A technological,organisational, and environmental analysis of decision making methodologies and satisfaction in the context of IT induced business transformations

Although Operational Research (OR) has successfully provided many methodologies to address complex decision problems, in particular based on the rationality principle, there has been too little discussion regarding their limited consideration in IT evaluation practice and associated decision making satisfaction levels in an organisational context. The aim of this paper is to address these issues through providing a current account of diffusion and infusion of OR methodologies in IT decision making practice, and by analysing factors affecting decision making satisfaction from a Technological, Organisational, and Environmental (TOE) framework in the context of IT induced business transformations. We developed a structural equation model and conducted an empirical survey, which supported four out of five developed research hypotheses. Our results show that while Decision Support Systems (DSSs), holistic IT evaluation methods, and management support seem to positively affect individual satisfaction, legislative regulation has an adverse effect. Results also revealed a persistent methodology diffusion and infusion gap. The paper discusses implications in each of these aspects and presents opportunities for future work.     

Investigating and comparing the dynamic patterns of the business value of information technology over time

The long-debated issue of the business value of information technology (IT) to the firm (country) has received a great deal of attention in the literature. But the studies have rarely examined the dynamic patterns of the IT value as measured by the firm’s productive efficiency over time. The objective of this paper is to apply the three-factor constant elasticity of substitution (CES) time-varying stochastic production frontier models and use the same data set as used in several previous studies to investigate the dynamic patterns of IT value over time in connection with the issues of inputs substitution and complement and the productivity paradox. This paper adopts two analytical skills, collective and individual, to analyze the empirical results. Collectively, we find that the dynamic patterns of IT value are closely related to the substitution and complement of three inputs and the IT productivity paradox. Individually, we identify five common dynamic patterns of the IT value measured by productive efficiency and interpret their implications for the productivity paradox as summarized in a two by two matrix of practical applications and strategies. This matrix accounts for four different scenarios of the relationship between the average productive efficiency and the IT productivity paradox, illustrates some practical applications by the analytical results, and provides some business insights and managerial strategies for IT decision makers and PO/IS managers. This represents a new contribution to the understanding of the dynamic influence of IT investments upon the value of IT over time.     

Detecting inefficiently managed categories in a retail store

Growth in operational complexity is a worldwide reality in the retail industry. One of the most tangible expressions of this phenomenon is the vast increase in the number of products offered. To cope with this problem, the industry has developed the ‘category management’ approach, in which groups of products with certain common characteristics are grouped together into ‘categories’, managed as if they were independent business units. In this paper, we propose a model to evaluate relative category performance in a retail store, considering they might have different business objectives. Our approach is based on Data Envelopment Analysis techniques and requires a careful definition of the resources that categories use to contribute to achieving their business objectives. We illustrate how to use our approach by applying it to the evaluation of several categories in a South American supermarket. The empirical results show that, even for very conservative assumptions, the model has a significant discriminatory power, identifying 25% of the sample as not operating efficiently. Although efficiency scores might exhibit a relatively large dispersion, the set of efficient units is robust to data variations.     

Holistic oil field value management: using system dynamics for ‘intermediate level’ and ‘value-based’ modelling in the oil industry

System dynamics has been seen primarily as a strategic tool, most effectively used at the highest level of strategy to identify robust policy interventions under a wide range of scenarios. However, an alternative, complementary and powerful role is emerging. This is at an ‘intermediate level’ in organisations to coordinate and integrate policies across the value chain. It is at this level where business value, as defined by the discounted value of future free cash flow, is both created and destroyed. This paper introduces the need for ‘intermediate-level’ and ‘value-based’ modelling and emphasises the natural role of system dynamics in supporting a methodology to fulfil the need. It describes the development of an approach and its application in the oil industry to coordinate the response of people and tools within operational, financial and commercial functions across the value chain to address a variety of problems and issues.     

Adapting and refining in multi-criteria decision-making

This paper describes the implementation of a Structured Methodology for Direct-Interactive Structured-Criteria (DISC) Multi-Criteria Decision-Making (MCDM), an eight-stage nomological adjusting cycle of activities that shape the information used to make a decision, requiring it be accessible, differentiable, abstractable, understandable, verifiable, measurable, refinable and usable. It shows, in a major IT strategic investment case, that Structured DISC MCDM provides a robust model that can be used for deep and serious consideration of multi-criteria decisions by a group of decision-makers over a long period. The paper describes the case as it moves through stages of the adjusting cycle and shows that, after completing the cycle, it reverses and becomes an adapting process, starting with refining the information. Refining is shown to be more extensive than previously understood, and to cover ‘alternatives & scores’, ‘criteria & weights’ and ‘set of alternatives’. Next the form of measurement is adapted. As the number of alternatives are reduced it can become more appropriate to directly compare the two or three most preferred alternatives relative to one another rather than objectively. Finally the criteria tree can be adapted using a ‘magnifying glass’ approach. This confines the evaluation to that part of the criteria tree in which the difference between a few preferred alternatives is mainly emphasised.     

Assessment and improvement of employee job-satisfaction: a full-scale implementation of MUSA methodology on newly recruited personnel in a major French organisation

During the last 20 years, a large number of studies have investigated the relationship between employee satisfaction and specific job characteristics, with often contradictory results. The aim of this paper is the assessment of job satisfaction of recent recruits in a large French company. The approach adopted here is to view employees as internal customers of an organization, and their satisfaction as an important driver for business success. Using the MUSA multicriteria methodology for customer satisfaction evaluation, the study aimed (1) to identify and measure satisfaction criteria of newly recruited personnel, and (2) to determine new organisational policies based on the findings.     

Beyond methodology choice: critical systems thinking as critically systemic discourse

Professional competence in applied disciplines such as OR/MS requires both technical expertise and critically reflective skills. Yet, a widespread misconception has taken hold of the OR/MS community: ‘critical’ and ‘emancipatory’ systems methodologies are opposed to ‘hard’ and ‘soft’ ones as if they were sensible alternatives. Accordingly, adequate ‘methodology choice’ is now widely considered a key condition of reflective professional practice; critical systems thinking (CST) is understood to deal mainly with this issue. The present paper argues that this conception of CST is neither theoretically sound nor conducive to reflective practice. An examination of the two major current strands of CST suggests some basic requirements of an alternative conception: (1) Reflective practice depends more on a framework of critical argumentation and discourse than on a framework of methodology choice. (2) A well-conceived discursive systems approach will give a proper place to the public sphere. (3) The much-discussed emancipatory orientation of CST inheres in the methodological requirements of discourse rather than in an arbitrary ‘commitment’ on the part of the systems practitioner. (4) Systemic boundary critique—the methodological core concept of critical systems heuristics (CSH)—allows us to translate these requirements into practical methodology. (5) Contrary to present conceptions of methodological pluralism or ‘complementarism’, boundary critique must not be subordinated to methodology choice, for it is constitutive of all critical inquiry and practice. These considerations lead to a reconstitution of CST, and to a new view of reflective professional practice in general, as critically systemic discourse.     

Predicting default of a small business using different definitions of financial distress

The paper introduces a number of risk-rating models for UK small businesses applying an accounting-based approach, which uses financial ratios to predict corporate bankruptcy. An enhancement to these models is considered through features typical to retail credit risk modelling. A common problem of default prediction consists in the relatively small number of bankruptcies or real defaults available for model-building. In order to expand the ‘default’ group beyond bankrupt companies, the paper considers adopting four different definitions of ‘a failing business’ by investigating combinations of financial distress levels. The impact of each default definition on the choice of predictor variables and on the model's predictive accuracy is explored. In addition, the paper examines the value of categorizing financial ratios used as predictor variables.     

Estimating the demand distributions of single-period items having frequent stockouts

Very often, the service level of a single-period newsboy-type product is set at such a low level that: (i) stockouts occur in the majority of the periods, and (ii) a large right-hand side of the empirical demand distribution is never observable. This paper reports a practical approach for estimating the periodic-demand distribution of such a product. The approach has three components: (i) using the non-parametric ‘product limit’ method to estimate the fractiles of the observable left-hand side of the empirical distribution; (ii) using a subjective approach and an ‘extrapolation of hourly sales’ approach to ‘fill in’ the missing right-hand side of the empirical distribution; (iii) fitting the estimates obtained in the preceding two components to a Tocher curve — which can handle the diversity of shapes of a realistic demand distribution and is also computationally very convenient for subsequent calculations for production/inventory decisions. The entire approach is shown to be simpler but more powerful than existing alternatives for the problem.     

Information technology and systems justification: A review for research and applications

Information technology (IT) such as Electronic Data Interchange (EDI), Radio Frequency Identification Technology (RFID), wireless, the Internet and World Wide Web (WWW), and Information Systems (IS) such as Electronic Commerce (E-Commerce) systems and Enterprise Resource Planning (ERP) systems have had tremendous impact in education, healthcare, manufacturing, transportation, retailing, pure services, and even war. Many organizations turned to IT/IS to help them achieve their goals; however, many failed to achieve the full potential of IT/IS. These failures can be attributed at least in part to a weak link in the planning process. That weak link is the IT/IS justification process. The decision-making process has only grown more difficult in recent years with the increased complexity of business brought about by the rapid growth of supply chain management, the virtual enterprise and E-business. These are but three of the many changes in the business environment over the past 10–12 years. The complexities of this dynamic new business environment should be taken into account in IT/IS justification. We conducted a review of the current literature on IT/IS justification. The purpose of the literature review was to assemble meaningful information for the development of a framework for IT/IS evaluation that better reflects the new business environment. A suitable classification scheme has been proposed for organizing the literature reviewed. Directions for future research are indicated.     

Productivity breakdown of the information and computing technology industries across countries

In this paper, we measure productivity growth of the information and computing technology (ICT) industries in 14 Organization for Economic Cooperation and Development countries over the 13-year period of 1978–1990. The ICT industries are the providers of essential information technology (IT) capital goods. This macro-level analysis seeks to find out how productively such IT capital goods are provided. The basic unit of analysis employed is the Malmquist Total Factor Productivity (TFP) index. The Malmquist TFP index is then decomposed into three constituent elements accounting for different sources of productivity growth: technological progress, efficiency change, and change in economies of scale. The approach of measurement is based on the concept of distance functions and employs the non-parametric frontier method of data envelopment analysis. Our results indicate that each country's ICT industry manifests its own particular patterns in various performance measures. Among the 14 countries examined, 10 had witnessed productivity growth in their ICT industries. Overall, these ICT industries are found more productive than other industries when compared with previous research. Further analyses reveal that (1) most of the productivity growth measured is due to technological progress; (2) efficiency change exerts a relatively small positive effect on productivity growth; and (3) the change in scale economies unfavourably affects productivity for most countries. Finally, practical implications for formulating IT policy are drawn from our results, and topics are identified for future research.     

Knowledge management <Emphasis Type="Italic">sans frontières</Emphasis>

Knowledge management is a topic that crosses borders of various kinds, such as those between departments, between organisations or between countries. In this paper we will consider various issues relating to knowledge management, in the context where more than one department/organisation/country is involved. To do this, we place an emphasis on knowledge management as a process, rather than as an organisational system or, worse, as a piece of technology. This process involves trust, negotiation—and indeed some technological support. In this paper we wish to introduce the concept of ‘triangles of trust’, and to focus on where ‘the top meets the bottom’ in terms of knowledge management and organisational learning. Partial examples will be offered in support of our views, but no full and complete examples—knowledge management simply is not well enough understood or documented for that yet. Our overall conclusion is that there is no one best way to “do” knowledge management, but there are principles that ought to be applied.     

Writing practitioner case studies to help behavioural OR researchers ground their theories: application of the mangle perspective

Behavioural research into the practice of OR needs to be grounded. Case studies written by practitioners can potentially help address this need but currently most do not. The paper explores a way of describing OR projects that place the emphasis on the ‘actors’ who provide the motivating force and the consequences of their actions. The ‘mangle’ perspective focuses on the dynamic intertwining of people, technology and concepts; this can provide the basis for an insightful narrative describing the reality of the project in terms of the planned approach, the problems met and the outcomes. Two examples are given, one of a conventional model building exercise, the second of a ‘soft OR’ intervention: both describe projects conducted by practitioners for commercial purposes. It is concluded that, by using the mangle perspective, the OR case writer can winnow the wheat from the chaff in order to write a succinct informative narrative, a narrative that could be utilized by behavioural OR (BOR) researchers. It is further concluded that BOR researchers should engage with ‘practice theory’ to deepen their understanding of what actually happens in projects.     

Evaluating soft OR: some reflections on an apparently ‘unsuccessful’ implementation using a Soft Systems Methodology (SSM) based approach

This paper reflects on a case study in which a soft OR problem structuring approach, based on Soft Systems Methodology (SSM), was used to help in the design of an information system for health service users providing care in the community in a part of the South and West Health Region in the UK. The paper reflects on why an apparently ‘successful’ structuring led to an apparently ‘unsuccessful’ implementation. As part of this reflective process, the paper makes a contribution to the soft OR literature by reviewing some of the approaches taken in the literature to the evaluation of success of problem structuring using soft OR. This review reveals a lack of evaluative criteria, a lack of clarity over the identification of users, and a failure to differentiate criteria associated with ‘structuring’ and ‘implementation’ issues. An evaluative framework is proposed, which is applied retrospectively to the case study.     

Group inquiry to aid organisational learning in enterprises

This paper describes a method for surfacing and exploring ‘situated knowledge’ in medium-sized organisations, with employee groups utilising a ‘low impact’ form of group support system (GSS), based on wireless handsets. Some results of piloting this method are summarised and one intervention is presented in detail. The method encouraged organisational members to give voice to the emotions and politics of leadership and learning in organisations, and helped to articulate how situated knowledge was ignored, as well as utilised. The method is practical, and may be used by organisations for themselves to aid the development of group as well as individual reflection, to stimulate the consideration of change.     

Evaluating Strategy — Its Role Within the Context of Strategic Control

The paper uses a case study to illustrate a number of points in relation to strategy development and strategic control. A group decision support system — ‘Strategic Options Development and Analysis’ (SODA) — was used. The method focuses on the ‘linkages’ between strategic issues rather than on the issues themselves. The paper focuses upon the strategy review process. Three related elements of strategy' are considered as a part of the review: an evaluation of the extent to which the strategy has been implemented and is embedded in the organization; an evaluation of the assumptions underpinning the strategy; and an evaluation of the influence the strategy has on those at the ‘coal-face’.     

Convenient expressions for computing the exact annual cost of a continuous-review (<Emphasis Type="Italic">Q</Emphasis>,<Emphasis Type="Italic">R</Emphasis>) system with backordering

For a continuous-review order-quantity reorder point system, the ‘average on-hand inventory level’ (‘AOI’) is often computed by the approximate Hadley–Whitin expression, while the exact AOI is given by a double integral that appears daunting to both students and practitioners. This paper presents exact AOI expressions that are simple enough to be executed by the most basic business softwares. Numerical examples are provided to illustrate the ease of using these expressions as well as the necessity of using them in situations where the standard Hadley–Whitin approximation becomes too inaccurate.     

Basic concepts for a theory of evaluation: Hierarchical aggregation via autodistributive connectives in fuzzy set theory

The ‘aggregative operator’ introduced by Combi (1982) in his analysis of ‘basic concepts for a theory of evaluation’ in this journal is based on the axioms of associativity, continuity, and monotonicity. In this paper, an alternative approach is given where associativity is replaced by another axiom, viz. autodistributivity, implying a kind of hierarchical aggregation instead of the former horizontal one. The new set of properties yields a general class of operators for connecting fuzzy sets which are formally similar to the aggregative operators, but are purely compensative (in a strong sense). Moreover, this modified approach generalizes a recent approach based on generalized means as compensative connectives. It appears to be similar to expected utility approaches in decision making under uncertainty, and seems to be a very promising tool to handle representation problems as they grow from other fields of human decision making, e.g. of multicriteria analysis and of welfare theory.     

Inventory rationing via drop-shipping in Internet retailing: A sensitivity analysis

In this paper, we study a threshold level inventory rationing policy that is of interest to e-tailers, operating in a business to consumer (B2C) environment and selling non-perishable, made-to-stock items such as books, CDs, consumer electronics, and body and bath products. A Monte Carlo simulation model is developed to examine this policy when the demand process is stochastic, lead-time is stochastic, and the e-tailer uses ‘drop-shipping’ as an order fulfillment option. The methodology presented, which includes computer simulation and a full factorial experimental design, permits understanding of the complexity of the decision-making environment and implications of different sources of uncertainty (e.g. demand variability and lead-time variability) on a profit-maximizing threshold level of inventory, a stock level below which low margin orders are drop-shipped directly from the e-tailer’s supplier rather than fulfilled from internal stock.     

On evaluating the performance of GSS: Furthering the debate

Following criticism from proponents of workstation group support systems about the lack of validity of ‘wide-band’ group support systems (GSS), a recent article argued that it was inappropriate to attempt to establish the level of experimental validity for such GSS that is demanded by researchers working with 'narrow-band' GSS. It was argued that ‘wide-band’ and workstation GSS are very different and this means that it is unlikely that the same measures of success would be appropriate. This paper agrees with this view but not with its extension, that the overall validation requirement is different; theoretical validity is a necessary feature of a full evaluation but it is not sufficient by itself - experimental validity must also be sought. This paper argues against the view that since experimental validity cannot be obtained, theoretical validity will suffice. A twin-track research approach involving theoretical and experimental validity is proposed that can unite researchers investigating (almost) all forms of GSS, modelled on the PIMS programme and supported by one of the research frameworks that already exist.