Managing the Impact of IT on Firm Success: The Link between the Resource-based View and the IT Infrastructure Library

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1 Managing the Impact of IT on Firm Success: The Link between the Resource-based View and the IT Infrastructure Library Heinz-Theo Wagner E-Finance Lab J. W. Goethe-University, Frankfurt, Germany Abstract In this paper, two distinct approaches to addressing the question what is the impact of IT on firm success, the resource based view (RBV) and information management, are incorporated. Both approaches provide valuable insights into how to use IT but have so far been rather independent of each other. While the RBV has provided valuable findings regarding the deployment of IT, at the same time lacking concrete practical applicability, the information management literature has suggested broadly accepted best practice frameworks like the IT Infrastructure Library (ITIL) evolved that lack theoretical grounding. This paper aims to link both approaches to make the RBV more applicable to practical problems and to inject theoretical grounding into ITIL thereby enhancing its value for managers. Employing a single case study approach, it is shown that ITIL can be theoretically based on the notion of resource-based learning loops and routines. Furthermore, it is indicated how parts of RBV insights can be applied to a practical problem. 1. Introduction Information systems are crucial in many industries. IT is used to deliver services, create financial products, coordinate activities along the value chain and form the foundation of strategic alliances. The central role of IT is also reflected when investigating investments in IT. Spending in IS accounts for 3.4% of the U.S. GDP in 2003 [5] and has risen from 5% of all business equipment spending in 1970 to almost 50% in 1996 [13]. But despite its key role as ubiquitous enabler, there is still a virulent lack of frameworks to both explain the profit impact of IT and to guide firms in exploiting the IT resource as a source of competitive advantage. A great part of this literature is based on the RBV which is engaged in the research into the connection between the resource endowments of a firm and its gaining and sustaining of a competitive advantage [3, 23]. Also engaged in IT, the discipline of information management has emerged dealing with the resource information and with business-it interworking. Although linked in research, a great deal of information management as implemented in industry is lacking theoretical grounding. This can be exemplified with ITIL which is called a best practice framework constructed and further developed by practitioners to provide guidelines for implementing IT service management [20]. The success of ITIL is underpinned by now about 2500 firms in 18 nations which are member of the user organization itsmf (IT Service Management Forum In this paper, we aim to link theoretically grounded work of the RBV with the successful best practice framework ITIL thereby explaining how IT may impact business processes and can be used to create a sustainable competitive advantage (SCA). Thus, based on a literature survey about how the RBV explains the conditions and the transmission from resource to a potential SCA and briefly introducing ITIL (section 2) we manifest the theory by focusing on the resource-based learning loops and the development of routines (section 3). It is shown that ITIL provide a platform for organizational learning and can practically be used to leverage complementary effects between IT and business resources thereby enhancing the value of IT for business purposes /06/$20.00 (C) 2006 IEEE 1

2 2. Theoretical base 2.1. Resource-based view While many studies have found evidence of IT investments resulting in superior performance, there are also cases where high investment in IT is not or negatively correlated with performance. These inconsistent findings are in parts due to inadequate measurement and analysis methodologies [7] and are partly rooted in the incomplete understanding of IT resources and their impact on firm performance [4]. A great part of literature focusing on the impact of IT on competitive advantage is based on the RBV which is engaged in the research into the connection between the resource endowments of a firm and its gaining and sustaining of a competitive advantage Gaining competitive advantage. Gaining a competitive advantage is essentially based on the idea of the heterogeneity of valuable resources [14]. According to the RBV, a resource is of value if it improves a firm s cost position by reducing costs and/or if it increases the revenues [17]. Early RBV studies tend to focus on the unique value of scarce IT resources while more recent IT payoff studies take complementary non-it resources into account when evaluating the positive impacts of IT [18]. The first mentioned approach deals with the concept of scarcity rents (Ricardian rents) while the latter approach refers to quasi-rents. Quasi-rents are the excess of an asset s value over its salvage value or its value in its next best use. The primary reason for this is that their optimal deployment is contingent on the presence of other complementary assets as is the case when analyzing IT resources in copresence of business resources to explain a positive outcome. Another reason for quasi-rents may be learning how to deploy assets efficiently. Additionally, there is a cost involved in transferring this asset along with the complementary assets to another firm, thereby reducing its productive value [23, 26]. Research into resource endowment identified several resources or classes of resources as a prerequisite for earning rents often based on a classification into physical, human, and organizational resources [3]. Especially organizational resources gained a lot of interest. One example is the so called relationship asset [24, 25] which deals with the linkages between the IT function and business units. These linkages are viewed as enhancing performance [18] underpinning the significance of the complementarity between IT and business resources. The linkages referred to by the construct of relationship asset at an organizational level can be coded into routines. Organizational routines refer to regular and predictable patterns of activity which are made up of a sequence of coordinated actions by individuals [12]. Routines become well known in IS literature since its introduction into evolutionary economics by Nelson and Winter [19]. More recently, research turned to more complex concepts like capabilities (see section 2.2.) which also build upon the concept of a routine making it a central element in IS research. In lots of IS research resources were analyzed regarding their potential to earn rents and to gain a competitive advantage. But as rents are subject to competition and tend to erode over time, gaining a competitive advantage is one thing, sustaining it another. RBV, therefore, is also engaged in the sustainability of a competitive advantage by investigating barriers to rents erosion, which is briefly discussed in the next section Sustaining competitive advantage. Sustainability builds on some form of barriers to competition [23] or isolating mechanisms [26]. The latter term was coined referring to mechanisms protecting uniqueness of resources; examples are causal ambiguity, patents, and reputation. To provide the basis for SCA a resource has to be valuable to obtain a temporary competitive advantage, but must also be rare, nonimitable, and non-substitutable [3]. Rarity corresponds to the concept of heterogeneity. When a resource is broadly distributed and available, other firms may also be able to plan and implement value-creating strategies with this resource providing no differentiation from competition. Rarity is not sufficient because other firms may imitate these resources. A cause for inimitability can be unique historical conditions (e.g. locations) and causal ambiguity describing the insufficient understanding of the link between resources and SCA. Among others a further reason are time compression diseconomies, which are related to the law of diminishing returns when one input factor, which is the time, is held constant [8]. A further attribute of a resource is nonsubstitutability which means that there is no equivalent a competitor can appropriate. Extending Barney s set of attributes, immobility can be added. Mobility refers to the possibility to transfer a resource [17]. If a resource is mobile other firms can acquire the resource and scarcity rents cannot be earned. 2

3 2.2. Dynamic extension of the RBV: capabilities While early work on RBV emphasizes the endowment with resources and analyzes which resource or class of resource are related to firm success, more recent studies focus on the ability to deploy resources [1, 10, 25, 27]. This so-called capability-building perspective builds upon the availability of valuable resources and examines how the productivity of these resources can be enhanced [16]. Grant points out that resources are inputs into the production process but mostly do not create value on their own [12]. Resources must work together to create organizational capabilities referring to the ability to team resources. These capabilities can then implement competitive advantages [3]. Capabilities refer to a firm s capacity to deploy resources, usually in combination, using organizational processes, to effect a desired end [1]. These capabilities are based on organizational processes which in turn can be identified as routines [6, 19] referring to regular and predictable patterns of activity [12]. Capabilities can be seen as build on routines, or in parts of the literature are identified with routines. Such routines are also rare as they are idiosyncratic and not broadly distributed and available. Therefore, routines can have the potential to gain and sustain competitive advantage according to the RBV. The development of capabilities was investigated by Andreu and Ciborra [2]. They emphasized the learning aspects and identified three learning loops leading from resources to capabilities. The first identified learning loop is the routinization loop by which efficient work practices make use of standard IT resources. Hereon, within the capability learning loop effective routines develop which are basis for the forming of capabilities enabling the deployment of resources. Finally, the strategic learning loop links these capabilities to the organizations competitive environment and business mission. Capabilities are developed by routines that embed knowledge acquired by learning [2, 19]. Learning is intrinsically social and collective of nature and occurs by joint contributions to the understanding of a problem. One result is new patterns of activity or so called routines [27] ITIL ITIL is a de facto standard for IT service management and was developed since 1989 in the UK by the Central Computer and Telecommunication Agency (CCTA) which was incorporated into the Office of Government Commerce (OGC) in 2001 and is supported by the itsmf. The goal of ITIL is the direction of IT services to current and future requirements of the business and its customers, to improve quality of service, and to reduce long-term cost of service activity [20]. IT is viewed under the aspect of optimal support of business processes and of providing the business with technology options. ITIL is a process-based method and forms a set of integrated processes to deliver services for the business [21]. Being a framework, ITIL describes the outlines of organizing Service Management in specifying what has to be done as opposed to how it has to be done. The concrete realization has to be developed firmspecifically [21]. ITIL comprises ten service management processes and additional functions which are split into service support disciplines focused on operative services and service delivery disciplines focused on long-term assurance of IT services. The service support domain comprises Incident, Problem, Configurations, Change, and Release Management where the first is designed to enable the usage of IT services. The other processes are designed for adaptation, documentation, and problem resolving,. The service delivery domain comprises Service Level, Financial, Capacity, Continuity, and Availability Management where the first is designed to interact with the business by negotiating Service Level Agreements, for example. The other processes are to assure a high service quality [21, 22]. 3. Research model In this section, first the case study methodology is introduced, followed by a description of the single case chosen. Afterwards, the status before the ITIL introduction is presented and the results of the case study are described. Especially, the emergence of routines and the learning processes involved will be highlighted. The focus will be on the routinization loop introduced in section 2.2 and the routines during the planning and implementation of one specific ITIL function which is the Incident Management Methodology The methodology chosen for this research is a case study which is one form of empirical studies often employed in IS research investigating a phenomenon within its real-life context [28]. To achieve the necessary rigor of a study, case studies have to be prepared and carried out thoroughly. Especially, the research question, the propositions and the unit of analysis have to be made explicit during design and preparation [28]. The research question employed for the 3

4 single case study presented in this paper is: how do organizational routines develop and how do they impact the IT business interworking? How and why questions are identified as appropriate for case studies [28]. After the definition phase the case was selected. The introduction of ITIL functions as a means to make IT services more efficient and effective varies among countries and industries. In Europe ITIL is very popular. In parallel, the financial services industry is known to depend heavily on IT and therefore may especially benefit from ITIL. Therefore, and additionally due to the author s access to the data available, a case in the European financial services industry was selected. For carrying out the case study, case and interview patterns were developed, discussed within the research community, and then tested with two IT managers and two managers of business units which were named as key informants. After testing, the adapted documents were used for the actual case study interviews [9, 28]. Interviews were conducted in two parts. The first part was carried out with a semi-structured questionnaire to cover a variety of contextual variables while the second part consisted of a structured questionnaire. The interviews last about three hours per interviewee. Data was complemented by extensive reports, process documentation, and academic literature. The interviewees validated the collected data as well as the results. This procedure is concordant with the literature in case study methodology [9, 15, 28]. The following section describes the concrete case Case description The case was carried out in a European bank serving customers with online retail services like transfer and savings accounts and trading services for shares, for example. Over the last two years the bank has more than doubled total assets and the amount of customers. The following table shows some key data of the bank (data are smoothed due to anonymity reasons): Table 1. Key data Year Total Assets # Customers # Employees (bln. ) (Mio.) The bank comprises three major sites with about 600 employees each and employs some 60 different applications like terminal server products, archiving tools, ERP, business applications and office products. Most applications are run on six server farms and two host sites. Servers and hosts are operated by four different service providers which are managed by the IT department. The IT department is one out of three departments (like controlling) that are allocated to the responsibility of one member of the board. A Chief Information Officer does not exist. The interviewees were one IT manager and one specialist of each IT group forming the IT department (in sum four IT groups see below) which sums up to eight IT representatives and five managers and five specialists from five different business units running operational business summing up to ten business representatives. The representatives also formed part of the project team described in section 3.4. The business unit representatives did not have an IT education or an IT working background and in average were working three years in the bank. The IT representatives, in turn, did not have a banking background and in average were working two years in the bank. The IT department is split into four IT groups and is responsible for the planning, development, systems integration, and the operation of the IT platform and the applications and additionally for the project management. The IT group Project Management carries out major projects and is also responsible for the project budgets in the sense of a cost center. The IT group Technology Office develops the IT architecture, and plans and coordinates all changes of platform and applications which affects the architecture. The IT group IT Development has to develop, maintain and operate applications. Finally, the IT group Operations manages operation, maintenance and development of the IT infrastructure and is additionally responsible for hardware provisioning and acceptance and handling of failures Case status before ITIL introduction Because the focus of this case is on the introduction of the Incident Management function, the following part reports the status of affected IT functions before introducing Incident Management. First, a general overview over the situation is presented, followed by a more detailed description of service processes. In general, business units request services from Operations. These services are problem resolutions, simple questions how to use a system, requests for project support, feature requests, or support requests in the case of project management. In parallel, these requests can be directly passed to the otherit groups 4

5 like Project Management, for example. Thus, Operations can be bypassed. Bypassed requests are not registered and therefore cannot be tracked or reported. There is no overview about requests, only parts of the requests can be tracked, and promised call backs to users may be forgotten. This results in dissatisfied users relying on their own or colleagues to resolve problems, or interact directly with people of the IT department they know personally. To summarize, following deficiencies could be detected that were similarly reported by business and IT units. Most often it was reported that checklists for a structured problem solving are missing, processes are not documented, and service was not sufficiently specified. Furthermore, the business units list not sufficient help desk times and that not all tasks could be covered by the help desk (e.g. regarding specific software). To present more details, the employed procedures can be reported as follows. If a user reports a problem regarding an application, the problem is addressed to a help desk that is part of Operations. This is regularly done via phone using a call center that is distributed among two out of three main sites of the bank. The help desk registers the problem. If there is a known solution or workaround the help desk supports the user, correspondingly. One typical request of this kind is restoring a password. If an immediate remedy is not possible the problem is passed to another colleague within Operations. Because the employees of Operations are mainly supporting in projects reported problems cannot be handled promptly. For example, restoring a destroyed file may last a week or longer. Problems are handled on-site during working hours and centrally (according to the duty plan of the call centers) in the evening which gives a two-shift operation, leaving the night and the early morning to remote operations. If a problem occurs during the night service employees are informed using Personal Information Management (PIM) technology and may dial in via remote access. If a problem solution is not possible, an on-site service is delivered. Calls are registered using a help desk tool but an automatic escalation process does not exist. Responsibilities for specific applications are not defined. Users are informed by an automatically generated e- mail when a problem is registered and after a successful problem solution. Standardized reports showing the performance of the help desk are not available. The reason for the indicated deficiencies was seen in a former re-structuring of the IT department. This re-structuring also shifted responsibilities that cause changes in already introduced processes and in turn ambiguities in interfaces between the IT groups as well as to business units. The situation was reported to be problematic for the business units but also for the IT department itself. A summary of the status regarding the perception of IT by ten business unit representatives is shown in table 2. Indicators with ratings like average are employed using a 5-point-Likert scale. Table 2. Incidents prior to ITIL introduction Indicator Answer Proactiveness of IT IT almost always acts on request Understanding of business Regarding application requirements by IT development moderate; staff regarding operations low. Responsiveness of IT High responsiveness. People take care of requests although not responsible for the task, just to get things done. Satisfaction with IT services Very heterogeneous; five reported not satisfied ; two rated indifferent; three are satisfied and also reported personal Interaction between business and IT contacts Regularly if a failure occurs using phone calls to the help desk; no formal meetings; informal contacts are rare Because of the reported problems, an initiative was started by the top management to better align the IT service to what is needed by business units as well as the IT processes within the IT department. It was decided to implement some ITIL functions and to start with the Incident Management. Before the ITIL introduction, tasks and goals for the IT domain were defined and documented which is depicted in the following. The task of the IT domain is formulated as optimal support of business processes which refers to a shortterm cost reduction, long-term cost containment and a continuous improvement of service delivery. Fulfilling this task requires the alignment of IT services to the current and future requirements of the business units and their customers. The IT services has to be planned, monitored, and managed within defined processes. Achieving these goals implies the configuration of processes in a way that human and technology resources can be used in an efficient and effective way. 5

6 Goal of the ITIL introduction is to enable the IT department to deliver the right services to the business units in a cost-effective manner. Following this goal service management processes has to be developed and implemented. The first process to be introduced is the Incident Management, because it is expected that this process will positively affect the availability of services to the user, thus enable the business units to use the information systems as intended. Therefore, the primary goal of the Incident Management is the assurance of high service quality, in that problems and questions of users are resolved in an efficient way Results ITIL is a best practice framework and defines blueprints for service support and service delivery processes carried out and managed by skilled labor making use of technical resources. These blueprints are available to everybody and do not provide per se for heterogeneity among firms as required by RBV analysis introduced in section They exhibit commonalities across effective firms what can be termed best practice [10] but the concrete manifestation differs among firms. What may provide for heterogeneity are routines and the learning processes involved as depicted in section 2. The first step of introducing Incident Management in the bank was to set up a project, defining the project manager, the project structure and plan, and employing a consulting team helping to introduce the Incident Management. Part of the project structure was the setting-up of an IT internal work group and an IT business work group. These work groups, together with the consulting team of three persons and the project manager, formed the project team. The work groups met twice a week and, besides discussing planning and implementation steps, had the task to multiply information to their respective departments and to bring in ideas from their departments (multiplication function). The IT internal work group consists of two representatives of each of the four IT groups (in sum eight persons). The IT business work group consists of five business unit representatives and four from the IT groups (in sum nine persons). The project manager, one consultant and the four IT representatives of the IT business work group took care of the information flow between the work groups. The first regular meeting of the IT business working group took place two weeks in advance of the first IT internal meeting. The reason was providing requirements from the business side as input for the IT internal work group. Strong requirements stated from the business side were customer orientation, increased reachability of the service desk, and transparency of call handling (mainly regarding reports and status). Within the IT department requirements were also prioritized. Among those were the clear definition of tasks and processes (e.g. structured and qualified registration and processing of requests), the interface definition to change and problem management processes, the reporting for management and IT departments; and the sensitization of service desk employees for qualified documentation of requests to assure further processing. A further step was the agreement on a common language. Instead of using different terms for the same instance like problem, error, failure, the meaning of terms was unified using the ITIL framework. Therefore, after some meetings of intense discussions several definitions were adopted. As an example, an incident was defined as an event which does not belong to the standard operation of a service and that causes actually or potentially an interruption or degradation of service quality. A service request was defined as a user request for support, service enhancement, delivery, information, advice, or documentation. After defining and adopting these terms the agreement on procedures started. The organization of the Incident Management function as well as the definition of its tasks was clarified. The interfaces between sub-tasks of the Incident Management and to further functions like Problem Management gets defined, the processes specified, and supporting tools chosen, planned, and introduced. Especially documentations like checklists for the qualified acceptance and classification of requests, reaction times, restore times, escalation procedures, and responsibilities were clearly laid down. These processes evolved out of intense discussions within the work groups and between members of the work groups and other members of the IT department and the business units. For example, it was investigated how existing help desk tools and workflow management systems can be used in a way supporting the tasks specified. Additionally, it was discussed which personnel to deploy for the tasks defined due to the skills and experiences of these personnel, regardless to which department it currently belongs. A preliminary solution for the order of tasks, and the tools and personnel to be deployed was found after (in parts) lots of iterations. These iterations also involved the acquisition of an additional software package for the help desk making it easier to create and distribute reports. This in turn causes a re-arrangement in the ordering and contents of tasks because partially man- 6

7 ual elaboration of reports using MS-Excel could be replaced by the acquired software package. The planning process lasts four months and did not involve a deeply detailed process description. It was more important to the project team to get an 80%- solution and to show results quickly. The planning process also involved the transfer of information into the departments et vice versa. Furthermore, a training plan for future members of the Incident Management function were prepared and carried out. During the implementation phase further fine tuning occurred. Using the ITIL Incident Management as a blueprint, technology and personnel was configured to form the Incident Management function in defining how these resources should be teamed, firmspecifically. This involves formal stated work procedures as well as not formally stated, but repeatedly practiced procedures. These procedures developed during the creation of the Incident Management function covering different IT groups as well as the interface to the business units. After two months a rather stable status could be established. The following table highlights the answers of the business unit representatives after finishing the planning phase of the Incident Management and running operations for three months. Table 3. Incidents after planning phase Indicator Answer Proactiveness of IT IT mostly acts on request but gives additional hints to improve systems usage Understanding of business Moderate requirements by IT staff Responsiveness of IT Responsiveness is rated moderate. Known people sometimes take care of requests although not responsible for the task. Satisfaction with IT services Between indifferent to satisfied; most were in- Interaction between business and IT different Regularly if a failure occurs using phone calls to the help desk; formal meetings between units monthly; informal contacts predominantly among persons working together in the planning and implementation phase Comparing table 3 with table 2 indicates that ratings for proactiveness, understanding and satisfaction with IT services improved while responsiveness slightly decreased. Remarkably, the interaction between IT and business are more frequent and intense than before. Three factors were reported as important for the success of the Incident Management project. The first factor influencing the ITIL project was the support by the top management and the insight of the affected departments into the necessity to change procedures, thus accepting the ITIL project as a means to improve the situation. The second factor was the development of a common language within the IT department, but especially between IT and business units. Developing this language includes frequent communication to get the same understanding. The third factor was the quick implementation showing that the processes developed can work efficiently, thereby abandoning too detailed procedure descriptions. Using the lens of the resource-based learning loops during the project different steps of learning occurred. One step referred to the development of a mutual understanding of how procedures should run, which results to be produced, and which resource configurations to use. That was reported as an iterative process with frequent interactions among the group members working together over four months in the planning phase intensively and further on in the implementation phase. During the planning process technological and human resources were investigated to specify which resource to deploy in what manner to form the whole ITIL function. Different configurations of the resources available were developed, implemented and fine-tuned where necessary. This in turn lead to rearrangements in the procedures employed to make better use of the resources which then in some cases causes requirements to alternative functionalities or characteristics of the resources. These effects are described as routinization loop [2] where so-called work practices take advantage of resources and by doing so create a need for alternative resources or resource characteristics which in turn change the work practices. The work practices are build up to form organizational routines which is a particular way of doing what an organization have developed and learned [2]. Routines as regular and predictable patterns of activity which are made up of a sequence of coordinated actions by individuals [12] are based on frequent interactions incorporating also informal interactions. Such routines could be observed in the planning phase when the work groups interact to produce Incident Management procedures with technological and human resources employed according to the needs of 7

8 the bank. This interaction was predominantly based on informal interaction. Also, evolving routines could be observed during the implementation phase when practicing the pre-planned procedures and handling of technology. In this phase, the pre-planned sequences of activity were used as a skeleton which was filled and also changed by informal ways of doing things. This was necessary because of the intended lack of a detailed process description, and on the other hand the informal procedures naturally developed because of the necessity to adapt to the practical environment. This repeated interaction proofed to be necessary for the flow of information from one IT group to another and from business to the IT groups as well as for the creation of a mutual understanding of perspectives. As Galunic and Rodan [11] put it, individuals interacting frequently come to share a common meaning by developing a common language and symbols which improves the exchange of knowledge and also guides further actions by the creation of mental maps. Routines make up one part of the capability learning loop which connects to the routinization loop. The case indicates a more frequent interaction and the development of a mutual understanding which are important steps in forming routines. This can especially be reported within the IT internal work group covering different IT groups and within the IT business work group covering business units and IT department. The members of these groups met frequently, in most cases informally, over months during the planning and the implementation phase. ITIL as a best practice framework relies heavily on learning processes to continuously improve during adaptation within a firm. Learning is an important issue because new work practices and a processoriented thinking is introduced which has to be trained across the organizational structure including the interaction with the business domain. Therefore, different types and stages of learning are inherent to ITIL [20]. The view of ITIL as interconnected learning processes can be supported by the resource-based learning loops [2]. Learning in the case of ITIL occurs at different stages before and during implementation in creating workplace practices which transforms to repetitive, rather stable patterns of activity (routines) afterwards and result in interaction patterns with the business. The routines evolving during learning loops make available IT resources to the business and business requirement and thinking to the IT function thereby adapting and interlinking IT and business resources. Furthermore, learning as discussed above regarding of how to deploy assets efficiently and resulting in routines is a basis for quasi-rents. A further consequence of the concept of quasi-rents is the fact that transferring one of the complementary assets to another firm will reduce its productive value [26]. That means, for example, transferring the software package acquired for reporting purposes with all its customized adaptations to another firm without having the appropriate procedures and organizational environment in place will reduce the productive value of this package. Also, transferring all developed schemes of the Incident Management practices exactly as they are to another firm will hardly work, because the human and technological resources to be employed within these schemes are not adapted to fill them out. Although, the ITIL framework is available to everybody the manifestation of the ITIL functions is path-dependent and heterogeneous among firms. Learning occurs within and considering the specific organizational context [2]. Learning loops lead to routines which are known from RBV as immobile and imperfectly imitable, thus providing a basis for differentiation. Thus, the ITIL framework per se does not provide for a competitive advantage but the concrete manifestation may have this potential, shaped by environmental conditions [18]. 4. Conclusion Methodologically, a critical discourse of the RBV was used focusing on organizational routines. Especially, the concept of learning loops was investigated. The case indicates that the ITIL framework can be seen under a RBV lens as based on learning loops to master the use of resources, create efficient work practices, and develop patterns of activity among the human capital of a firm which embed the knowledge acquired by the learning processes. Routines are known from RBV which provide for heterogeneity among firms and, as they are immobile and hard to imitate, may provide for a SCA. Andreu and Ciborra [2] showed that routines are the basis for the development of capabilities which in turn may develop to core capabilities when exposed to the competitive environment and the business mission. The implication is that not single information systems alone nurtures a core capability and in turn a competitive advantage. Instead, learning processes are needed to find new configurations of resources and processes, iteratively. Thus, from a theoretical point of view the introduction of ITIL can be grounded on the RBV due to the development of routines which form the basis for capabilities. From a practical point of view, insights from RBV can be taken to foster positive effects from ITIL introduction like assured high service quality. Besides providing the foundation for quality of IT services, the implementation of ITIL functions itself can be a 8

9 implementation of ITIL functions itself can be a substantial step towards understanding business necessities and the role of IT, respectively, which is important regarding the delivery of services really needed. Derived from the considerations of this paper the following managerial guideline can be provided. The adoption and implementation of ITIL processes should be fostered using cross-departmental teams. It may be of greater value to develop the mutual understanding among organizational units than to produce formal service level agreements. Such agreements can be seen as a product of former learning processes whereas their fulfillment and adaptation rest on routines. The limitations of this case study are that the effects of the introduction of the Incident Management on actual IT usage are not covered. Furthermore, due to the relatively short operational phase of three months some indicators shown in table 3 may be biased by the previous planning phase. Additionally, it must be pointed out that only qualitative data could be derived from the interviews, not allowing a statistical proof of hypotheses. Acknowledgement This work was developed as part of a research project of the E-Finance Lab. I am indebted to the participating universities and industry partners. 5. References [1] Amit, R. and Schoemaker, P.J.H., "Strategic Assets and Organizational Rent", Strategic Management Journal, 14(1), 1993, [2] Andreu, R. and Ciborra, C., "Organisational learning and core capabilities development: the role of IT", Journal of Strategic Information Systems, 5(2), 1996, [3] Barney, J., "Firm Resources and Sustained Competitive Advantage", Journal of Management, 17(1), 1991, [4] Bharadwaj, A., "A Resource based Perspective on Information Technology Capability and Firm Performance: An Empirical Investigation", MIS Quarterly, 24(1), 2000, [5] Chang, Y.B. and Gurbaxani, V., "An Empirical Investigation of Information Technology Returns: The Role of IT and Market Structure as Determinants of Efficiency", Proceedings of the 25th International Conference on Information Systems, Washington, D.C., USA, [6] Collis, D.J., "Research Note: How Valuable Are Organizational Capabilities?" Strategic Management Journal, 15(Special Issue), 1994, [7] Devaraj, S. and Kohli, R., "Performance Impacts of Information Technology: Is Actual Usage the Missing Link?" Management Science, 49(3), 2003, [8] Dierickx, I. and Cool, K., "Asset Stock Accumulation and Sustainability of Competitive Advantage", Management Science, 35(12), 1989, [9] Eisenhardt, K.M., "Building Theories from Case Study Research", Academy of Management Review, 14(4), 1989, [10] Eisenhardt, K.M. and Martin, J.A., "Dynamic Capabilities: What are They?" Strategic Management Journal, 21(10-11), 2000, [11] Galunic, D.C. and Rodan, S., "Resource Recombinations in the Firm: Knowledge Structures and the Potential for Schumpeterian Innovation", Strategic Management Journal, 19(12), 1998, [12] Grant, R.M., "The Resource-Based Theory of Competitive Advantage: Implications for Strategy Formulation", California Management Review, 33(3), 1991, [13] Gurbaxani, V., Melville, N., and Kraemer, K.L., "The Production of Information Services: A Firm-Level Analysis of Information Systems Budgets", Information Systems Research, 11(2), 2000, [14] Jarvenpaa, S.L. and Leidner, D.E., "An Information Company in Mexico: Extending the Resource-Based View of the Firm to a Developing Country Context", Information Systems Research, 9(4), 1998, [15] Lee, A.S., "A Scientific Methodology for MIS Case Studies", MIS Quartely, 13(1), 1989, [16] Makadok, R., "Toward a Synthesis of the Resource- Based and Dynamic-Capability Views of Rent Creation", Strategic Management Journal, 22(5), 2001, [17] Mata, F.J., Fuerst, W.L., and Barney, J., "Information Technology and Sustained Competitive Advantage: A Resource-Based Analysis", MIS Quarterly, 19(4), 1995, [18] Melville, N., Kraemer, K.L., and Gurbaxani, V., "Information Technology and Organizational Performance: An Integrative Model of IT Business Value", MIS Quarterly, 28(2), 2004, [19] Nelson, R.R. and Winter, S.G., An evolutionary theory of economic change, The Belknap Press of Harvard University Press, Cambridge (Mass.), [20] OGC, "ITIL-Planning to Implement Service Management", Commerce, Office of Government. 2002a, The Stationary Office: London. 9

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