The Business and Information Technologies (BIT) Project

The following sections are included:

• FOREWORD

• OVERVIEW

• ABOUT THE AUTHORS

• CONTENTS

The UCLA Business and Information Technologies (BIT) Survey is aimed at understanding and tracking the impacts of technologies on business practices. This report presents the results of the second survey conducted in the US in 2004–2005.

The subject group of the survey consisted of organizations and sub organizations that make independent decisions with respect to the acquisition, implementation and the use of new technologies. The survey was sent to chief information officers and senior information systems managers as these individuals are most likely to be able to respond to the survey.

The survey addressed a wide range of business practices, including technology adoption, internal organization transformations, market facing activity, supplier and vendor relationships, and business results and performance consequences from the application of new technologies. Globalization and outsourcing/offshoring were also included.

The survey results indicate that businesses are changing internally as well as in terms of their interactions with their customers and trading partners. As might be expected, the rate of change is perhaps not as rapid as might be suggested by the “high water mark” examples which are described in the popular business press. However, the changes are without question both pervasive and on-going.

Some of the key results of the survey were as follows:

• The internal organization of companies is changing significantly in terms of both structure and workforce. Organizations are becoming flatter, with a wider span of control, more geographically distributed, and more “virtual”. Teleconferencingteleconferencing is increasing, telecommuting is not as widely accepted.

• The workplace and work requirements are changing. Many employees face screens, many are being monitored for performance. Technical capabilities are becoming necessary. Executives are asking for more and better structured information.

• The degree to which outsourcing and off shoring are being pursued is still limited. IT services, payroll and market research continue to be the more widely outsourced business functions. Outsourcing is not considered to be causing workforce reductions.

• The technologies and systems that are the most widely adopted are wireless hardware and software and e-commerce tools and websites.

• Radio frequency identification (RFID) and identity management solutions are not being widely adopted at this time. However, many firms plan to purchase them in the near future, indicating that the interest in security is going up.

• Organizations are using multiple touch points for customer relationship management (CRM). These include online, mail, face-to-face and phone.

• Companies are collecting more data with online technologies. However, the use of this data for customer view integration is not as prevalent for marketing yet.

• The adoption of on-line sales has not as yet had a major impact on marketing strategy. In particular, there has not been a significant change in branding or positioning (across all respondents). However, there is substantial interest in having customers perform more self-service tasks while purchasing online.

• Technology adoption has caused internal communication costs and production costs to decrease. However, the costs of technology acquisition and implementation, and of consultancy and collaboration have predictably increased.

The most striking outcome of the survey is perhaps the organizational impact. It is clear that work life at the level of the individual, as well as firmwide organizational structures are changing. It is also clear that certain technologies and capabilities have been very widely adopted, e-commerce and active websites for internal and external communications are the most widespread. At the same time, there are some rather negative results: organizations do not say that they have expanded their reach on the market side very dramatically. The adoption of hardware-based technologies such as biometry and RFID appears to be slower than the software and communications side.

We note that since the survey is across all industry sectors, some finer analysis may reveal important local differences. This work is under way. In addition, the firm level surveys do not easily reveal sector level changes. Industry and sector studies that are being conducted by us and our research partners will help to understand those issues better.

This is the second survey in a series of surveys to understand the impacts of technologies on business practices. By comparing the results for the two years, we find that most patterns continue to remain the same. This shows the validity of the survey findings. Some trends that are emerging include the following:

• Some technologies that are beginning to emerge as the technologies for the future include wireless software and hardware, RFID and collaboration portal tools. ERP also continues to be popular for deployment in the near term.

• Continued investment of technology budgets into security hardware and software is observed. Although off shoring/business process outsourcing continues to be lower in the list of company technology budgets, it is seen to have an increasing trend.

• Outsourcing of IT services is increasing. Outsourcing is also not seen as the reason for reduction in jobs.

• The trend is towards the automation of all CRM functions. Partner relationship functions are also becoming more automated as supported by the strong increase in the adoption of e-payments and e-procurement.

•Technology is seen to be helping organizations understand their customers better in all strategic areas. However, although more data is collected with automation, businesses are not yet integrating the customer view significantly.

• Globalization is not seen to a great extent. However, the trend is towards increasing globalization to the Asian regions.

The major intent of this project is to study the impact of new information technologies on industry structure, firms' practices and strategic results. Our research team, since 2002, has worked on this research agenda. The study that we present here builds on the results of the first Business and Information Technologies (BIT) study developed in Italy in 2002–2003 (see DeMattè et al., forthcoming), which highlighted three important phenomena: first, the substantial difference in the rate of digitization of core processes, between firms of different sizes and information and communication technologies (ICT) governance complexity, which could be explained not only by different firms' capabilities, but also by the different role of technology in specific competitive contexts. Second, the different rate of digitization of different organizational processes: digital investments were much higher in the internal processes, and much lower in external relationships, with both customers and suppliers (e-commerce and e-procurement were not highly diffused). Third, the importance of cultural, social and organizational variables, not only as a precondition for the success of e-business projects, but also as a complementary “effect” of the projects themselves.

Our second survey built on these results, aims to collect more detailed data on the same critical areas:

(1) different and specific areas of adoption;

(2) the ICT governance processes;

(3) the organizational and social processes (capabilities and changes) related to ICT business impact;

(4) the general business results related to ICT innovation.

This report synthesizes the results we found with this 2004–2005 survey.

The Italian 2004 BIT dataset includes data collected through a survey of the chief information officer managers of a sample of the larger Italian companies, carried out between October 2004 and April 2005.The respondents could fill in the questionnaire using the phone, the mail, and the web. The usable questionnaires were 214 out of 2326 invited answers (the response rate was 9.2%).

We have analyzed the results of the 2004–2005 BIT survey, focusing in particular on two areas of knowledge:

(1) the processes of ICT adoption and ICT governance;

(2) the relationship between firm's intangible resources and ICT processes and effects, at the organizational and business level.

In this survey, we found that:

• At this stage and for the type of firms considered (the larger firms), there is not any digital divide between Southern and Northern Italy in the spending for information technology (IT), despite of the economic diversity of the two areas.

• There is not any divide between Italian and foreign companies operating in Italy, since foreign groups doing business in Italy do not show higher spending rates for IT.

• The real divide, consistent with what we found in the previous BIT study, is related to the different IT investment efforts made by companies of different sizes.

• The nature of the industry helps in explaining the different IT adoption processes; the level of spending is significantly higher in the information intensive businesses of the service industries (financial services, consulting, and telecommunications).

With regard to the applications adopted and technology use:

• Corporate intranets and corporate websites represent the most diffused applications, while a minority of companies have explored e-procurement, e-commerce and other innovative frontiers in collaborative supply chains, in line with what we found in the first study, that is, that Italian companies have started to digitize internal processes more than external relationships, and communication processes more than commercial activities (Demattè et al., forthcoming). This phenomenon is particularly interesting, if we consider the average size of our sample companies.

• The most innovative systems, radio frequency identification and e-learning platforms, still have a very limited diffusion, also confirming that the Italian companies tend to be late in the innovation cycle.

• It is also worth mentioning that the size of the company and the nature of the industry (more or less information-intensive) influence the type of activities performed online, and therefore the sophistication of the digital communication forms. Also, the organizational complexity and richness of the firm is important; our correlation analysis in fact showed that ICT adoption and ICT adoption trend are higher not only in companies distributed geographically (number of organizational units in Italy), but also in companies with a higher degree of organizational capital, marketbased social capital, and innovation orientation.

With regard to the changes (strategic and organizational) induced in the organization:

• In the majority of firms, the number of employees who now use these new communication and information instruments has increased, the ICT function has become more integrated in the production processes, and there are more instruments to support employees in their decisions.

• New communication technologies have also started to change the way firms and people work, in the direction of what we call “digital enterprise”, an enterprise connected and coordinated through digital communication (firms are now more geographically dispersed; in many of them videoconferencing has substituted business travels, and they use internet-based systems to coordinate employees).

• Despite these changes, the organizational impact of ICT investments is varied. Considering the perceived effect of ICT, in only a minority of firms the organizational structure seem to have become flatter, and employees are believed to have increased their power (components of what we call new organizational capital or new organizational capabilities).

• A richer explanation of how the ICT processes impact the organization can be derived by the analysis of the influence of the organizational and social capital on the ICT processes, and how the combination of these different resources with ICT can dynamically produce new capabilities and business advantages, beyond the organizational change called “digital enterprise”. ICT adoption is in fact also correlated to significant changes in the organizational structure and capabilities.

With regard to the impact of ICT on firms' performance:

• The majority of the managers surveyed believed that their firms have achieved important results in the organizational and operational productivity areas, while it appeared more problematic in recognizing the benefits in terms of commercial efficiency, positive impact on successful new product development, and new strategic learning.

In conclusion we can say that, in general, the direction of ICT innovation in Italy has not much changed, even though the digital investments of firms seem to have increased (we cannot do a direct comparison because the two samples in the studies are different). There is still a divide related to the size of the firms and there is a tendency to invest more on internal communication and information processing than on the digitization of the external relationships and supply chain collaboration. This is particularly significant considering that we have surveyed some of the largest companies in the country. We know that this situation can draw a negative light on the Italian potential to explore the new frontiers of innovation and global competition. No country and no company can afford to consider itself protected and isolated in its local markets and capabilities.

Italian firms should learn and dare to explore the new frontiers of digital innovation in the awareness that ICT is not just a technology for doing the same things as before, in a more convenient and efficient way. ICT can become a strategic variable in firms, if it combines with new capabilities, new organization, and new pictures of the economy and the world.

The UCLA Business and Information Technologies (BIT) Survey is a baseline study aimed at understanding and tracking the impacts of technologies on business practices. This report presents the results of the first survey conducted in India in 2002–2003. The subject group of the survey consisted of organizations and suborganizations that make independent decisions with respect to the acquisition, implementation and use of new technologies. The survey was undertaken by information system managers or chief information officers of the various organizations or subdivisions. The survey comprises of a varied set of questions covering diverse business practices, technology adoption, transfer, outsourcing and its impact on the organizational structure.

The survey indicates that the Indian businesses are changing, requiring more effective solutions to deliver better value to the customers and maintain their position in a fiercely competitive scenario. Indian businesses during 2002–2003 were definitely at an inflection point in terms of deployment of information and communication technologies, ready for a quantum leap in few years to come.

A few of the key results of the survey were as follows:

• The number of employees facing the screen is increasing across all sectors and the need for retraining to keep abreast with the latest technologies is being felt increasingly.

• The span of control is increasing with the organizations becoming flatter. The demand for executive decision-making tools is increasing across all the sectors.

• ERP, website, e-commerce, groupware and security tools form the most commonly deployed technologies by the Indian businesses. Also, third party authentication and verification, wireless networks, content management and collaboration tools have been identified for near-term purchase.

• Security is becoming a major concern with all the organizations and the importance of disaster recovery and business continuity is being realized. Even with this trend, advanced techniques like biometry still have to gain a strong hold in the Indian business sector.

• Radio frequency identification is also not widely adopted yet there is no significant inclination to purchase it in the near future also.

• Outsourcing is limited to market research in nonIT and programming, network management, etc. within IT. Functions like payroll and finance and accounting are largely being performed in-house.

• Organization websites are largely being used as platforms to provide information, except for in the financial sector, where transaction processing services are also made available through the website.

The Korean economy has been transformed to an information economy gradually. According to the GNP study conducted by our team, the primary information sector which produces information goods and services as a final product explains 46.1% of year 2000 GNP. The proportion of information economy used to be 40.4% in 1990. In spite of the importance of the information economy, research on the business and information technologies has been limited.

The Business and Information Technologies (BIT) project was initiated by the Center for Management of the Information Economy (CMIE) of UCLA in 2003. This project is to understand the impact of new information and communication technologies (ICT) on business practices over an extended time horizon. The BIT project consists of three parts: first, the annual survey of firms to collect data on how firms are using new technologies, and how firms, industries and economies are changing as a consequence; second, tracking the evolution of economies through analysis of national accounting data and GNP figures; third, in-depth study of industry segments.

• The Service and Logistics Research Center at Korea University has taken part in the project since 2004. This report presents the results of the survey which was conducted in Korea in 2004–2005. Some of the key results of the survey were as follows.

• The technologies used most frequently by organizations are websites/e-commerce, groupware/productivity tools, enterprise resource planning (ERP). In spite of its popularity, radio frequency identification are the least adopted technologies by organizations.

• Even though the lists of most/least adopted technologies are similar, the adoption rates between Korea and US show big difference.

• Since new decision-making tools and online technologies become increasingly available, workforces need to retrain constantly to keep up with changing technologies.

• IT function is most frequently outsourced by organizations, while finance, accounting, payroll are the least outsourced business functions.

• Order placement, Order tracking/fulfillment, integration with ERP/SCM, and customer complaints management have been automated by over one-third of the organizations. However, content management of web sites and sales calls automation are the least-automated CRM functions.

• Direct purchasing, long-term purchasing contracts, and catalogues are most frequently used purchasing mechanisms.

• In business performance, production costs, commercial costs, and customer service costs have been reduced seriously. However, technology costs, internal communication, and R&D costs have increased. The revenues and profits have increased due to the technology.

• Trade in other countries, number of production/service bases, and number of countries in supplier base have increased as globalization progressed.

This study, carried out by the e-business Center PwC&IESE, is the Spanish Chapter of the Business and Information Technologies (BIT) Project, being spearheaded by the UCLA Anderson School of Management. The main objective of the project is to analyze the impact of the new information and communication technologies (ICT) on business practices.

The study has been conducted by a survey addressed to the chief information officers of Spanish organizations belonging to a wide range of industries. All the companies make independent decisions on issues related to their information systems. To allow for crosscountry comparisons, the Spanish Chapter has followed the guidelines set forth for all countries. As a consequence, this summary reports the main findings for Spain, comparing them with previous US results.

The results indicate that ICTs have a positive impact on business activities of Spanish companies, mainly by the reduction of (1) production costs, (2) internal information costs, (3) the creation of new work habits, and (4) the implementation of user-oriented strategies. Nonetheless, no significant changes can be observed neither in operating margins nor revenues, and the use of ICTs does not seem to have contributed to simplify organizational structures.

Comparing the results obtained in the Spanish survey with those of the United States, the main difference between the implementation of ICT in both countries lies in the organization of the workforce. While Spanish companies have experienced only small or even inexistent changes of their organizational structures, US companies have introduced more flexible structures, which increase the geographic dispersion of workers.

This research paper is an overview of technology-induced change in the entertainmentmedia industry value chain focusing on film and television distribution. Specifically, which key emerging distribution technologies are disruptive' enough to induce change is explored. The impacts of emerging technologies such as digital cinema, video on demand (VOD), personal video recorders (PVR), high definition television (HDTV) and video over wireless devices (VOWD) are studied.

The emergence of information and communication technologies (ICTs) has changed the life style of consumers. However, literature on their influences on businesses is limited. In this paper, we explore the impacts of ICTs on business practices and resulting business performances. Customer relationship management, supply Chain Management, business process outsourcing and globalization are considered as business practices. Business performances include overall business performances and functional area costs. The data sets are collected as a part of The Business and Information Technologies (BIT) project. The results from path analysis models are compared using Korea and US data sets. In both countries, ICTs have a direct impact on overall business performance. However, Korea shows stronger indirect impacts on business performances through selected business practices.

This paper identifies the technologies that will have significant impact on the United States consumer loan origination process in the next five years and what their impact will be on the major industry trends. Major industry trends considered include “the paperless mortgage, ” one-stop shop, automation and outsourcing, and the continuing role of brokers and agents. Enterprise software and extensible markup language, intelligent systems, electronic signatures, security, and document imaging are identified as the key technologies. The paper concludes that the technologies will affect the loan origination process, but the level of change with respect to the industry trends may not be significant. The paperless mortgage will not be commonplace and the role of brokers and agents will not be eliminated in the next five years. On the other hand, the adoption of the five technologies will increase the level of automation and the use of outsourcing and the creation of one-stop shop for both home buying needs as well as diversified financial needs in the next five years.

This study examines business continuity in the retail sector. The findings are from a mail survey, case studies and secondary research. An economic framework is also developed for business continuity in retail.

The study found that retail organizations are aware of the need for business continuity, the greater attention being given to information technology. The events of 11 September have not had a major impact on business continuity planning in retail organizations. There might have been a short period when organizations paid greater attention to business continuity. However, that spike has now disappeared.

Retail organizations display certain characteristic features that appear to diminish the incentives for continuity planning. The assets of retailing firms are primarily in the form of inventories, which tend to be geographically dispersed. This provides automatic protection against many kinds of disruptive events. Since the inventories are part of a flow of sales, they do not have long-term asset value. In other words, they are replaceable. Inventories are typically covered by insurance, which adequately protects retail organizations against the monetary impact of losses.

Retail organizations also have some informational assets. The preferred mode of managing informational assets has shifted from paper to telecommunications technologies. As a result, with better telecommunications technologies and lower storage costs, the risk to informational assets has reduced.

Indian businesses during 2002–2003 were poised for a quantum leap in deployment of information and communication technologies in business practices. Computersavvy employees, at every level, were becoming imperative, need for Decision Support Systems (DSS) and Executive information systems (ESS) were being increasingly felt across the industry. Outsourcing was limited to market research in nonIT, programming, network management, etc. within IT divisions. Functions like payroll, finance, accounting were largely being performed in-house. The advent of e-commerce has underlined the importance of investment in security tools, though advanced techniques like biometry and radio frequency identification were yet to gain a foothold in the industry. Organization websites were largely being used as platforms to provide information, except for in the financial sector, where transaction processing services were also made available through the website.

The following sections are included:

• INDEX