5 Data Analysis .................................................................................................................26. 4. INFORMATION SERVICE INDUSTRY ANALYSIS .......................................... 27 4.1 Industry Overview..........................................................................................................27 4.2 E-business Opportunity for Information Service Providers in Taiwan ..........................37. 5. RESEARCH ANALYSIS AND FINDINGS........................................................... 52 5.1 Competitive Factors that Drive the Need for SCI in a Company ...................................52 5.2 How E-business Helps a Company Achieve and Enhance SCI .....................................54 5.3 E-business as a Source of Competitive Advantage ........................................................55 5.4 Factors Affecting the Implementation success of E-business on SCI ............................56. 6. CONCLUSION ........................................................................................................ 57 6.1 Summary ........................................................................................................................57 6.2 Future Research..............................................................................................................58 6.3 Limitation of the Study ..................................................................................................58. REFERENCES ............................................................................................................ 59 APPENDIX .................................................................................................................. 64. iii.

(5) List of Figures Figure 1-1 Research Process ........................................................................................ 4 Figure 2-1 Supply Chain Management ........................................................................ 6 Figure 2-2 Supply Chain Integration ........................................................................... 7 Figure 2-3 Internal Integration by Function................................................................. 8 Figure 2-4 Flexibility as a Top Supply Chain Priority .............................................. 10 Figure 2-5 How E-business Integrate Information from Business Processes to Facilitate Supply Chain Management ........................................................................ 11 Figure 2-6 Depiction of the GSCF Framework ......................................................... 18 Figure 3-1 Research Framework ................................................................................ 22 Figure 4-1 Information Service Industry Value Chain .............................................. 28 Figure 4-2 2013-2018 Taiwan Information Service Market Size by Segment .......... 31 Figure 4-3 Breakdown of Taiwan System Integration Segment ................................ 31 Figure 4-4 e-Government Value Chain Analysis....................................................... 35 Figure 4-5 e-Business Value Chain Analysis ............................................................ 36 Figure 4-6 e-Society Value Chain Analysis............................................................... 37 Figure 4-7 List of Company P’s Business Customers ............................................... 39 Figure 4-8 Shipping Management System ................................................................. 42 Figure 4-9 E-Billing System ...................................................................................... 42 Figure 4-10 Vendor & PO Management/VMI EDI System ...................................... 43 Figure 4-11 Warehouse Management System ........................................................... 44 Figure 4-12 Truck Management System Procedure .................................................. 45 Figure 4-13 Buyer-Supplier Information Exchange .................................................. 47 Figure 5-1 The Relationship Between E-business Benefits and Competitive Advantage .................................................................................................................. 55. iv.

(6) List of Tables Table 2-1 Supply Chain Integration Dimensions....................................................... 12 Table 3-1 Basic Information of the Case Company................................................... 25 Table 3-2 In-depth Interview Questions .................................................................... 25 Table 4-1 Information Service Market Scope ............................................................ 29 Table 4-2 2013-2018 Taiwan Information Service Market Size ............................... 30 Table 4-3 The Impact of Three Major Programs on the Information Service Industry Value Chain ............................................................................................................... 34 Table 4-4 Comparison of Traditional Outsourcing Service and ASP........................ 38. v.

(7) 1 INTRODUCTION 1.1 Background and Motivation In the Internet-driven business environment today, companies are given a cuttingedge capability advantage to increase their business value. They can use the Internet to reach new markets across the world through new channels of business as buying and selling can now be done on Internet. If properly managed, the Internet capabilities can empower companies to gain global visibility across their network of trading partners and help them act quickly to rapidly changing customer demands captured over the Internet (Lee & Whang, 2001). As a result, companies are constantly striving to be on the leading edge of internet-based technologies in order to remain competitive.. With the hyper growth of Internet, market globalization and product proliferation that resulted in the increasing complexity of supply chain networks in recent years, companies must work on tighter coordination and collaboration among their supply chain partners. This practice is often called “supply chain integration”. In fact, companies are growing more dependent on collaborative business processes where effective flow of information internally and externally is a crucial success factor (McLaren, Head, & Yuan, 2002). It is therefore clear that the use of information technology (IT) and emerging e-business applications are gaining a pivotal role in the new era of supply chain integration.. Despite all the hype and some success stories, the process of implementing e-business in supply chain integration has proved difficult in practice. This is due to a clear lack of understanding of the actual benefits that can be obtained and what information needs to be shared, especially how companies should re-align their business processes when new technology is implemented (Barratt, 2004).. Therefore, it is vitally important to understand the value of e-business to supply chain integration. Theoretically, the benefits one company could gain if it is properly employed might range from cost reductions and operational efficiencies that come from a more synchronized and coordinated workflow, also increased market share and revenue. However, the impact of IT and e-business applications in supply chain integration naturally varies according to the industry and company size involved. 1.

(8) Some demonstrate instant results that can contribute to revenue generation. Meanwhile, others end up creating a gap between the investment and expected result. Empirical evidence on the actual benefits of e-business in supply chain integration also appear to be less clear (Cagliano, Caniato, & Spina, 2003).. It can thus be seen that understanding how e-business impacts the processes within a supply chain is of great importance for most companies. The impacts it brings can be described along the eight business processes that need to be managed and integrated, involving both cross-functional and cross-enterprise processes. Only then can companies be able to fully capture the role of these emerging technologies in supply chain integration and leverage it to enhance their processes.. There is a lack of knowledge about how to translate e-business concepts and technologies into successful supply chain integration practice. This study aims to improve the understanding of the potential role of e-business in enhancing supply chain integration. The result of this study will not only have important theoretical contributions for the emerging e-business field, but also generate valuable practical guidelines to supply chain practitioners.. 2.

(9) 1.2 Problem Statement and Research Objective In the increasingly complex business environment of the 21st century, managing a more integrated systems and processes in the supply chain network requires supportive information and technology. Companies are growing more aware of the need to implement e-business technologies in order to streamline their business processes through integrating their supply chain network. Researchers have recognized the trend of e-business concepts and technologies, but the empirical evidence regarding the real impact and benefits brought by e-business is still lacking. Moreover, the nature of e-business in supply chain integration varies since the key methods used to integrate and manage process links among supply chain partners may differ according to the internal structure of the company, relationship within the supply chain network and economic conditions in the marketplace.. The primary objective of this proposed study is to gain more comprehensive understanding of the potential role of e-business as an important variable to drive and enhance supply chain integration. The findings of this study will shed further light on these research questions: a. What are the factors that drive the need for supply chain integration in a company today? b. How does e-business help the company achieve supply chain integration? c. Does e-business give the company a competitive edge in the supply network?. In order to reach these objectives, the researcher has explored a variety of methods in qualitative research. These include in-depth interviews with a Taiwanese company from the Information Technology service sector that offers e-business technologies and services to enterprises in Taiwan. The researcher seeks to investigate and evaluate the main objective of the enterprises to invest in e-business technologies, the challenges faced during implementation phases, and the major impacts of e-business applications on their supply chain performance through success stories from the company’s business customers.. 3.

(10) 1.3 Research Process This thesis begins with identifying relevant problems and developing precise research questions and objectives. In order to gain an in-depth understanding of the research topic, this thesis explores mixed methods research for data collection. Preliminary literature reviews related to the research problem are conducted early in the research process. Interview method is also chosen, in which detailed insights are required from the participants for investigation of the study. The set of data will be analyzed based on the existing theories and research streams, to provide theoretical and practical results needed to answer the research questions. Finally, the results will be followed by recommendations for future research. The research process is presented in Figure 1-1 below:. Define research problem and objective. Review the literature. Design interview questions. Conduct an interview. Organize interview data. Conduct qualitative content analysis. Interpret and present results. Figure 1-1 Research Process. 4.

(11) 1.4 Structure of the Study The thesis consists of six parts. Chapter 1 provides an introduction to the relationship between e-business and supply chain integration, and also the idea of the study. A review of the literature or basic theories related to e-business and supply chain integration is presented in Chapter 2. Chapter 3 describes the main method that the researcher used to achieve the purpose of the study, including data collection through an interview or a research in secondary sources. Chapter 4 details the analysis of general environment, key events and trends within the selected industry.. The empirical part of the study is presented in Chapter 5. This chapter explains a detailed background analysis of the case company, the key elements to its successful implementation of e-business and supply chain integration, the challenges it faced throughout the process, also how the new supply chain strategy changes its business model.. Finally, Chapter 6 summarizes the key findings and conclusions of the study. This chapter interprets results from Chapter 5, showing the theoretical and practical contribution of the study. Limitations of the study are discussed in this section. Here the researcher also offers suggestions for future research.. 5.

(12) 2. LITERATURE REVIEW 2.1 Supply Chain Integration (SCI) Concept It is imperative to understand the definition of supply chain and supply chain management (SCM) before reviewing supply chain integration in details. Mentzer et al. (2001a, p.5) defines supply chain as “three or more organizations directly involved in both the upstream and downstream flows of products, services, finances, and information from a source to a customer.” Generally speaking, supply chain is an entire network that directly and indirectly links together vendors who supply raw materials, manufacturers who produce finished goods from the raw materials, warehouses that store, distributors that organize and deliver the products to retailers, and ultimately retailers who bring the products to the end-users.. Meanwhile, supply chain management(SCM) is the successful coordination of the flow of materials from suppliers through to the end users(T. C. Jones & Riley, 1985). It coordinates all the activities including product and service design, procurement, inventory management, planning, logistics, distribution and customer satisfaction into a seamless process (Mentzer et al., 2001).An efficient SCM involves integrating critical business processes both within and among the network of linked business partners (see Figure 2-1). Additionally, companies today are increasingly dependent on their suppliers since procurement happens in almost every aspect of an organization, particularly business needs.. Figure 2-1 Supply Chain Management Source: Lambert, Guinipero, & Ridenhower, (1998). 6.

(13) Thus, the need for companies to integrate themselves into a continuously growing network of supply chain becomes more prominent. The lack of integration may lead to an underperforming supply chain(Kanda & Deshmukh, 2008). Supply chain integration (SCI) is the concept of integration that enables business processes across the supply network to work together and align their processes beyond the intra- and inter-organizational boundaries (Romano, 2003).Basically, there needs to be collaboration, symmetric information, shared vision and technology as well as open communication between the upstream suppliers and downstream customers for SCI to functions effectively(Flynn, Huo, & Zhao, 2010).. Figure 2-2 Supply Chain Integration Source: (“Supply Chain Integration”, n.d.). 2.1.1 Integration Process It is also generally necessary for companies to integrate their internal and external supply chain partners at different levels. The position and role of a company in supply chain strategically determine its level of integration with its supply chain partners (Cook, Heiser, & Sengupta, 2011). Different integration approaches are then adopted in accordance with the level of integration in a company. Supply chain integration usually starts from within the company itself, such as in-house improvements, and gradually works outward to supplier selection, functional integration, and eventually process management. That being said, the first step to supply chain integration would be to make in-house improvements by reducing inventory that can help minimize. 7.

(14) supply chain costs and better aligning supply chain strategies to improve service levels. 2.1.2 Supplier selection A higher level of integration would be to select specific suppliers with specific values that can help maximize overall supply chain performance and increase company competitiveness. This approach involves combining company’s core competencies with external capabilities and resources provided by its key suppliers to structure their inter-organizational procedures into collaborative and synchronized processes (Yeung, Selen, Zhang, & Huo, 2009).Searching for competitive suppliers that fit into company’s existing chain might be a daunting task for many. Companies must first identify their current and future capabilities, and map them against their capacity needs, before searching for competitive suppliers that will best fill in the gap.. 2.1.3 Integration by function In most companies, supply chain integration may require a cross-functional effort within their organizations. Such effort is often referred to internal integration. It is the process of attaining seamless coordination between the functions or activities within a company (See Figure 2-3).. Production. Sales. Distribution. Figure 2-3 Internal Integration by Function Source: Basnet (2013). Since each functional area tends to specialize solely in its own tasks, there is a higher risk of information asymmetries and conflicts over differing expectations and priorities on how to better manage the supply chain (Shapiro, 1977). As a result, many companies may also approach integration through cross-functional collaboration, focusing first on functions that yield highest returns. While the focus varies between industries, procurement, production and distribution functions remain the most frequently integrated when it comes down to integrating company functions into the overall supply chain system. 8.

(15) Additionally, more studies on internal integration have sought to identify the potential performance results of integration. Ellinger (2000) for instance, evaluated marketinglogistics collaboration using a survey and a regression analysis. He figured out that “cross-functional collaboration” and “effective inter-departmental relations” were serially linked. Giménez and Ventura (2003) further found out using a survey and equation modelling that in addition to external integration, internal integration also had a positive effect on performance. Despite the different instruments employed by researchers to measure the performance benefits of internal integration, results of their research come down to same conclusion, which by and large reflect that internal integration should result in excellent customer service and company performance.. 2.1.4 Integration by process The increased complexity of business structure in an organization or company created difficulties in identifying the interrelationships and key activities between organizational functions. As a result, integrating supply chain by process rather than by functions has become the preferred approach adopted by many companies today to achieve supply chain integration. A business process architecture is usually used to analyze processes and manage supply chain relationships to give managers or business analysts the viewpoints. Business process is defined as a series of activities performed to produce a specific product for a customer(Davenport, 2013). The architecture of the business process represents what a company does which, when applied, makes it easier to define and analyze the current processes of the company.. This way, supply chain is viewed as a set of collaborative processes instead of disconnected functions within a company. The effort required to identify which nonvalue-added or redundant processes to eliminate can thus be minimized. Complicated processes or tasks can also be coordinated to best advantage between functions in order to achieve maximum performance results. Above all, integration that happens across multiple processes is most beneficial, since it creates a more flexible and agile supply chain. In fact, according to PwC’s recent Global Supply Chain Survey, 64% of respondents from different industries have acknowledged the importance of supply chain flexibility in addition to improving delivery performance and keeping supply chain costs to a minimum (see Figure 2-4). 9.

(16) Figure 2-4 Flexibility as a Top Supply Chain Priority Source: PwC, Global Supply Chain Survey 2013, September 2013. 2.2 E-business and SCI Supply chain for a business consists of many entities that typically starts with the suppliers, manufacturer, distributor, retailers and ultimately the consumers. Effective management of the supply chain can be a daunting task, even under normal circumstances. It requires integrating all the entities of the supply chain into one collaborative process (K. C. Laudon & Laudon, 2004).This integration is possible through various communication linkages within a supply chain network that will allow collaboration among these entities.. The importance of information in an integrated supply chain environment has therefore become more apparent as it allows information sharing and knowledge exchange along the supply chain network. Prior to 1980s, companies were still using paper-based over digital mediums as their communication tool, which is deemed greatly ineffective in today’s competitive business environment.. Companies today are increasingly dependent on the effective flow of information within their organization in order to better manage the supply chain of the business, reduce inventory and deliver top-notch customer service to a competitive level. A 10.

(17) company is considered to have a high level of integration when the information systems used by different entities are cohesively linked together (Frohlich & Westbrook, 2001). It makes sharing accurate and real-time information among the entities possible, and there are also effective communications across the network. As a matter of fact, this communication linkage is the heart of today’s emerging ebusiness concepts and technologies. There are a number of communication linkages and technologies, including the Internet, a company intranet, an extranet and Electronic Data Interchange (EDI) that can be used to facilitate better management of supply chain with e-business (See Figure 2-5).. Figure 2-5 How E-business Integrate Information from Business Processes to Facilitate Supply Chain Management Source: Kalakota, Ravi and Whinston (1997). E-business itself can be defined as a series of transactions and processes within a firm, that are motivated by information systems controlled by the firm for the improvement of extended business performance (Simchi-Levi & Kaminsky, 2008). It plans and executes the front-end and back-end operations in the supply chain through the Internet (Lee & Whang, 2001). Actually, it can also be simply described as the marriage between the Internet and supply chain integration (Johnson & Whang, 2002). Despite the varying definitions of e-business, it is generally known as a business process that includes the use of Internet-based technologies and different applications (Cagliano et al., 2003). 11.

(18) The importance of e-business in fostering supply chain integration is unfortunately not directly mentioned in the definitions stated above. However, Professor Lee & Whang, (2001)examined how e-business can contribute to supply chain integration in a white paper titled “E-Business and Supply Chain Integration” published by the Stanford Global Supply Chain Management Forum. They explained the impact of ebusiness on supply chain integration along the four dimensions, namely: (1) Information Integration; (2) Planning Synchronization; (3) Workflow Coordination; and (4) New Business Models. These four dimensions create a higher level of integration and coordination among supply chain partners.. Table 2-1 Supply Chain Integration Dimensions Dimension. Elements . Information Integration. Planning Synchronization. . . Benefits. Information sharing &. . Reduced bullwhip effect. transparency. . Early problem detection. Direct & real-time. . Faster response. accessibility. . Trust building. . Reduced bullwhip effect. . Lower cost. . Optimized capacity utilization. . Improve service. Collaborative planning, forecasting & replenishment. . Joint design. . Coordinated production. . Efficiency & accuracy gains. planning & operations,. . Fast response. Workflow. procurement, order processing,. . Improved service. Coordination. engineering change & design. . Earlier time to market. Integrated, automated business. . Expanded network. . Better asset utilization. . Higher efficiency. . Penetrate new markets. . Create new products. . processes. New Business Models. . Virtual resources. . Logistics restructuring. . Mass customization. . New services. . Click-and-mortar models. Source: Lee & Whang (2001). 12.

(19) Supply chain efficiency is highly important since uncertainties in the supply chain can lead to bad consequences, such as increased inventory and inaccuracy of demand forecasts caused by greater demand variability. Effective information sharing between entities in the supply chain network is essential to achieve this efficiency. Based on the four dimensions of supply chain integration practice mentioned above, information integration as a form of information sharing is the foundation. The other three dimensions: planning synchronization; workflow coordination; and new business models will take place and improve faster once information integration is completed. With electronic connections being made possible by the emerging ebusiness technologies today, companies are provided with a whole new level of collaboration that enhances business performance and efficiency.. 2.3 E-business Tools and Methods The invention of the Internet has surely revolutionized the way people communicate on a global scale, but its impact on business is no less profound. The wide reach of the Internet has brought together the development of many emerging e-business technology infrastructures today. These e-business tools and methods are largely dependent on the use of the Internet and are usually related to communication software and applications (Geoffrion & Krishnan, 2001). Through the implementation of e-business applications, supply chain partners can potentially benefit from the increased communication agility and real-time information exchange.. Electronic Data Interchange (EDI) is the oldest technology among the e-business tools and methods that is still widely used by supply chain partners to exchange data via electronic messaging service. But there are also some drawbacks of EDI, which include its inflexible message formats and the high costs it incurs (Van Amerom & Speyer, 2000). As a result, many use extensible markup language (XML) as an alternative to the traditional EDI. It represents text and data in a much simpler format that can be exchanged across organizational boundaries. Moreover, it has proved to be a more cost-effective method of exchanging information across platforms since it can be processed with relatively little human or machine intelligence.. 13.

(20) 2.3.1 Integration of Information System (IS) and e-Business Since e-business involves communications electronically through the Internet that allow companies to share and receive information, the role of information system in the e-business operations has become more important than ever. IS not only realizes effective flow of information between business functions within an organization and its processes at internal level, but also allows connection with the environment such as, downstream distributor and buyers (Laudon & Laudon, 2005). The earliest successful integration example of IS was the point of sales system (POS). A POS allows business enterprises to manage sales transactions at checkout counters with barcode or scanner and ultimately simplifies their day-to-day business operations. Through these transactions, the system then connects upstream suppliers, manufacturing plans, retailers, and other sales and marketing systems with end customer demand. Today, it has become a crucial information resource for sales and customer management.. In addition, an efficient model of e-business of an organization requires a sophisticated activity model including an integrated supply chain. This integrated supply chain typically uses advanced Information and Communication Technology (ICT) such as intranet, extranet, Web portals, wireless networks, etc. Information flows in the supply chain are managed by information systems that provide the backbone necessary for e-business in enhancing supply chain integration. The system help integrates internal supply chain processes within a company.. In the early days, the system was called materials requirement planning (MRP). An MRP system helps plan production, delivery and purchasing schedules according to orders received. It works backwards from a schedule for finished goods to a breakdown of requirements for components and raw materials needed to produce the finished goods within a given timeframe. It had later evolved to a manufacturing resource planning to provide inventory management and logistics functions in addition to production planning. In the 1990s, MRP system was further expanded to enterprise resource planning (ERP) systems which are generally believed as the core of e-business operations today. ERP is a standard, enterprise-wide information system that automates many back-office functions related to technology, services and human resources. It integrates the. 14.

(21) business processes within and across functions in an organization, including manufacturing, production planning, sales and marketing in a single application.. The development of principles in supply chain management in the 1990s had heightened the expectation for more cost reduction and product quality improvement benefits from integrating internal business processes with external processes. As a result, ERP systems have been extended to include supplier relationship management (SRM) and customer relationship management (CRM), providing a seamless and integrated workflow over a supply chain.. 2.4 Performance Measurement Measurement is important, as it helps ensure the progress of business plans and the success of new investment decisions. Performance measurement describes the feedback on operations that is usually associated with behaviors that impacts customer satisfactions, strategic decisions and supply chain performance (Bhagwat & Sharma, 2007).Traditionally, companies evaluated performance based largely on the financial performance of the corporations, which is not directly tied to business operational efficiency and effectiveness. Purely financial-based performance measures are more often harmful (Eccles, 1991). As such, the traditional (financial) accounting principles that were widely applied do not always tell the complete story and are often very historically oriented.. Deficiencies in these traditional accounting methods for measuring performance of an ongoing investment has further emphasized the importance of the use of non-financial measures to manage performance proactively. Moreover, it is imperative that companies align their performance measures to the strategic objectives of the underlying system of the business (e.g. supply chain). Supply chain partners, however, adopt different supply chain strategies depends on the set of competencies required in a dynamic environment and their different positions in a supply chain. The impact of new business plans or investment decisions on the supply chain thus varies based on how effectively the operations execute against these supply chain strategies at different levels. Companies can generally refer to the three different stages of their. 15.

(22) organizational development (Lapide, 2000) when determining the types of measures that they need to focus on, including: 1. Functional Excellence Most companies in the early days focused on their performance measurement on achieving functional excellence. It is a stage in which development of excellence is necessary within each of its operating units. In this stage, a company is recommended to use metrics that are focused on individual functional units. 2. Enterprise-Wide Integration This is a stage in which a company starts to establish cross-functional process integration to facilitate and drive an overall improvement in a supply chain. As such, metrics for the company in this stage should be directed to realize crossfunctional activities rather than individual tasks. 3. Extended Enterprise Integration As the importance of collaborative management in a supply chain becomes more apparent today, companies are motivated to increase the level of integration. to. extended. enterprise-wide. degree.. Extended. enterprise. integration is a stage in which a company establish excellence not only within the enterprise but also across extended enterprises. That being said, a company needs to adopt metrics that will focus on external cross-enterprise collaboration in this stage.. Good metric in measuring the performance of a business plan or new investment decisions is critical for efficient and effective measurements. Most importantly, the measurement process should be linked and aligned to operational excellence including supply chain objectives and activities. This helps to ensure that resources are appropriately applied so that company can closely monitor whether or not desired strategic result is happening.. 2.4.1 Measuring the performance of a supply chain (The GSCF Model) There are a variety of widely employed model for supply chain performance assessment. These models help establish a framework linked to performance measurement that can communicate and align supply chain strategy across the. 16.

(23) organization. One of the widely used and prevalently accepted framework is the one developed by the Global Supply-Chain Forum (GSCF)1. It is essentially a process reference model for supply chain management to measure supply chain performance. An effective supply chain management requires an end-to-end integration of key business processes within and across the network of business partners that comprise the supply chain (Lambert, 2008). Many organizations today aspire to achieve the necessary integration to drive performance improvement. However, it can hardly be realized since most executives do not fully understand the key business processes and the linkages necessary to integrate them.. The GSCF framework provides the linkages required to facilitate the integration among supply chain entities and identifies eight business processes that need to be managed and integrated. The eight business processes are both cross-functional and cross-enterprise processes, which mainly include Customer Relationship Management, Supplier Relationship Management, Customer Service Management, Order Fulfillment,. Manufacturing. Flow. Management,. Product. Development. and. Commercialization, and Returns Management. A cross-functional team is created in each process and is assigned to manage it. The cross-functional team is made up of representatives from every business function within the firm, including those from sales and marketing, research and development, logistics, production, purchasing and finance. Each process is further broken down into a sequence of strategic subprocesses, so as to provide a detailed overview for implementation of the framework.. 1. GSCF is a forum directed by Dr. Douglas M. Lambert that consists primarily of leading representatives from industry and academia to capture critical issues related to operational excellence in Supply Chain Management.. 17.

(24) Figure 2-6 Depiction of the GSCF Framework Source: Lambert, Guinipero, & Ridenhower, (1998). Of the eight processes, customer relationship management (CRM) and supplier relationship management (SRM) are the essential linkages that provide a crucial link to external companies within the supply chain network. The remaining six processes are coordinated through the linkages.. The GSCF framework focuses on the integration of processes across various partners in a supply chain. The concept is that cross-functional and cross-firm involvement is very important, in which all functions that are involved in the delivery of a product or service must work together. As such, proper coordination mechanisms across various functions are essential to achieve effective and efficient supply chain. Organizations are also required to continuously develop and maintain close relationships with their key customers and suppliers to enhance integration in a supply chain. All in all, the model suggests that integrated and collaborative supply chain yield good results in improved productivity, reduced cost, reduced inventory levels, and better demand planning.. 18.

(25) 2.5 Implementation Success Factors The adoption and implementation of a new system is a complex, time-consuming, expensive and error-prone project. In times like these, the implementation project may bring great opportunities or even deliver great rewards, but at the same time also bring enormous risks to companies. Wrong implementation approaches or unwise choice of a new system that ends up being not a good fit for the enterprise will impact on company performance and possibly bring financial disadvantages. In order to minimize the project’s risks and capture the potential opportunities of the project, it is imperative that companies focus on the critical success factors (CSFs) that influence the success of the implementation of the project(A. Jones, Robinson, O’Toole, & Webb, 2006).. Those factors can be described as main variables that project managers use to increase the possibilities of achieving the desired results out of their projects (Westerveld, 2003). Over the course of time, authors shifted their focus to identifying different success factors based on different project types. But in the pressure of a dynamic global environment and evolving business world today, finding the right critical success factors that will contribute to projects’ success can be challenging.. Davis (2014)further studied the evolution of critical success factors approaches from 1970s to present. According to the author, most of the earlier project management literature was more focused on the operational level of a project. After 2000s, the concept has since evolved to include key stakeholders. This being the case, more lists of success factors have emerged since then. One of the most commonly used is from the paper published by Pinto and Slevin in 1987, where the authors developed a list comprised of ten success factors as presented in Table 2-2.. 19.

(26) Table 2-2 The 10 Success Factors Definitions 1. Project Mission–A clearly defined goal at the outset of a project that is understood by not only the project team, but everyone in the organization. 2. Top Management Support – Willingness of top management to provide sufficient resources in terms of financial resources, manpower, etc. and authority to drive engagement. 3. Project Schedule/Plans – A well-developed project plan for the successful implementation of the project. 4. Client Consultation – Communication and active listening to end-users of the project. 5. Personnel– Selection and training of people who are a good fit for the project team. 6. Technical Tasks – Availability of adequate technology and skills to support specific technical tasks in the project. 7. Client Acceptance – Selling the resulting project to its intended end-users. 8. Monitoring and Feedback – Timely information about reactions to a performance taskat each stage in the implementation process. 9. Communication – Availability of adequate communication channels and necessary data to everyone involved in the project implementation. 10. Troubleshooting – Ability to resolve unanticipated problems within the project.. Source: Slevin and Pinto (1986, pp. 57-58). As was stated initially, the dynamic nature of most projects has made it difficult for project managers to control or focus on every aspect in the project. The ten success factors mentioned above represent questions the project manager should be reviewing at each stage in the implementation process. They provide the rationale and variables behind the project that when used effectively, will contribute to project success in the end.. 20.

(27) 3. RESEARCH METHODOLOGY This chapter introduces the research methods applied in this study. The subsequent sections describe the structure of research framework, research design as well as data collection method for this study, which specifically includes in-depth interviews.. 3.1 Research Method To investigate the potential role of e-business in supply chain integration, a qualitative research approach is adopted and developed throughout the study. This entails a detailed study of the factors that lead to the adoption of e-business concepts and technologies in a company, the challenges faced during implementation phases, and the changes in supply chain performance that come from the implementation process. A literature review related to supply chain integration (SCI) concept and theories, the relationship between SCI and e-business, the commonly used e-business tools and the existing theories to measure e-business performance in a supply chain is conducted early in the research process, to provide a solid background to the area of study. The research also focuses on a Taiwanese Information Technology (IT) service provider company that provides e-business technologies and services to enterprises in Taiwan. Further study is then conducted based on success stories or cases from the company’s business customers and is realized through in-depth interviews with the company. Leveraging data collected from the interview, the researcher organizes the key findings from within and provides insights to the research questions.. Interviews, as one of the most widely used qualitative research methods, are believed to be a valid approach when little is already known about the study phenomenon. It provides a deeper understanding of the study as more detailed explanations are obtained from the participants. Oftentimes, interviews in qualitative research tend to be more open-ended and less structured (Merriam, 2001). For the present research, indepth and open-ended interview is suitable as complete explanations and detailed insights are expected from the participants. A general outline of questions is presented to give a clear view of the big picture of the context settings and the participant has the flexibility to respond with his or her own sentences.. 21.

(28) 3.2 Research Framework The research framework intends to provide insights to research questions highlighted in Chapter 1 and is illustrated in Figure 3-1. It is developed based on the literature in each respective area to provide guidance throughout the whole research process.. Figure 3-1 Research Framework. Carter, Monczka, Ragatz, & Jennings (2009) discussed the implications of the competitive factors affecting supply chain competition on supply chain integration as follows: . Globalization is making supply chains longer and more complex, bringing higher uncertainty and risk. Such complex processes highly require effective information sharing and collaboration across multiple partners in the supply chain.. . Companies are constantly facing increased volatile customer demand while customers demand “real-time” responsiveness. A tightly integrated supply chain gives management operational flexibility in meeting dynamic customer demands and improving responsiveness.. . The extended supply chain also means that more partners are involved and there are longer lead times in supply chain processes. At this point, a collaborative system needs to be incorporated in order to improve the timeliness and quality of supply chain information.. 22.

(29) (1) What are the competitive factors that drive the need for supply chain integration in a company today? The emerging e-business concepts and technologies, or Internet computing, has fundamentally changed companies’ supply chain strategies (Lee & Whang, 2001). In a constantly changing business environment today, companies are challenged to reinvent their supply chain strategies in order to stay competitive. Some of these strategies include integrating all the entities of the supply chain into one collaborative process, known as the supply chain integration approach (K. C. Laudon & Laudon, 2004). However, achieving the goal of supply chain integration can be a daunting task. E-business, on the other hand, has emerged as the most compelling driver that can facilitate this integration (Lee & Whang, 2001).. (2) How does e-business help a company achieve and enhance supply chain integration?. (3) Does the impact that e-business brings help put the company at a competitive advantage in the supply network?. 3.3 Sampling Procedure This study aims to improve the understanding of the potential role of e-business in supply chain integration through multiple case studies from a Taiwanese IT service provider company. Hence, the IT service industry was chosen as the object of this research. For the purpose of this study, the object of this research should be a large, or at the very least, midsize IT service provider company with over 10 years of experience in the IT service industry, and has significant number of customers as well as notable reputation success stories in order to improve research results.. The list of winners in the respective industry from The Top 1000 Dun & Bradstreet (D&B)2 SME Award was also used to identify potential candidates for the interview. In order to qualify for the outstanding awards, companies should meet very strict and. 2. Dun & Bradstreet (D&B) is the leading provider of B2B business decision-support services worldwide, offering a wide spectrum of risk management and business education solutions to its more than 150,000 customers, which includes more than 80 percent of the Fortune 500.. 23.

(30) high standard D&B eligibility requirements, which include the analysis of business age, company payments, financial information, public records and other important factors. The recognition is a professional testament to a company’s business success and achievements. It represents the brand name, credibility and reputation of the company. Therefore, it is included in the criteria to select the right candidate for the research interview. The researcher then collects secondary information from companies’ websites to further identify Taiwanese companies that provide e-business products and services. Since some websites might have been created for advertising purposes and might not deliver accurate source of information, the researcher only utilizes data from websites that are created by reputable companies and qualified professionals. In-depth and face-to-face interview method is used to investigate data relevant to E-business implementation and performance in supply chain integration in Taiwanese companies, thereby limiting the sample to the smallest viable number of cases.. 3.4 Data Collection Two different data collection approaches are adopted to obtain necessary data for this study, as described below:. a. Qualitative research interview The qualitative research interview method is used to obtain the data, which is primarily consisted of qualitative nature. The interview questions are developed based on the existing literatures in respective field of study that align with the research framework presented in Section 3.2. Merriam (2001) pointed out that interviews in qualitative research are usually more open-ended and less structured ones. Hence, all the four questions are open-ended and required face-to-face interviews.. 24.

(31) . Basic information of candidate for the research interview. Table 3-1 Basic Information of the Case Company Company Name (Initial). Company P. Founded. March 12, 1996. Industry. Information Technology Services Global Freight System, EDI Declaration System, Supply Chain Management, Warehouse Management, Express. Products and services. Platform, Cargo Tracking System, Global AMS/ISF Solutions, Truck Management System Taiwan (Taipei, Tainan, Kaohsiung), Hong Kong, China. Location. (Shenzhen, Fuzhou), USA (Los Angeles). Number of employees. . 80. Interview questions. Table 3-2 In-depth Interview Questions Participant. Company P’s Sales Manager Hands-on. Requirements. experience. in. e-business. technologies. application and solid understanding of key client projects in respective area. Improve the understanding of the potential role of ebusiness in enhancing supply chain integration, including. Research Objective. factors affecting the adoption of e-business and the impact it brings, through success stories from the company’s business customers.. Section 1. Competitive pressures as the driver for supply chain integration. 1. What are the competitive factors driving supply chain integration in a company?. 25.

(32) E-business implementation and performance on supply. Section 2. chain integration. 2. What are the common challenges faced by business customers during implementation phases? 3. How does e-business help business customers achieve or even enhance supply chain integration? 4. Does the impact that e-business brings help put these companies at a competitive advantage in the supply network? Describe based on the 8 key processes in the GSCF Framework: Customer Relationship Management, Supplier Relationship Management, Customer Service Management,. Order. Fulfillment,. Manufacturing. Flow. Management,. Product. Development and Commercialization, and Returns Management(Cooper, Lambert, &. Pagh, 1997).. b. Documentation Secondary data are obtained from the existing literature, in the form of books, journals, articles and scientific research, relevant website information and company’s data base to provide basic knowledge related to the study.. 3.5 Data Analysis In qualitative research, data analysis is conducted through examining, categorizing, and combining the evidence, in order to address the initial purpose of the study and conduct cross-checks of facts (Yin, 1989). After conducting the interview, each of the cases collected from the interview is organized and later described in Chapter 4. Data analysis is then conducted by developing a comparison of the sample cases from the carefully constructed data categories. The following set of topics, which are based on the literature review, are also utilized for further discussion and comparison of the sample cases, including the three main parts of supply chain integration challenges (Awad & Nassar, 2010), the GSCF Framework (Cooper et al., 1997), and the ten critical success factors (CSFs) (Pinto and Slevin, 1987).Finally, research findings and results interpretation on the potential role of e-business in supply chain integration are presented in Chapter 5.. 26.

(33) 4. INFORMATION SERVICE INDUSTRY ANALYSIS This chapter details the analysis of the Information Service Industry as the object of the research. An overview of key characteristics of the industry in Taiwan, industry value chain and the emerging trends are presented in Section 1. Section 2 describes ebusiness development in Taiwan, along with the existing government policies that help promote the development. Sample cases including the IT service provider company and business customers are also presented in Section 2 to provide insights on e-business applications, especially in supply chain integration.. 4.1 Industry Overview 4.1.1 Key characteristics of Information Service industry in Taiwan Information Service industry in Taiwan is considered a capital and technologyintensive industry with a relatively low entry threshold. Based on the statistics published by the Directorate General of Budget, Accounting and Statistics, Taiwan in 2001, there were a total of 5,385 IT service provider companies in Taiwan. It is common knowledge that industry in Taiwan essentially consists of many small and medium-sized enterprises (SME) with fewer large enterprises. This also reflects in the information service industry, in which there were only 6 firms with over 500 employees and 63 firms with around 100 to 499 employees, while firms with less than 100 employees accounted for 98.7%.. Although the uses of information service encompass a somewhat diverse field, it can be observed that the application areas of information service in Taiwan involve primarily these three categories: product, project and service (see Figure 4-1).. Product refers to software products that can be used directly after downloading and installing from a complete installation package such as, software system and applications. With the rise of many application service providers (ASP) today, selling types have shifted from product-centric mindset to a more service-centric approach. It can thus be seen that in addition to safety and bandwidth, service level is now also a significant variable to be considered in product development. This new business model along with emerging trends of e-business have helped grow the size of the total market. However, market growth can be slow if there is a shortage of innovation, bad business conditions or if users do not adopt a high demand of the product. 27.

(34) Project involves interrelated tasks of software development, consultation, training, and computer facilities services that are carefully planned to achieve a particular aim based on the demands established by customers. Growth in the market mostly credited to government support and policies to push the development of information service within Taiwan. The initial plan was to focus on developing supply chain management systems, before expanding into a more diverse field to include manufacturing, finance, agricultural and architecture, etc.. Service includes the provision of Internet-related services, including electronic information and Internet connection services. Size of the market has continued to go from strength to strength, taking advantage of the ever-growing number of Internet users in Taiwan. In fact, there were nearly 18.83 million Internet users in Taiwan as of 2015, which equaled 80.3% of the population. In the last few years, Taiwan has seen a new rise in the B2B & B2C ecommerce services, online advertising, Internet banking and online shops. All these have undoubtedly boosted the size of the total market.. Figure 4-1 Information Service Industry Value Chain Source: MIC (2001). 28.

(35) 4.1.2Market conditions Taiwan’s information service market generally comprises of system integration, IT outsourcing and cloud computing service segments. System integration segment primarily focuses on providing system infrastructure and deployment services, as well as business processes development and business consultant services. IT outsourcing segment includes software support and hardware maintenance services. Companies in this segment usually carry and sell original factory-sealed software and hardware from overseas, then bundle basic maintenance and support fees into it. Cloud computing service segment, on the other hand, involve offering services according to three standard models, which are Infrastructure as a Service (IaaS), Platform as a Service (PaaS), and Software as a Service (SaaS).. Table 4-1 Information Service Market Scope Market. Segment System Integration. Information Service. Details System infrastructure, development, integration, construction and consultation IT Outsourcing (ITO), Business Process Outsourcing. IT Outsourcing. (BPO), software development outsourcing, system maintenance and support, training. Cloud Computing. IaaS, PaaS, SaaS Source: MIC (2001). According to a recent research by Taiwan’s Market Intelligence & Consulting Institute (MIC), global information service market is projected to grow at a compound annual growth rate (CAGR) of 4.4% from 2016 to 2019, reaching an expected value of $ 948.9 billion by the end of 2019. In 2016 alone, the number reached $ 836.8 billion, with cloud computing service remaining as the fastest-growing segment at a value of $ 480 billion. In the following years, big data, intelligence, mobile internet, system integration and cloud computing will still play a pivotal role in promoting the growth of global information service market. Following the anticipated growth in the global information service market, Taiwan’s information service sector is also forecasted to grow at a CAGR of 3.1% during the. 29.

(36) end of 2018. The market reached NT$ 156.7 billion in 2015 and the number is expected to further grow to almost NT$ 177 billion in 2018.. Table 4-2 2013-2018 Taiwan Information Service Market Size Year Market Size (NT$ billion) Growth (%). 2013. 2014. 2015E. 2016F. 2017F. 2018F. 141.5. 148.1. 156.7. 164.9. 171. 176.3. N/A. 4.6. 5.8. 5.2. 3.7. 3.1. Source: MIC (2015). Different from the condition in the global information service market, system integration segment is apparently the biggest contributor to the overall growth in Taiwan’s market. This is because more and more companies of all sizes, particularly from the manufacturing, finance, and circulation industry, are seeking to expand beyond domestic borders. They need to have an integrated IT infrastructure in place to support effective information sharing and guarantee communication quality across the world. Furthermore, the government has also been strongly promoting the Industry 4.0 3 movement since the last few years. The concept foretells advanced real time communication across the entire value chain made possible via the Internet. Under this movement, growth of Taiwan’s system integration segment is expected to accelerate further in the next few years.. 3. First conceived in Germany in 2011, Industry 4.0 is the “fourth industrial revolution” after the steam power, electrical power and industrial automation. It is the current trend of automation and data exchange in manufacturing.. 30.

(37) (Billion NT$). 200 180 160 140 120 100 80 60 40 20 0. System Integration IT Outsourcing Cloud Computing. 2013 100.31 30.88 10.35. 2014 104.52 32.05 11.61. 2015E 110.81 33.20 12.70. 2016F 115.45 34.68 13.85. 2017F 120.03 36.01 15.01. 2018F 123.02 37.20 16.15. Figure 4-2 2013-2018 Taiwan Information Service Market Size by Segment Source: MIC (2015). A further breakdown of the system integration segment reveals that system construction service took up most of the market (see Figure 4-2). Global business expansion, replacement of outdated system and the importance of cross-function or cross-enterprise integration resulted in the constant demand coming from large companies and public sectors that ultimately help boost the market. 140.00 120.00. (Billion NT$). 100.00 80.00 60.00 40.00 20.00 0.00. System Infrasructure System Construction Consultant. 2013 16.22 76.66 7.43. 2014 17.39 79.39 7.74. 2015E 18.35 84.26 8.20. 2016F 19.23 88.58 8.64. 2017F 20.26 90.74 9.03. Figure 4-3Breakdown of Taiwan System Integration Segment Source: MIC (2015). 31. 2018F 20.81 92.72 9.49.

(38) 4.1.3 Industry trends analysis a.. Emerging trends in enterprise application software Competition for customers and markets has intensified significantly in. response to the phenomenon of globalization. Companies are forced to grow more competitive if they are to survive in the market. In response to this, the government has taken measures to raise industry competitiveness and improve Taiwan’s economy by introducing the e-business policy that includes B2B, B2C and B2G program in general. These government-funded programs will most likely create new demand for e-business applications like ERP, SCM, CRM, etc., to facilitate effective enterprise integration for companies to stay ahead of the competition.. According to MIC, Taiwan market for enterprise solutions will rise to NT$ 45.3 billion in 2017, with ERP, CRM and e-business systems being the main drivers of growth. Most of the large companies in Taiwan today focus primarily on the application of CRM and Business Intelligence (BI), while the SMEs invest heavily on ERP and CRM system. IT service provider companies in Taiwan also tends to seek out opportunities to work with large and enterprise sized businesses. They then shift their focus to target on the SMEs when the market for large companies passes into the maturity stage.. b.. System integration gaining importance The system integration market is further propped up by an upsurge in demand. for enterprise application software including ERP, SCM, data management and BI. Companies have a tendency to embark on continuous improvements mission, especially when their existing system and application software have been under development for quite some time. They extend the value of those applications and enhance processes by integrating with other enterprise software solutions such as the BI system, which are becoming an essential part of the organizations information systems. BI system helps deliver and integrate relevant and significant business information in an organization. The resulting insights allow companies to better evaluate, understand and adapt to trends in customer behavior. As such, many companies that first started with ERP, SCM or CRM system are seeking out potential integration opportunities to achieve greater business efficiency with BI system.. 32.

(39) With enterprises keen on moving toward consolidating multiple software and capabilities into a single suite and sharpening efficiency of business operations, system integration market is expected to scale greater heights in the years to come. In fact, the market is projected to grow to NT$ 123.02 billion in 2018 according to MIC. As companies grow increasingly dependent on external entities, the need for B2B integration becomes more apparent and critical. However, for many enterprises, inhouse application integration still remains to be the top priority.. Opportunities for systems integrators Increasing revenues and sales is a constant challenge for all companies. Since maintenance fee is the main source of income for most system integrators, they always strive to offer integrated and innovative product lines or services to capture high-margin projects, generate new sources of income and ultimately grow their business. That being said, emerging cloud technology today presents huge opportunities for system integrators. It is now common practice to use Software as a Service (SaaS). From the traditional role of providing software, hardware installation and support, system integrators can now develop their software to include a modified service offering, with a scalability and usability of thousands and even millions of end users, without customers having to make senseless investments into hardware.. In addition to cloud computing phenomenon, there is also a shift in the system integrator market towards specialism. As mobile devices become an integral part of everyday work in many companies, it is of paramount importance for companies to ensure that corporate confidential data are protected when used on mobile devices. Mobile Device Management (MDM) helps address those security issues and offers data protection services on mobile devices. There is just immense potential that can be leveraged when it comes to implementation and management of MDM services. 4.1.4 Industry value chain As most IT service providers in Taiwan are SMEs, focusing resources on a specific customer segment allows small businesses to better serve a target market and help expand the industry. Basically, the focus is on the three main areas of e-Taiwan (eGovernment, e-Business and e-Society), that serve as the key growth drivers for the industry. The main components of the industry value chain include tight connection. 33.

(40) among operator, infrastructure provider, storage provider, content provider, value added service provider, internet service provider, developer, system integrator, embedded solution provider, etc. The impact of the three major programs on the industry value chain varies significantly across all these components as shown in Table 4-3.. Table 4-3 The Impact of Three Major Programs on the Information Service Industry Value Chain e-Government. e-Business. e-Society. Content provider Developer Value added service provider Internet service provider System integrator Embedded solution provider Note:. Secondary influencer. Primary Influencer. Source: MIC (2001). e-Government Almost ten years have passed since Taiwan government initiated the first egovernment project in 1997. Following the roadmap for e-government, Taiwan has earned some achievements along the way and also added more projects into it to ensure that citizens would have confidence in using government services that can be accessed anytime and anywhere. Some of the key e-government initiatives include setting up a government portal site, developing online services like official document electronic interchange (G2G), e-procurement (G2B), e-taxation (G2C), etc.. The current e-government program further employs innovative methods to provide superior integrated services that allow the government to provide end-to-end applications, information queries, download and online fee payments services. For these projects to be successful, active involvement of information service industry is very crucial. It can thus be seen that promotion of these e-government projects will be one of the key drivers of growth in the system integration sector. It will also help. 34.

(41) expand markets for software developer, value added service provider and embedded solution provider.. Figure 4-4 e-Government Value Chain Analysis Source: MIC (2001). e-Business Taiwan’s e-business program development is believed to accelerate growth in the information service industry. With the increasing demand on e-business applications as either a service or a project, the role of ASP, ICP, ISP, value added service providers, system integrator, IT consultant and embedded solution provider becomes more important than ever. But of all, system integrators will contribute the most to the development of e-business program. They have adequate business domain knowledge as well as the knowledge on technological advancements that can facilitate end-to-end connectivity and communication. That being said, system integrator is more likely to see more demand coming in the future.. On the other hand, Internet service provider (ISP) also has growth potential. ISPs leverage the economics of scale for competitive advantage. They use this cost 35.

(42) advantage to build a network that can be shared by many senders and receivers to exchange multiple data across all applications or platforms at all times. In addition, many ISPs are offering packages tailor-made for specific markets and expanding into value added service (VAS) sector.. Figure 4-5 e-Business Value Chain Analysis Source: MIC (2001). e-Society In the society today, people use digital media in most relationships, including peer to peer relationship, government to other, other to government and peer to other. Companies are also creating and selling products that are mostly tied to digital communications and computational technologies nowadays. Promotion of the esociety program is likely to create new opportunities in the information service industry. The Internet enables information service providers like system integrator, embedded solution provider, content provider, value added service provider and developer to deliver more innovative value-added services.. 36.

(43) Figure 4-6 e-Society Value Chain Analysis Source: MIC (2001). 4.2 E-business Opportunity for Information Service Providers in Taiwan Signs of new opportunities for country economic growth are seen in the heightened interest in e-business and e-commerce stems from the transition into the knowledgebased economy. This new environment is characterized by global competition, faster flow of information and communication, shorter product life cycle, increasing business complexity and technological advances. Enterprises in Taiwan have grown to realize the importance of embracing innovative enhancements, such as investing in e-business technologies in particular, to maintain competitive edge and emerge as an industry leader.. However, the SMEs, particularly small businesses with limited resources and lack of in-house expertise, still find it hard to put their time and energy to invest in e-business. As mentioned earlier in this Chapter 4, industry in Taiwan is mostly made up of SMEs, which accounts for 90% of the total amount of the whole business. If implemented successfully, e-business can benefit SMEs in terms of business expansion, cost cutting and performance efficiency. Support for SMEs is available from the government in order to ensure a fair chance for all enterprises to participate and promote overall industry competitiveness.. 4.2.1 Embracing e-business with Application Service Provider (ASP) The rise of broadband Internet access has enabled application service provider (ASP) to deliver computer-based services to individuals or enterprises over a network. ASP 37.

(44) services are expected to help not only small businesses, but also large enterprises to realize e-business capability in the near future as a form of outsourcing. IT outsourcing is then being fueled by the rise of ASP. According to MIC, IT outsourcing is projected to reach NT$ 37.2 billion in 2018. IT outsourcing provided by the ASP is basically different from the traditional outsourcing way (see Table 4-4).. Table 4-4 Comparison of Traditional Outsourcing Service and ASP Items. Traditional Outsourcing. ASP. Outsourced IT environments. Mainframe computer. Internet. Data resource management. Hardware equipment. Software application. Software application process. Customized. Packaged. Software procurement. Purchase or In-house. process. developed. Service delivery. Offline. Online. Business model. One-to-one. One-to-many. Rental basis. Source: MIC (2000). ASP offers its services mainly through two segments, the individuals and enterprises. Services provided to the individuals include productivity software (like Microsoft Office), online games, antivirus programs, etc. Meanwhile, for enterprises, ASP provides mainly e-business or enterprise application software, such as ERP, SCM, CRM, etc. As the system integration becomes increasingly important, ASP has also expanded to include not only Internet Service Provider (ISP), IT Consultant and Independent Software Vendor (ISC), but also system integrator (SI) to deliver both software application and integration service. According to a forecast by Gartner, Inc. Analysts (2015)4, worldwide spending on enterprise application software is expected to grow to more than $201 billion in 2019. For SMEs and small businesses with limited capital resources for technology innovation, ASP is a cost effective alternative that helps encourage the active use of e4. Gartner (2015). Forecast Analysis: Enterprise Application Software, Worldwide, 2Q15 Update.. 38.