5.3 Model 3: Impact of a successful project organization on the fit between purchase
5.3.1 Impact of the project success on the relationship success
In this chapter the hypotheses concerning the impact of the project success on the direct and indirect value functions are derived. The argumentation is based on four keystones:
( 1) The project success confirms the first step in the right direction.
(2) The project success supports the development of trust and commitment in the new E- tools.
(3) A cost-benefit calculation of the project motivates the realization of further improvements.
(4) The procurement professionals are interested in proving their own competences by topping the improvement results of the project team.
Ad1: The project success is the first step towards the new procurement environment, therefore it has a positive contribution to the relationship success.
Initiatives for new IT-solutions often fail to appreciate the need for an integrated program of change management. In case of the B2B E-marketplace introduction project, change management is not only required for the relevant procurement professionals, but also for the corresponding sales people at the supplier side (Neef 2001, p. 187). A successful project shows that traditional processes 311d procedures can substantially be improved. Backed with
96 5 Theoretical framework and hypotheses of the study
the project success the procurement professionals can more easily convince the broad supplier base to adapt to the new processes and to transfer the current transactions on the E- procurement tools.
Ad2: The project success helps to build trust and commitment in the new procurement environment and thereby generates a motivation, which further supports the relationship success.
Introduction projects offer a first opportunity to get familiarized with the new E-procurement environment. With close guidance of the project team the buyer is able to gain first experience with the new processes and job requirements. Within organizations trust contributes to more effective implementation of strategy, greater managerial coordination and more effective work teams (McAllister 1995, Doney et al. 1998, p. 601). Based on the definition of trust by Walter et al. (2000, p. 4) the buyer can develop trust concerning the "motivational or intentional trust dimensions". First success indications support the establishment of benevolence, since the buyer can see first savings and improvements. Trust also encompasses honesty, which the buyer can develop based on the tight involvement in the project. The buyer can be convinced, that the optimization of the purchasing environment is the major goal of the project by reducing material cost on the one hand, but also by optimizing the work process by eliminating routine-work. The skepticism about the new E-procurement solution being able to improve and replace the common procurement processes can be reduced after first pilot runs.
As Doney et al. (1998, p. 603) posit, "in trusting situations the sources of risk generally are related to vulnerability and/or uncertainty about an outcome". Moreover, based on the first positive results the buyer can also build confidence in the competence of such B2B E- marketplaces. The trust in these first results of the project helps to build commitment. The buyer can be convinced that the B2B E-marketplace is able to deliver the predicted objectives.
Consequently the author argues that project success helps to convince and motivate procurement personnel to go forward with the project by implementing the new procedures in the day-to-day business. The success of this implementation can be measured by the indirect and direct value generation of the supplier relationship with a more long-term perspective.
Ad3: For justifying the investment of the project, certain improvements are required, which support the motivation to realize further improvements and savings.
Part of many project evaluations is a calculation comparing the project cost and the predicted benefits. Only if this equation is balanced the project is profitable. It is the responsibility of the project leader to control this balance. He needs to guide the project in the right direction.
As Hauschildt and Chakrabarti (1988, p. 385) found out the "process promotor" is responsible for the management of the process. He needs to be able to have a larger picture based on economic and social aspects. Hauschildt and Keirn (1999) conclude that the project leader is the perfect "process promotor", managing the project depending on the specific circumstances. In case of budget conflicts the project leader needs to motivate the team to develop more creative solutions, which can be faster implemented. In case of time constraints the project leader needs to filter the more important tasks and prioritize them. The process promotor has the function of a cost controller, who has to keep the equation between cost and benefits of the project in balance. Based on this balance his job is it to convince his team that the project is just a first step of the B2B E-marketplace implementation, which will continue after the project. With a successful project rollout long-term savings can be realized.
Ad4: The improvements and savings of the project prove the optimization potential of the new procurement environment, which motivates the procurement personnel to realize even further improvements and savings than the project team.
Often projects have a "teaching" character, which gives the feeling to prove that someone could do better. In this study a "radical innovation" (Leifer et al. 2000), the B2B E- marketplace, has to be implemented, which will have decisive impact on the day-to-day purchasing work. Since the B2B E-marketplace is new, the teaching character is limited. But the project work enforces some kind of competition between the project team and the regular procurement professionals. The project team shows, that saving potentials can be realized with the project. The procurement professionals are under pressure to show, that they can do at least as good as the project team or even better. This competition forces the motivation for further realization of optimization potential. Additionally, the project causes learn-effects. The procurement professionals have learned during the project, so that they are able to implement and apply the new processes after the project.
Combining these arguments the author draws the conclusion:
98 S Theoretical framework and hypotheses of the study Proposition 7a: The higher the project success is, the higher is the generation of indirect
value functions.
Proposition 7b: The higher the project success is, the higher is the generation of direct value functions.