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Development of a Model of Product Innovativeness for Large Packaged Software: A Design Science Approach

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This project uses a design science research (DSR) approach to develop a model of product innovativeness for large packaged (i.e. enterprise systems) software. The project was motivated by the lack of a suitable model to assess the level of innovativeness of business intelligence (BI) software products. The design of the model was informed by a literature-based innovation output indicator (LBIOI) content analysis of 17 years of press releases and publicly available financial records to understand the sources, categories and rate of innovation of typical large BI platform vendor, and a concept-centric literature review of academic research on product and customer innovativeness. The model of product innovativeness for large packaged software (LPS) consists of seven constructs and six associations grouped into an industry perspective and a customer perspective. The industry perspective of the model can be used as stand-alone model to determine the inherent level of innovativeness of a new version of LPS, while the customer perspective can be used in conjunction with the industry perspective to assess the level of innovativeness of a new version of LPS relative to the specific circumstances of the customer. The primary contribution made by this research is the detailed definition of a draft model of product innovativeness for LPS that will be useful for academic researchers and practitioners alike, and the extension of the concept of product innovativeness into IS research. The secondary contribution made by this research is a demonstration that the LBIOI method can be used to describe and understand the nature of innovation for a single software company over an extended period.

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Development of a Model of Product Innovativeness for Large Packaged Software: A Design Science Approach

  1. 1. Information TechnologyDevelopment of a Model of ProductInnovativeness for Large PackagedSoftware: A Design Science Approach MBIS(Hons) Minor Thesis Final Presentation Mr Steve Remington Decision Support Systems Laboratory Supervisor: Emeritus Prof David Arnott
  2. 2. Agenda Key Definitions Research Method and Strategy Design Science Phases – Problem and Relevance – Industry Case Study – Literature Review – Draft Model Design – Evaluation Method Selection and Design – Reflection Minor Thesis Final Presentation - Steve Remington November, 2012 2
  3. 3. Key Definitions Business Intelligence (BI) Platform – A system that can “…enable all types of users – from IT staff to consultants to business users – to build applications that help organisations learn about and understand their business” (Gartner, Inc. 2012c) Large Packaged Software (LPS) – “A packaged configuration of software components or a software-based service, with auxiliary materials, which is released for and traded in a specific market, and that requires a significant amount of customisation and implementation work to be done before it can meet the requirements of the customer.” Xu & Brinkkemper 2007) Minor Thesis Final Presentation - Steve Remington November, 2012 3
  4. 4. Key Definitions Innovation – “An innovation is the implementation of a new or significantly improved product (good or service), or process, a new marketing method, or a new organizational method in business practices, workplace organization or external relations.” (OECD / Eurostat 2005) Innovativeness – “…a measure of the degree of „newness‟ of an innovation” (Garcia and Calantone 2002) Minor Thesis Final Presentation - Steve Remington November, 2012 4
  5. 5. Design Science: Guidelines Identify and define the problem. Awareness Determine academic and practical relevance Investigate the problem in more detail. Create a tentative design SuggestionApproach based on for an artefact and develop evaluation criteriadesign scienceresearch guidelines Development Design an artefact that realises the tentative designdeveloped byVaishnavi and Assess how well the artefactKuechler (2007) Evaluation performs with respect to the evaluation criteria. Assess the rigour with which the Reflection research was conducted and the overall quality of the artefact Minor Thesis Final Presentation - Steve Remington November, 2012 5
  6. 6. Design Science: Strategy for this Project Practitioner concerns Practitioner and about reduced academic relevance of innovativeness in BI Awareness the problem, and scope software post-2007 of research Study of innovation in a Understanding of BI software vendor problem, tentative Suggestion design and evaluation Literature review of product innovativeness criteria Knowledge of software The Artefact: vendor innovation and Model of product general models of Development innovativeness for large product innovativeness packaged software Concerns about Design of focus group to innovativeness in BI evaluate the model of software post-2007 Evaluation software product acquisitions innovativeness Hevner et al. guidelines to evaluate design Reflection science research Minor Thesis Final Presentation - Steve Remington November, 2012 6
  7. 7. Awareness Practitioner concerns Practitioner and about reduced academic relevance of innovativeness in BI Awareness the problem, and scope software post-2007 of research Study of innovation in a Understanding of BI software vendor problem, tentative Suggestion design and evaluation Literature review of product innovativeness criteria Knowledge of software The Artefact: vendor innovation and Model of product general models of Development innovativeness for large product innovativeness packaged software Concerns about Design of focus group to innovativeness in BI evaluate the model of software post-2007 Evaluation software product acquisitions innovativeness Hevner et al. guidelines to evaluate design Reflection science research Minor Thesis Final Presentation - Steve Remington November, 2012 7
  8. 8. Significance of the BI software market The dominant Global BI Platform Market 9,000 technology for DSS in 8,000 medium and large Annual Worldwide Revenue (US$M) 7,000 organisations 6,000 A very high technology 5,000 priority of CIOs for five 4,000 of the last seven years 3,000 Significant money is 2,000 1,000 spent on this software 0 (US$7.8B in 2011) 2006 2007 2008 2009 2010 2011(Gartner, Inc. 2008a; Gartner, Inc. 2008b; Gartner, Inc. 2009a; Gartner, Inc. 2009b; Gartner, Inc. 2010a; Gartner, Inc. 2010b; Gartner, Inc. 2011a;Gartner, Inc. 2011b; Gartner, Inc. 2012a ; Gartner, Inc. 2012b) Minor Thesis Final Presentation - Steve Remington November, 2012 8
  9. 9. 2007: The Year of Consolidation 13.7% 10.6% 9.4% 14.5% 18.2% 7.9% 1.2%(Gartner, Inc. 2008a; IBM Corp. 2007; Oracle Corporation. 2007; SAP AG. 2007) Minor Thesis Final Presentation - Steve Remington November, 2012 9
  10. 10. 2007: The Year of Consolidation 13.7% 10.6% 10.6% 14.5% 26.3%(Gartner, Inc. 2008a; IBM Corp. 2007; Oracle Corporation. 2007; SAP AG. 2007) Minor Thesis Final Presentation - Steve Remington November, 2012 10
  11. 11. The Problem “A perceived difference between what is and what should be.” (Kroenke, Unknown cited in Venable 2006 p. 185)What is… What should be… No suitable model of  A model of product product innovativeness to innovativeness for LPS assess BI platform software suitable for academics and from different vendors practitioners (the artefact)Relevance of the Model Academic – Researchers use it to study the affect of innovativeness of LPS. Practitioner – Organisations can use it as part of product evaluation processes. Minor Thesis Final Presentation - Steve Remington November, 2012 11
  12. 12. Suggestion: The Industry Perspective Practitioner concerns Practitioner and about reduced academic relevance of innovativeness in BI Awareness the problem, and scope software post-2007 of research Study of innovation in a Understanding of BI software vendor problem, tentative Suggestion design and evaluation Literature review of product innovativeness criteria Knowledge of software The Artefact: vendor innovation and Model of product general models of Development innovativeness for large product innovativeness packaged software Concerns about Design of focus group to innovativeness in BI evaluate the model of software post-2007 Evaluation software product acquisitions innovativeness Hevner et al. guidelines to evaluate design Reflection science research Minor Thesis Final Presentation - Steve Remington November, 2012 12
  13. 13. Case Study Organisation – Cognos Inc. (acquired by IBM in 2007) Method – Literature-Based Innovation Output Indicator (LBIOI) (Edwards and Gordon 1984) – A form of content analysis used in innovation research Data Source – 17 years of press releases and financial statements Classification scheme emerged from content Compared pre-acquisition and post-acquisition innovation behaviour to see if there was change Minor Thesis Final Presentation - Steve Remington November, 2012 13
  14. 14. The LBIOI Process 1. 2. 3. Identify reporting Select reporting Select time sources service period 6. 4. 5. Collect additional Design Collect data and data classification and store in database (if necessary) database 7. 8. (Edwards and Gordon 1984) Analyse data Report findings Minor Thesis Final Presentation - Steve Remington November, 2012 14
  15. 15. Classification SchemePress Release Product and Type Technology (P) Product and Technology Product Technology Acquisition (TA) Output (PO) Type Product and Technology Technology Product Product Product Technology Purchase (TP) Licensing (TL) Release (PR) Application (PA) Integration (PI) Sub-Type New New New Product (NEW) Product (NEW) Product (NEW) Product Major Major Major Output Version (MAJ) Version (MAJ) Version (MAJ) Version Minor Minor Minor Version (MIN) Version (MIN) Version (MIN) Minor Thesis Final Presentation - Steve Remington November, 2012 15
  16. 16. Findings and Conclusions 1,376 press releases analysed 197 product and technology press releases found 230 discrete innovation events identified Innovation output is highly variable over time Identified a shift from “product” to “marketing” innovation Weak evidence to support reduction in innovation output post acquisition – Results may be confounded by change to press release process caused by acquisition by IBM Minor Thesis Final Presentation - Steve Remington November, 2012 16
  17. 17. Findings and Conclusions 40 100% Cognos, Inc. ← → IBM Corp. % of Prouduct Output Announcements in Each Innovation Type 30 75% No of Product Output Announcements 20 50% 10 25% - 0% 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Financial Year Product Innovation Marketing Innovation Product Output Announcements Minor Thesis Final Presentation - Steve Remington November, 2012 17
  18. 18. Suggestion – The Academic Perspective Practitioner concerns Practitioner and about reduced academic relevance of innovativeness in BI Awareness the problem, and scope software post-2007 of research Study of innovation in a Understanding of BI software vendor problem, tentative Suggestion design and evaluation Literature review of product innovativeness criteria Knowledge of software The Artefact: vendor innovation and Model of product general models of Development innovativeness for large product innovativeness packaged software Concerns about Design of focus group to innovativeness in BI evaluate the model of software post-2007 Evaluation software product acquisitions innovativeness Hevner et al. guidelines to evaluate design Reflection science research Minor Thesis Final Presentation - Steve Remington November, 2012 18
  19. 19. Literature Review: Overview Scope – Academic research on product innovativeness (primarily) and customer innovativeness Sample – 10 highly cited review / meta analysis articles – 21 highly cited empirical studies on product innovativeness from all fields – 6 highly cited conceptual and empirical studies on customer innovativeness Method – Watson and Webster‟s (2002) concept-centric analysis Minor Thesis Final Presentation - Steve Remington November, 2012 19
  20. 20. Literature Review: Findings Product Innovativeness research has been conducted for more than 50 years in many fields Inconsistent modelling and operationalization makes cross-study comparisons difficult Four common ancillary constructs identified – Newness to market – Newness to firm – Technological newness – Product uniqueness / superiority Majority of research has been conducted from the firm‟s perspective and lacks customer focus Minor Thesis Final Presentation - Steve Remington November, 2012 20
  21. 21. Literature Review: Findings Recent reviews have suggested need to include customer innovativeness concepts into product innovativeness models Only 5 empirical studies of related to software Customer innovativeness is based on Rogers‟ adoption and diffusion theory (ADT) Most relevant aspect of ADT to product innovativeness is “characteristics of innovation” Customer‟s perception of attributes of innovation can change perceived level of innovativeness Minor Thesis Final Presentation - Steve Remington November, 2012 21
  22. 22. Development Practitioner concerns Practitioner and about reduced academic relevance of innovativeness in BI Awareness the problem, and scope software post-2007 of research Study of innovation in a Understanding of BI software vendor problem, tentative Suggestion design and evaluation Literature review of product innovativeness criteria Knowledge of software The Artefact: vendor innovation and Model of product general models of Development innovativeness for large product innovativeness packaged software Concerns about Design of focus group to innovativeness in BI evaluate the model of software post-2007 Evaluation software product acquisitions innovativeness Hevner et al. guidelines to evaluate design Reflection science research Minor Thesis Final Presentation - Steve Remington November, 2012 22
  23. 23. Draft Model: Overview Customer Perspective Industry Perspective Relative Technology Advantage Newness of Innovation I1 (+) C2 (+) Market I2 C1 Perceived Product Position Product (+) Innovativeness (+) Newness Innovativeness C3 (−) I3 (+) Product Complexity Advantage of Innovation Minor Thesis Final Presentation - Steve Remington November, 2012 23
  24. 24. Draft Model: Industry Perspective Newness of functionality and technology embodied in the new version of LPS Technology Newness Newness of market I1 (+) position or customer base of the new version of LPS To be used by researchers Market I2 and industry analysts to Product Position Newness (+) Innovativeness assess innovativeness of LPS The overall, inherent level I3 (+) of newness of the new version of LPS Product Advantage The degree of superiority the new version of LPS has relative to competitors Minor Thesis Final Presentation - Steve Remington November, 2012 24
  25. 25. Draft Model: Customer PerspectiveDegree to which customerperceives new version ofLPS greater than previous Relative AdvantageLevel of newness of the of Innovationnew version of LPSperceived by customer C2 (+)To be used in conjunctionwith industry perspective C1 Perceived Product Productby customer to assess Innovativeness (+) Innovativenessinnovativeness of LPSThe overall, inherent level C3 (−)of newness of the newversion of LPS Complexity of InnovationDegree to which customerperceives new version ofLPS difficult to implement Minor Thesis Final Presentation - Steve Remington November, 2012 25
  26. 26. Evaluation Practitioner concerns Practitioner and about reduced academic relevance of innovativeness in BI Awareness the problem, and scope software post-2007 of research Study of innovation in a Understanding of BI software vendor problem, tentative Suggestion design and evaluation Literature review of product innovativeness criteria Knowledge of software The Artefact: vendor innovation and Model of product general models of Development innovativeness for large product innovativeness packaged software Concerns about Design of focus group to innovativeness in BI evaluate the model of software post-2007 Evaluation software product acquisitions innovativeness Hevner et al. guidelines to evaluate design Reflection science research Minor Thesis Final Presentation - Steve Remington November, 2012 26
  27. 27. Practitioner concerns Practitioner and about reduced academic relevance of innovativeness in BI Awareness the problem, and scope software post-2007 of research Study of innovation in a Understanding of BI software vendor problem, tentative Suggestion design and evaluation Literature review of product innovativeness criteria Knowledge of software The Artefact: vendor innovation and Model of productMethod Selection and Design general models of Development innovativeness for large product innovativeness packaged software Concerns about Design of focus group to innovativeness in BI evaluate the model of software post-2007 Evaluation software product acquisitions innovativeness Hevner et al. guidelines to evaluate design Reflection science research Due to limitation of minor thesis only evaluation method selection and design are addressed Used Venable et. al. (2012) selection framework – Strategy: Ex Ante – Naturalistic – Method: Exploratory Focus Group Purpose – Obtain feedback on draft model to identify improvements for future development phase Objectives – Assess usefulness of draft model relative to evaluation criteria in development phase Minor Thesis Final Presentation - Steve Remington November, 2012 27
  28. 28. Reflection Practitioner concerns Practitioner and about reduced academic relevance of innovativeness in BI Awareness the problem, and scope software post-2007 of research Study of innovation in a Understanding of BI software vendor problem, tentative Suggestion design and evaluation Literature review of product innovativeness criteria Knowledge of software The Artefact: vendor innovation and Model of product general models of Development innovativeness for large product innovativeness packaged software Concerns about Design of focus group to innovativeness in BI evaluate the model of software post-2007 Evaluation software product acquisitions innovativeness Hevner et al. guidelines to evaluate design Reflection science research Minor Thesis Final Presentation - Steve Remington November, 2012 28
  29. 29. Hevner et al (2004) Guidelines Minor Thesis Final Presentation - Steve Remington November, 2012 29
  30. 30. Question and Comments Contact Details: Steve Remington (steve.remington@monash.edu) This presentation is certified 100% pie chart free. Minor Thesis Final Presentation - Steve Remington November, 2012 30
  31. 31. ReferencesEdwards, K.L. & Gordon, T., J., 1984. Characterisation of Innovation Introduced on the US Market in 1982: Report to the US Small Business Administration, Glastonbury, Conneticut: The Futures Group.Garcia, R. & Calantone, R.J., 2002. A critical look at technological innovation typology and innovativeness terminology: a literature review. Journal of Product Innovation Management, 19(2), pp.110–132.Gartner, Inc., 2008a. Gartner Says Worldwide Business Intelligence Platform Market Grew 13 Percent in 2007. Gartner Newsroom. Available at: http://www.gartner.com/it/page.jsp?id=700410Gartner, Inc., 2008b. Gartner Says Worldwide Business Intelligence Spending to Grow 11 Percent in 2008. Gartner Newsroom. Available at: http://www.gartner.com/it/page.jsp?id=636310Gartner, Inc., 2009a. Gartner Says Megavendors Are Slowing Business Intelligence Revenue Growth but Increasing Usage by Bundling Applications. Gartner Newsroom. Available at: http://www.gartner.com/it/page.jsp?id=852112Gartner, Inc., 2009b. Gartner Says Worldwide Business Intelligence, Analytics and Performance Management Grew 22 Percent in 2008. Gartner Newsroom. Available at: http://www.gartner.com/it/page.jsp?id=1017812Gartner, Inc., 2010a. Gartner EXP Worldwide Survey of Nearly 1,600 CIOs Shows IT Budgets in 2010 to be at 2005 Levels. Gartner Newsroom. Available at: http://www.gartner.com/it/page.jsp?id=1283413Gartner, Inc., 2010b. Gartner Says Worldwide Business Intelligence, Analytics and Performance Management Software Market Grew 4 Percent in 2009. Gartner Newsroom. Available at: http://www.gartner.com/it/page.jsp?id=1357514 Minor Thesis Final Presentation - Steve Remington November, 2012 31
  32. 32. ReferencesGartner, Inc., 2011a. Gartner Forecasts Global Business Intelligence Market to Grow 9.7 Percent in 2011. Gartner Newsroom. Available at: http://www.gartner.com/it/page.jsp?id=1553215Gartner, Inc., 2011b. Gartner Says Worldwide Business Intelligence, Analytics and Performance Management Software Market Surpassed the $10 Billion Mark in 2010. Gartner Newsroom. Available at: http://www.gartner.com/it/page.jsp?id=1642714Gartner, Inc., 2012a. Gartner Forecasts Australian Business Intelligence Software Revenue to Grow 11.7 Percent in 2012. Gartner Newsroom. Available at: http://www.gartner.com/it/page.jsp?id=1924015Gartner, Inc., 2012b. Gartner Says Worldwide Business Intelligence, Analytics and Performance Management Software Market Surpassed the $12 Billion Mark in 2011. Gartner Newsroom. Available at: http://www.gartner.com/it/page.jsp?id=1971516Hevner, A.R. et al., 2004. Design Science in Information Systems Research. MIS Quarterly, 28(1), pp.75 – 105.IBM Corp. (2007). IBM to Acquire Cognos to Accelerate Information on Demand Business Initiative. HighBeam Research. Online Press Release Archive. Retrieved February 2, 2010, from http://www.highbeam.com/doc/1G1-171133011.htmlOECD / Eurostat, 2005. Oslo Manual: Guidelines for Collecting and Interpreting Innovation Data 3rd ed., Paris, France: OECD Publishing. Available at: http://www.oecd.org/document/33/0,3343,en_2649_34273_35595607_1_1_1_37417,00.html Minor Thesis Final Presentation - Steve Remington November, 2012 32
  33. 33. ReferencesOracle Corporation. (2007). Oracle Buys Enterprise Performance Management Leader Hyperion. Oracle Press Releases. Press Release. Retrieved April 10, 2010, from http://www.oracle.com/corporate/press/2007_mar/hyperion.htmlSAP AG. (2007). SAP to Acquire Business Objects in Friendly Takeover; Combined Companies to Accelerate Leadership for Business User Applications. HighBeam Research. Online Press Release Archive. Retrieved February 2, 2010, from http://www.highbeam.com/doc/1G1-169574461.htmlVaishnavi, V. & Kuechler, W., 2007. Design Science Research Methods and Patterns: Innovating Information and Communication Technology, CRC Press.Venable, J. (2006). A Framework for Design Science Research Activities. In M. Khosrow-Pour (Ed.), Emerging Trends and Challenges in Information Technology Management (pp. 184–187). Hershey, PA, USA: Idea Group, Inc. Retrieved from http://www.irma-international.org/proceeding- paper/framework-design-science-research-activities/32739/Venable, J., Pries-Heje, J. & Baskerville, R., 2012. A Comprehensive Framework for Evaluation in Design Science Research. In K. Peffers, M. Rothenberger, & B. Kuechler, eds. Design Science Research in Information Systems. Advances in Theory and Practice. 7th International Conference, DESRIST 2012. Las Vegas, Nevada, USA: Springer Berlin Heidelberg, pp. 423–438. Available at: http://link.springer.com.ezproxy.lib.monash.edu.au/chapter/10.1007/978-3-642-29863-9_31Xu, L. & Brinkkemper, S., 2007. Concepts of Product Software. European Journal of Information Systems, 16(5), pp.531–541.Watson, R. & Webster, J., 2002. Analyzing the Past to Prepare for the Future: Writing a Literature Review. Management Information Systems Quarterly, 26(2), p.xiii–xxiii. Minor Thesis Final Presentation - Steve Remington November, 2012 33

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