PHD/ MBA Assignment solutions on Identification of Design and Implementation of Domino's Pizzas strategy, Competitive advantage in Marketing strategy of DOMINOS

 Assignment task

Identify a strategy of a business unit (Domino's), identify the critical activities required to implement it and critically analyze to what extent are the culture, structure, routines, resources and capabilities aligned with the strategy.

The objective of the assignments is to critically identify the design and implementation of strategy. It should identify the successful application as well as the shortcomings.

Strategies and the meaning of success

Business strategies succeed when they lead to business growth, strong competitive position, and strong financial performance. Many different strategies are possible, but all are meant to bring improvements in these areas. In highly competitive industries, the firm's officers and other senior managers take a keen interest in knowing precisely how well their strategies succeed in serving this purpose. This is especially true just after the firm changes, or adjusts strategies.

Domino’s Pizzas changes strategies

In 2009, for instance, managers and owners of Domino's Pizza, Inc. were seriously concerned because the firm had just had 3 years of negative sales growth and shrinking market share. The firm was, in particular, losing market share to two major competitors, Papa John's and Pizza Hut.

Domino's operates in the "Quick Service Restaurant" (QSR) industry. Many people call this industry, unkindly, the "Fast Food" business. The firm competes not only with other Pizza restaurants, but also with restaurants with different menus such as Subway, McDonalds. This segment of the Restaurant industry defines itself not by menus, but instead by the words "Fast" and "Quick." Understandably, therefore, Domino's started with a strategy based on "Quick Service Delivery." The firm excels in fast delivery, a point that separates Domino's from its competitors. Nevertheless, in 2009, the strategy was clearly failing.

In late 2009, therefore, the firm's new CEO chose to "re-center" strategy on pizza quality. Market research showed that customers rated Domino's pizza taste as very poor ("like cardboard"). As a result, by the end of 2009, the firm had substantially improved the pizza recipe and launched a marketing program to bring this news to the market.

The firm began in 2009 detailed tracking of growth, competitive, and financial metrics appearing in the next section. By the end of 2010 the first results were impressive. Metrics in all three categories showed remarkable improvement. Domino's took this as confirmation that the new strategy was succeeding.

Now in 2017, the firm continues to research and improve the pizza recipe, while adjusting its marketing strategy at the same time. The firm is guided by a 7 year tracking history with these metrics.

Analysts measure impact on financial performance with metrics that focus on the firm's core line of business. Domino's prefers to measure strategic impact with EBITDA—Earnings before interest, taxes, depreciation, and amortization. This is because EBITDA and other selective income metrics measure strategic impact more precisely than overall Net income after taxes.

Strategy Implementation

Just being able to conceits bold new strategies is not enough. The general manager must also be able to translate his or her strategic vision into concrete steps that "get things done”

Strategy formulation entails heavy doses of vision, analysis, and entrepreneurial judgment, successful strategy implementa­tion depends on the skills of working through others, organiz­ing, motivating, culture-building, and creating stronger fits be-teen strategy and how the organization operates Ingrained behavior does not change just because a new strategy has been announced. Practitioners emphatically state that it is a whole lot easier to develop a sound strategic plan than it is to make it happen. In case of Domino’s, hey failed in the first time in identifying the reasons for decline in sales and profit margin.

Constituents of Strategy implementation

What makes the job of the strategy manager so complicated when it comes to implementation is the number of tasks involved and the variety of ways to approach each task. Strategy implementation has to be tailored to the organization's overall condition and selling, to the nature of the strategy and the amount of strategic change involved and to the manager's own skills, style, and methods.

Four broad areas stand out:

1. Performing the recurring administrative tasks associated with strategy implemen­tation.

2. Creating "fits" between strategy and the various internal "ways of doing things" in order to align the whole organization behind strategy accomplishment.

3   Figuring out an agenda and a set of action priorities that matches up well with the organization's overall situation and the context of the- sluing in which imple­mentation must take place.

4.  What managerial approach and leadership style to adopt in inducing the needed organizational changes.

The strategy implementers’ challenge in performing these tasks is to bring the organization's conduct of internal operations into good alignment with strategy and to unite the total organization- behind strategy accomplishment. The implemented job is one of building such enthusiasm and commitment up and down the ranks that a virtual organization wide crusade emerges to carry out the chosen strategy.

Strategy-supportive matches are needed with organizational skills and capabilities, functional area activities, organization structure, reward systems, and incentives, policies and procedures, information systems and control mechanisms, budgets and programs, and shared values and cultural norms. Domino’s started focusing on improvement in quality of its products rather than delivery. It also focused on improving its incoming figure by continuously doing market research and surveys with regard to the public opinions about the industry it belongs to and the things they prefer.

Administrative Aspects of Strategy Implementation

The Manager's role in the implementation process is to lead and keynote the tone, pace, and style of strategy imple­mentation. There are many ways to proceed. A strategy implementer can opt for an active, visible role or a low-key, behind the scenes role. He or she can elect to make decisions authoritatively or on the basis of consensus, to delegate much or little, to be deeply involved in the details of implementation or to remain aloof from the day-to-day problems. It is up to the strategy implementer to decide whether to proceed swiftly (launching implementation initiatives on many fronts) or lo move deliberately, content with gradual progress over a long period.    

To some extent, therefore, each strategy implementation situation is unique enough or require the strategy manager to tailor his or her action agenda to fit the specific organizational environment at hand- This forces the manager to be conscious of all that strategy implementation involves and to diagnose carefully the action priorities and in what sequence things need to be done. The manager's role is thus all-important His or her agenda for action and conclusions about how hard and how fast to push for change are decisive in shaping the character of implementation and moving the process along.

Successful strategy execution depends greatly on good internal organization, resources, healthy work culture and com­petent personnel. Building a capable organization is thus always a top strategy imple­mentation priority. Some of the organizational issues that stand out as dominant:

·       Developing an internal organization structure that is responsive to the needs of the people of the organisation.

·       Keeping a tune with the culture of the organisation that is aligning strategy with corporate culture and competencies.

·       Developing the skills and distinctive competences in which the strategy grounded and seeing that the organization has the managerial talents, technical expertise, and competitive capabilities it needs.

·       Keeping a match among the resources and routine activities that can be easily incorporated with the strategy.

·       Selecting people for key positions.

Matching Organization Structure to Strategy

The following five-sequence procedure serves as a useful guide for fitting structure to strategy:

·       Pinpoint the key functions and tasks requisite for successful strategy execution

·       Reflect on how the strategy-critical functions and organizational units relate to those that are routine and to those that provide staff support-

·       Make strategy-critical business units and functions the main organizational build­ing blocks.

·       Determine the degrees of authority needed to manage each organizational unit, bearing in mind both the benefits and costs of decentralized decision making.

·       Provide for coordination among the various organizational units.

1. Pinpoint the key functions and tasks requisite for successful strategy execution

 In any organization, some activ­ities and skills are always more critical to strategic success than others are. The strategy-critical activities vary according to the particulars of a firm's strategy and competitive requirements. To help identify what an organization's strategy-critical activities are, two questions can usefully be posed:

"What functions have to be performed extra well and on time for the strategy to succeed? And

 "In what areas bad performance would seriously endanger strategic success?

In case of Domino’s it has become very important to understand and raise the reasons for decline in its sales volume. Contrary to the perception of the industry it belonged, to have fast delivery, the problem was of focus on quality.

2. Understanding the Relationships among Activities

Activities can be re­lated by the flow of material through the production process, the type of customer served, the distribution channels used, the technical skills and know-how needed to perform them, a strong need to centralized authority over them, the sequence in which tasks must be performed, and geographic location, to mention some of the most obvious ways.

3. Grouping Activities into Organization Units

If activities crucial to strategic success are to get the attention and visibility they merit, then they have to be a prominent part of the organizational scheme. Senior managers can seldom give a stronger signal as to what is strategically important than by making key function and critical skills the most prominent organizational building blocks and, further, assigning them a high position in the organizational pecking order.

4.Determining the Degree of Authority and independence to be given to Each Unit

Activities and organizational units with a key role in strategy execution should not made subordinate to routine and non-key activities. Revenue-producing and results-producing activities should not made subordinate to internal support or staff functions. The crucial administrative skill is selecting strong managers to head up each unit and delegating them enough authority to formulate and execute an appropriate strategy for their unit.

5. Providing for Coordination among the Units

Providing for coordination of the activities of organizational units is accomplished mainly through positioning them in the hierarchy of authority. Managers higher up in the pecking order generally have authority over more organizational units and thus the power to coordinate, inte­grate, and otherwise arrange for the cooperation of the units under their supervision. The chief executive officer, to chief operating officer, and business-level managers are_, of course central points of coordination because they have broad authority. Besides positioning organizational units along the vertical scale of managerial author­ity, coordination of strategic efforts can also achieved through informal meetings, project teams, special task forces, standing committees, formal strategy reviews, and annual strategic planning and budgeting cycles.

Structure Evolves as Strategy Evolves: The Stages Model

Four distinct stages of strategy-related organization structure have singled out:

Stage I  organizations, are small, single-business enterprises managed by one person. The owner-entrepreneur has close daily contact with employees and each phase of operations. Most employees report directly to the owner, who mates all the pertinent decisions regarding mission, objectives, strategy, and daily operations.

Stage II organizations differ from Stage I enterprises in one essential aspect: an increased scale and scope of operations force a transition from one-person management to group management.

Stage III consists of organization whose operations, though concen­trated in a single field or product line, are scattered over a wide geographical area and large enough to justify having geographically decentralized operating units. The key difference between Stage II and Stage III, however, is that while the functional units of a Stage II organization stand or fall together (in that they are built around one business and one end market), the geographic operating units of a Stage III firm can stand alone (or nearly so) in the sense that the operations in each geographic unit are not dependent on those in other areas. Typical firms in this category are breweries, cement companies, and steel mills having production capacity and sales organizations m several geographically separate market areas.

Stage IV includes large, diversified firms decentralized by line of business. Typically, each separate business unit is headed by a general manager who has profit-and-loss responsibility and whose authority extends across all of the unit's functional areas except, perhaps, accounting and capital investment (both of which are traditionally subject to corporate approval). Both business strategy decisions and operating decisions are concentrated at the line-of-business level rather than at the corporate level

Competitive advantage in Marketing strategy of DOMINOS

Supply chain – Vertical integration across the supply chain has helped the company in aligning its resources and controlling the cost structure so as to be competitive in the market & at the same time emerge as most preferred Pizza provider.

Fast Delivery – Whether you have the mouth-watering Pizza at their outlets or get it delivered at your place, one can always count on Dominos for its quick delivery services which have helped the company in improving its value delivery process. It even brought in packaging to prove that its pizza is delivered Hot.

Low-cost outlets – It is one of the major cost components making their business viable as compared to the rival Yum brand’s outlets. There is no outlet of Domino’s which is premium designed with plush interiors. Instead, the outlets promote faster consumption so that people can order, eat and move on. Pizza is promoted exactly for what it stands for – Fast food.

The Strategy-Related Pros and Cons of Alternative Organization Forms

There are essentially five strategy-related approaches to organization:

(1) Functional specialization,

 (2) Geographic organization,

(3) Decentralized business divisions,

(4) Strategic business units, and

For instance, Sales at Domino's have soared since the company came out with a new pizza recipe in 2009. Having a better core product was necessary for business to turn around. Domino's has also innovated its sandwiches, pastas, and side dishes. The "specialty chicken," strips topped with cheese and sauces increasingly ordered alongside pizzas, driving up the average ticket sale at Domino's,

Domino's has opened 1,800 new stores in 10 countries in the past four years, Doyle told investors. Domino's is thriving in emerging markets like Brazil and China because it is a relatively inexpensive luxury. 

Selecting People for Key Positions

Assembling a capable management team is an obvious part of the strategy implementa­tion task. The recurring administrative issues here center on what kind of core management team is needed to carry out the strategy and finding the people to fill each slot. Sometimes the existing management team is suitable and sometimes the core executive group needs to strengthened and/or expanded, either by promoting qualified people from within or by bringing in skilled managerial talent from the outside to help infuse fresh ideas and fresh approaches into the organization's manage­ment. In turnaround situations, in rapid-growth situations, and in those cases, where the right kinds of managerial experience and skills are not present in-house, recruiting outsiders to fill key management slots is a standard part of the organization-building process.

Aligning culture and strategy:  Impact of Organizational Culture on Strategy Implementation

Organizational culture includes the shared beliefs, norms and values within an organization. It sets the foundation for strategy. For a strategy within an organization to develop and be implemented successfully, it must fully align with the organizational culture. Thus, initiatives and goals must be established within an organization to support and establish an organizational culture that embraces the organization’s strategy over time.

Dominos have both Veg & Non-Veg Pizza in its menu with options of different toppings to choose from. Though they offer both Veg & Non-Veg Pizza, Dominos Veg menu is more popular and hence it is Star in BCG matrix. With Domino’s almost taking away the market share of Pizza’s from Pizza hut, Non veg pizzas are in fact a cash cow for Domino’s (at least in India) because veg pizza’s have a lot of local competition but there is very less competition for Non veg pizzas.

Flexibility and Adaptability

Organizations that remain flexible are more likely to embrace change and create an environment that remains open to production and communication. This provides a model that welcomes cultural diversity and helps clarify strategy implementation. Culture within an organization can serve many purposes, including unifying members within an organization and help create a set of common norms or rules within an organization that employees follow.

Characteristics of Stability

A stable culture, one that will systematically support strategy implementation, is one that fosters a culture of partnership, unity, teamwork and cooperation among employees. This type of corporate culture will enhance commitment among employees and focus on productivity within the organization rather than resistance to rules and regulations or external factors that prohibit success.

Goal Unification

Flexible, strong and unified cultures will approach strategy implementation and affect implementation in a positive manner by aligning goals. Goals can come into alignment when the organizational culture works to focus on productivity and getting the organization’s primary mission accomplished. This may include getting products delivered to customers on time, shipping out more products than the organization’s chief competitor or similar goals. This will create a domino effect in the organization that ensures that all work performed by each individual in the company and work group focuses on performance and on the strategic importance of the company. This allows culture to align with strategy implementation at the most basic level. For this level of unification to work, goal setting must align with and be supported by systems, policies, procedures and processes within the organization, thereby helping to achieve strategy implementation and continuing the cultural integrity of the organization.

In year 2009 it has released its video under “Oh yes we did” campaign claiming it as a turnaround strategy where different stakeholders explained how they handled the critics. Company also communicated through it the innovating strategies they are following to cater the customers changing needs.

“30 minutes guaranteed delivery or free” is all-time popular campaign that helped the company increase its awareness across the geographies & demographics. Currently, in 2016, the brands ranking is 301 in the global brand ranking of Forbes. Pizza hut is also close with a ranking of 355.

Process Implementation

Part of cultural alignment and strategy implementation involves process implementation. Processes include utilizing technology to facilitate goal attainment and the results a company is looking for when working with customers to meet their needs. While most of the time the hard problems and needs of an organization get met, the culture becomes neglected in the process. That is where processes come into place and strategy implementation gradually comes into existence to uphold and maintain organizational culture and strategies.

Cultural Alignment

When culture aligns with strategy implementation, an organization is able to more efficiently operate in the global marketplace. Culture allows organizational leaders to work both individually and as teams to develop strategic initiatives within the organization. These may include building new partnerships and re-establishing old ones to continue delivering the best possible products and services to a global market.

Customer of Dominos varies geographically across the world. In developed nations like US, UK etc. consumers are of all age groups whereas in developing nations like India majority of customers are younger generations in the age group of 20-40 years.

Furthermore, health consciousness is definitely affecting the consumer psyche as people are looking for healthier options such as Subway or others which are lesser in calories as compared to a complete pizza

Aligning resources and capabilities with strategy

In appraising resources and capabilities to guide strategy formulation there are four key steps. Firstly, the key resources and capabilities have to be identified. Next they have to be appraised both for their strategic importance, and then for their comparative strength in relation to competitors. Finally, strategic implications — how these capabilities can drive value — have to be developed.

1. Identifying Key Resources and Capabilities

The first step is to identify the firm’s key resources and capabilities, and this should be done both from the client end (what the clients need) and the firm’s supply end (what the firm offers). It helps to thoroughly identify, analyze and appraise key resources and capabilities. This work should include an overall look at the practice, some investigation of client needs, industry and sector analysis, financial analysis, market intelligence, partner interviews and practice-group discussions.

2.  Assessing the Strategic Importance of The Firm’s Resources and Capabilities

The principle here is to assess how vital (or unimportant) it is for the firm or a department to have certain capabilities in order to successfully pursue their strategic objectives. The true test of strategic importance is to assess the extent to which the resources and capabilities of the firm actually give the firm a sustainable competitive advantage against its rivals.

3.  Relative Strength

Resources and capabilities need to be assessed for relative strength compared with those firms identified as competitors. A thorough competitor analysis — considering the likely strategies of competitors, their overall objectives, their resources and capabilities, their positioning in their markets, their specialist strengths, the sorts of clients and sectors they serve, their pricing, service levels and profitability — all helps to establish ways in which the firm can successfully compete. In its review of comparative strength of resources and capabilities, the firm should also look out for stagnating capabilities and declining competitiveness. Where relevant, benchmarking and other analytical methods should be used to move from subjective to objective analysis.

4. Bringing It All Together

How does the firm exploit its key strengths more effectively and what should the firm do about its vulnerabilities either to correct them or reduce the firm’s exposure to them? The next step, therefore, is to develop some strategic implications so as to exploit strengths more effectively and so as to address weaknesses by correction development, outsourcing or acquisition of further resources.

 

HRIS Project Report on issues and challenges faced by stakeholders in Procurement and Implementation of IS (Information System) in the Organisation- Negative impact of IS Constraints on Stakeholders & List of Challenges in IS Procurement & Implementation

  

Abstract

Procurement and implementation of Information Systems is especially challenging due to the complexity of procuring unknown technology and the importance an information system has for different stakeholders in an organization. Procurement and implementation of information systems (IS) and services provides several challenges and problems to the stakeholders involved in the procurement and their implementation processes. However, these are not well established or understood, and there is a knowledge gap that needs to be covered. This paper presents results from a Delphi study, which involved 46 experienced IT managers, HRIS officers, and vendor representatives from various industries. The participants identified 98 challenges and problems related to IS procurement and implementation, and subsequently ranked the relative importance of the top critical issues. The study supports findings from previous research related to diverging stakeholder goals; challenges in balancing between objectives; in requirement specifications; and in too narrow cost focus. In addition to providing empirical confirmation of these previous propositions the study revealed new findings, such as benefits realization in IS procurement and implementation; critical  issues of technological integration, negative impacts of IS constraints on stakeholders and measures to be taken to resolve the negative impacts of IS procurement and implementation and losses occurred due to IS constraints. The results provide a rich overview of IS procurement and implementation challenges and its negative impact on stakeholders in corporate sectors.

 Introduction

Procurement and implementation of information systems (IS) and related services is challenging compared to acquisition of more standardized goods and services. Information systems often need to be customized to the needs of the industrial units (Keiichiro & Hajime, 2005). Procurement decisions are made early in the procurement process, when requirements are still uncertain (Saarinen & Vepsäläinen, 1994). The buyer may have to compare between competing, complex system options. Information systems can support this process (Davila et al., 2003), but research shows difficulties in implementing e-procurement. Furthermore e-procurement offers limited support in the process focusing mainly on the selection of vendors, but less on other parts of the process such as requirements specification, negotiations and contract monitoring.

This research focuses on information systems that are implemented for specific organizational purposes, such as enterprise resource planning systems and e-services tailored for the buyer’s needs and various negative impacts reflected due to IT constraints on stakeholders. We thus exclude acquisition of off-the-shelf software from this study. Outsourcing of IS development and implementation is a relevant critical issue in this research context, as complex systems often require customization and involve contracting with a vendor to tailor an existing information system or develop a new system altogether.

The IS procurement and implementation process is in itself challenging, as is the complexity of procuring new or unknown technology and then making every one familiar to work with the same IS. However, these challenges are not well researched and this project seeks to fill this gap.

The research question concerns the challenges and dilemmas that are typically faced in procurement and implementation of information systems and related services in the corporate sector and how it impacts stakeholders of the organisation.

Previous research

IS procurement and implementation of Information Systems has gained little attention from researchers, but some of the previous work on it in general carries relevance for this research question. This is introduced below. A summary of challenges and negative impacts specific to Information Systems constraints on stakeholders, and provide an overview of the previous literature in table 1.

IS procurement and Implementation constraints and its negative impacts

One of the previously identified challenges and negative impacts concerns the critical issue of various internal stakeholders with conflicting goals. Organizational buying involves multiple participants in a process (Wind & Thomas, 2001) where many purchasing decisions are influenced by various members of the buying center (Spekman & Stern, 1979). In addition, an organisation involves the complexity of satisfying needs of different stakeholders.

One line of previous work has focused on the negative impacts of conflicting goals in IS procurement and implementation constraints-

·        Balancing the dynamic tension between

a) Competing socioeconomic objectives and

b) National economic interests and global competition as required by regional and international trade agreements;

·        Satisfying the requirements of fairness, equity, and transparency; and

·        Maintaining an overarching focus on maximizing competition.

There is also the critical issue of information asymmetry when procuring and implementing services from IS consultants (Dawson et al., 2011). Agency theory suggests contracts and monitoring of the work to limit opportunism from a vendor, but this may not be sufficient to cope with the problem as consultants have more knowledge of the problem area than the organisation. The challenge of consultant opportunism comes in addition to the challenge of competing interests from internal stakeholders and may necessitate a complex set of strategies.

The contemporary literature on IS procurement and implementation challenges and public procurement remains largely without an established theoretical base and there is limited empirical data to validate the conceptual and normative recommendations. The literature identifies a number of potential negative impacts, but there is little systematic research on additional challenges faced by stakeholders in  IS procurement and implementation. A study of 4 ERP procurements in private sector shows the importance of adopting a stakeholder approach (Poon & Yu, 2010). The challenge of different stakeholders may be more important in the public sector than in private sector, but there is limited research on how it interplays with other challenges. The main findings from previous research on challenges related to procurement & Implementation of Information Systems and their negative impacts / challenges are summed up in Table 1. The table further shows the research approach and the analytical lens for these studies.

Table 1: Summary of findings from previous research on negative impacts of IS constraints on stakeholder

Challenge / Negative Impacts on Stakeholders	Proposition / critical incidents	Type of study	Theory
Various internal stakeholders An organisation faces a variety of stakeholders, placing demands and constraints on managers (Boyne 2002) Gaps between project goals and stakeholder goals, both internal and external (Pan 2005)	Demands and constraints from different stakeholders may be in conflict Underestimation of stake-holder groups may lead to problems in terms of resistance	Literature review Case study of development of information system (for e-procurement	Stakeholder theory
Governance of procurement and implementation processes over time (Poon & Yu, 2010)	Adopting a stakeholder approach and preparing evaluation criteria are critical success factors	Case study of 4 ERP procurements in private companies	Micro-politics
Information asymmetry (Dawson et al., 2011)	Consultants are difficult to control through contracts due to information asymmetry; there are more opportunities for opportunism	Interviews with 15 experienced IS consultants and procurers	Agency theory, principal-professional lens

 

Challenge / negative impacts	Proposition	Type of study	Theory
Limited interest from vendors, due to payment model and standard government contracts	Not enough competition, and the buyer may not be able to get optimal price or quality	Analysis of guidance and model contracts for UK government IT projects (Doshi, 2005) Case study of two public IS procurements (Moe et al., 2006)	No specific theory
IS procurement balances between socio-economic objectives organisations have more ambiguous goals Local vendors and vendors representing minorities may be favored	This may create dilemmas between conflicting goals	Subsequent research supports Thais (2001) claim. Boyne (2002) finds support for ambiguous goals in literature review Bartle and Korosec (2003) find that social preferences are used by American state governments	Conflicting goals; these conflicts can be between different stakeholders
Specifying requirements before announcing tender Information Systems may have ill-defined scope and unclear requirements	The requirement may ask for the wrong system	Case study of two public IS procurements (Moe et al., 2006) Findings from two cases indicate that partnership may be better suited to complex procurements (Lawther & Martin, 2005)	None
Focusing on lifecycle cost and not just initial procurement costs	If managers do not adopt a long-term perspective for valuation, they may end up with higher lifecycle costs	Survey from materials procurement in Norwegian Army (Tysseland, 2008)	Agency theory, information asymmetry, project uncertainty

We saw a need for research to identify and prioritize the challenges and negative impacts due to IS constraints and assess how they are related. Delphi method is used for this research, this can be used to develop an overview of what challenges and problems are most prominent in a field (Okoli & Pawlowski, 2004). In this context, the challenges represent factors that may have negative impact on stakeholders arising due to procurement and implementation process constraints in the resulting system.

Research method

I chose to follow the process steps recommended for ranking-type Delphi studies (Okoli & Pawlowski, 2004; Schmidt, 1997) in order to identify, select, and rank the observed problems and challenges.

The Delphi method is useful in complex, immature fields involving expert judgment (Gupta & Clarke, 1996; Rowe & Wright, 1999). It fits especially well in situations where the experts are geographically scattered. The method formalizes communications between researchers and experts in order to extract unbiased information based on the experts’ opinions. The key features that characterize the Delphi method are anonymity, multiple iterations, controlled feedback, and statistical aggregation of the group response (Rowe & Wright, 1999). Potential disadvantages include lengthy process, potential researcher influence on responses based on formulation of the questions, and difficulties due to the fact that the experts never meet in person (Murry & Hammons, 1995).

Composition of the expert panels

First, I selected the experts for the study. It was limited to inviting practitioners only, from different types of organizations of a reasonable size (hospitals, banks, PSUs). I also selected experts from vendors who provide Information systems and services and have a considerable portion of this market. This design involves three expert panels: IT managers, HRIS officers, and vendor representatives

I contacted the experts, whom I knew from previous projects or through professional networks by e-mail and phone, inviting them to participate and explaining the purpose and process of my research. I further asked them to nominate other experts who satisfied my selection criteria.

The IT manager panel included 18 participants, the HRIS officer panel 17 participants, and the vendor panel 11 participants.

Data collection and analysis

Data collection process is divided into three phases: -

brainstorming, narrowing-down, and ranking, as recommended by Schmidt (1997) and Okoli & Pawlowski (2004).

Brainstorming

In the first phase I brainstormed critical  issues related to the research question. A welcome letter was sent to the participants by e-mail. Each expert was asked to list at least six challenges for or dilemmas of IS procurement and implementation. I asked them to give each challenge a name, a definition, the causes for each challenge and the consequences that would occur if they were not managed. By answering this, the experts gave a structured explanation of each challenge. For example, one challenge is writing clear requirements specifications. One HRISO explained that this was due to the strict requirements for tender format and the low threshold for official complaints. This could lead to the vendors taking advantages of shortcomings in the specification, and to the procuring entity ending up with making the wrong choices. One of the procurement managers explained that the challenge was caused by a lack of holistic understanding of the business processes, and this could lead to a lot of change orders and to procurement of modules that are not implemented.

The experts e-mailed their lists to me and  After collecting the replies, I combined the critical  issues into a single list, removed exact duplicates, and unified terminology. I collated the responses independently, before comparing and consolidating the individually constructed lists. I sent my consolidated list of 96 challenges back to the experts to ensure I had not eliminated any challenges in this phase and that I had not misinterpreted any critical  issues. This step resulted in the addition of two more items. The entire consolidated list of 98 challenges and dilemmas from the brainstorming is presented in Appendix A.

Narrowing down the results

In the second phase I narrowed the list down to a manageable number of the most important critical  issues. In each panel, each expert defined around 20 critical  issues that they considered the most important. The presentation order of the full list of critical  issues was randomized to avoid bias in selection of the most important challenges, based on a factor’s sequence in the list.

This phase resulted in a list of 19 critical  issues, which were selected as follows. First, I selected a “top ten” list based on the votes in total across the three panels. This resulted in 13 challenges in total, as the challenges ranked from 10 to 13 got the same number of votes. Then I checked whether there were large differences between the panel selections. Kendall’s tau (a measure to study ranking correlations between different panels) values showed some correlations between the panels selections for the narrowed-down lists. However, all the correlations were less than 0.5 (Table 2), and values below this threshold is a sign of two rankings not being relatively similar. So I decided to include challenges chosen by more than 50% (Schmidt, 1997) of members in each particular panel. This step assured that each panel had its challenges represented in the narrowed-down list. It resulted in six additional challenges to be included for further analysis, giving a total of 19 in the list.

Ranking

In the third phase the relative importance of the top 19 critical issues were ranked. Since the Kendall’s tau values between all the pairs of the panels were below 0.5, we chose to do the ranking separately for all the three panels. By dividing the experts into three separate panels, I expected to reveal potential differences in challenges between these three stakeholder groups.

The third phase was carried out in two rounds. In Delphi studies, the number of ranking rounds should depend on whether each panel reaches either an acceptable level of consensus or a state where the level of consensus stagnates. Kendall’s coefficient of concordance (W) was used to measure the level of consensus within each of the panels.

The results from the first round of ranking were fed back to the panel members. They were asked to reflect on their ranking compared to the group’s average, and then re-rank the challenges. Kendall’s tau values on the first ranking round (Table 2) showed some interesting results. While the top critical  issues from the narrowing-down phase correlated between all panels to some extent, the dissents between the vendor panel and the two other panels increased after the ranking rounds. The vendors’ selection did not correlate significantly with the two other groups. The IT managers’ and HRISOs’ rankings continued to correlate, however some factors were very differently valued by the two panels. Hence, a panel-wise discussion and comparison of the ranking results is legitimate.

Schmidt (1997) recommends a concordance level of W = 0.7 to indicate a high level of agreement among the respondents in each panel. Ideally, the ranking rounds should continue either until that level is reached, till the concordance level does not increase further between two consecutive ranking rounds, or till one more round is no longer considered feasible (Schmidt, 1997). I decided to stop ranking after two rounds, due to several indications that the panel members were not willing to participate in more rounds. I had to send several reminders on the second round, and expected to lose more panel members if I continued one more round. One representative of the vendor group had dropped out of the study between the first two rounds, and more dropouts would have weakened the reliability of yet another ranking. I had gained a moderate consensus (W > 0.5) in two of the groups (IT managers and vendors), whereas the HRISO group consensus was low (W > 0.3) to moderate (Tables 3-5). The biggest relative changes within each panel were maximally two positions up or down, so we are confident our results correctly ranks the critical  issues most important to the panelists.

Table 2: Kendall’s tau values between the three panels

	IT managers *HRISOs	IT managers *Vendors	HRISOs*Vendors
Narrowing-down phase (all 98 items)	0.474 (sig. 0.000)	0.205 (sig. 0.006)	0.234 (sig. 0.004)
Ranking round 1 (top 19 items)	0.471 (sig. 0.002)	-0.106 (sig. 0.585)	-0.076 (sig. 0.710)
Ranking round 2 (top 19 items)	0.450 (sig. 0.008)	-0.112 (sig. 0.584)	-0.088 (sig. 0.681)

Results

The following tables present challenge rankings after the first and second round for each of the three panels. There were some minor changes in the ranking order between the first and second round, but overall the top-ranked challenges had a higher score (closer to 1), and the lower-ranked challenges had a lower score (closer to 19) in the second round.

As the results in tables 3-5 below show, the three groups ranked challenges somewhat differently. “Change of work processes and benefits realization” was ranked as the most important challenge by IT procuring officers, with an average ranking of 2.2. HRISOs ranked “Clear requirements specification” as the most important challenge, with an average ranking of 4.3. This challenge was not considered much more important than the next two challenges. “Finding and using good assessment criteria” received an average ranking of 4.5, and “Integration, compatibility” received an average ranking of 4.6 from the CIO´s. Vendor representatives differed from these two groups, ranking “Too much focus on costs” as the most important challenge with an average of 2.0.

Table 3: Ranking results: IT Procurement & Implementation managers

Challenge		Mean ranks
Rank	Critical issue	Round 1 (N=18)		Round 2 (N=18)
1.	Change of work processes and benefits realization	5.0		2.2
2.	Clear requirements specification	7.1		4.7
3.	Integration, compatibility	7.9		5.1
4.	Lack of coordination and standardization	8.1		6.1
5.	Weighing / prioritizing the assessment criteria	8.2		6.4
6.	Complete requirements	8.7		7.6
7.	Frame agreements	9.5		7.9
8.	Procurement competence	8.9		8.4
9.	Cooperation between different stakeholders	10.1		8.8
10.	Tendering obligations may conflict with long-term planning	10.1		10.6
11.	Monopoly-resembling vendor conditions	10.3		11.2
12.	Too much focus on costs	10.6		11.3
13.	Municipal cooperation is challenging	11.0		11.7
14.	Finding and using suitable assessment criteria	11.0		12.5
15.	Partnership and innovation are hindered	11.2		13.3
16.	Complex regulations	12.6		14.9
17.	Vendors tend to oversell	12.7		15.0
18.	The vendors don’t get to show their qualities	14.1		15.4
19.	Feasible requirements	13.0		15.7
Kendall’s W		0.160	0.537

 

Table 4: Ranking results: HRISOs

Challenges		Mean ranks
Rank	Critical issue	Round 1 (N=17)		Round 2 (N=17)
1.	Clear requirements specification	6.4		4.3
2.	Finding and using good assessment criteria	6.5		4.5
3.	Integration, compatibility	5.1		4.6
4.	Lack of coordination and standardization	8.2		7.4
5.	Weighing / prioritizing the assessment criteria	8.9		7.8
6.	Partnership and innovation are hindered	8.4		8.2
7.	Change of work processes and benefits realization	7.5		8.5
8.	Too much focus on costs	8.3		9.3
9.	Tendering obligations may conflict with long-term planning	9.8		9.5
10.	Complex regulations	9.8		9.6
11.	Frame agreements	9.3		9.8
12.	Cooperation between different stakeholders	10.1		10.4
13.	Procurement competence	11.0		11.1
14.	Complete requirements	12.2		12.2
15.	Municipal cooperation is challenging	11.2		12.5
16.	Vendors tend to oversell	12.8		13.8
17.	Monopoly-resembling vendor conditions	13.3		14.4
18.	The vendors don’t get to show their qualities	15.5		15.9
19.	Feasible requirements	15.6		16.2
Kendall’s W		0.268	0.391

Table 5: Ranking results: Vendors

Challenges		Mean ranks
Rank	Critical issues	Round 1 (N=11)		Round 2 (N=10)
1.	Too much focus on costs	2.7		2.0
2.	Feasible requirements	6.5		5.0
3.	The vendors don’t get to show their qualities	6.5		5.1
4.	Change of work processes and benefits realization	6.6		5.5
5.	Cooperation between different stakeholders	7.3		6.0
6.	Partnership and innovation are hindered	9.0		7.8
6.	Complex regulations	8.5		7.8
8.	Procurement competence	8.8		8.6
9.	Weighing / prioritizing the assessment criteria	9.1		8.7
10.	Tendering obligations may conflict with long-term planning	9.6		10.2
11.	Lack of coordination and standardization	10.7		11.0
12.	Clear requirements specification	10.8		11.1
13.	Complete requirements	11.4		11.9
14.	Frame agreements	12.3		13.3
15.	Municipal cooperation is challenging	11.8		14.0
16.	Finding and using suitable assessment criteria	14.7		15.0
16.	Integration, compatibility	13.4		15.0
18.	Monopoly-resembling vendor conditions	14.9		15.5
19.	Vendors tend to oversell	15.5		16.9
Kendall’s W		0.354	0.563

 

The Kendall’s tau values (Table 2) shows the similarity between the three panels. The correlation was statistically significant between procurement officers and HRISOs, with a value of 0.450. However, as the value is below 0.5 there is not a high level of agreement and it made sense to have separate panels. The correlation was even smaller between the internal stakeholders (procurers and HRISOs) and the vendor representatives. I will explore the differences between the panels further in our discussion section.

Finally, Kendall’s W values in Tables 3, 4, and 5 indicate the level of consensus between different members of each panel after both rounds of ranking. The consensus increased in all three groups from the first to the second round. Yet another round might have led to a loss of respondents without the consensus increasing all that much.

Discussion

Discussion on findings is done in light of previous research and whether prior findings (Table 1) are confirmed. More importantly, various new challenges and negative impacts are identified that have not been highlighted before.

Several of the main findings relate to stakeholder critical issues. The different stakeholders had differing views on the procurement challenges, the Kendall’s tau values showed clear differences between the three panels. This difference between the stakeholders may in itself be a challenge. If I had included internal users as yet another stakeholder group in my panels, I might have found further differences.

It is also found that vendors ranked the critical issue of cooperation between stakeholders among the top five challenges. This confirms previous findings on stakeholder critical issues being important in IS procurement & implementation.

The panels did not highlight any critical  issues related to information asymmetry with consultants, even though I asked for challenges in procurement of information systems and IS services, including consulting. The critical issue “Vendors trying to oversell”, may be related to information asymmetry. This was in the narrowed down list, but it was ranked consistently low. On the other hand, my findings did not suggest that gaps between stakeholder goals and project goals were a challenge.

The data suggested that balancing between different objectives and goal ambiguity is a challenge. The terms were not used in the consolidated list, but vendor respondents point to feasible requirements, i.e., customers are asking for more than they plan to use, as one of their top challenges. According to one vendor, this challenge is due to “Many stakeholders being involved in the early parts of the procurement and implementation process; they all have their wish list, and no one takes charge of prioritizing and shortlisting”. I did not find support for favoring of local vendors and minorities as a challenge. This was surprising, as the vendor representatives in the sample were mainly from the big national vendors, and should be inclined to bring up the critical issue if they felt it caused them to lose contracts. Partnership and innovation was also an critical issue, especially for the HRISOs and the vendors. Transparency for ensuring fair competition between vendors is clearly a public-sector-specific challenge; private firms can be more pragmatic on these critical  issues.

The results of findings confirm “Specify requirements before announcing tenders” as an important challenge. Our panelists have used other denominators that are clearly linked. They see developing “Clear requirements” as one of the key challenges. The regulations normally require procurement entities to develop requirement specifications without talking to vendors. A procuring entity may have limited knowledge of what to ask for in a niche area. And they are dealing with experienced vendors who know their software. This challenge of developing “Clear requirements” is rated high both by procurement officers and by HRISOs . Our panelists also brought up the critical issue of “Complete requirements,” which they ranked slightly lower.

The vendor panels had a slightly different view on the challenges, highlighting feasible and realistic requirements from their customers, but were less concerned with getting the specifications completely and clearly. It may not be in all vendors’ interest to have clear and complete requirement specifications, as this may give them less leeway when creating their bid.

A main challenge for the vendors is rather to get an opportunity to show their qualities. The very detailed requirement specifications would limit these possibilities. Vendors viewed “Focusing on initial procurement costs instead of life cycle costs” as the top challenge, hence the previous finding (Tysseland, 2008) is supported. In the brainstorming some of the panelists explained this challenge and the consequences of not solving it.

According to one, the inherent processes in the systems are not evaluated as part of the selection. Only costs for investment, user support and maintenance.

There are some interesting new findings in the lists of top challenges (tables 3-5). Experts across all three panels rated the critical issue of facilitating change in work processes and benefits realization as the most important procurement-related challenge (1, 7, and 4). This finding supports the benefits realization literature (e.g., (Ward & Daniel, 2006), which highlights the importance of planning from early on for benefits from IS investments. IT managers actually ranked change management of work processes and benefits realization as the top challenge. This may be somewhat surprising, as the change of work processes starts after a contract is signed and the responsibilities of the IT personnel are finished. The critical issue has not been identified in previous literature. The results indicate a need for further research and for education on benefits realization practices in connection to IS procurement in the organisation.

The critical issue of technological integration and compatibility of purchased systems was ranked third both by the IT procurement managers and the HRISOs. This is a technical challenge, relating to questions like interoperability. Lack of integration results in silted systems. Interoperability has been high on the agenda in the organisation, and it is believed to be the most critical issue facing businesses that need to access information from multiple information systems (Park & Ram, 2004). Multinational organisations tend to have a large amount of information systems covering the needs of very diverse sectors.

Lack of coordination and standardization of the procurement and implementation process was ranked as the 4th most important challenge by both procurement personnel and HRISOs. In order to understand this critical issue we have to take into account the sample in these two panels, which were largely made up of employees in municipalities.

Finding and using good assessment criteria and weighing/prioritizing the assessment criteria were also high on the agenda of the internal stakeholders. This may be related to the need to stick to the requirement specifications due to the formal tendering process, and to the possibility of vendor complaints. In addition, rules and regulations were seen as hindering longer-term vendor-customer partnerships, both by HRISOs and vendors. Longer-term cooperation could give some benefits such as less scope for opportunism from the vendors (Parker & Hartley, 2003), and trust relationships and coordinated strategies between buyers and suppliers (Parker & Hartley, 1997).

Category / critical incidents			Challenge / negative Impacts on stakeholders		Explanation
1. Requirement specification
Quality	1.1		Clear	Difficult to define clear and objective requirements.
		1.2	Complete		Incomplete req. specifications
		1.3	Feasible		Customers ask for more than they plan to apply
Content		1.4	User support as part of the requirement specification	Get optimal user support from the vendor
		1.5	Operations as part of the requirement specification
		1.6	Requirement for specific technologies		Require for instance ASP or cloud computing
Process for developing the req. specification	1.7		Based on process improvements		Make a requirement specification based on, e.g., a process map or use-cases
1.8			Verified requirements specification
1.9			Balanced/prioritized between different needs
1.10			Allocation criteria		Difficult to develop criteria for allocating contracts
2. Change management		2.1	Change of work processes and benefit realization			Difficult to achieve change of work processes and of the organization and to realize the possible benefits
		2.2	Resistance to change

Complete list of challenges / negative Impacts on stakeholders due to IS procurement & Implementation Constraints

 

	2.3		User training for new systems and work processes		The need for training is not estimated properly
3. Different stakeholders, cooperation	3.1		Involvement of procurement personnel	Procurement of information systems may be done without involving the group with procurement competence
	3.2		Gathering of key personnel for the procurement process		Gather personnel with the critical knowledge
	3.3		Cooperation between different stakeholders		Different government sectors or business units have to cooperate, without understanding each other´s needs
	3.4		Differing viewpoints and interest in assessment criteria (of the vendor)		Need to find common criteria
	3.5		Conflict		Conflict between different business units
	3.6		Citizen focus		Not enough concern for “customers”
4. Competence	4.1		Procurement competence
	4.2		Competence in rules and regulations
	4.3		Judicial competence
	4.4		Financial competence
	4.5		Competence in negotiations
	4.6		Product competence
	4.7		Competence in license critical  issues
	4.8		Domain competence
	4.9		Competence in existing systems and infrastructure
	4.10		Competence in installation, testing and supplier responsibilities
	4.11		The supplier’s competence
5. Competition	5.1		Lack of methods for evaluation
	5.2		Find good criteria for evaluation
	5.3		Weighing/prioritizing between different assessment criteria
	5.4		Comparing systems
	5.5		Conditions resembling monopoly situations		Only a few vendors of the requested system type
	5.6		The supplier is not given the opportunity to show their qualities		The customer asks so that the vendor does not get the opportunity to show their competitive assets
6. Contract critical  issues		6.1	Complexity, few complete contracts	Difficult to calculate the cost of all items specified in the contract
	6.2		Lack of use of the government’s standard contracts
	6.3		The government’s standard contracts		These differ from traditional contract regulations (rules, laws)
	6.4		Unclear contract, differing understanding of contracts		Unclear if certain critical  issues are included in a contract
	6.5		Contracts with duration over several years		Discounts included in longer contracts
	6.6		Frame agreements		Frame agreements that ensure flexibility or that have price mechanisms which are beneficial over

 

 Implications for research and practice

The classic challenge of coordinating between various stakeholders in IS procurement and implementation and IS investments emerged as one of the major challenges. Research results support previous calls for more focus on managing these challenges in procurement and implementation practices and processes.

The experts further highlight the importance of clear, complete, and feasible requirements specifications. Increased focus on requirements specifications may be especially important for the organizations. Our data confirms that this dilemma still has to be solved in an organisation. One possible solution could be more use of competitive dialogue, where vendors are invited to participate in a competition and in a dialogue with the procuring entity before the requirements are fully specified.

The challenge of technological integration and system compatibility highlights the importance of involving IT expertise in the procurement and implementation process.

Conclusion and further work

This Delphi study revealed typical challenges for IS procurement and implementation to various stakeholders in an organisation. Three expert panels defined 98 challenges and dilemmas, divided into 13 categories: requirements specification, change management, cooperation among stakeholders, competence, competition, contracting, inter-municipal cooperation, governmental management, procurement process, rules and regulations, technology and infrastructure, vendors, and IT governance. The results provide a rich overview and complement the previous, largely conceptual and case-based literature on public IS procurement challenges.

The study supports previously identified challenges related to stakeholders and to balancing between their objectives related to requirement specifications. All relevant stakeholder groups should be involved in procurement projects. More research is needed on critical issues such as stakeholder management and on balancing different goals without asking for more than is needed. The interplay between procurers and vendors in public procurement has not previously been much researched. This interplay may not function very well in public sector due to recurring competitions and complex regulations.

One especially important critical issue is the conflicting interest of IT procurers and vendors. Procurement and Implementation personnel strive for complete and clear requirements specifications, at the same time vendors seem to prefer less detailed specifications this would give them more room for showing qualities that are not mentioned in the request.

In addition, the study revealed challenges that have not been discussed previously in connection to IS procurement and implementation, such as aligning benefits realization to procurement. The study further supports previous findings on plain focus on costs. If procurement managers and HRISOs want to achieve benefits from investments in new systems, they need to balance the focus on cost with the need for quality, and they need to give room for vendors to show their qualities.

The challenge of complex and constraining regulations was also prevalent. This may make the process more complex and costly than needed, and may also hinder SMEs from participating. Lack of coordination and standardization was also revealed. Public procurement of Information Systems is a complex task, and many years can go by between subsequent projects in one professional domain, before new systems are bought, hence help should be needed. The problem could be overcome by copying successful procurement processes from other government entities or collaborating municipalities. However there may be risks with in doing this.

Further work will also focus on creation of cause-effect relationships between the most commonly observed critical  issues through qualitative analyses of the brainstormed data and through additional fieldwork. Another natural avenue for further work resides in cross-country studies, which might reveal more information about generalizability of these results to other countries with equally strict procurement regulations.

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