Restructuring ICT strategy In a strategically diversified environment

Restructuring ICT strategy

In a strategically diversified environment

Restructuring ICT strategy

In a strategically diversified environment

Final Version

Master research A. B. Dijkstra

Bieze Exploitatie mij Supervisor: A. Drost

Preface

This report addresses the issues involved with centrally steering a strategic aspect like ICT strategy in a holding type organisation that handles its strategies decentralised. There is very little information present for these specific issues and this research tries to fill that gap with a literature survey and an empirical research at the Bieze Holding. The survey provides generic insights for holding organisations and post acquisition situations and contributes to the improvement of the ICT strategy at the Bieze Holding.

This report is made in assignment of the board of directors of the Bieze holding and the Rijksuniversiteit Groningen. The researcher wishes to thank his supervisors of both institutes for their guidance and help during the process of writing this report.

Management Summary

The goal of this research is twofold. First the research aims to create a framework of theories to help the Bieze holding restructure their ICT strategy. Second, the research combines existing literature to give organisations that compete in holding structures or post acquisition organisations guidance in restructuring their information strategy. This goal is embodied by the following central research question, which represents the central need for restructuring ICT strategy in holding or post acquisition situations.

“How should the ICT strategy of firms be restructured after a merger or acquisition to match the strategy of the holding firm and the acquired firm?”

It becomes clear that technology and strategy have a two dimensional relationship, which shows itself in four points. First IT can support corporate strategy. IT applications can be used to utilise each of the three major strategies of Porter. Second IT can create new strategic options. Applications can catalyse a revolutionary approach at the market as well as on the internal conduct of business as described by Benjamin and others. Third a strategic concept should be used to coordinate the ways that IT becomes available to the business. Finally the capabilities of an organisation on the different aspects of information technology can have a positive aspect or a negative effect on the application or availability of IT.

These four key points of ICT strategy prove not to be sufficient for post acquisition organisations or organisations that compete in holding structures. These organisations have often multiple strategies whereas the given theories presume only one strategy for ICT strategy to align with. These organisations need additional advice to cope with these often diversified strategies. The integration type is important this has its implications on the to-follow strategy. The multiple strategies have to be managed top-down for creating synergies between the different organisations, but bottom up for keeping the advantages of multiple strategies. The organisation has to find the balance where advantages of both methods prevail. The integration type determines the amount of top-down and bottom-up steering. These theories prove to replenish the general theories about ICT strategy. Centralised and decentralised strategies can exist together as long as the decentralised strategies are matched with the central overall strategy.

ICT strategy functions in a similar way; the advantages of both methods can be utilised, as long as there is top-down and bottom-up control. The organisation has to find its own balance in these methods, which should depend on the degrees of freedom already given to local management with normal strategic decisions.

Table of Contents

2.3.3 Explanation of the research question...3

2.4 INTRODUCTION TO THE BIEZE CASE...3

2.4.1 Organisation of the Bieze Holding ...3

2.5 CONCEPTUAL RESEARCH...4

2.5.1 Research structure...4

2.5.2 Research methods ...5

2.5.3 Relevance ...5

2.5.4 Conceptual Model ...6

3 ASPECTS OF INFORMATION STRATEGY ... 7

3.1 INTRODUCTION...7

3.2 SUPPORT OF CORPORATE STRATEGY...8

3.2.1 Introduction ...8

3.2.2 Defining corporate strategy...8

3.3 NEW STRATEGIC OPTIONS... 12

3.3.1 Introduction ... 12

3.3.2 How to create business opportunities ... 13

3.4 STRATEGIC CONCEPTS... 14

3.4.1 Introduction ... 14

3.4.2 Alignment ... 14

3.5 ICTCAPABILITIES... 16

3.5.1 Introduction ... 16

3.5.2 Capability maturity model ... 16

3.6 CONCLUDING ASPECTS OF INFORMATION STRATEGY... 18

4 IS IN A DECENTRALISED ENVIRONMENT ... 19

4.1 ICT AND ACQUISITIONS... 19

4.2 MANAGING MULTIPLE STRATEGIES... 21

4.3 UTILISING ICT STRATEGY IN A HOLDING SITUATION... 23

4.4 CONCLUDING DECENTRALISED INFORMATION STRATEGY... 24

5 CASE OF THE BIEZE HOLDING ... 25

5.1 INTRODUCTION... 25

5.2 BACKGROUND OF THE SUBSIDIARIES... 25

5.2.1 Bieze... 25

5.2.2 CêlaVíta... 25

5.2.3 Neptunus... 26

5.3 DYNAMICS OF ICT IN THE BIEZE HOLDING... 26

5.3.1 Management of ICT... 26

5.3.2 ICT issues... 27

5.4 DISCUSSION... 30

5.5 CONCLUSION OF THE BIEZE HOLDING CASE... 32

6 CONCLUSIONS AND RECOMMENDATIONS ... 34

6.1 CONCLUSIONS... 34

6.2 GENERAL RECOMMENDATIONS... 34

6.3 RECOMMENDATIONS FOR THE BIEZE HOLDING... 35

6.3.1 General recommendations ... 35

6.3.2 Action plan for the Bieze holding... 36

REFERENCES... 38

LITERATURE... 38

LIST OF FIGURES... 39

1 Introduction

In the summer of 2005 the German company Wernsing GmbH acquired the Dutch company CêlaVíta b.v. Wernsing operates in The Netherlands via the Bieze Holding. The Bieze holding was already a facilitator for six subsidiaries and Wernsing GmbH decided that CêlaVíta will also operate under the Bieze Holding. This implicated a lot for both companies. Not only did Bieze’s personnel staff grew from 190 to almost 500, it also gained another location and production plant. For CêlaVíta this implicated much more, CêlaVíta started as an in-house subsidiary for cooperation Agrico, with as sole purpose selling potatoes, not more. Now CêlaVíta is a full subsidiary of Bieze, which means it now has to act like a full company with all facets of competition.

2 Problem Definition

2.1 Goal

The goal of this research is to improve the ICT strategy of the Bieze Holding. However this research goal does not stand by itself. The case of the Bieze Holding is one of many organisations today. Bieze operates in a holding situation and recently acquired new subsidiaries. These brought new ICT in the company. Bieze and other companies in the same situation need assistance in creating one overall strategy which serves for the complete holding. The goal of this paper is to provide insights in the issues that surround the ICT strategy for a holding situation or post acquisition companies. The situation of the Bieze Holding will serve as a case to empirically test the findings in the literature survey.

2.2 Management question

Bieze’s management has decided to thoroughly investigate the ICT strategy of the complete holding. This decision had two reasons. The first is described in the introduction, Bieze has grown dramatically in the last year and therefore feels it has to revise their current strategy. The second reason lies in the fact that there are several issues in the subsidiaries that perhaps be prevented or solved using a new integral approach to the ICT strategy.

The central management question of Bieze that has been formulated is: “What improvements can be made to the current ICT strategy according the theoretical frame work developed in this study?”

2.3 Outline Research

2.3.1

Research question

Many companies acquire new firms or are competing in a holding situation of different firms. This situation is similar to the one described in this study, as those companies encounter the same issues as Bieze. Therefore Bieze’s central management question is translated into a general central need, which forms the basis for this report. This central need for holding or post acquisition situations is represented by the following central research question.

2.3.2

Sub questions

The central research question has been elaborated into several sub questions, these strengthen the structure of the research.

¾ How do ICT strategy and business strategy: ƒ support corporate strategy? ƒ provide new strategic options?

ƒ are affiliated with other strategic concepts? ƒ relate to IT Capabilities?

o ICT strategy in a decentralised organisation ƒ How do acquisitions affect ICT strategy?

ƒ Reasons for decentralised or centralised strategy

ƒ Can decentralised and centralised strategy exist together? ƒ How does these strategic points relate to ICT strategy? ¾ How should these theories be applied to Bieze’s current ICT strategy?

2.3.3

Explanation of the research question

The research provides a set of theories and insights pointed towards companies that are competing in a holding structure as well as the specific managerial problem at Bieze. Companies facing acquisition projects or are operating in a holding structure can learn from the insights acquired in this research. Furthermore these theories and insights provide a background by which Bieze’s management problem can be solved.

Improvements in the ICT strategy are broad; they can affect the strategy itself or the actions following the strategy. Possible improvements enhance unity between the overall business strategy and the ICT strategy, but can also improve consistency between the strategy and its actions according to the provided theories.

2.4 Introduction to the Bieze case

In order to understand the nature of the management question and to get a better insight of the given case, a short impression of the structure of the Bieze Holding is first given. This gives an insight into the case itself and into the diversity of problems faced by the management of this holding.

2.4.1

Organisation of the Bieze Holding

¾ Exploitation mij. Bieze, is the main subsidiary which facilitates many activities for the other subsidiaries. Activities like financial administration, the human resource department and ICT are centrally controlled by this subsidiary.

¾ Vers Logistiek, is a transport company that handles that facilitates the main transportation of the Nijkerk based subsidiaries.

¾ De Zuivelmaatschappij is a trading firm that concentrates on dairy products such as milk, coffee milk and yoghurt.

¾ Neptunus was taken over in the beginning of 2005 and it is located in Enschede. Neptunus is a production company and produces a wide variety of herring products.

¾ Epos is a spice production company which delivers to retail and to end users like butchers. ¾ CêlaVíta was taken over by Bieze in the summer of 2005. CêlaVíta is located in Wezep and

produces all sorts of potato products.

¾ Bieze, finally, is a trading firm and carries a wide variety of products in the cool fresh department. The range of products extends from salads to ragouts and to potatoes.

Figure 1 - Organisation of the Bieze Holding

2.5 Conceptual Research

2.5.1

Research structure

2.5.2

Research methods

The methods that were used to clarify the questions in the research are the following:

• Interviews, the researcher spoke to key persons in the companies to get the latest insight information and subjective views on the issues;

• Literature research, literature provides a theoretical framework on which the conclusions and recommendations are based;

• Desk research, inside the companies there is already much documentation present that helps to form the understanding of the two companies;

• Action research, the researcher works in the Bieze Holding and therefore could observe first-hand how the ICT and other processes are managed in the company.

2.5.3

Relevance

The relevance of this report lies in several different dimensions. The practical relevance is that the defined framework of theories that is proposed, provide methods for the Bieze Holding to update and to manage their ICT strategy after recent acquisitions. After applying this framework, the Bieze Holding can face current problems and proactively respond to future problems.

2.5.4

Conceptual Model

The conceptual model provides a graphical representation of research. It shows how the theories are intertwined and how the sub questions relate to the main question and each other.

The research examines a firm that has a divisionalised or holding structure. Each subsidiary or strategic business unit (SBU) has its own mission, strategy and goals, as well as an overall corporate strategy. Normally the ICT strategy is a derivative from corporate strategy. This would indicate that each subsidiary has its own ICT strategy. In many cases, like the one of the Bieze holding, this is not true. In these cases ICT is centrally steered from the holding firm. This instantly creates a conflict of how and where ICT should be steered. The research tries to create a framework for applying an ICT strategy in a divisionalised or holding organisation, solving these issues.

First, the research addresses information strategy in general and how set up information strategy. Second, the issues of centrally steering ICT in a decentralised business are discussed.

3 Aspects of information strategy

In this chapter the base theories of the research are explained. These theories provide the basis for explaining the importance of information strategy and clarify how closely information strategy and business strategy are linked. Furthermore, this chapter offers several tools for proper analysis of strategy and information strategy.

3.1 Introduction

Information technology is more than just computers and software. For many managers it provides an excellent tool for improvement of operational effectiveness, however it but should not be viewed merely like that. Managers realise more and more that structured information should be a strategic issue.

Information technology affects competition in three fundamental ways (Porter and Millar, 1985). Information technology changes industry structure and whilst doing that, alters the rules of competition. Furthermore, it creates new ways for companies to outperform their rivals and create competitive advantage. Finally, information technology spawns whole new businesses, often from a companies existing business. Competition immediately leads to strategy and translating these three fundamentally altered ways of competition leads to four main points on which ICT and strategy influence each other (Earl, 1989). It becomes clear that technology and strategy have a two dimensional relationship, which shows itself in these four points.

1. IT can support corporate strategy. IT applications can be used to utilise each of the three major strategies of Porter (1985)

2. IT can create new strategic options. Applications can catalyse a revolutionary approach at the market as well as on the internal conduct of business as described by Porter and Millar (1985) and Cecil and Hall (1988)

3. A strategic concept should be used to coordinate the ways that IT becomes available to the business

4. The capabilities of an organisation on the different aspects of information technology can have a positive aspect or a negative effect on the application or availability of IT.

3.2 Support of corporate strategy

3.2.1

Introduction

ICT can support corporate strategy, but where to fit ICT is the total strategy is not clear. The following paragraphs explain how to fit ICT strategy in the overall strategy. Certain important strategy theories are explained and their relationship with information and communication technology is described. These theories create a blueprint to effectively utilise the use of ICT as a strategic means.

3.2.2

Defining corporate strategy

3.2.2.1

Five Forces

Corporate strategy must begin with a thorough analysis of the environment of the firm. The most renowned tool for that is the analysis of the five competitive forces (Porter, 1980). This model teaches us that strategy is more than looking at what the competition does. In this model five different forces are set against each other and how these forces affect the environment. It shows us how to shape strategy within that force field. This method is already many times used to explain ICT strategy. (Cecil and Hall, 1988; Porter and Millar, 1985; Earl, 1989)

The power of each force is different for each industry, and may even differ for companies within the industry. This model tells you to focus on the strong forces to stay ahead of the competition.

Threat of new entrants

New entrants bring new capacity to the market and if they grow, it can affect the grow of the current companies in the market. New entrants can enter the market in various ways. They can start a new business in that market, or they can enter the market via acquisition. Porter identifies six different barriers for entry. These barriers prevent possible new entrants from entering that market. These are then also mechanisms that can be used to prevent the new entrants from entering.

o Economies of scale: These economies force new entrants to either come in at a large scale or to accept a cost disadvantage.

o Product differentiation: Brand identification creates a barrier which forces new entrants to invest heavily in customer loyalty.

o Capital Requirements: In order to compete large investments have to be done, this creates a barrier.

o Cost disadvantages independent of size: Independent of the economies of scale, some major investments still have to be done. These can be legal of nature like patents or government regulations but can also come from issues like getting access to the best raw materials etc. o Access to distribution channels: New competitors have to invest heavily in getting the product

in the shelves.

o Government policy: Governments can create barriers to enter markets by limiting access to raw materials, raising or creating taxes and can even foreclose some markets for new entrants.

Customer power

Customers can demand lower prices, higher quality or better service. They can also play out different competitors against each other. Customers are powerful if they suffice the following criteria.

o They are concentrated or buy in high volumes o The products are standard or undifferentiated

o The products represent a significant amount of the costs o They earn low profits

o The product is unimportant to the quality of the buyers’ products or services. o The product does not save the buyer money

o The buyers pose a creditable threat of integrating backward to make the industry’s product

Threat of substitutes

Other products with similar properties can reduce the growth of the industry. Substitutes must be taken into account when:

o The products are subject to trends improving performance tradeoffs o The products are produced by industries earning high profits

Supplier power

itself cannot recover this increase in its own prices. This is very similar to customer power, but only on the other side. A supplier group is powerful if:

o They are dominated by a few companies and is more concentrated that the industry it sells to o Their product is unique, differentiated or it has built up switching costs

o They are not obliged to compete with other products for sale to the industry o They pose a creditable threat to integrate forward into the industry

o The industry is not an important customer of the supplier.

Internal rivalry

This is also called jockeying for position, it represents the existing competition within the industry. Actions like price competition, product introductions and advertisings campaigns are the result of this. Internal rivalry is related to a few factors.

o Competitors are numerous or are roughly equal in size o Industry growth is slow

o The product or service lacks differentiation

o Fixed costs are high or the product is perishable, creating strong temptation to cut prices o Capacity is normally in large batches

o Exit barriers are high

o The rivals are different in strategies, origins and “personality”

Information technology and the five forces

Information technology can alter each of the five forces. It can for example lower costs and thereby lower the barriers for entry. But when information technology is extensively used, the costs also increase, thus raising barriers for entry. Technologies like the internet, on one hand increase buyer power, because customers can compare different products better. Customers can also more easily group, creating a powerful coalition that thus increases customer power.

With a thorough analysis, ICT will probably end up in influences on each force, which shows how large the impact of ICT is.

3.2.2.2

General strategies and positioning

After the industry’s competitive forces are analysed, the companies own generic strategy has to be established. Companies can choose several different ways to outperform their competitors. The general thought behind this theory is to be better at one thing than to be mediocre and at all things. In other words; competitive advantage is at the heart of the strategy. The important thing is that the company has to make a choice to which competitive advantage it seeks to attain, and choose the scope within it seeks to attain it in (Porter, 1985).

There are three different generic strategies for achieving above average performance; Cost leadership, Differentiation and Focus. The latter has two different variants, Cost Focus and Differentiation Focus.

proprietary technology or preferential access to raw materials. Because of the scale of this company, its prices can be lower than those of competitors.

The second generic strategy is differentiation. This strategy sets a company to seek uniqueness in certain dimensions that are widely appreciated by the customers. Because of the uniqueness of this company, it can afford a premium price. This premium price compensates for the extra costs needed to be unique.

As mentioned, the last of the generic strategies, focus, has two variants. The main difference between this and the first two generic strategies is that the competitive scope of focus is much narrower. Companies that pursue the focus strategy, serve only a segment of group of segments in the industry and tailors its strategy to completely serve them. This narrow focus, itself is not a source for above-average performance in an industry, thus has to be used with an extra dimension. The dimension that does give that to the company is the competitive advantage it seeks. It can be in cost or in differentiation. The difference between these two variants is that one chooses to seek competitive advantage in the costs is a certain segment and the other in differentiation is a certain segment. The companies that pursue this strategy, have to completely devote themselves to this, because persuasion of more than one generic strategy causes confusion and thus lower than average performance.

Figure 4 - Three Generic Strategies (Porter, 1985)

3.2.2.3

Strategic Fit

the activities themselves and finally they can occur from limits on internal coordination and control. A trade off is for example when the reputation of the company is low-cost production, the company cannot be a front runner in new ICT techniques, because expensive new ICT projects are inconsistent with the image of being the cheapest competitor.

Choosing the right set of activities and trade-offs is essential for sustainable completive advantage. All these activities have to correspond to each other, creating a fit. 'Fit' between activities is one of the oldest ideas in strategy. Fit is a more important part in competitive advantage than most people realise. Each activity affects all the activities it is linked with and how well the activities are linked is represented by fit, hence its importance. Thus these individual activities have to be evaluated against the whole, creating an integral system of activities that is so strong that when competitors want to duplicate this completive advantage, they have to duplicate the whole system of activities. One activity is easily copied, but copying a whole set of activities is far more complicated and thus having fit in the activity system creates more long-term competitive advantage.

There are three types of fit, but they are not completely mutual exclusive. First-order fit is simple consistency between individual activities and the overall strategy. In other words, if your strategy is low cost, that means that all activities have to be focused on low costs too. Second-order fit occurs when individual activities are reinforcing each other. That implies that, for example, if a company with a low cost strategy releases a new product, that during the research for that new product, low cost production methods are kept in mind. Third order fit goes beyond reinforcement and is called optimisation of effort. It means that investing or being good at one activity can save more costs on other activities and can thus lower overall costs.

The significance of ICT in this theory is that in order to create fit as a whole, the different ICT activities should be an integral part of the company’s set of activities. Therefore choosing the right set of (information) activities should be well considered choice for the management in order to create fit for the company as a whole.

3.3 New strategic options

3.3.1

Introduction

Information technology can be used in several ways to create new strategic options and leverage existing business strengths. There are three elementary ways for creating new strategic possibilities: enhancing scale, product differentiation, creating unique institutional skills or integration. (Cecil and Hall, 1988; Porter and Millar, 1985) The four ways and are explained in the following paragraph.

scale of information. This is when information from one end of the company can be used to improve another part of the company that normally would not have this information. The final way to improve scale with IT is to share costs between businesses. By developing a system and deploying it over the own divisions, total costs can be shared and thus reduce individual costs. Product differentiation can also be strengthened by using ICT. Competitors usually do that by improving customer loyalty. Customer loyalty can be improved by improving service. This can be improved by ICT especially if the product itself has a high information component. ICT can store vast amounts of data and this can be used to enhance product differentiation. The topic is discussed earlier in this paper.

Unique institutional skills are created by using information technology to leverage the existing skills. However these are only in rare cases sustainable, competitors often try to copy these skills. Perhaps the most important aspect of ICT application is integration. The most powerful ICT application is not that of single automation but that of integrating different aspects of the business. Cecil and Hall (1985) recognise 3 aspects of integrating business with IT: The first is integration across products and customers to create more a customer focus. The second is to integrate across business functions to create a complete enterprise system and the third is integration across businesses to create a global focus.

Organisations often tend to think in the normal patterns, focus on product, customers or geographical instances. This means that IT applications often get developed as a series of add-ons, which is not really integration. These applications never get really linked. In conclusion, integrative applications that do have proper alignment within the system, often also create sustainable competitive advantage.

3.3.2

How to create business opportunities

After the discussion what opportunities information technology can create, a step plan for creating an action plan that exploits information technology opportunities is explained.

3.4 Strategic concepts

3.4.1

Introduction

The strategic significance of information technology lays in the fact that information technology affects all aspects of the value chain (Porter and Millar, 1985). The value chain is the system of the company’s interdependent activities, which are connected via linkages. Such a linkage exists when an activity is performed; it affects the costs or effectiveness of other activities. For example, better logistics immediately reduce the need for a lage inventory.

Information technology generates more data, makes activities more effective and more efficient. However, these are all improvements in the activities themselves; IT can also play a major role in improving the linkages in the value chain.

Traditionally products carry a physical and information components. This information component is among other things, everything that a buyer needs to know to purchase the product and all information that is required to use the product to achieve the required functionality.

Further, as discussed in paragraph 3.3.1, only the fullest potential of ICT can be unlocked when integration is sought within IT (Cecil and Hall, 1988). To unlock this high potential an integrative approach is required from a strategic point of view.

3.4.2

Alignment

Much is said about aligning, or creating synergy, between strategy and information. The importance of alignment to improve overall business performance is widely recognised. The punctuated equilibrium model (Sabherwal, Hirschheim and Goles, 2001) is a model which shows how well different organisational dimensions are aligned. It derives its strength from the fact that it combines different and widely accepted theoretical views in one overall model.

Business strategy may be examined by using different typologies for the corporate level strategy and the business level strategies. The typology that will be used is that of Defenders, Analysers or Prospectors (Miles and Snow, 1978)

Business structure is examined in terms of decision making being organic or mechanic. An organic business structure is flexible and can react quickly to a changing environment, whilst a mechanic structure is rigid and has difficulties adapting to a rapid changing environment. This may also be linked to centralised and decentralised decision making. (Burns and Stalker, 1961)

Information systems structure is examined using similar constructs; centralised, shared or decentralised Information systems management. (Brown and Magill, 1998)

The last dimension Information systems strategy is examined by looking at the impact of the information systems that are used on the organisation. This is done by using the five strategic thrusts: low costs, differentiation, growth, alliance and innovation. (Brown and Magill, 1994)

As can bee seen in the figure, these four dimensions will be examined along six types of alignment. The first is Strategic alignment, where the fit between the business strategy and the Information Strategy is examined. The second is Information Strategy alignment where the consistency between the IS systems and the IS structure is examined. The third is Structural alignment where the fit between the different structures is examined. The fourth is Business alignment where the consistency between the business strategy and the business structure is examined. The fifth and the sixth are alike; cross dimensional alignment. Where the different consistencies between either the business strategy and the IS structure and the IS strategy and the business structure are examined.

There are two important lessons taught in this theory. One is that business strategy and information strategy and resulting structures, cannot be seen apart. They are closely linked to each other and should be closely aligned to receive optimal benefits. The other lesson that can be learned from this theory is that alignment is important and is not a one dimensional phenomenon. Alignment is multidimensional and should thus be treated as such in strategic planning.

Alignment is still an abstract construct. How should an organisation create alignment? And furthermore, after creating alignment, how can alignment be sustained? Studies have showed that effectively sustaining alignment is a very difficult process (Sabherwal, Hirschheim and Goles, 2001). In order to effectively achieve and to sustain alignment, a six step approach should be used (Luftman and Brier, 1999). This six step approach makes the execution of business and IT alignment more tangible.

¾ Set the goals and establish a team ¾ Understand the business-IT linkage ¾ Analyse and prioritise gaps

¾ Specify the actions

¾ Choose and evaluate success criteria ¾ Sustain alignment

team looks if the goals do not exceed the technology or vice versa. Does technology match with our business? Does it improve our business? Is it consistent with our strategy? These are questions that the team must take into recognition but they are often overlooked. The second step is to understand the linkage between the business and IT. This means that IT has to fit the business and that the business has to fit to IT. They both have to realise that with this greater understanding of each other’s needs, better overall performance would be achieved. The third step is to analyse and prioritise the gaps between the current and the future state of the organisation. The gaps with the highest priority will have to be tackles as first in the fifth step, specification of the actions. This step is essentially project management of the gaps that were assigned in the previous step. After the goals are set and the action plan is made, the evaluation criteria have to be chosen. This step involves looking back at the original goals to construct the appropriate success criteria. These can involve flexibility, sustainability or economics. The final step, and perhaps the most difficult, is sustaining business and IT alignment. This can be done by making the team a permanent IT steering committee and making the alignment steps into a continuous process, like the strategic planning process.

Alignment is a very complex and dynamic process that takes time and effort to develop and even more to sustain. Companies that achieve and sustain alignment can build strategic competitive advantage, increasing transparency, efficiency and profitability.

3.5 ICT Capabilities

3.5.1

Introduction

ICT capabilities are important for the company. They determine how well the given strategies and concepts are carried out, how new possibilities are identified and how well the strategic concepts for IT are defined. It is therefore important to know at what level of competence the company is. Furthermore knowing what the ICT capabilities of the organisation are can provide more insight in organisational issues like whether to gain knowledge inside the company or get external knowledge or whether to customise or to standardise enterprise systems.

3.5.2

Capability maturity model

Figure 6 - The Capability Maturity Model (Paulk et al, 1993)

The model consists of five different levels of process maturity and offers a way to prioritise improvement. Each level in the model provides a platform for achieving better maturity.

At the first level, initial, processes are created ad-hoc, even somewhat chaotic and success depends on individual effort. The second level, repeatable, is when early project management is installed to track costs, schedule and functionality. The process management is installed to repeat the successes from earlier projects. The third level, defined, is where processes are documented, standardised and captured in software processes. The fourth level, managed, is where detailed information is collected and used to steer the processes. At the fifth level, optimising, processes are continuously improved by qualitative feedback and from new ideas and technologies.

3.6 Concluding aspects of information strategy

4 IS in a decentralised environment

In the previous chapter a solid basis is made for setting up an IT strategy. However, the previous chapter concludes that for firms that operate in holding structures or that are in a post acquisition situation, the currently provided theories prove not to be sufficient.

This chapter focuses on that particular gap, existing between centrally steering ICT in an organisation that handles its strategies decentralised.

4.1 ICT and acquisitions

Mergers and acquisitions are often means for expansion for organisations. Integrating the organisations is often a key issue post acquisition. In this respect, ICT plays an important role in successful integration.

There are four types of acquisition, which each has its own following integration path (McKiernan and Merali, 1995). These four types differ in the need for organisational autonomy and the need for strategic interdependence. The simplest type is acquisition and integration by holding, where the need for strategic interdependence as well as the need for organisational autonomy is low. In essence the acquired company and the acquiring company stay totally independent. The next type, absorption, is when low need for organisational autonomy and high need for strategic interdependence meet. It involves maximal operational consolidation. The following type is completely the opposite of that and is called preservation. It for the companies it means that there are several autonomous operations and management is at arms length. The last type, symbiotic, is the most difficult type of acquisition and integration. It involves both high need for organisational autonomy and high need for strategic interdependence. In practice this means that there is some interdependence between the companies.

The type of acquisition and integration determines how ICT should be integrated. Integrating information systems is mostly done as a reactive role; IS/IT needs to be changed to accommodate other operational aspects. IS/IT can also take on a proactive role; IS/IT is the facilitator for other organisational changes or as a prime motivator for the merger. Clearly, the type of integration determines the ICT integration. The preservation and holding categories imply a low strategic interdependence and thus information systems can be fairly left intact. The absorption and symbiotic categories entail high strategic interdependence and thus will require more extensive ICT integration. Symbiotic integration proves the greatest challenge for IS/IT integration where it may be possible to centralise some systems but in order to preserve an organisations autonomy, a bridge must be built between unchanged systems.

The strategic role of ICT is importation should not be neglected in mergers and acquisitions. It failure to recognise its importance can result in a reactive role whereas a proactive role should be preferable. Therefore it is important to formulate a new ICT strategy for the new company, whilst its absence after the acquisition can have great implications for the firms. First absence of a proper ICT strategy can promote development of fragmented systems. Second, its absence together with the absence of long term plans and failure to make the role of ICT personnel explicit can result in the loss of able ICT staff. Competent ICT staff and more important, the management of IT, are furthermore important enablers for successful ICT integration.

Proper management of the transition plays an important role in the information system integration success. (Stylianou, Jeffries and Robbins, 1996) Furthermore, participation also plays a vital role to maximally exploit the opportunities coming from the merger. To improve this even more pre-merger studies can be done. It is important to realise and foresee problems that can arise with the integration.

It is of the best interest of any organisation that relies on IT to have IT systems that are well integrated and operate in a synergistic way. To measure the success of the IT integration in the merged organisation 5 dimensions can be used (Robbins and Stylianou, 1999).

¾ The ability to exploit opportunities arising from the merger ¾ The ability to avoid problems stemming from the merger

¾ The end user satisfaction with the integration process and integrated systems ¾ Improved IS capabilities that help support the underlying motives for the merger ¾ Efficiency and effectiveness of resource utilisation during the integration process

4.2 Managing multiple strategies

There are two important reasons for strategic planning on the subsidiary level. First of all this provides a means to facilitate the realisation of overall strategy by adopting it to local market circumstances and customer needs. Second it serves as an important feedback medium to businesses in assessing its overall positioning (Sargeant, 1990) The existence of a local strategy does not imply that that the subsidiary works away or remote from the corporate strategy. On the contrary, it represents a local form of that general overall strategy. Enabling the overall company to penetrate markets they normally would not have.

These two main purposes for a local strategy can be split into five reasons for strategic planning at the subsidiary level.

¾ Localisation of overall strategies to take into account local idiosyncrasies ¾ Maximisation of ‘Subsidiary Added Value’

¾ Local grow and development of subsidiary ¾ Train local management

¾ Alignment of the subsidiary with the common viable purpose

A subsidiary works closely on its own market. Therefore it can react better on fluctuations in that market. Provided with a general strategy, a local subsidiary can translate a general strategy into a strategy that works on a local level. In this case the subsidiary does not work on its own but functions within the strategy but adopting it to the local needs. Subsidiaries have more insight in their own processes. Therefore they should be able to optimise their internal processes better than that the mother could. When local strategies are applied it is interesting to compare the different subsidiaries in order to see which subsidiaries are maximising their added value. A subsidiary is not a static firm; it grows and matures over time. As the subsidiary grows, it acquires more and more skills, until eventually the subsidiary is capable of making its own decisions and because of the before mentioned aspects it can adopt itself better to the local circumstances. Furthermore a subsidiary can be used to train management staff and prepare them for possibly becoming higher management. Subsidiaries can be used in this way to create a career path in the company and thus becoming more attractive for promising personnel. Finally, the subsidiary always has activities that do not integrate into the global strategy. These activities have to be steered so that their outcome matches with the common purpose within the total company.

The reasons for strategic planning at the subsidiary level are now clear, but often holding firms want to create synergy between the diversified businesses. The subsidiaries are themselves very diversified, but nevertheless management would like to create interdependencies between the different companies in order to make the most out of the whole of the holding and thus creating synergy.

A method for analysing diversified businesses and tracking their possible interdependencies is the Four Portfolio method (Clarke and Brennan, 1990). This method advises companies to look at their company in four different ways to get the most out of a company which has different subsidiaries with diversification strategies. The method clearly states that in many companies diversification and portfolio strategies fail, in order for these strategies to work multiple angles for the portfolio have to be used. This method prevents that pitfall using four different angles to examine the subsidiaries and thus create a clearer image of the strategic opportunities for a given mix of businesses. Using the four portfolios the synergies between the subsidiaries can be recognised and be used to its fullest potential. The four portfolios are

¾ Product Market Portfolio ¾ Resource Portfolio ¾ Customer Portfolio ¾ Technology Portfolio

Each portfolio by itself is a sort of SWOT analysis specifically focussed on each aspect. The product market portfolio is focussed on the products and the markets they serves. The resource portfolio identifies the key productive activities. The customer portfolio identifies the market share in relation to the competition. And finally the technology portfolio is focussed on the positioning of the technology within the firm.

Once these four analyses have been made, the synergies between the businesses can be sought. Because the dimensions of how to look at the firm are now changed, new perspectives for synergies arise. Similar activities can be easily be recognised or activities that once combined function even better can be recognised. Subsidiaries itself, by their nature, cannot see the possibilities for synergy and therefore this is the task for the top management in the holding to create and maintain synergies throughout the holding.

4.3 Utilising ICT strategy in a holding situation

The previous paragraph concluded with that ICT strategy should have some of both key aspects; centralisation in order to create synergy between the different subsidiaries and decentralisation to let the subsidiaries maintain their own identity en not loose their connection with their own market.

A recent trend in information technology is that of recentralisation. Networking started highly centralised with mainframes and terminals. Later networking became more client-sever orientated. Now more and more a trend starts to recentralise not only that client-server environment but also the organisation handling the ICT (Simson, 1990). There are three factors driving this trend towards recentralisation. First, high costs; in IT cost are often high, for example licensing costs can be reduced when this is centrally deployed. Second, changing demographics of IT; not only changes the sites for IT, a larger central IT organisation can offer better career paths and can thus attract better personnel. Third, emphasis on company wide information systems; A central IS organisation can integrate corporate systems far more effectively than decentralised IS organisations. This last factor is the key factor towards recentralisation.

However, this trend towards recentralisation proves to be more than the old centralisation, it proves to transcend the traditional trade-off between centralisation and decentralisation. In this way a hybrid organisation exists with both the advantages of centralisation and that of decentralisation. The advantages of decentralised IS organisations are that subsidiaries can get their own wishes into the system, thus creating a better fit with their organisations. With the hybrid IS organisation, a powerful central IS organisation keeps the overview of the central needs but by placing key persons in the subsidiaries, still manages to fit their wishes into the system. This is not possible without a strong, central IS staff with a strategic overview of the business. This way companies can exploit the advantages of centralisation without losing the flexibility of decentralisation.

A recent survey of over a 100 IS executives (Kahai, Carr and Snyder, 2003) show almost the same results. Organisations are trying, to centralise their IS resources so that it offers benefits like better hardware and software control. This again, is not so much centralised as in the age of the mainframe. This structure provides a mix between centralisation and decentralisation so that it allows the organisation to take the advantages of the both. This is often done in what is called two new breeds of centralisation. (Berkman, 2001) The first is to organise the IT employees to support a specific business process for the entire enterprise, the second is to organise the IT employees by skills. In either case, only one IS organisation serves the whole organisation. This results in what is called centres of excellence, as IT staff is pulled away from the rest of the business and consolidates in a central IS unit.

4.4 Concluding decentralised information strategy

When the insights of this chapter are lifted to a higher platform, information strategy, they prove to replenish the theories provided in the previous chapter. Centralised and decentralised strategy can exist together as long as the decentralised strategies are matched with the central overall strategy. It is merely to respond better to the local market. For ICT it is basically the same. It can be centrally steered and still maintain the advantages of a decentralised system. The key for this to function in a holding firm or in post acquisition situations is that as well as supervising the local corporate strategy for each subsidiary, the subsidiaries can each have their own information strategy supervised by the central information organisation. Their information strategy should also have been set up with the tools provided in the previous chapter. These information strategies have to be brought in alignment with the total information strategy drawn up by the holding. After that they have to be absorbed in the total information strategy, creating one total centralised information strategy with for each subsidiary their own unique aspects. This creates an information strategy with the advantages of centralisation and the advantages of decentralisation creating synergy in for the total holding. The type of acquisition and integration determines the degrees of the freedom that should be given to the subsidiaries in formulating an own information strategy or the amount of centralisation in the overall ICT strategy.

5 Case of the Bieze holding

5.1 Introduction

The goal of this research is to improve the ICT strategy of Bieze and also provide general insights in other companies that are also in holding or post acquisition situations like Bieze. Therefore Bieze serves as a case to empirically test the general theories provided earlier in this research. In this chapter the findings of the previous chapters are compared to the case of the Bieze holding.

5.2 Background of the subsidiaries

To provide better insights in the case of Bieze, supplementary the information given in paragraph 2.4, a short history of the background of the subsidiaries on the three locations of Bieze is given.

5.2.1

Bieze

The location in Nijkerk is the main facility of the Bieze Holding, it houses four of the six subsidiaries including Vers Logisitiek, the in-house transportation company; Zuivelmaatschappij, which is a trading company of all sorts of dairy products; Epos, which is a production plant for spices and herbs and Bieze, a trading company for salad products. The basis of the Holding company, the Bieze Exploitatie mij, is also situated in Nijkerk.

Bieze started its automation in the financial department. The urge came to have better financial insights to provide better control of the company. Along with that, the Warehouse Management System that Bieze used performed poorly. Performance in the warehouse was at about 50%. Bieze started customising their financial system Exact with additional Warehouse features. This created Easy Logistics, which now is a full and official module of Exact. Since Bieze has a close relationship with their software house Modulair, Exact has been extensively customised. The other Nijkerk based subsidiaries have similar automation, since this is all centrally controlled from the Exploitatie mij. Epos, for example, has a production module custom built in Exact and Easy logistics.

Bieze also recently started working with e-Synergy from Exact. E-Synergy is a web based collaboration platform, which handles all information within the company.

Furthermore Bieze has outsourced the technical maintenance and the daily system control to Modulair, which has a special department for that purpose. However, since Modulair became a full Exact daughter in 2005, the relationship has become less informal and more professional.

5.2.2

CêlaVíta

CêlaVíta is based in Wezep and was acquired in the summer of 2005 by the Bieze Holding. CêlaVíta started out as a part of a cooperation of farmers, Agrico. It’s sole purpose was to the potatoes of the cooperation. Now, CêlaVíta is a full subsidiary of the Bieze holding, producing potatoes in the cool fresh segment.

the raw potatoes. For CêlaVíta it handles the receiving of potatoes, the preproduction quality control and the financial completion of the process.

In 1997 production felt the need for a more ERP driven process. That lead to the implementation of the ERP package Protean in 1998. This package handles the major flow of the production process of the company.

The latest large package implemented by CêlaVíta is Avantis. Avantis handles purchasing, and at this time it only handles the purchasing of the technical goods and the auxiliary matters for the production. The main advantage of Avantis is that, since it was originally of the same vendor as Protean, it seamless integrates with Protean.

The IT organisation of CêlaVíta was complicated. IT was not really a department but more a few persons which had a daily task in providing support. These persons had to answer to the head of Automation at Agrico and furthermore had to answer to a chef locally at CêlaVíta.

5.2.3

Neptunus

Neptunus is based in Enschede and started out as a family company producing different herring products for the German market. It was taken over by Bieze in the beginning of 2005 and is now a full subsidiary of the Bieze Holding.

Neptunus started late with ICT and automation. The largest step in automation came when it was taken over by Bieze in the beginning of 2005. Neptunus now has implemented a customised solution in Exact and Easy Logistics for their production and warehousing.

5.3 Dynamics of ICT in the Bieze holding

5.3.1

Management of ICT

years. The ICT strategy, as the general strategy, should not rigid, but should be reviewed and updated each year for keeping the best fit in dynamic times. Updating the ICT strategy also forms another purpose; the ICT strategy is then also updated with the influences of the subsidiaries keeping the fit with the local strategies also maximal.

The next paragraph focuses on a few issues of the Bieze Holding and compares them with the given theories for a first falsification of the provided framework of theories.

5.3.2

ICT issues

Because the subsidiaries are different, the nature of the issues that arise are different. Furthermore the recent overtakings have brought their own problems into the holding. In these paragraphs some of the current ICT issues of the Bieze Holding will be addressed and each will be related to the given theories in chapters 3 and 4.

5.3.2.1

Separation CêlaVíta from Agrico

Since Agrico sold CêlaVíta, the affiliations between the companies become lesser. Furthermore this meant that the farmers joined by the cooperation Agrico, once the owners now were just the suppliers of CêlaVíta. This situation created a conflict of interests, because CêlaVíta still depended for a large part of (IT) resources on Agrico. Activities that were handled by the AGRsyst system were; purchasing of the potatoes, receiving of the potatoes, basic quality control of the potatoes, order entering, customer management and invoicing. This conflicting interdependency, along with poor performance and high costs resulted into the decision that these activities had to done internally at CêlaVíta. The separation was done in two projects running simultaneously. Both were finished in the summer of 2006.

Warehousing at CêlaVíta

CêlaVíta still handled the stock in their cold store by hand. The problem was, that with no administration, it was not really clear exactly which products were in the cold store and how long a product stayed there. This meant that basic activities like FIFO deliveries were difficult and product tracking and tracing is complicated. Though additional features and activities this was still within the official regulations and within the requirements of the customers, but this was still a gap in the supply chain, creating all sorts of difficulties. Therefore it was decided that there had to come a warehouse management system to overcome these problems and simplify the traceability. To improve synergy between the different subsidiaries the same warehouse management system was chosen as the rest of the subsidiaries for CêlaVíta.

problems in the first week. Currently the system is more settled and users are getting more and more used to it.

These problems prove that CêlaVíta is at a low scale at the Capability Maturity Model; the new processes are getting more settled, moving CêlaVíta towards the second level, repeatable. The higher it moves up the scale the better the processes will run. The decision to implement the same warehouse management system as the other subsidiaries increased the synergy between the different subsidiaries.

Purchasing at CêlaVíta

Since CêlaVíta is separated from Agrico, potatoes no longer have to be purchased from the growers joined by the Agrico Cooperation. However, due to moral obligations the growers from Agrico still are the main suppliers. The main difference is that in the past the growers had contracts with the cooperation. In this cooperation sales were guaranteed and more important, profits were shared and equally divided. With the separation every grower makes each season a new contract with CêlaVíta with several possible different price agreements with bonuses and discounts. These price agreements are dependent on quantity and several different aspects of the quality of the potatoes. This new activity for CêlaVíta had to be controlled and had to be placed in the CêlaVíta supply chain. This was also important for the tracking and tracing of different batches within the supply chain. This department had to make do with the old procedures and the AGRsyst system.

The project to solve these problems was started in March of 2006. The scheduled end date was June 2006. The project was lead by experts in the field of potato purchasing automation and was implemented in Navision. First the functionality was to be added to the existing ERP package FlexProcess, time pressure and the fact that the consultants already had a customised solution in Navision, led to the decision to implement the solution in Navision. In order to integrate Navision in the supply chain, an automated link with FlexProcess was built.

The solution for the purchasing issues shows the autonomy of CêlaVíta in the entire Bieze holding. Specific demands for one subsidiary were the drive for some degree of decentralisation and this issue will be one of the items for only one specific subsidiary in the total Bieze ICT strategy.

The time paths of this project and that of the warehousing project show further that ICT strategy is addressed on a short term basis. Short term often means quick success, but can also tend to forget long term competitive advantage.

5.3.2.2

Transition to Exact Globe 2003

Bieze is currently on the globe 2000 version of Exact. Bieze wants to upgrade to the globe 2003 version of Exact. The problem is that with so many customisations, transitions are complex, and require extensive testing before going live. Previous transitions went almost flawless at Bieze but Globe 2003 handles the internal tables differently, which created a conflict for many of the customisations by Bieze. In addition of testing all functionality, all of the customisation had to be revised of be completely rebuilt for Globe 2003. This took a lot of effort. Bieze has transitioned in the beginning of 2006, but is still solving small problems of the transition on a daily basis.

that ICT is handled reactive and short term. To capture the full long term potential of ICT in a proactive manner, ICT should not be focused on quick success, but on the long term advantages in order to make all future transitions transcend more smoothly and keeping the fit to the organisation at a maximum.

5.3.2.3

ERP package Protean

The ERP Package that supported the production at CêlaVíta, Protean, has had many owners. After almost 10 years of different owners, SSA Global purchased Protean and its sister package Prism. SSA has taken over many ERP packages, including the Baan series. A study by the Gartner Research Institute in 2004 (Steenstrup et al, 2005) analysed the acquisitions by SSA and concluded that development of Protean will slowly be stopped by SSA and that customers will be encouraged to migrate to the SSA products. Recent contacts of Protean users with SSA have emphasized these predictions. In that same article, Gartner advises that customers who want an alternative for SSA should consider FlexProcess. FlexProcess is developed under licence by Japanese company NEC and is built on the core of Protean 3.2. Since CêlaVíta was still operating on version 3.2 of Protean, this was attractive alternative. Bieze decided to replace Protean with FlexProcess. This transfer was not more than a large migration and was implemented in 9 weeks and was guided by an external consultant.

The fact that CêlaVíta is a production plant makes that the demands are different then those of distribution plants like Bieze and de Zuivelmaatschappij. ICT support for the production facilities will be one of the specific key points specifically for CêlaVíta in the total Bieze ICT strategy.

5.3.2.4

Implementation of E-synergy at Bieze

Bieze purchased E-synergy two years ago. Since the implementation, very little has happened to make a collective effort to implement the system companywide. Almost everybody uses parts of the system, yet almost none of the users is satisfied. Because of this dissatisfaction, users do not want to use the system and therefore many users resist to use this system. A recent management decision decided to extend the use of E-synergy and let all internal communication go via this system, making E-synergy the official internal communication channel. Following, an internal investigation has started to expose all discrepancies and collect additional wishes of the users to boost the user satisfaction of the system and the use of the system itself.

The implementation of E-synergy shows that at Bieze, the management is still at the defining level and the users are still at the repeatable level of the Capability Maturity Model. Increasing these levels will automatically improve the usage of E-synergy and user satisfaction.

5.3.2.5

Time registration at Bieze

In order to increase synergy between the different subsidiaries, the decision was made to implement the time registration system already present at CêlaVíta. Also some form of centralisation will be applied by only using one time registration server for the entire holding.

5.3.2.6

IT department organisation

With the takeover of CêlaVíta, also the complete IT department structure of the different companies was revised. The intention was to accommodate the whole IT department under the holding with helpdesks at the different locations. This centralised solution was a major change in the organisation of IT for all companies. Although the organisation of the IT department is now centralised, there are still helpdesks on different locations. These provide direct support for local problems. Larger issues are handled more centralised from the holding.

5.4 Discussion

The Bieze holding has grown significantly in the past few years. With that, the IT in the organisation has grown equally. At the present time many IT activities require more or better coordination and slowly more and more business issues arise. Still, many of these projects are, for a large degree, done by external personnel. This is the reason for the current management to re-examine the current ICT strategy. The given framework of theories in this study can provide Bieze the necessary backbone for their ICT strategy. There are already some parts of the theories that are used, and practice shows that these are indeed paying off. Bieze is, for example, already gaining from the fact that now each subsidiary has the same warehouse management system. Possible alterations, new reports etc invented made at one subsidiary are evaluated by a general user forum and if they prove to add up to the current standards they are added to the system. In this way local improvements quickly become available for all the subsidiaries so each of them can profit from these improvements.

Table 1 - Bieze’s subsidiaries vs the report’s contructs

The strategic interdependence levels of the Nijkerk based subsidiaries are the highest. These subsidiaries formed the old holding which was strategic very closely intertwined. The same conclusion can also be drawn for the organisational interdependence; the Nijkerk based subsidiaries have the most intertwined organisational interdependence. Bieze and de Zuivelmaatschappij, for example, share many resources like the cold store. CêlaVíta and Neptunus also make little use of that same cold store, but their organisational interdependence is thus not as large as that of Bieze and de Zuivelmaatschappij.

The strategic fit is difficult to establish because the exact strategies are not known to the researcher which is vital for determining the strategic fit. The used values are based on estimates by the researcher. The fit is in most subsidiaries reasonable to good. Vers Logstiek has the highest strategic fit because this subsidiary combines transportation activities for Bieze, de Zuivelmaatschappij and Epos, which is third order fit; optimisation of effort.

The alignment is also difficult to establish since extensive research is necessary in order to get a complete insight of each of the four alignment aspects and their interrelatedness. Neptunus probably has the worst alignment of the Bieze holding, since Neptunus does not have their Information systems strategy and their Information systems structure very much developed.

The Capability Maturity Level is an estimate which roughly indicates the level on which each subsidiary operates. Most of the subsidiaries have the most processes at the defining level. CêlaVíta for example is with their WMS project still between the first level; initial and the second level; repeatable. Other processes, for example the production process is at a higher level. Neptunus is has the lowest level on the CMM scale, which derivates from the fact that they started late with general automation.

handle on-site issues. Neptunus depends on that part highly on CêlaVíta and Bieze to provide their ICT support.

As said earlier, low values are not necessarily bad and high levels are not necessarily good. More interesting is to see whether values in the table correspond with the strategy and if the values mutually correspond. High organisational interdependence should correspond with a high level of centralised ICT. Furthermore, low strategic interdependence should indicate a high level of decentralised ICT.

Vers Logistiek is a good example for that; it has high strategic interdependence and high organisational interdependence. Furthermore it has highly centralised ICT primarily handled by the Bieze Holding. It is a strategic choice to completely centralise Vers Logistiek’s ICT strategy because of its tight relationship with the entire holding. CêlaVíta is the opposite of that; it has low strategic and organisational interdependence. It is then a strategic choice to centralise and to decentralise the ICT strategy in order to preserver CêlaVíta’s uniqueness as a subsidiary in the entire holding. Table 1 also gives a quick glance of possible inconsistencies with strategic choices and the operational practice. For example Neptunus has a low strategic interdependence and a moderate organisational interdependence. On top of that, both centralised and decentralised ICT are not at a high level, which indicates that either the strategic interdependence is inconsistent with the chosen ICT strategy or vice versa. Another option is that one of these constructs is not executed properly by the subsidiary.

An interesting aspect of Table 1 is that the last two additions to the holding, CêlaVíta and Neptunus, are also the most strategic and organisational independent. The other subsidiaries are all situated at one location and are much longer a part of the Bieze holding. The current development is that the strategic and organisational interdependence is growing between these two subsidiaries and the rest of the holding. On indication that organisational interdependence is growing between these two subsidiaries and the total holding is that CêlaVíta and Neptunus are currently using the cold store of Bieze and de Zuivelmaatschappij to store their slow-movers.

Another interesting aspect of Table 1 is the high levels of strategic and organisation interdependence. According to the theory in 4.1 by McKiernan and Merali (1995) only low strategic interdependence with low organisational interdepence indicate a holding type integration. When looked at these figures, the integration type of the entire Bieze holding is, contrary than the name expects, symbiotic.

5.5 Conclusion of the Bieze Holding Case

The given theories did not fully comply with the Bieze situation, since Bieze is currently not implementing the full framework. There are small aspects of the theory like centralisation and synergy used. These aspects comply with the given framework and they are already beneficial to Bieze. The parts that do differ from the framework are also current issues for Bieze and these can be explained using the theory. For that reason it will be beneficial for Bieze to implement the total given framework.