Introduction

Motivation Of Research

In today’s competitive world it is essential to minimize the time required to deliver new business solutions to the market and to minimize the costs of the Information Technology (IT) systems supporting the business. Companies are increasingly confronted with cost cutting issues while the market demands an increasing flexibility towards the customer at the same time. This is certainly true for financial service companies as they are faced with costs of IT development and delivery that are continuously increasing. These costs are caused by necessary adaptations in IT as changes in the business environment are taking place all the time, such as globalization, regulatory requirements and more demanding customers.

One of the ways to break the trend of rising IT-costs is to introduce standardization of the IT infrastructure. IT infrastructure is defined as a shared set of capital resources that provide the foundation on which specific IT applications are built (Duncan, 1995; Broadbent and Weill, 1997). In general the IT infrastructure of a firm consists of several layers and standardization may concern any of these layers. Standardization simplifies interoperability and re-usability but may impact on, for example, the agility and responsiveness to adapt IT services to business changes. As there is an intuitive tension between standardization and flexibility (Hanseth et al., 1996) in some sort of way one has to “standardize for flexibility”. In more general terms, the drawbacks and advantages of standardization and usage of standards on business performance are unclear. The same is true on how to accomplish the intended benefits from standardization of the IT infrastructure.

Figure 1.

The IT infrastructure (Adapted from Weill and Broadbent, 1998)

Flexibility is just one of the aspects of effectiveness of business performance. In general, business performance can be expressed in terms of efficiency and effectiveness. Shafer and Byrd (2000) summarize anticipated improvements in business performance resulting from usage of IT and this study will investigate how such business benefits hold for the usage of IT standards as well:

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  improved quality,

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  reduced costs,

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  increased flexibility,

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  improved customer satisfaction,

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  overall improvements in operations.

It is especially the combination of these five benefits which is the most challenging as organizations have to provide customized products and services in a timely and cost efficient fashion. Several concepts have been introduced addressing this, such as modularization (Pine, 1993) and virtual corporations (Davidow and Malone, 1992). Modularization is a concept for products and processes that have been designed as independent building blocks based on customer requirements and can be assembled relatively easily and inexpensively into specific forms. It has been the basis for what is called “mass customization”. A virtual corporation is an arrangement where the product or service is created only after an order is placed. A supply chain of organizations is created for that purpose, and the product or service is tailored instantly in response to the customer requirements.

The main research objective of this book is to investigate how organizations can realize the intended business benefits from IT standardization. In order to investigate this, we will also study what this standardization process entails and how the usage of the resulting standards impacts business performance. Although ultimately the interest lies in the business performance effectiveness and efficiency, for practical reasons, the focus of this study will be on its intermediate level: the performance of business processes.