Trigger and Barriers for the adoption of IT/tel. service x
December 2008 Censored Version
Student: Michiel Kalis Student number: S1300245
E-mail: MichielKalis@Gmail.com Tel: +31 (06) 413 707 54
Supervisors: Rob de Graaf Niels Faber In assignment of: Company x B.V.
Supervisor Company: W. van M.
Place, Date: xxx, December 2008
Programme: Master Technology Management Specialization: Discrete Technology
Faculty of Economics and Business Administration, University of Groningen
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Preface
In April 2008 I started my research at Company x and this thesis is the final result of this research. It is also the end of my study program Technology Management at the University of Groningen. I worked on this thesis for six months and I am proud of the result. There are a number of things I would like to say regarding this thesis.
Writing this thesis was a difficult but great time. For the first time, I could finally experience all the theory in practice. When I started working, I had very little knowledge about “IT/tel.
service x” and I had to work my way in, but it was worth it!
First of all, I want to thank my parents, girlfriend, family and friends for supporting me. Not only for the support during my research, but also during my time as a student in Groningen. I have had a great time and learned a lot.
Furthermore, I would like to thank Rob de Graaf for his supervision, advises and feedback.
Sometimes it gave me completely new insights, that always helped me. I want to thank Niels Faber for being my second supervisor, on such short notice. I want to thank Ed Vonk for his support and the introduction of me to all the telecom managers of the participating multinationals, whom I also want to thank.
Last but not least, I want to thank everybody at Company x, especially W van M., as being my supervisor. My internship at Company x was not only about doing research, I was looking for an internship where I could be able to contribute to the daily operations, and this was exactly the case at Company x. The team consists of highly intelligent, capable but also very social individuals, working together as a strong team, delivering a unique service, but also delivering me a great time as an intern.
Again, my time as a graduate intern and working on my thesis, has contributed to my skills, and my knowledge. It was an unforgettable experience.
With the kindest regards,
Michiel Kalis
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5 | P a g e covered by the products of Company x. But all groups differ in their maturity of centralization and standardization of telecom and IT and also in their perception towards benefits of
“IT/tel. service x”.
The Innovators and Early Adopters are very advanced in their globalization of IT and both had a strong vision and opinion on “IT/tel. service x”. Both segments had already made a choice for or were already using “IT/tel. service x”.
The last three segments had more difficulty aligning the local departments and countries to the new globalization strategy. They also faced problems in gathering the necessary information to support decisions about globalization. Company x should focus on these groups with another proposition. “IT/tel. service x” should help them in an easy and transparent way to quickly assess all the telecom costs, traffic and assets. This advice is supported by the theory of Moore (1991), which describes that a chasm can exist between the needs or the usage of an innovation, between the early adopters and the early majority.
After having created a good case at such a customer, Company x has a good position to sell it normal services to these customers, because they are already known with the product and Company x.
Delivering Value
From the interviews can be concluded that Company x has a product (or service) portfolio that is almost the similar to the needs of the multinationals. But there are a small number of things Company x should pay attention to.
All multinationals mentioned that they primarily need management information and business intelligence. They want clear and easy accessible “in-your-face” information that can be used to support management decisions.
Company x should focus its service more towards end-user awareness than end-user involvement. All multinationals manage their telecom costs on excesses and they see no benefits to actively involve the end-user in the process. They want the possibility of informing end-users about proper and responsible telecom usage.
Furthermore, some other needs as invoice validation, usability, consultancy and
compatibility-issues should be evaluated by Company x.
6 | P a g e Price
This research does not offer an actual price advice to Company x. Company x should position itself with a clear and transparent price strategy, and focus on a short and easy implementation trajectory with no initial investments. Multinationals have problems with comparing different suppliers, due to a lack of standards, but also because the untransparent offerings most players make. By choosing a clear and transparent position Company x should place itself in a better position.
Communicating Value
As stated before, the product portfolio of Company x basically fits the needs and expectations of multinationals regarding “IT/tel. service x”, but Company x is not recognized like that and too often seen as a local player or hero.
Company x has put effort in not only being a European leader, but also being known and seen as a European leader in “IT/tel. service x”. The telecom expense market is mostly focused on the US, but with markets getting more and more global, Company x should use its position as a thought leader in European “IT/tel. service x”.
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0 Abstract
In this research the factors that influence the decision of “IT/tel. service x” within multinationals were investigated, alongside with the needs multinationals have for “IT/tel.
service x”. Methodology used in this research was a qualitative interpretive methodology, because of the deeper insights that were needed to answer the questions. These findings were consequently used to give advices to Company x with regard to their product and service portfolio, but also how Company x should position and market itself and its products.
Keywords:
adoption decision, adoption, diffusion, innovation, customer segmentation, qualitative interpretative, customer needs.
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Table of Contents
Preface ... 3
Management Summary ... 4
1.1 Methodology ... 4
1.2 Research Questions: ... 4
1.3 Findings ... 4
1.4 Recommendations ... 4
0 Abstract ... 7
Keywords: ... 7
1 Introduction ... 10
1.1 “IT/tel. service x” ... 10
1.2 COMPANY X ...11
1.3 Adoption of “IT/tel. service x” ...11
2 Research methodology ... 12
2.1 Framework of Ideas ... 13
2.2 Methodology ... 15
2.3 Area of Concern ... 17
2.4 Research Strategies and Methods ... 20
3 Theory ... 24
3.1 The Adoption Decision ... 24
3.2 The adoption context ... 25
3.3 The Framework of the Adoption Context ... 30
3.4 Factors influencing the decision ... 31
3.5 All factors ... 33
3.6 Framework of Innovation adoption ... 34
4 The Interviews ... 35
4.1 Data Analysis ... 35
5 What factors influence the adoption of IT/tel. service x”. within multinationals? ... 37
5.1 General findings ... 37
5.2 Factors influencing “IT/tel. service x” ... 41
5.3 Conclusion: ...44
6 Needs for “IT/tel. service x” and the fit with the product portfolio of Company x ...46
6.1 Summary on needs ...49
6.2 The fit between the current portfolio and the needs ...49
6.3 Current portfolio ...49
6.4 The fit ...49
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6.5 The (partially) blanks ... 51
6.6 Conclusions ... 51
7 What should Company x Change? ... 52
7.1 Choosing the Value (The value Proposition) ... 53
7.2 Delivering Value ... 56
7.3 Communicating Value ... 59
7.4 Conclusion ... 60
8 Conclusion ... 62
9 Discussion ... 63
9.1 Methodology ... 63
9.2 Financial Impact ... 63
9.3 Outsourcing ... 63
10 References ...64
11 Appendix ... 67
11.1 Questionnaire ... 67
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1 Introduction
1.1 “IT/tel. service x”
During the last decade the telecom market faced a high growth, in market size and technology. New technologies enable more varied uses of telecom. Mobile phones enabled business to be more flexible and employees could travel and still be able to call with their mobile phone. Recently mobile data traffic is growing rapidly enabling business people to access their mail everywhere at any time.
Related to the growing telecom usage are the rapidly increasing telecom costs for companies.
Whereas ten years ago a company only faced a bill for their fixed (land-line) telephone costs, nowadays they face different bills, often from multiple providers, involving many different cost sources, including mobile, data and roaming costs.
Telecom managers were often focused on the technology and the products. Telecom managers wanted to be leading in the technology. Telecom costs were often taken for granted. Nowadays a shift is recognized from a technology leader to also a more cost aware telecom management.
Telecommunications within multinationals were always managed on a local base. Most telecom providers were also local or country based. Due to the globalization of our economy, businesses tend to be more global. Providers slowly also recognize the need of globalization and are adapting to the needs of the market.
Companies are facing growing total telecommunications spend, although the average calling cost per minute is decreasing. More and more companies are looking into “IT/tel. service x”.
“IT/tel. service x” can be defined as the management of all telecommunication costs, such as mobile, fixed and data. Managing means: getting insights into the costs, reducing costs, and actively trying to optimize the telecom and telecom costs. According to EVUA, a European User-group regarding corporate telecom, the average Fortune 500 Company reports that telecommunications and related network services are their business top expenses.
During the last decade, the number of “IT/tel. service x” companies has grown rapidly.
According to AOTPM it is a high fragmented market, and despite of some major mergers, the total number of companies is growing. Most research on the “IT/tel. service x” market is focussed only on the United States. Gartner, a well established analyst has done some research on the major global “IT/tel. service x” players, but focussed only on the US market.
European markets are very young and mainly consists of small players, often local heroes.
The number of pan-European “IT/tel. service x” players is very limited. Some US-players are
planning to enter the European market, but there is still no report of an actual success.
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1.2 COMPANY X
Company x is a Dutch (based) company that is founded in the year 2001. [partially removed, sensitive business information]
Company x is a fast growing. Company x is one of the industry leaders. [partially removed, sensitive business information]
Company x is, considering the number of employees, a rather small company. The small size of the company results in very flat organizational structure. This structure also enables an informal working ambience with a high interaction between the employees. Every employee is aware of the overall company goals and recent developments. The organizational structure is graphically showed below:
[partially removed, sensitive business information]
Fig. 1-1 Organizational Structure of Company x
Proposition of Company x
Company x has a service portfolio of telecom management solutions that covers the entire telecom market. Their target market focus is twofold. The first market is the (international) business to business telecom market; the other market is the telecom operator market.
[partially removed, sensitive business information]
Fig. 1-2 Company x Service Outline
The initial goal was to provide telecom invoice management as an application service provider (ASP). A more recent and more appropriate term for this delivery model is software- as-a-service. Software as a Service (SaaS) is a software distribution model in which applications are hosted by a vendor or service provider and made available to customers over the Internet. This model delivers all the possibilities of a normal software package, but the application is hosted at the provider, which lowers total cost of ownership, centralized maintenance and global and easy accessibility. According to the AOTMP (2008-1), Company x is one of the few companies that are delivering its services via a SaaS model, although many analysts claim that SaaS has the future.
1.3 Adoption of “IT/tel. service x”
Despite the growing number of “IT/tel. service x” companies in the world, and their ability to reduce telecom costs for enterprises, there is still a low adoption of “IT/tel. service x”.
Company x wants to gain more multinational corporations as clients. Company x thinks it has the capabilities to serve most needs of multinationals regarding “IT/tel. service x”. Company x wanted to gain more insights in triggers and barriers of “IT/tel. service x” within the multinational market, and initiated, together with Ed Vonk, CEO of the EVUA, this research.
There have been numerous studies on the adoption of innovations. Rogers (2003) did an
extensive research on the diffusion of innovations, along with Kamal (2006) and Beaumaster
12 | P a g e (2002). Beaumaster (2002) focused in his research on the adoption and implementation of an IT innovation. Wilming (2007) and Wilming & De Graaf (2009) did research on the adoption of IT services of an academic IT service provider. These researches try to describe the context in which an adoption decision is made.
These researches have been used as a theoretical basis for this research.
2 Research methodology
Methodology describes the study of the principles of method use, in the sense that it sets out to describe and question the methods that might be employed in some activity. Methodology establishes the principals and basics and rules behind the use of methods and on an even lower level, tools and techniques (Jackson, 2000). Checkland (1985) provides a model that makes the distinctions between methodology, theory and practice clear.
As Checkland’s model shows needs any kind of research three basic elements: A Framework of Ideas (F), a Methodology (M) and an Area of Concern (A).
Fig. 2-1 Checkland's model
The framework of ideas can be a current theory, or a discipline. In this framework of ideas, the knowledge of the situation and environment is expressed (Jackson, 2000). This framework of ideas states the reason, why this research is necessary and that is adds a significant value for its readers. According to Jackson (2000) and Checkland (1985), this framework of ideas is then embodied into the methodology. Methodology is the structured gathering of all methods, tools and techniques, so that is the appropriate methodology for the framework and the research. The last element of Checkland’s model is the Area of concern.
This area of concern reflects a specific problem or an existing real-world situation that is found problematic.
In the next part the Framework of Ideas has been drawn. This framework is then used to verify the choice of a specific methodology. Then the Area of concern is described following the guidelines of the chosen methodology.
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2.1 Framework of Ideas
As can be concluded from previous researches by Gartner and Ovum, telecom costs for Multinational Companies are growing, although the costs per minute or per byte are decreasing fast. Telecom usage has been growing for decades and forms now a substantial percentage of the total spends of Multinationals.
According to the EVUA is “IT/tel. service x” still in its infancy in Europe. More Multinationals increasingly have business requirements placed upon them to control network facilities and costs, and to be compliant with recent demands for corporate information control. Some have already built internal processes and services. Mobility services in particular are seen to be a huge problem for enterprises and, as a consequence, a big ”IT/tel. service x” opportunity for
”IT/tel. service x” providers.
The need to manage mobile (data) costs is increasingly important, as is visibility of costs across the board (Ovum, 2008) Overall does Ovum (2008) expect telecom budgets to change little over the coming years. However many multinationals expect telecom expenses, especially on mobile data to grow.
Fig. 2-3 Top Telecom network initiatives (Ovum, 2008)
According to the Aberdeen Group paper, the Fortune 500 companies spend on average 0.84% of their total revenue on telecom service, whereas their average total annual profit was around 1% of the total revenue. This means that potential savings of 25 % in the telecom cost could generate a high potential improvement (almost 20%) in their profit.
As can be concluded from this graph there is a difference in strategy on telecom issues within most Multinationals. Differences can be found between perceptions and plans of finance and IT departments. Although there is a common understanding those telecom costs have to be reduced.
In many Multinationals it’s hard to point out a specific department that is responsible for all telecom businesses. Telecom is often divided over several business functions and cut up in different pieces. This makes it difficult to have telecom costs managed centralized and having a clear overview on costs.
Fig. 2-2 Primary Responsiblity (Aberdeen, 2006)
14 | P a g e In spite of growing awareness and knowledge of “IT/tel. service x”, relatively few multinationals are actually using it. This, in spite of all the effort the EVUA and other user groups have put in creating awareness of “IT/tel. service x”.
Company x a Dutch “IT/tel. service x” provider acknowledges the findings mentioned above, and is searching for ways to convince European multinationals in using “IT/tel. service x”.
According to the researches done by Ovum and Gartner, European multinationals are the potential customers for “IT/tel. service x”-supplier, such as Company x.
The decision within a multinational to choose for “IT/tel. service x” is taken in a very complex context. Those kinds of decisions are made through strict guidelines and could be influenced by organizational politics. The adoption decision process within an multinational regarding
”IT/tel. service x” is a very complex and, most of the time, is a time consuming process where many people with specific interests are involved.
Research Need:
There is a clear need for insights into triggers and barriers for the adoption of “IT/tel. service x”. These triggers and barriers can be seen as factors that influencing the decision for Multinationals whether or not to adopt “IT/tel. service x”. Also for providers of “IT/tel.
service x” it is necessary to know what the specific needs of companies are, regarding “IT/tel.
service x”.
Focusing on Company x, the need of this research is find out, how they should target this large group of potential clients, and what value Company x needs to deliver to these companies.
By describing the context and the research need, a Framework of Ideas has been drawn.
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2.2 Methodology
To be able to reach the research goal, a research methodology has to be chosen. According to Downey and Ireland (1979), is the most important issue in a choice for a methodological perspective, is to look at the research context. As they say: “Methodologies are neither appropriate nor inappropriate until they are applied to a specific research problem” The choice of tools for data inquiry is heavily depending on the kind of research problem.
Qualitative or quantitative methodology?
Qualitative and quantitative methodologies are paradigms that can be seen as two extremes in research methodology. Quantitative research focuses on the gathering hard evidence, in the form of numbers, and is based on statistical methods and conclusions. The goal of qualitative research is to give deep insights into relationships, meanings and perceptions.
Below is an overview of the most important differences between Qualitative and Quantitative research methodology (Sandberg, 2005)
Methodology Qualitative Methodology Quantitative Methodology Aim Thick description. Generate rich and
detailed descriptions of the research object.
Focus on meaning
Thin description. Establish law like patterns about the research object
Design Small samples. Maximize variation of subjects. Often extreme cases. Theoretical generalization
Large samples. Random samples. Statistical generalization
Methods Designed to capture rich and complex data.
Observations, interviews, analysing texts and documents, recording and transcribing.
Researcher the primary research instrument. Research participants as the point of departure
Designed to capture thin data or law-like patterns. Questionnaires and experiments.
Researcher should be eliminated from research process. Point of departure, categories pre-defined by researcher
Analysis Generate themes that provide a rich
description of the research object Analyze the frequency and distribution of a phenomenon in the population
Justification
Meta-theory Trustworthiness, credibility and dependability
Phenomenology, hermeneutics social constructionism
Validity and reliability Positivism
Goal of this research, is to find the factors that are influencing the adoption decision. To be able reach this goal, a deep insight into the context, but also an interpretation of different perceptions of “IT/tel. service x” is needed. The total number of participants on this research is limited, and the focus is on detailed insights.
The most suitable methodology to surface the assumptions, perceptions, and problems, according to the analysis above, is a qualitative methodology.
Qualitative Research is based on several theoretical backgrounds. However there is wide
discussion between positivists and constructionists about the epistemology of qualitative
research. According to Denzin (1994) these two paradigms can be viewed from three different
dimensions, ontological, epistemological a methodological. To be able to describe the
differences a description of both the positivism and the constructivism paradigm is given.
16 | P a g e Positivism
Positivists believe that the “real world” is pre-defined and can be seen and measured objectively. All individuals have the same perception of the world. (Seale, 1999) Theories are used to generate hypotheses that can be tested. Knowledge is produced by collecting facts (Flick, 2007). According to Gubrium (1988), Positivist researchers are able to observe and analyse without affecting the outcome with the researchers own perceptions (Lincoln, 1998).
Positivists believe that knowledge can only come from research through strict scientific methods. The mostly used methodology by positivists is quantitative research. Quantitative research focuses on gathering large amounts of objective data, which then can be analyzed and interpreted for statistical use and conclusions. Seale (1999) states in his book that positivists search for statistical regularities that can be formed of interpreted as casual laws.
Constructivism
Rüling (2002) states that: “there is no such thing as a “real” world that can objectively be accessed”. Constructivists don’t believe or search for an ontological reality, but focus on a constructed reality. The observations of a researcher can be described as constructions in his mind. There is no unified view or construction of reality (Denzin 1996). The goal of Constructivists is to create a better and deeper understanding of the subject that is studied.
Constructionists use constructive methods to examine the relationships that form a reality.
Reality exists of multiple perceptions (Jackson, 2000). The world exists of perceptions, attributes and worldviews (Jackson, 2000). These perceptions of individuals are formed by a person’s history, experiences and environment (Guba & Lincoln 1994). According to Ruling (2002) embraces the constructivist’s epistemology the qualitative and interpretive methods.
Because of the ontological and epistemological believe of constructivists argue Guba &
Lincoln (1994) that “individual constructions can be elicited and refined only through interaction between and among investigator and respondents”. Methods that fit these
“interaction” are mostly interpretive methods.
Justification of Methodology
From this viewpoint can be concluded that a constructivism (or interpretative) approach of a qualitative research is the best approach to confront the problem of this research. This research is focusing on factors that influence adoption of an innovation. These factors vary from the characteristics of TEM, which could be seen as measurable, or objective factors, to management or leadership implications, which can be seen as less measurable, or subjective factors. These soft factors and problems could have a foundation in misperceptions and different views from different actors. This implies the ontological foundation that a person has its own world view. This research is facilitated by Company x for whom the researcher also worked; this gave the researcher deeper insights into “IT/tel. service x” and the “telecom world”.
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2.3 Area of Concern Research Goal
The goal of this research is to advise Company x about their product portfolio marketing strategy of “IT/tel. service x”, to their clients and prospect.
Research Questions
A qualitative constructivism (interpretative) research is focusing on specific “what”- questions, which could be answered after a discussion between different views and perceptions (Jackson, 2000).
What are the needs of multinationals regarding “IT/tel. service x” and what should Company x change in its product portfolio to fulfil these needs?
What factors influence the adoption of “IT/tel. service x” and what should Company x change in its marketing strategy?
Sub-questions
To be able to find factors that influence the adoption of “IT/tel. service x”, it is necessary to have insights into the context of this adoption (or the specific trajectory) and to find the factors that are influencing the adoption decision of an innovation. These insights will be created through the following sub-question:
1. Which factors influence the adoption decision according to the literature?
After having described the context and factors of a general innovation adoption it is then necessary to turn to the multinationals and find out what factors specifically influence the adoption of “IT/tel. service x”.
2. What factors influence the adoption decision of “IT/tel. service x” within multinationals?
Needs of potential clients regarding “IT/tel. service x” are very important to know, for answering the second main research question. It is practically impossible to market a product without knowing the specific needs of the potential clients. This leads to sub-question 3:
3. What are the needs of multinationals regarding “IT/tel. service x”?
To give recommendations to Company x about their product offering and the current fit
between the product portfolio and the needs of multinationals regarding “IT/tel. service x”,
sub-question 4 has to be answered.
18 | P a g e 4. What is the fit between the current portfolio and the needs of the multinationals?
If Company x wants to gain more Multinationals as clients, it has to create awareness of its products and its name. It needs to market its products in such a way that it fulfills the needs of Multinationals. This leads to the last sub-question:
5. What should Company x change in its product portfolio and marketing strategy to gain a better fit between the offering and the needs?
Research Model
Fig. 2-4 Research Model
Research Scope
As said in the introduction, Company x has different services and focuses on different markets. This research focuses on companies who are multinational based, with their headquarters in Europe. As can be concluded from the main research question, this research focuses on “IT/tel. service x”. Although Company x delivers multiple services, such as telecom service management and online telecom manager (the application for telecom operators), this research focuses primarily on “IT/tel. service x”.
Because of the broad and threefold definition of “IT/tel. service x”, sometimes other services have become of interest of this research, but then it has been mentioned.
The scope of the recommendations towards Company x is primarily focused on the marketing
and product portfolio of Company x. This means that recommendations about e.g. mergers or
focussing on different markets is outside the scope of this research.
19 | P a g e The Researcher
As said before, in a qualitative interpretive research, the perspective of the researcher and the theoretical sensitivity plays an important role in the quality and credibility of a qualitative research (Ragin, 1994).The use of an interpretive research methodology makes it obligatory to describe the researcher to better understand the interpretations that are given in this research Before a researcher should start with its research the researcher should gain theoretical sensitivity (Strauss & Corbin, 1990). With theoretical sensitivity is the personal quality of the researcher meant. It’s about the awareness of data, the researcher’s skills, and the ability of giving meaning to data and understands the theoretical context of the subject.
According to Strauss and Corbin (1990) the theoretical sensitivity is build upon a theoretical and literature inquiry and the researcher’s experiences. This means that the quality of a qualitative research depends on the theoretical sensitivity of the researcher.
For this research it means that the quality of this research heavily depend on the researchers personal and professional experience, all the knowledge that he has gathered during his study and the theories he studied for this research.
During its study Technology Management at the University of Groningen, the writer gained a lot of (broad) knowledge about business management, innovation trajectories, product development, marketing and supply chain and purchasing (or procurement) issues. At the start of this research the researcher spend a lot of time gaining knowledge about “IT/tel.
service x”, the market and suppliers, like Company x. Also his activities at Company x gained him information and knowledge about the subject. All this together gives the researcher a broad background on “IT/tel. service x”, and factors that could influence the adoption decision on TEM.
On the other side, activities at Company x could alter the researcher’s objectivity in the sense that his view is intrinsic influenced in favour of Company x. The researcher’s personal knowledge of products of Company x are exceeding the knowledge of other “IT/tel. service x”
players on the market, in spite of the effort in doing a broad research on other players.
During the interviews the researcher tried to act as objective as possible on this subject as possible. During the introduction of the research the researcher made the interviewee aware of the fact that his research is initiated and facilitated by Company x, but it was also noted that Company x won’t have any access to the detailed information from the interviews.
During the interviews the researcher tried to act as objective as possible on the subject
of”IT/tel. service x”supplier, and not to steer the answers in favour of Company x. By asking
open questions and leaving the interviewer free in answering, the interviewer tried to get the
most objective results as possible.
20 | P a g e Definitions
• “IT/tel. service x” in this research is divided into three different definitions, on different aggregation levels. “IT/tel. service x” can be defined as:
o A (holistic) Management Approach to control telecom cost, this includes management decisions, but also the intentions and ideas of controlling telecom costs.
o A Process to help controlling the cost, this means the actual process of (actively) controlling telecom cost in a broad perspective
o An application to support (key) (telecom) processes, this includes the applications delivered by TEM-suppliers or Operators, or applications which are developed within the organization
• Innovation, according to:
o Wijnberg (2005): Innovation is something new which is presented in such way, that its value will be determined by its selectors.
o Rogers (2003): An innovation is an idea, practice or object that is perceived as new by an individual or other unit of adoption.
• Adoption is defined by Rogers (2003) as a decision to make full use of an innovation, as the best course of action available.
• Diffusion is, according to Rogers (2003): the process in which an innovation is communicated through certain channels over time among the members of a social system.
• According to Finchman (1999) Diffusion defines as the process by which a technology spreads across a population of organizations;
• Assimilation refers to the process within organizations stretching from initial awareness of the innovation, to potentially, formal adoption and full-scale deployment (Finchman, 1999).
2.4 Research Strategies and Methods
In this part the research strategies and methods will be justified for the sub-questions, following the principals of the interpretative Methodology. Sometimes a combined approach or strategy was needed to answer. This either because their answers heavily depend on each other or the method of data gathering is equal.
Strategy on Sub-question 1
In the past, there have been numerous studies performed on the adoption decision context (Beaumaster, 2002; Boonstra, 2002; Rogers, 2003) and factors influencing the adoption decision context (Finchman, 2000). Wilmink (2007) built a framework to define innovation diffusion and assimilation, by combining the context and the influencing factors. Because all this information is at hand in varied scientific literature, and for this sub-question this research is focusing on all the factors exist, that influence the adoption, the best way to research this question is to do a literature study and create a list or framework of factors could influence the decision to adopt TEM.
In chapter 3 more insights on the adoption process and decision trajectory of an innovation
and IT-service are given.
21 | P a g e Strategy on Sub-question 2 and 3
To answer these sub-questions, research has been done at the participating multinational companies. For this research the participating companies were companies to whom Ed Vonk had access and from whom he knew in advance that they had a high probability of willingness to participate in this research. The variety in organizations, focussed on their core business, is high. Also size, number of employees, growth and revenue, differs strongly.
Two prevailing forms of data collection associated with qualitative inquiry are interviews and observation. Observation is a technique that focuses more on the behaviour of humans and the roles of humans in groups. The goal of this research is to gain insights into processes and factors which could be a trigger or a barrier in a decision context. To gather this information, interviews are the best method or technique. By interviewing the researcher is able to steer the interview in the desired direction and address the problem effective. Observation is not a suitable method, because this research does not focus on the behaviour of humans.
Qualitative interviews can be used and be performed in different ways. It can be solemnly used, as data inquiry method, but it can also be combined with other methods as observations (Bogdan & Biklen. 1982). Baarda, de Goede and Van der Meer-Middelburg (2007) give in their book five types of qualitative interviews: Unstructured, semi-structured, focused, expert and retrospective interviews. All these types differ in the way they are structured, performed and the way the focus or choose a target group (Baarda et al., 2007).
The most appropriate method of interviewing, for this research is a semi-structured interview. A semi-structured interview starts with a couple of important open questions and predefined subjects which should be covered. In this way, there is large freedom of movement within the interview, which also enables the researcher to dig deep into the underlying meanings of answers, but it also guarantees that the researcher will not loose the goal of the interview (Baarda et al., 2007). This kind of interview demands an environment where a high interaction takes place between the researcher and the interviewee. The best way to create such an environment is interview the interviewee in his natural environment in a face to face conversation. In this research a face to face interview was held with the telecom managers of the Dutch-based Multinationals. Because of the travelling time and costs, the interviews with the non Dutch-based multinationals were done by telephone interview.
The choice was made to record all the data digitally and during the interview notes were made on paper. This decision was made, because it gives the researcher more freedom during the interviews and enables him to make a better analysis afterwards. After the interviews, the transcriptions were worked out. The interviews were not transcribed to the very detail of each word, but the meaning of all the answers was left untouched.
Data analysis have been done according to the method of Pope, Ziebland and Mays (2000)
and Ulrich and Eppinger (2003). They developed a method to systematically order, filter,
analyse and interpreter data gathered from interviews. This will be explained in detail in
chapter 6.
22 | P a g e Strategy on Sub-question 4 and 5
These Sub questions will be answered after studying the processes at Company x. During this research the researcher was primarily working at the marketing department of Company x.
This means that many data will used for answering this sub-question is produced through the researchers own experience and interpretations. Action research takes its cues from the perception of practitioners within particular, local practice contexts. It builds descriptions and theories within the practice context itself, and tests them there through intervention experiments(Argyris & Schön, 1985). This means that action researchers are always engaged in some practice context.
The research strategy that is specifically designed for environments where the researcher is part of actions and objects that have to be studied is Action research (Checkland & Holwell, 1997). Action research is an iterative method, where the researcher and his knowledge and experiences, are part of the investigation. Actions taken by the researcher also influence the outcomes of the research. This was also the case during this research. Those findings are covered in the results and discussion section.
Action research is problem centred, client centred, and action oriented. It involves the client system in a diagnostic, active-learning, problem-finding, and problem-solving process Johnson (1976).
Agyris & Schön (1985) Distinguish two types of action research; single and double loop learning. Single loop learning can be described as trying to reach the desired outcome (or consequences) by steering only on the action itself. With double loop learning, the researcher will not only focus on the action, but also on the governing variable. Agyris & Schön (1985) state that steering on process, norms and variable will be more effective than single loop learning.
Fig. 2-1 Single & Double loop learning
Coughlan & Coghlan (2002) describe in their paper four main features of action research.
First, Action research focuses on research in action, rather than research about action. The central idea is that action uses a scientific approach to study the resolution of important social or organizational issues together with those who experience these issues directly.
Action research works through a cyclical four-step process of consciously and deliberately:
planning, taking action and evaluating the action, leading to further planning and so on. In this case the research is focusing on the important issue of getting more clients through a better marketing campaign. To create this a well founded planning needs to be made for taking actions and afterwards the results of the actions taken need to be checked.
Second, Action Research is participative. Members of the system which is being studied
participate actively in the cyclical process outlined above. Such participation contrasts with
23 | P a g e traditional research where members of the system are objects of the study. As stated before the researcher is actively involved with Company x and preliminary findings of this research have already been used before this research was finished
Third, Action Research is research concurrent with action. The goal is to make that action more effective while simultaneously building up a body of scientific knowledge. The scientific background and knowledge about adoption is covered in chapter 3. To answer Sub-question 5, a broad range of marketing theories and methods is used to give specific advises about action that Company x could take to gain more clients.
Finally, Action research is both a sequence of events and an approach to problem solving. As a sequence of events, it comprises iterative cycles of gathering data, feeding them back to those concerned, analyzing the data, planning action, taking action and evaluating, leading to further data gathering and so on.
Now the research elements, defined by Checkland (1985) have been discussed. After the
creation of the Framework of ideas, the choice for a qualitative constructivism methodology
was made. Following the guidelines and principals of this methodology, the area of concern
was defined. In the last paragraph the choice for the different research strategies and
methods for answering the sub-questions was justified.
24 | P a g e
3 Theory
3.1 The Adoption Decision
Academic research on innovation is a very broad area of research. This becomes already visible if one enumerates all the different types of innovation. Before these different types of innovations are explained, a well formed definition of innovation is needed. Throughout the literature, there are numerous definitions of innovation.
Jacobs (2007) definition is:
‘… innovation in the realm of style, content, the development of new concepts, services, experiences, or the introduction of new forms of organization…’
Both definitions give a definition about what an innovation could be (form) or its advantages (value).
In this research the focus is also on the adoption trajectory of an innovation. Wijnberg (2005) gives a more applicable definition of innovation:
“Innovation is something new which is presented in such way, that its value will be determined by its selectors.”
This definition states, what an innovation is, what it delivers, and it clearly states that an innovation is, only then, an innovation, if its value has been determined by its selectors.
Wijnberg (2005) makes a clear distinction between an invention and an innovation, whereas Damanpour et al. (2006) and Jacobs (2007) don’t. According to Wijnberg (2005) an innovation is an innovation after the selectors have given a judgement on the potential value for the selectors. Wijnberg (2005) argues that there are three selection systems, End-user selection, Expert selection and Peer selection. Differences in selectors will be explained in a later section.
The fact that Wijnberg (2005) argues, that the value has to be determined, suggests that there has to be decision moment on that specific innovation, or better said invention. During the time that an invention is brought to the market and finally is diffused throughout an organization as an innovation, there has been a decision moment, whether to adopt or refuse the innovation. At that particular moment, the organization decides if the invention delivers enough positive value, to adopt and implement this innovation. This decision moment is referred to as adoption decision.
This research is focussing on the factors that are influencing the decision whether to adopt
“IT/tel. service x” within multinational companies.
Telecom (Expense) Management within in an organization is mostly the responsibility of the telecommunications group, which is part of the IT department. Combining the definition and the placement within a company, ”IT/tel. service x” can be considered as an IT product or service.
To understand why a decision to adopt or reject is taken, an understanding of the context in
which the decision is taken is needed (Wilming, 2007). In the next paragraph a literature
study on decision context is presented. After an understanding of the context is created, the
25 | P a g e factors that are influencing this decision have to be studied. In paragraph ## a literature study, mainly based on the findings of Wilming (2007) and Kamal (2006) is presented.
3.2 The adoption context
The adoption context describes the context in which the adoption decision is made. It reflects the way in which the company is organized regarding the adoption of new technologies and what phases, processes and formalities are used during this process.
This research tries to find the triggers and barriers that influence the adoption of TEM.
Before those triggers and barriers (or factors) can be found, the context on where those factors work has to be identified. The following section gives an overview of the literature on the adoption context.
The adoption process of an innovation is a broad field of research. Many researchers tried to find or construct a general framework that describes the adoption process. In the next part a brief overview on the innovation adoption process will be given.
Damanpour et al. (2006) recognizes three general stages in the innovation adoption process:
Pre-adoption activities (initiation, adoption decision and implementation), Managerial adoption decision phase and Post-adoption phase. Other examples are the “technology acceptance model” (Davis, 1989), the stages of adoption (Becker & Whisler, 1967) and the model of innovation diffusion (Rogers, 1983).
Kamal (2006) did an extensive research on the different phases of IT innovation adoption,
found in different researches from half way last century until the beginning of this
millennium. He did a literature research on the differences and similarities of the different
models that described the different stages of Adoption.
26 | P a g e Below is the table that Kamal (2006) formed:
Fig. 3-1 Different phases found by Kamal (2006)
From this table can be concluded that most of the models show a lot similarities in their phases.
Wilming (2007) created a framework from the research done by Beaumaster (2002) en Rogers (2003). Beaumaster (2002) developed a framework for the IT development and deployment. This framework describes the adoption process in three stages, the planning, procurement and implementation phase. These are probably the most general applicable phases. After that, Beaumaster (2002) did a research on the issues that affect these phases.
He discovered 5 groups of issues: Leadership, Organizational Environmental, Management
Process, Personal and Technical Systems. The issues found by Beaumaster (2002) are part of
the factors that are influencing the actual adoption decision and will be dealt with in another
section.
27 | P a g e
Fig. 3-2 Framework of Beaumaster
Research done by Rogers (2003) revealed five sequential stages that describe the choices and actions that are taken in the different stages of adoption. According to Rogers (2003) five stages can be distinguished that contribute to the attitude towards an innovation and finally influence the adoption of an innovation. Wilming (2007) summarized those five stages as:
1. Knowledge 2. Persuasion 3. Decision
4. Implementation 5. Confirmation
Wilming’s (2007) framework shows that those five stages occur in and through different stages of the Beaumaster (2002) model.
Fig. 3-3 Framework made by Wilming
This framework also clearly shows that the adoption trajectory is not an “off the shelf”
trajectory to follow and that it is very iterative. Rogers (2003) is adding an extra phase to the three of Beaumaster (2002). This phase could be described as a post-adoption-decision.
Kamal (2006) suggest in his article that all these models neglect the reality of the
implementation trajectory within the organization. Most of these models suggest that after
the decision is made to adopt and implement a new technology (or innovation) the users that
have to work with it, will not have any alternatives than to accept it under the conditions that
were determined is the decision process. Kamal (2006) argues that the reality of a successful
28 | P a g e adoption and implementation require modifications to Kamal (2006) developed his own framework that describes the adoption process with an emphasis on the difference between the adoption on organizational and individual level. He also states that the innovation adoption process ends, when the end-user has accepted the innovation and is actually using it. His model has focus on the post-adoption-decision which, according to Kamal (2006), others have not.
According to Kamal (2006) the adoption process has eight stages. These are:
Motivation towards innovation
In this stage awareness of the innovation is formed. The organization or members of the organization are exposed to the innovation. The organization gains interest and is trying to gain knowledge about the specific innovation. This phase is equal to the Motivation-phase of Rogers (2003)
Specific conception about innovation
In this stage the organization is creating a plan on how to pursue with this innovation.
Member(s) will be assigned to investigate the value of the innovation for the organization.
The organization is also forming an attitude towards the innovation. Rogers (2003) calls this phase the persuasion-phase.
A formal proposal to the rest of the organization
In this stage the rest of the organization get the proposition of the innovation. According to Kamal (2006), this is a very crucial stage, because the approval of different departments is needed, to gain legitimacy for a new innovation. This phase is not specified by Rogers (2003), but it could be part of Rogers’s persuasion-phase.
Actual adoption decision stage
The actual adoption decision stage is the stage that eventually leads to the adoption decision.
In this stage organizations gather the requirements of all the different departments that were gathered in the previous stage. The organization will start a Request for Proposal trajectory (RFP) in which they will select a group of potential suppliers to give their price proposal on the requirements the organization formed. At the final stage of this phase the decision whether to adopt the innovation or not, is made. Rogers (2003) also calls this phase the decision-phase.
Implementation of innovation in the organization
Implementation is the phase where the organization is starting the trajectory of making the organization ready for implementation of the innovation and the actual implementation trajectory. Rogers refers to this phase as the implementation-phase.
Confirmation of innovation idea
In this stage, the members of the organization, or the users of the innovation within the
organization, will be exposed to the innovation and they will reform their attitude towards
the innovation. This can be positive or negative. This phase is equal to Rogers’ confirmation-
phase.
29 | P a g e User acceptance
This is the phase where the actual end-user accepts (or rejects) the innovation. If all the users accept the innovation, the innovation will have enough legitimacy within the organization that it will actually be used.
Actual use of Innovation
When the innovation is accepted by the organization and it members, the innovation can actually be used.
Integrating innovative technology with other IS applicants.
A supplementary phase is the integration phase. An innovation needs to be integrated and made compatible with existing technologies for an easy implementation and use. This phase is difficult to place in line with the other phases, because is parallel to the implementation and actual use phase. This depends on the decision of the organization. The decision to integrate the innovation during the implementation phase could cause problems if the innovation is rejected in the individual adoption stages.
Below the adoption process of Kamal (2006) is showed. The circles refer to the stages Rogers (2003) stated in his framework.
Fig. 3-4 The adoption process by Kamal and Rogers
30 | P a g e
3.3 The Framework of the Adoption Context
As with the framework of Wilming (2007), Kamal’s framework shows also that the adoption process is not a clear path to follow, but that the process iterative. The most important difference between Wilming (2007) and Kamal (2006) is the focus on post-implementation- phase, which is also the phase that is mainly focused on the individual level, and acceptance of the user. To come to a final framework, the findings of Wilming and Kamal are combined in one framework:
Fig. 3-5 The adoption Context
31 | P a g e
3.4 Factors influencing the decision
The next step after investigating the whole adoption decision context is the explanation of the factors that influence the adoption decision, or better said the adoption context. These factors are of great importance to understand the problem and to answer sub question 1 and 2
Wilming (2007) and Kamal (2006) both did an extensive research on factors that influence the adoption decision. Kamal built a framework that was based on findings by many different authors (see appendix). After a qualitative interpretive research on he found 42 critical factors that influence the adoption. He divided these factors into five main categories:
1. Perceived Technology Factors 2. Organizational Factors
3. Collaboration Factors 4. Support
5. External Forces
Wilming (2007) extended Kamal’s framework of the adoption context with factors he found through a literature research, mainly based on findings from Finchman (1999). Finchman (1999) found 67 factors that influence the adoption that influence the Diffusion and assimilation of the innovation. Those factors were divided in to 8 categories and those categories were grouped into 3 main groups. After his research at an IT service provider, Wilming (2007) found a ninth category, which he added to his framework. It has to be mentioned that during his research Wilming was not able to confirm all of the categories he found in the literature. In the next section these categories will be enumerated.
Factors according to Wilming (2007)
1. Technology & Diffusion Environments (Diffusion Factors) a. Innovation Characteristics
These are the innovation characteristics that describe the value of the innovation to the adopter. According to Rogers, the more positive characteristics an innovation has, the more value it delivers, so the faster it diffuses through the organization (Wilming, 2007). The innovation Characteristics can be divided into classic and other characteristics.
b. Propagating Institutions
As the name states are the influences of companies that propagate the specific innovation to the organization. Those companies could be, for example, the manufacturer or reseller (Wilming, 2007). The propagator has many instruments (e.g. marketing) on hand to influence the potential adopter.
2. Organization & Adoption Environments (Assimilation Factors)
Some organizations are more innovative than others. According to Finchman (1999), in order to understand these differences, these organizations have to be studied on their characteristics, leadership and operating environment.
a. Firm & IS Unit Characteristics
Wilming (2007) uses four categories of Characteristics in this group: Size, Structural
Characteristics, Leaders Workforce and Comm. Environment.
32 | P a g e b. Sectoral / Environmental
According to Finchman (1999) organizations do not exist in a vacuum, but rather, operate in an environment that provides opportunities and imposes constraints. This means that the innovativeness of an organization depends on its environment in which it operates. Some sectors are known to be more innovative driven and structured then other sectors. Wilming (2007) found in his research no evidence of factors from this category influencing the decision, but this may be caused by the fact that there was little competition between the organizations that were studied.
3. Technology-Organization Combination
Not every factor that is influencing the adoption of an innovation is factor that is characteristic of either the organization or the innovation. Many factors describe a combination between technology and organization. (Finchman, 1999) This also describes the difference why some innovations cannot be successful for all organizations that are adopting it.
a. Organization-Innovation Fit
The organization-innovation fit is the fit between the organization and the innovation on e.g.
needs, strategies, resources or capabilities. This also describes why some organizations with a high propensity to innovate, sometimes fail, as an innovation does not fit to the organization (Finchman, 1999)
b. Innovation Perception
Finchman (1999) divides the perception into two levels of how a potential adopter perceives the innovation. The first is the perception that is influencing the initial adoption decision.
The second level is the perception that is taken place in post-adoption-process (see figure of Kamal 2006) As stated before, it is very important that the end-user perception of an innovation is in line with the perception of the organization, in order to create the user- acceptance. Also factors from this category were not found influencing the adoption during the research of Wilming (2007). According to Wilming, this is caused by the fact that in his particular research the end-users are not involved in the decision making. With “IT/tel.
service x”, the actual end-user perspective could play an important role in the adoption; this is why this category is included in this research.
c. Social Influence
The perception of a technology is constructed through social influence such as group norms, (co-)worker attitudes and behaviour. (Finchman, 1999) Some researchers (Fulk, 1993) argue that social influence and innovation perception should be treated separately, whereas others (Karahanna & Straub, 1999) argue that it should be integrated because the perception of an innovation is not only constructed by objective factors. In this research these factors will be separately investigated, because social influence could not only influence the innovation perception, but also the actual (end-user) acceptance.
d. Innovation Delivery Systems
According to Leonard-Barton (1988) are the means by which the implementation process is supported and managed for a particular innovation is the delivery system for that innovation.
e. Innovation-service Provider fit
This factor was not found by Finchman (1999), but Wilming (2007) found in his research
that some special factors influence the relationship between the provider and the client.
33 | P a g e
3.5 All factors
After having explained all the different categories Wilming and Kamal found in their researches, all the single factors will now be enumerated and similar factors, found by Wilming and Kamal will be grouped, but the categories of Wilming will be used.
Category Factors
Innovation characteristics Classic innovation characteristics:
relative advantage, compatibility, complexity, trailability, observability Other characteristics:
Cost, Communicability, Divisibility, profitability, social approval, voluntariness, image, usefulness, ease of use, result demonstrability, visibility, functionality, reliability
Propagating institutions Promotion, advertising, pricing, technology standardization, technology simplification, technology sponsorship, subsidies, reputation, industry competitiveness, (customer) Support, trust
Firm and IT/ IS unit
characteristics Size and related variables:
host organization size, IS unit size, scale, slack resources.
Other structural characteristics:
centralization, formalization, specialization, vertical differentiation, infrastructure, performance, productivity, financial.
Characteristics of leaders and the workforce:
professionalism, education, technical expertise, technical specialists, managerial tenure, receptivity towards change, Decision structure, Social Attitude
Communication environment:
information sources and communication channels.
Sectoral/environmental
Adoption environment: concentration/competitiveness, competitive pressure, profitability/wealth, R&D intensity, IT intensity, rate of technical change, Politics, Innovative Capacity, Collaboration, Policy/Legal framework, social economic status
Organization-Innovation fit Absorptive capacity, related knowledge, diversity of knowledge, task- technology compatibility, wealth
Innovation perceptions Classic Innovation Characteristics:
relative advantage, compatibility, complexity, trialability, observability, user participation
Technology Acceptance Model: usefulness, ease of use
Social influence Group norms, co-worker attitudes and behaviours, opinion Leaders, change agents, Social Attitude, Politics
Innovation delivery system
Delivery system factors:
top management support, technology champion, training, links to propagating organizations
Delivery system process models:
fit of process model with technology and organization Innovation-service Provider
Fit
Joint Development, innovation timing, utilization of knowledge, collaboration
Tabel 3-1 Factors influencing Adoption
