Building and sustaining partnership between line and I/S managers

HD28

.M414

-^s^

Center

for

Information

Systems

Research

MassachusettsInstitute ofTechnology

Sloan SchoolofManagement

77MassachusettsAvenue

BUILDING

AND

SUSTAINING

PARTNERSHIP

BETWEEN

LINE

AND

l/S

MANAGERS

John

C.

Henderson

September 1989

CISR

WP

No.

195

Sloan

WP

No. 3085-89

©1989

Massachusetts

Institute of

Technology

Centerfor Information

Systems Research

Sloan School of

Management

Building

and

Sustaining Partnership Between

Line

and

I/S

Managers

1.0

INTRODUCTION

In today'scompetitive world, the effectiveuse ofinformation technology (I/T) asanelement of

a competitivestrategy is critical. Cash and Konsynski (1985), Rockartand Scott Morton(1984), and

others have cited numerousexamples of

how

organizationshave used information technologyto build

andsustain

new

relationshipswith suppliersorcustomers and,asaresult, have achieveda significant

competitive advantage.

A

common

themein theseexamplesis theuseof information technology to

improvethe coordination ofthe activitiesacrossorganizationsthatarecritical todevelopingand

delivering productsand services to a market. However, it is oftennoted that theseorganizations did not gain their advantage byvirtue ofthe information technologyin andofitself. Johnston and Lawrence

(1988) point out thatForemost

McKesson

radicallychangedboth itsinternaloperationsand itsworking

relationships with customersin its efforts tobuildand sustain acompetitive advantage over large,

integrated pharmaceutical companies. Rockart and Short (1989)discusstheneedfor effective internal

integration acrossvalue-added functions as a criticalaspectofeffective execution ofinterorganizational

information systems. Konsynski and

Warbelow

(1989) arguethat theuse of information technology

linkages betweenorganizationswillonly 'sp>eedupthemess*ifa fundamentalrestructuringofthe

nature ofwork inorganizations is notachieved.

To

the extentthat theseobservations arecorrect, seniormanagers must

now

effectively integrate

the

management

ofinformation technology intoevery aspect oftheirorganizations(Henderson and

Venkatraman,1989).

One

approachtoachievethis level ofintegrationhasbeen to decentralize the I/S

organization,placing the responsibility formanagementof theI/Sfunaion directlyunderthe general

managerofstrategicbusiness units.

And

yet thisdecentralization in itselfdoes notremove the need for effectivecoordination ofactions across the information systems community. Infact, such

telecommunications or data resource management(Keen, 1986).

Further, while there are

many

examples of

how

investmentsin technology haveyielded

significantcompetitive advantage, there are also

many

exampleswheresuch investments have resultedin

no measurable impact (Curley and Henderson,1989). In

many

cases, this failureappears tostem not

from an inappropriatevision but fromthe inabilityofthe organizationtoeffeaively integrate the use

and themanagement ofthe technology intothe mainstreamofthe firm.

One

key element ofa solution

tothis managementchallenge suggested by Rockart andShort (1989) is the buildingofa partnership

between L'Sorganizationsandline managers. Theyargue thatwhilethere is afundamental role for line

managers in providing leadershipand commitmentto theuse of information technology, there still

remains therequirement to effectivelymanage theinformation technologyinfrastructure, to

appropriately understand anemerging and dynamictechnology marketplace,and tochange the nature of

work practice associatedwith theoperations,development and implementation of informationsystems.

This paper explores theconcept of partnership andthe buildingof partnershipas a management

strategy. Regardless ofthe level ofdecentralizationofthe ITSfunction,therestill remainsacritical

need tobuildaneffective workingrelationshipbetweenlinemanagers andinformation systems managers

and specialists. While

some may

envision the dayinwhichinformation systemsspecialists are not

required, trends in technologyandthe increasing complexity of the technologyinfrastructure (such as

telecommunications, database systemsandlarge transaaion/application systems) suggestthat this

funaional area of the businesswillnotsoon disappear. Rather,thispapertakes the perspectivethat

information systemsmust be recognizedas acriticalfunaion in theorganization.

As

such, senior

management must createandenacteffectiveworking relationships

among

themanagers

who

have

variousfunctional expertise inordertoachieve

maximum

valuefrom theirI/Tinvestments.

In

many

ways the concept of partnershipin the

management

of

LT

is not new. Strategies for

managingthedevelopment and of>erationsofinformation technologyare often grounded in participatory

perspective providesa powerful paradigm forunderstanding theeffective

management

of information

technologyin organizations. Similarly, Markus and Pfeffer(1983) buildonnotions ofpower and

influence as a theoretical perspectivein examining mechanismsfor effectivelymanagingLT.

Inasimilar vein,corporatestrategyresearchershave focused on the conceptof partnership asa

general

management

strategy. Whiletheir focus isoften external,i.e.,undersundingthe working

relationships across organizational boundaries,the term"partnership"isused todescribeaworking

relationship that reflects a long termcommitment,asenseofmutualcoop)eration,shared risk and

benefits,andother aspects that are consistentwith conceptsandtheoriesofparticipatory decision

making(Wilson, 1989).

Inthis paper

we

willpresent the results of researchthatprovide a basis fordevelopinga

descriptive model ofpartnership. Executiveinterviews thatfocusboth on

management

relationships

with externalorganizations as well as relationshipsbetween I/Sexecutives andline executives provide the

data todevelop this model.

2.0

THE

PARTNERSHIP

CONCEPT

It isimportant tounderstand the differencebetweena partnershipandother notions of exchange relationships. Gardner and Cooper(1988)differentiate betweena "transactional styleof

relationship"anda"partnership styleofrelationship."

In essence, the transactionstyle relationshipis an arm's length exchange in which the "rulesof

thegame"arewell specified. Further, ina transaaionalstyle relationship,ifone

member

failsto deliver

on

his/hercommitment, litigation ismostoften the formofredress. In contrast,a partnershipstyle

relationshiprequires both parlies toshare investment and risk,and toparticipate in anexchange that

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summary

of

some

major characteristicsof partnerships thatare often usedto differentiate them froma

transaction styleofrelationship.

Forexample,the concept of value-added partnership,putforth by Johnstontnd Lawrence

(1988), is characterized as"a setof independentcompaniesthatworkcloselytogethertomanage the flow ofgoodsandservices alongthe entirevalue-addedchain." Itisinteresting tonotethat they argue

thatwhile theconcept of value-added partnership isnot

new

and thatit is notdependent on technolog), information technology can greatlyincrease theease ofcommunication andthe abilitytoshare

information, therebyenabling partnershipstoemerge as

new

majorcompetitivefactors in the

marketplace today.

From

ourperspective,the opportunityalso carries therequirement for

more

effective partnershipsbetween lineand

LT

managers.

The

researchpresented herebuilds on thepreviouswork onpartnershipstylerelationships by

exploring twofundamental dimensions:

PartnershipinAction (PIA) - Partnershipin Actionis definedas theability_ofmembersofthepannenhip

toeffectivelyinfluencekeypoliciesanddecisions that affect theperformance oftheparmership. This

dimensionof partnership looks at thekeyfactorswhichcreate theday-to-dayworkingrelationship.

Partnership inContext (PIC)- Partnershipin Contextisdefinedas thedegreetowhichmembersofthe parmershipbelieve that thepartnershipwillbesustainedovertime. Thisdimension of partnership looksai

thekey factorswhichestablish the participant's beliefinthelongevity,stability,and interdependence of

the relationship.

In this research,

we

developa modelof partnership basedonstructured interviewswith

executives.

We

focusboth onrelationshipsbetweencompaniesand on theinternalrelationshipbetween

the lineorganizationsand theI/S function. While there are limitations inadaptingan externalmarket

exploretheconcept of partnership between line managers and I/S.

3.0

A

MODEL

OF

PARTNERSHIP

3.1

RESEARCH

METHOD

In developing themodel ofpartnership, a seriesofinterviews wereconducted with seniorline

executives currentlymanagingpartnership stylerelationshipswith customers orsuppliers as well aswith

executives involved in internal I/S-line relationships.

A

totalof 23 interviewswere conducted.

Each interviewfollowed astructured format.

The

executives wereasked todescribeactual

exchangerelationshipswith customers orsuppliers that theyconsideredtobe examples (critical

incidents) ofeffective partnershiprelationships. Then, threegeneralquestions basedonthe two

dimensions discussed in Section 2were f>osed:

1.

What

are thefactors orelements ofthis relationship thatcontributeto itseffective execution onaday-to-day,week-to-weekbasis (PIA)?

2.

What

are the factors or elementsofthis relationship that leadyou to believe that this relationshipwill be sustained over time (PIC)?

3.

What

are theaaions thatyou took or are takingto build orsustain thisworking

relationship?

The

order of questions 1and 2were randomized across subjects.

As

might be expected,the response to

thesequestions often overlapped. Thatis, in discxissionof partnership operations,executiveswould

oftenbegin to talkabout

why

they believed thatthiswasgoingto bea partnershipthat had a long-term

effect

The

interviewer

made

noattempttoconstrainthesecomments. Each interviewlasted

approximatelyone hour.

The

sameinterviewstructurewas used formanagers thatwerefocusingonthe internal I/S-Iine

relationship. In thiscontext, theanchoring concept involved a descriptionofthecurrentworking

relationshipbetween the ITSfunctionand the linefunction.

The

same threegeneral questions were

Inadditionto individual interviews, the partnershipmodel was presented in two focusgroup

sessionswith executive teams. These sessionssought tohave themodelcritically examined tosurface

possibleenhancements and toprovide furtherexamples.

In the followingsection

we

willdescribedsixdeterminanuof partnership (three ineach

dimension) that emerged fromthese interviews. Ineach case

we

willdescribethedeterminant from the

externalpartnership perspective. InSection 4

we

willdiscussthe implicationsforthe line-L'S

partnershipwhich follow from thisresearch aswell as specificaaions to buildandsustain partnership

relationships. Figure 1 illustratesthe sixdeterminants.

3.2

PARTNERSHIP

IN

CONTEXT

3.2.1

PARTNERSHIP

IN

CONTEXT:

MUTUAL

BENEFITS

A

common

theme emergingin every interviewwastheneedfor mutualbenefit

among members

ofthepartnership.

One

executive defined partnershipas

*aworkingrelationshipinwhich

members

of thepartnershipreceivebeneHtsthatcould

not be achievedthrough independentaction.*

The

executives arguedthat itwasnot sufficient tohave a generalfeeling that thepartnership added

value. Rather,effectivepartnerships require explicitattention to articulatingandagreeingupon the

benefitsaccrued by each

member

of thepartnership.

There wereseveral typesofbenefits that surfacedrepeatedly through the interviewandfocus

group sessions.

The

primary view ofbenefits related to afinancial return directly attributable to actions

taken by thepartnership. In general, thesefinancial returnswererelated to eitherincreased revenue

throughmarket accessor toreducedcost by increasingtheefficiencyoftransactionsbetween

members

ofthe partnership. For example, the use of

EDI

to bettercoordinate the actionsof afirm andsupplier

wasoften cited asamechanismbywhich costscouldbe reduced or

new

marketsaccessed.

theinterviewswas theabilityofthe partnership topool expertise, marketknowledge,andprocess

knowledge in awaythatenabled the partnership to innovate,and, ultimately translatethese innovations

into products orservices.

The

third typeofbenefit related torisksharing.

The

executivesarguedthat partnerships enable

each ofthe firms to pool riskand therefore resultin an increasedwillingness to takerisk.

Finally,a fourthcategorydealtvkith the abilityofthe partnership toadapt to market or

unforseen changes. This category couldbe viewed asanaspect ofriskmanagement. Thatis, the

partnershipmanages riskcoUeaively by increasing the likelihood thatiheywillbe able to react

effectively toenvironmental uncertainty. Thisissue app>eared tobequite significant.

Many

ofthe executivesdescribed thebenefitofthepartnership asits abilitytocoordinate actionasacompetitive

unit in response to marketuncertainty orcompetitor response. Forexample,one executivediscussed

how

hisfirm's partnershipwitha distributor enabled themto moreeffectivelybringaproduct response

into their distributionchannels, therebyresponding

more

quicklytoacompetitor's product introduction.

Our

intervieweesalso stressed theconverse point thatifthebenefitstreamisuncertain, the

partnershipis at riskand thefuture ofthe partnershipisproblematic.

The

partnership model shown in

Figure 1 incorporates "mutualbenefits" as adeterminant of PIC.

One

executive'sstatementsums it up:

"Why

doI thinkitwilllast? Because

we

allhave something togain."

3.2.2

PARTNERSHIP

IN

CONTEXT:

COMMITMENT

Eachofthe executivesdiscussed at length thatcommitment

among

the

members

ofthe

partnershipwasamajor contributorto their belief that the relationshipwould besustained. Three

major indicatorsof

commitment

were identified: shared goals, incentive systems,andcontracts.

Shared goals was raised by everyexecutive as a majorindicatorofacommitment toa

could sustain thepartnership

when

expectedbenefit flowswerenot realized. Further, sharedgoals, they

argued, provided a

common

ground upon whichtonegotiatesolutionsin areaswheregoals conflicted.

Thisseemed tobeparticularlycritical

when members

of a partnership included potentialcompetitors.

Closely related tothe notion of sharedgoalswasthatofincentivesystems within the

organization. In general the executivesarguedthat the existenceofan appropriateincentive systemthai

served toreinforcethegoal structureofthepartnership,wasasignificantindicatorofcommitment. For

example,one executivedescribed at lengtha partnership thatrequired a focusonquality rather than

volumeasa measureofeffectivenessofthe distributionsystem.

A

majorgoalofthis partnershipwas

thatallmaterialswould bedelivered undamaged.

The

producing organizationhad to restructure the

underlyingincentiveand compensation systemin eachstageofitsdistributionsystem toensure that

qualitywould be rewardedand recognized throughout theorganization. In essence,theexecutives

arguedthat the existenceofan appropriately designedandvisible incentivesystem aligned with the goal

structureof the partnership reflected adepth of

commitment

totheworkingrelationship itself,and

hence, increased thebeliefthat the partnershipwouldbesustained.

Finally, theexecutives said that contracts playedanimportantrole ina partnership. However,

theyadded that thecontract provided onlya generalsenseof theresponsibilities ofthe partnership.

Each executiveargued that,asanenforcementmechanism,contractswereoften ineffective. They

attributedthis to the fact thattheworkingrelationshipwas complex and ambiguous andcould not be

defined in terms ofexplicitconditions. However,theydid notethatthe existence ofthe contractin

itselfreflected a willingnessof the

members

tocommittothe workingrelationship. Several ofthe

executivespointed out thatwhile thecontract became increasinglyless specificovertime,it provided an important symboliccommitment.

3.2.3

PARTNERSHIP

IN

CONTEXT:

PREDISPOSITION

The third majordeterminant ofPICispredisposition: anexistingpredileaionin favor ofthe

partnership.

Two

conditions thai intervieweesdescribed as indicating predispositionwere trustand

existingattitudes/assumptions.

Every executive emphasized that hisor her belief intheabilityto sustain thepartnership

ultimately translated into asense oftrust

among members

ofthe partnership.

When

askedtoexpand

upon theirconcept oftrust, the two

common

enablers were 1) theexistenceofan explicittrack record

among members

ofthe partnership, and 2) personalrelationships. They feltanexistingtrack record

indicated the extenttowhich

members

ofthepartnership have

made

commitments anddelivered on

them.

The

executives alsofelt thatbuildingtrust required

members

of the partnerships tosurface their

failures, aswell as to highlight thosecommitmentsachieved. Inthis sense,theexecutives stated that a

trust relationshipwasbuilt bycreating anopen communication between

members

ofthe partnership.

Similarly, personal relationshipswerealsoa majorelement oftrust. Each executive emphasized

theneed todevelop personal contact at alllevelsofthe organization.

As

oneexecutive said,

1'ou musthave theabilitytobypass the organizationandgodirectly tosomeonethat

you

know

will listenand act'

A

second condition indicating predispositioncentered onthe existing attitudesandassumptions of

members

ofthe partnership.

Many

of theexecutives said that the attitudesof

management

towards

cooperative relationships playedamajorpartin theirabilitytosustainpartnerships overtime. Several

stated that these attitudes could be traced to underlyingassumptions about the nature of competition in

their industry. That is,as executivesbegan to believe that strategicpartnerships weregoingto bea

major element of competitivestrategy, theirattitudestowards the benefits of cooperativerelationships

improved.

3.3

PARTNERSHIP

IN

ACTION

The

second majordimension discussed in the interviewsfocusedonthe determinantsofthe

effectiveexecution ofapartnership, i.e.,PartnershipInAction (PLA). Inthe nextsection

we

will

discuss the threedeterminants of

PLA

3.3.1

PARTNERSHIP

IN

ACTION:

SHARED

KNOWLEDGE

One

major determinant of

PIA

was the extentof shared knowledge

among members

ofthe

partnership. For example, oneexecutive described a partnershiprelationship'with aJapanese

organization.

The

Japanese

management

team developed jobdescriptions for keyroles in 15 minute

segments for24 hoursa day,seven days aweek. Theyarguedthat an in-depth understanding of key

roleswas vital tothe effective workingrelationshipof the partnership.

A

second example,also involving a partnership negotiation withaJapaneseorganization, hadAmerican managers sending

workers toJapan for 4to6weeks inorder to helpthem betterunderstand the culture of Japanese

organizations. This typeofexample was used by each executive to illustratethecrilicalityof shared

knowledgeoftheenvironment,culture,and work processes, as a basicfoundation for effectively

operating ina partnership relationship. As one executive stated,

"Ifwedon'tunderstand

how

theywork,

we

cannoteffectivelyinfluencethem inareas thatarecritical."

3.3.2

PARTNERSHIP

IN

ACTION:

MUTUAL

DEPENDENCY

ON

DISTINCTIVE

COMPETENCIES

AND

RESOURCES

It is notsurprising that resource dependencywashighlightedby every executive thatdiscussed Partnership InAction.

Many

oftheexecutives

commented

that thedifficulty in establishingpartnership relationshipswas comingtogrips with managingan environmentin which resourcedependencies in

criticalparts ofthe businessexisted.

One

managerargued,

"Just-in-time inventory

management

isabsolutelycriticaltoour manufacturingstrategy.

And

yet,we depend on ourrelationshipwithourcarrier to

make

ourjust-in-time

inventory system work. Theyhave thetrucks, thedistribution systemand increasingly, thelogistics

management

skills. Ittookour

company

a long timetobecome

comfortable with an environmentinwhich therewassuch acriticaldependency."

Itwas interesting tonote that the executives includedmarketknowledge,

management

skills, and

experience along with productattributes askey types ofresources.

This low substituiabilityofthe assetsownedby

members

of the partnershipwas highlightedby

many

examples.

A

typical onewas described as,

'Although Icould replace the revenue stream provided by

my

customer (I.e.replace the

monetaryasset), Icould never replacetheirknowledgeof

how

touse

my

productin theirorganization. They have customizedtheirusage systemin theirorganization in

suchawaythat

my

marginsare higher withthatcustomerthan ina^yotherpart of

my

business. IfIlosethatbusiness partnerIcould replace the revenuestreambut I

couldnever replace the margins.'

Of

course, the notion ofasset specificitywould arguethatcustomizingausage systemwouldcreate a

customer lock-in structure,therebyshifting powerto the supplier. In thiscase,however, the executive

arguedthatcustomizing ofthe usage systemtranslated directly intoreducedcost to thesupplier and

thus generateda mutualdependencyratherthan an asymmetric dependency. Ifthepartnership failed,

each

member

ofthe partnership lost. Asa result,each member'sinfluenceover keypolicies and

decisions increased.

3.3.3

PARTNERSHIP

IN

ACTION:

ORGANIZATIONAL LINKAGE

A

final determinant highlightedbyexecutives refleaed aneedfororganizational process linkage.

Threetypes of linkagewereidentified: physical process integration,information integration,and social

networks.

Process integration reflected the designof business processes inamanner that intertwinedthe

actions and acti\iiies oforganizations. Thus,executives describedthe use offacilitiesoftheir partner lo

store inventoriesoruse oftheirpanner's

human

resources to establishandmanagequalityin a business

process that crossed organizationalboundaries. Joint planning processeswere often used toillustrate a

successful partnership.

A

secondform ofintegrationemphasized informationintegration.

Many

exampleswere

highlightedin which theexchange of information enabled the organizations tobetter plan orexecute

their

own

internal businessprocesses.

Of

course

EDI

exampleswere most prevalent. However,the

needtoexchange monitoring informationwasalso highlighted.

One

executive stated,

"You

know

they'reseriousabout partnership

when

they're willing tosharereal costs."

Thus,

we

see an exiended notion ofelectronic integration. Thatis, informationexchange goes beyond

transaction automation intoprocesses integration throughbetterand moreeffective informationsharing.

Finally, a major mechanismforcreatingorganizationallinkagesagainemphasized personal

relationships. Eachofthe executiveshighlighted thecriticalityofestablishingpersonal relationships at

all levelsofthe organizationin order to

make

partnershipseffective. Itwasnot sufficienttohave a personalrelationship

among

senior managers. Rather,middlemanagers must establish relationships,and

relationships must be reflected in the actualbusinessprocesses thatwerecritical tothe partnership. As

oneexecutivesaid,

'Itisoftenthe personal relationships thatarebuiltbetween organizationsthatenable

you to

manage

acrossthe roughspots.'

4.0

IMPLICATIONS

As

discussed in Section3,

we

conducted interviewswithboth generalline executives and with

executives focussingon the internal line-I/S partnership. Inthis seaion

we

willdescribe

how

the

dimensions ofthe partnershipmodelapply tothe line-I/S relationship.

4.1

LINE

AND

I/S

PARTNERSHIP

IN

CONTEXT

4.1.1

LINE

AND

I/S

PARTNERSHIP

IN

CONTEXT:

MUTUAL

BENEFITS

Executives thatfocusedoninternal line-I/S partnershipraised theconcept ofbenefitsbut

appeared to havedifficultyinarticulating a notion ofmutualbenefit.

To

many

the internalpartnership

was viewedashavinga single typeofbenefit: achieving the goalsor objeaives of thefirm. The I/S

organizationwasviewed strictlyas a service organizationprovidingsupport andresources toline

management in theirpursuitoftheir businessobjectives. However,as the executives discussed this

concept in thecontext ofeffectiveworking relationships,the concept ofamutualbenefit between I/S

andlinesemerged. The interviewssurfacedwhatappeared tobethreemajorcategories of shared

benefits from an internal perspective: financial contribution,operations efficiency,andqualityofwork

life.

The

ability toexplicitlyarticulate the financial contribution

made

by the 1/Sfunction to the

achievement of businessobjectiveswasconsistently raised asan important requirement to sustain

effective I/S-line partnerships. Executivesstated that themeasures,aswith

many

approaches to defining

proportional contributions,weredifficult tonegotiate but

when

establishedhelped tocreatean

environmentwhere I/Scould be viewed asan equalpartner.

A

second element emphasizedoperations efficiency forboththe lineand theI/S organization. In thisview, effective partnerships enabled the redesignofworkprocessesthat relate to the

development, implementation,and maintenanceof awiderange ofI/S productsandservices.

The

emphasis wasonopportunities toreduce headcount, toimprovequalityand timelinessofsystem

development projects,andto reduceredundancyin variousworkspecialties.

Finally,a thirdcomponent related to qualityofwork life. Corporateexecutives arguedthat an

improved workingrelationship asmeasured byindicatorssuchasjobsatisfaction,wasan important

complement tothe financial perspective. Forexample, each oftheexecutives identified the abilityto

manage

conflict as amajorbenefitstemming froma partnershiprelationship.

One

stated that "conflictsoftenstemmed from differentknowledge bases/experiencesand working

relationships found across functions ofthe business ratherthan afundamentalconnict ingoals between the I/Sorganization andtheline.'

The

abilityto build apartnership inwhich goalconflia couldbeeffectivelyand openlymanaged

provided amajor benefit to theorganization in terms of bothefficiencyandthe opportunityto

challengeeachother's assumptions.

4.1.2

LINE

AND

I/S

PARTNERSHIP

IN

CONTEXT:

COMMITMENT

The

concept ofcommitment as amajorelement of

PIC

surfacedhere as well. However, the

executives believedthatgaining thecommitment from peoplein differentfunctionalor businessdivisions

wasa significant challenge.

The

samethreemajor indicatorsofcommitment weredescribed: shared

goals,incentive systems, andcontracts.

Shared goals provided a means lo establish anexplicitcommitment

among members

in a

partnershiprelationship. Although theI/Sfunction has incentive systems, executivespointed out that

they differed fromthose in the lineorganization.

The

traditional incentive for the I/Sfunction reflected

efficientoperations ofthetechnology ratherthan efficient execution of a businessprocess. Inaddition,

ineffective pricingschemesfor I/Sservicescould lead to high

demand

forservices from line

organizationswhich might not be the high payoffareas for the company. I/Sresources, therefore,

may

not beeffectively channeledto lineorganizations.

In thearea ofcontracts,several executives pointedto their useof formal service-levelcontracts

between I/Sand lineorganizations. In quiteasimilarfashion totheexternally-oriented interviews, they

described

how

the nature ofa partnershipcould notbespecified in terms ofexplicitcontingencies. As

such, the

commitment

reflected byservice-levelcontractswasoften symbolic ofadeeperworking

relationship.

One

executiveexpanded onthis point byillustrating

how

easyitwastocreate a service-levelcontract thatwas"safe".

He

argued,

"the real importanceofsuch contractsistoensure everyoneiscommittedtoanefTective

working relationship."

4.1.3

LINE

AND

I/S

PARTNERSHIP

IN

CONTEXT:

PREDISPOSITION

Issuesoftrust and existingattitudessurfaced asmajor

elemenu

in sustaininganeffective

partnership. Several of the executives explicitly attributedthelackoftrust betweenI/Sand line

managersto the inability to developaworkable partnership.

One

executive described their strategyof

selecting managersfor both the lineand VSorganizations:

'we choose people

who

haveanexisting positivepersonalrelationship.'

Thisstrateg\ was taken intentionally totry tohave an impactonthelack oftrtist between I/Sand line

organizations.

The issueofexistingassumptionswashighlightedspecificallywith regard to "attitudes towards

technologv'."

The

executives argued thatpositive attitudes towards technology, beliefein the strategic role

of technolog>, and assumptions aboutthe useoftechnologyandtechnologytrends in theirindusir)-,

were importantindicators ofa positive predispositiontowards buildingapartnership relationship

betweenI/S andthe line.

4.2

LINE

AND

I/S

PARTNERSHIP

IN

ACTION

4.2.1

LINE

AND

I/S

PARTNERSHIP

IN

ACTION:

SHARED

KNOWLEDGE

As

in external partnerships, the requirementfor shared knowledgewasconsistently highlighted

as akey to effectiveworkingrelationshipsbetween lineandI/S organizations. Eachofthe executives

underlined the needfor effectiveeducationand work experiencefrom both a technologyand abusiness

perspective.

One

executive said,

"AVhat

we

must haveismutual understanding of both technologyandbusiness practices ifwe're goingtobe able tojointly

make

keydecisions."

Thatis, thisexecutiverejected thenotionthatan effectivepartnership couldbeachievedvia translation.

Itwas notsufficient to translate thelanguage of technologyintobusinessterms (or visa versa). Rather, each partner had todevelop an appreciationanddeep understanding ofthe other's task environment.

4.2.2

LINE

AND

I/S

PARTNERSHIPS

IN

ACTION:

MUTUAL

DEPENDENCY

ON

DISTINCTIVE

COMPETENCIES

AND

RESOURCES

Many

examplesweresupplied bythe executives to reflect assetdef)endencies: skilled resources, available headcount, andcontrolover physical assetssuchasequipment. However,perhaps ofmost

interestwere discussions that focusedontheneedfor theI/S-linepartnershipto negotiateownershipof

assets.

The

prime exampleofthis centered aroundtheeffective

management

of data inorganizations.

In several instances,executives arguedthat datacould not bemanaged ifitwasviewedasbeing owned

exclusivelyby either I/Sor line. Rather, theyfelt thatbothlineorganizationsand I/Sorganizations

brought tobear criticalskills,experience,andphysical assets thatwere necessaryto managedata across

thecorporation. Ownership ofdata standardsandaccountability for integrityof dataatthesource of

generationwereoften used toillustratethe needforownership ofthedata froma line perspective.

Yet, theabilityto manage large databases in a high performance environment required skillsand

specialized assets that oftenwerebest managed bythe I/Sorganization.

As

one executive stated,

"We've trieditcentralized,we'vetrieditdecentralized. I believetheonlysolutionisto recognize thatboth lineandI/S have unique skillsto

manage

data.'

The keyissue, heasserted,was the need tonegotiateandclearly establish rolesandresponsibilities.

4.2.3

LINE

AND

I/S

PARTNERSHIP

IN

ACTION:

ORGANIZATIONAL LINKAGE

Tlie requirementsto intertwine organizationalprocesses, toexchange information, and tobuild

personalrelationshipswerealsohighlighted in the discussionsofinternal processes.

One

I/Sexecutive stated that,

'My

measureof partnershipisdenned aswhetherornot,

when

a key decisionis made,

oneof

my

peopleis intheroom."

In thatsense, hewasarguingthat forkey managementprocesses, i.e.,planningandcontrol,the I/S

organization must be included as a

member

ofthe decision-makingprocess.

Of

course, this process of

organizational linkage needsto bebi-directional. Lineexecutives pointed out thedesire to have more

involvement in decisions

made

by I/Sconcerning technology standardsandtechnologydirection. Similar

emphasiswas placed on the roleofinformation exchange, i.e.,providing accurateprice/cost information

ofITSservicesand theneed forgoodpersonalworkingrelationships.

4.3

ACTIONS

TO

BUILD

AND

SUSTAIN

PARTNERSHIPS

As

part ofthe interview process,each executivewasasked toillustratespecificactions taken to

build orsustain the partnership.

Aaions

werealsogeneratedas partof the general discussion

surrounding questions 1 and2.

To

be defined asanaction, theexecutive had to describea specificset

ofactivitiestaken with theexpress purpose of building orsustaining a partnership. Table 2 providesa

summary

ofthe action itemsgenerated duringtheinterviewprocess.

4.3.1

EDUCATION

Specific action taken to provide educationfor

members

of the partnershipwasidentified by

every interviewee.

As

illustrated inTable 2,educationreflected three basic concepts. First, therewasa

focuson skills transferortraining. Thatis, each ofthe interviewees identified theneed formembersof

the partnershiptobe trained in thosetask-relatedactivities inwhich high interdependencyexisted. The

developmentofjoint trainingprogramsofleiftaughtjointlyby

members

ofthe partnershipwas a

common

action.

Thesecond majoreducational concept wastheneedforgeneral education thatspanned the

partnership. Tliatis, the interviewees believedthat itwas necessaryfor individuals tohave an understanding ofthekey conceptsandskills held by other

members

of thepartnership.

One

example

oftenmentioned was the need for theinformation systems expert tobe given general business education.

And

yet, inevery instancethose interviewed fromboth the I/Sand lineorganizationsarguedthat it was

also necessaryfor linemanagers to be educated in the essentialconceptsandcritical issuesrelating to

the technology.

Finally, a thirdelement of education related to social orcultural education.

One

interviewee discussed indetail their programforsending key workers toJapan in orderforthem to better

understand theJapanese culture. Theyargued,

"We

musthave anunderstanding ofwhat it

means

toworkforJapaneseorganizationsif

we

aretobeable to effectively participate inthe partnership.'

In

many

instances, cross trainingorshon-termassignmentswere used asameans todevelop cultural

appreciation ofthe partner'swork environment.

One

executivesaid

'I

make

sure

my

peoplehavea personalworkexperience asa

means

tounderstandourkeypartners.'

As suggestedabove, theexecutives believed thatsharedknowledge wasacritical element inthe

abilityto effectively participate inandinfluence policiesanddecisions that affect the partnership. In

everyinstance,the executives could point to specifictraining/educationalprograms and budgetary

commitment asanindication that this aaion wasbeingcarried out. In

many

cases the executivesfelt

thata secondary impact of educationwaspredisposition. However, theyquicklyconcededthatsuch

educationprograms were long-termstrategies for affecting existing attitudes.

4.3.2

JOINT

PLANNING

The

second major activity setemphasizedby the executivesinvolvedjoint planning. Byjoint

planning,theexecutives described farmore than exchange of planning-related information,i.e.,a

manufacturer providingadistributorwith a production schedule. Rather, theydiscussed an ongoing,

iterative planning processthat reflected bothstrategicthinking bythe partnershipas well as the

translation ofthat strategy'intoaction plans.

The

executives identifiedat least threemajor impacts ofthe planningprocess. First,planning

wasaprimarymechanism tonegotiateandagreeupon areasofmutualbenefits for the partnership.

Secondly,planningwas a primarymechanismforcreating a

common

goal set

among members

ofthe

partnership. Finally,

many

ofthe executives viewed the process of planning(e.g., including assumption

surfacing andtesting) as a formof education.

As

such it had amajorimpact on the abilityto create a shared knowledge base

among members

ofthe partnership. It is interesting tonote thattheexecutives

did not indicate that theplanning process alonewas aneffective means toinfluence the predisposition

ofthe

members

ofthe partnership. Thatis, theyfelt thatthe planning processin and ofitselfdid not

reallyaeate trust. Similarly,they did not believeplanningwas aneffeaivemeans toaddress issues of

attitude,e.g., attitudes towards technology.

The

mechanisms used to implementjoint planning processesvaried. In mostcases the planning

processes reflectedamultilevel commitment. Inaddition tothosepeople direaly involved with the

process, a task force groupor committeeofsenior-levelmanagers was formedto act assponsors ofthe

planning process and, ultimately, to

make

finaljudgmentsregarding appropriate goals and commitments

to benefits. This task force alsoprovided the mechanismtoensure top

management

commitment.

Another mechanisminvolved the participation ofkey

members

in the organization. Inalmost

every case the executivesemphasized adecrease in relianceonprofessionalplannersorstafffor creating

and implementingplans. Rather, theysawthe planning processasanactive,dynamicprocess, that

involved the keyindividuals

who

wouldbeworkingtogether. In

some

cases the executivesdescribed a

planning process that involved the exchange of personnel orco-locationof key

members

ofthe

organization.

Planningbecame an ongoingprocess inwhich the organizationsboth solvedproblemsof

immediateconcernand positioned themselves todealwith long-term organizational change. Inthis

sense,the joint planning processbecame oneof thekey organizational processesthat reflected

organizational linkage. That is,the planningand, as

we

will discuss in the next section, themonitoring processes ofthe partnership became intertwined.

4.3.3

MEASUREMENT

AND

CONTROL

A

third major actiontaken by the organizations centeredonaaivities to identifyandcreate appropriate measures used bythe organizationsto monitoractivitiesandtojudge p)erformance. Ineach

case the abilityofthe partnership todesignandimplementthemeasurement and controlsystemswas

viewedasa key action necessaryto buildand susuinthepartnerships. Thisactivityhadwide impacton

thepartnership setting.

From

aPartnership InAction perspective,thisaaivityreflected a key

organizational linkage.

The

organizations,throughthe designof ajointcontrol system, provided a

mechanismfor information integration.

The

actions taken todevelopamonitoring process seem toemphasizethreekeyconcepts. First,

theexecutivesfocused onthe notion of designing compatibleincentivesystemsthat reflected joint

commitment.

An

I/S-linepartnershipexamplesimilar totheearlierdiscussion onqualityinvolved the

use ofperformance measuresthat reflected qualityoftaskcompleted rather than transactionvolume.

A

second majoraction wasto focusontheneed for effectivebenchmarkingat theinitial stages of partnershipdevelopment. Inseveral cases,bothin external relationshipsand I/S-linepartnerships,

thecriticality ofbenchmarking asanactivity required to build effectivepartnershipswasdiscussed.

One

executive said.

"We

allagreedon bencHts, but aswesat inthe room, weeach hadverydifferent concepts of current performance.

Had

wenotbenchmarkedthekey businessprocesses,

we

could have implemented oursolutionsand,inthemindsorsome, the benentswould

nothave appeared.*

This focuson benchmarkingis akey element in

many

strategies forimplementing qualitycontroland

continuousimprovement processes. It is, ineffect, anattemptto level theplayingfield

among members

ofthe partnershipand togroundthemeasures used by the partnershipintheaaual experiences ofthe

organization.

Finally, therewasamajor emphasis on the actual designand implementation ofthe information

systems necessary toprovide operationsand performancedata. In

many

cases, the design ofthese

systems requiredsubstantial investment bythe partnership.

And

yet theexecutivesargued thatthese

information systemswere critical tobuildingandsustainingthepartnership. Forexample,

many

executivesnoted that thetnist relationshipwasdirectlyrelated to track record:

"irtheorganization does not haveanacceptableinformationsystemthatmonitors

performance andprovides track recordson commitment andactivitiesof the

partnership, thetrustrelationshipwill always beinquestion.'

The

cost of informationis amajor element of anyorganization'scontrolstrategy.

As

such, investment

in I/renabled innovation in controlprocesses aswell as businessprocesses.

The

abilitytodeflneand implementan acceptable measurement andcontrol systemwasa major

strategyused by the organization to affect predisposition,mutualbenefits,and commitment.

The

executivesargued that theabilityto share dataconcerningcriticalprocessesaffecting thepartnership,

establishedthefoundation forbelieving that thepartnershipwouldsustain. Further, themeasurement

systems servedaskey linkagemechanisms, in thatan

EDI

linkagealsoenabled thebasic information

flowfor developing ajointmeasurement and controlsystem.

4.3.4

EFFECTIVE

USE

OF

TEAMS

The

fourthmajorarea discussedby theexecutiveswas the effectiveuse of aoss-functional

teams.

The

use ofcross-functional teamswasjustifiedonthree bases. First,executivesarguedthat the

ability to effectivelyintertwineandcreate linkages betweenthe organizationsrequired multiple

disciplinesandextensiveknowledge ofthe organizationalprocesses.

As

such,the partnership hadto

haveaccess toindividualswithvaried knowledge such asmanufacturing,distribution, engineering, or

sales in order to dealwith problems, lo effectivelyplan and to

make

day-to-daydecisions relating to the

performance ofthe partnership. Cross-functional teams providea means tocoordinatethisdiverse

knowledge.

The

secondmajor justification for theuseofcross-functional teamsrelated to social networks.

From

thisperspective,everyexecutive discussed thecriticalityofpersonal relationships in the effective

operations ofa partnership. Thesesocial networks not onlyhadtospanacross functional areas, but

they had toalso spanhierarchically in the firm. Theyprovided theability toquicklynetwork tothose

members

ofthe organization

who

had to participateinorsupport theactions taken by the partnership.

Forexample,one manager describedamajor crisis thatinvolvedan unexpeaedprice increasewhich had

a fundamental impacton the benefit flow forthe pannership:

'If

we

did not have a team thatcould effectivelynetworkacrossboth organizationsto quicklyinvolvekeydecision makers inadjusting the price strategy,thepartnership

would likelyhavefailed. Itwasnotanissue of knowledge,but theabilityof the cross-functionalteam togetpersonal accesstopeople

who

hadthe powertoinfluence the pricing decision."

Finally,the third major justificationoftheuse ofcross-functional teamsrelated tostability.

Many

of theexecutivespointed outthat theirorganizationalstruauresand workassignments of key

members

ofthe organizationwere quitedynamic. Theyarguedthat theuse ofcross-functional teams

wasa mechanism tocreatea stableorganizationalform. Thatis,while individualsmightshift their

organizational assignment andeven theirworkassignment, their participationin a cross-functionalteam

related tothe strategic partnershipcould remainconstant.

One

organization even describedaconcept

ofsustainingahalf-lifeofacross-functional team forstrategic partnerships: theywould notremove

members

from the teamifbydoing so itreduced the average levelof tenurefor theteam belowa critical point.

The

need forstability,theyargued,wasmultifold.

The

team not onlyhad tobe able to

build and sustain personalworking relationships,necessary foreffeaiveaction,but theyalso had to

develop an organizational memory.

Many

of theexecutives pointedoutthatifthe relationshipand

indi\iduals involved in managinga partnershipchanged constantly, theabilityto bringtobear past

discussions and commitmentsto understandthe impact ofacurrentdecisionwasat risk.

4.3.5

MULTILEVEL

HUMAN

RESOURCE

STRATEGY

A

keyissue identified bymost ofthe executivesin the interviews related to the needto establish partnershipsatmultiplelevelsofthe firm. Actions tobuildpartnership (education,joint

planning, measurement andcontrol,and teams) should addressall levelsof the firm. Itwas interesting

tonote that mostexecutives said strategicpartnershipswerefairlyeasytoformandsustainat the senior

levels of thefirm andat the op>erational levelof thefirm. However, theabilityto effectively establish a

partnershiprelationship

among

middlemanagers acrossorganizations oracross functions provideda

more

difficultchallenge. They arguedthat a multilevel

human

resourcestrategywasrequired. This

strategywoulddirectpartnership-buildingactionsacrosslevelsofthe firm, as well as theselectionand

assipmentof key p)ersonnel. Forexample,asdescribed inSection3,onefirmdirectlyaddressed the

issueof predispositionfor a strategicpartnership byestablishingan executive teamthathad anexisting

trustrelationship.

Many

of the executives,discussing issues relating to I/S-linepartnerships indicated

that their

human

resourcestrategywasakey element inestablishingsharedknowledge, organizational

linkage and improvedpredispositionatalllevels ofthe firm.

4.3.6

TECHNOLOGY

Finally,a key action found throughout theinterviews wastheuse of technology necessary to

buildandsustain partnershiprelationships. Each of theexecutives talkedabout thecostof coordination

necessary to

make

aneffective partnership work.

The

information technology necessaryto effectively

execute a partnership wasviewed ascritical. Technologycan affeaallasp)ects of apartnership. In

some

cases, theexistenceof the information systemwasviewedasthe primaryassetwhich the

partnership

member

wasbringing totheorganization. It provided themechanismbywhich

interorganizationalprocesses werecreated,e.g.,EDI. Itwasalsoviewed as akey element supporting

joint planning processes. Forexample,

many

of theexecutivesulkedabout theneed tohave theability

tocreateandcirculate position statementsquickly

among members

of thepartnership.

One

executive

suggested,

"We

must change

how

longit takesustothinkstrategically. Inordertodothat,

we

havetohave the technologythatenablesustoexaminethecompetitive environment, think aboutiteffectively,andcometosomedecisions.

The

onlywayIcan see that

workinginthe partnershiprelationshipisif it'sgot significant information technology support."

5.

CONCLUSION

This research has provided a descriptivemodelofthe concept ofpartnership.

The

modelwas

developed from both anexternal partnership perspective andthe perspeaive ofaninternal relationship

between the ITSand the lineorganizations.

The

work suggests thatthegeneralmodel of partnership

described here can be aneffective meanstodescribeandexplore theI/S-linepartnership.

The

sixdeterminants of partnership can be tised toexaminethe elements required todefinea

managementstrategy for the creation ofa partnership. In addition,thesixcategories ofactions taken

byfirms to build andsustain partnerships canbe operationalized aspartof the

management

strategy.

Future research should focusondefiningadequatemeasuresforeach determinant of

partnership.

A

measurement model canestablishthose indicators thatwouldreliablyreflect the status ofapartnership. Ultimately, the measures of partnershipmustberelated to performanceofthe firm,

through understanding the benefitstream resultingfromthepartnership andways tovalue those

benefits.

The

beneGts achieved through partnerships

may

beunanticipated. Therefore longitudinal studies

of partnershipshouldbe conducted to assess the impacts of theserelationshipsonthe participating

organizations.

Acknowledgements

The

authorwould like toacknowledge thecontributions

made

tothis researchby Jay Cooprider,

Christine Bullen and the individuals

who

served on the industry,and academicadvisorypanels.

This research wasfunded byagrant fromthe

IBM

Corporation.

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