Sunday, November 15, 2009

Carbon Credit Trading

The trading of carbon credits in Europe is a very promising instrument to cap the output of CO2 emissions. The European Union Emissions Trading Scheme (EU ETS) is a cap-and-trade system that has an absolute limit on covered emissions and rights to emit those emissions are conveyed by tradable permits (called European Union Allowances (EUAs)). These allowances are bought and sold via online auctions. Recent research by the MIT Joint Program on the Science and Policy of Global Change shows that the European Emission Trading Scheme is working successfully. Denny Ellerman and Barbara Buchner concluded in 2008 that - based on the first 2 years of the first trading period - CO2 emissions were about 3% lower than the allocated allowances.

Thursday, June 25, 2009


Kindle is the wireless reading device that Amazon is bringing on the US market.

As a fanatic reader (and with more time to read during my visiting scholarship at MIT) I recently bought the Kindle. The Kindle is wireless connected to the Amazon Kindle web site and in the US you can download books, newspapers, magazines, and blogs. For wireless downloading (only in the US yet) you need to have an US address and an US credit or debit card. The first experiences are very positive: great reading experience, easy to use, fast downloading, extra functionalities like the text-to-speech feature, the use of the dictionary, and the 9.99 dollar per book download. Let's see how I am going to use it the coming weeks. Keep you informed.

MIT Sloan CISR Summer Session

Great sessions and great interactions with an active group of CIOs and researchers during a series of five one-day workshops: that is the MIT Sloan CISR Summer Session 2009 (June 15-19, 2009). Five topics were discusssed: 1. IT Governance; 2. Enterprise Architecture; 3. IT Risk Management; 4. The IT Savvy Firm; and 5. IT-Enabled Change. Guest CIO speakers were: Diane Bryant (Intel); Yury Zaytsev (Swiss Re), Joe Antonellis (State Street), Per-Ake Tobiasson (Tetra Pak), and John Glaser (Partners Healthcare). CISR is the Center for Information Systems Research at MIT Sloan School of Management.

Standard Battles

Setting the standard is an important strategic asset. For example, if the Dutch would have been able to enforce the Dutch language to the rest of the world, for most of us it would be more difficult to communicate (unless you learned Dutch).

Fortunately for the non-Dutch, the Dutch are not able to do that anymore. (They had a chance around the 1640s - but decided to concentrate on the Dutch East India Company (and not the Dutch West India Company) and therefore lost control over Brazil in the Second Battle of Guararapes (1649) and later also lost control over Manhattan in 1664. Otherwise Brazil and the US would have spoken Dutch!

Geerten van de Kaa investigated Standards Battles for Complex Systems in the setting of home networks.

Home networks combine components and technologies from the consumer electronics industry, the information technology industry, the telecommunications industry, and the home automation industry. Irrespective of the fact that the home network has been technically possible for many years, it has not become a practical reality. A major reason is the lack of generally accepted common standards. In this dissertation we develop a framework with which we can explain and predict which standard will have the highest chance of achieving dominance. We applied the framework to several standards battles and it appeared that it can be used to explain these standards battles better, when compared to existing frameworks in the literature. We applied a multi-attribute utility approach to standard selection and provide a first indication of weights for factors. Also, we have studied two factors in depth: the diversity in the network of actors that support a standard; and the flexibility of the standard. We provide a first indication that these variables influence standard dominance positively and reinforce each other.

Risks, Real Options, and IT Projects

Project managers of IT projects are trying to find the right balance between analyzing risks and building flexibility in the project. Cokky Hilhorst did fundamenal research on this topic. She defended her dissertation "Reacting to Risks with Real Options: Valuation of Managerial Flexibility in IT Projects" very successfully at Tilburg University.

This dissertation investigates how managerial flexibility, as a response to risks, impacts IT project valuation. The dissertation attempts to answer this question by conducting three separate studies using a real options perspective. Firstly, we explore whether managerial flexibility in IT investment decisions is recognized in practice by conducting exploratory case study research. Secondly, we investigate how managerial flexibility in IT projects can be valued. We develop a theoretical decision-making model which deals with both financial and non-financial IT project valuation criteria and apply the model in a case study. Thirdly, we take a qualitative perspective on the management of managerial flexibility in relation to IT project risk. We empirically test the effects of specific risks on the valuation of real options in IT project decisions in an experimental setting. The primary contribution of this dissertation is to provide evidence that managers differentially assess the relative value of different types of options when controlling IT project risks. The relative value that IT professionals place on various real options is both driven by both the intrinsic real options value and by risk factors associated with an IT project. Their assessment generally follows real options-based risk management reasoning.

Theory of Informedness

New technologies such as mobile phones and smart cards provide more and detailed information about customers. Customers on the other hand are using web-technologies that enable them to get far detailed information about the offerings of firms. Ting Li defended in an excellent way her PhD dissertation entitled "Informedness and Customer-centric Revenue Management".

The dissertation proposes new theoretical perspectives – firm informedness, customer informedness, and informedness through learning – to re-conceptualize the decision making process of customer-centric revenue management. It consists of three studies. First, using multiple cases in which firms adopt smart cards and mobile technologies in America, Europe, and Asia, Ting Li examines the value creation process of the firm using the explanation of firm informedness and investigate how it advances revenue management. Second, she tests the theory of consumer informedness and examine heterogeneity in consumer preferences using stated choice experiments. She finds the evidence for trading down and trading out behavior and shows that the use of mobile ticketing technologies can help firms to build a hyper-differentiated transport market. Finally, using a computational simulation, Ting li explores the opportunity for devising service offerings to capture profitable consumer responses, considering demand-driven revenue and capacity-management. Overall, this research introduces methods, models, and guidelines for organizations to strategize the informational challenge, make informed decisions, and create transformational values to win in today’s competitive network environment.

Friday, January 9, 2009

ICIS 2008

Indeed it was a busy weekend. Around 1,400 people gathered in Paris for the 2008 International Conference on Information Systems (ICIS). Several great presentations and exciting panels (for example Design Science in IS, and IS Reserch and Education in the Post-industrial Economy) argument the need and urgence to transform the IS field in a profound way. I agree - let's move in a pro-active way.

My small contribution was to discuss three excellent teaching cases. A great teaching case has to be like Leonardo da Vinci's "Mona Lisa" painting: intriguing, well crafted, and provoking. The three teaching cases were:

Tracking Freight Railcars in Indian Railways: Technology Options and Stakeholder Interests by Srivastava, Shirish, HEC School of Management, Paris; Mathur, Sharat, Indian Railways; and Teo, Thompson S. H., National University of Singapore.

To Make or to Buy? Outsourcing Decisions at Zurich Cantonal Bank by Katharina Reinecke, Abraham Bernstein, and Stefanie Hauske, University of Zurich.

Indo Gives Its Sales Force New Mobility Technology by Sandra Sieber, IESE Business School.

We also organized on Monday December 15, 2008 the CBS-HSE-RSM reception in Hotel Le Meridien, see picture. Great to have colleagues from around the world at our reception.

WISE 2008

Great presentations and a great crowd. The Twentieth Workshop on Information Systems and Economics (WISE) with the program co-chairs Anindya Ghose, Geoffrey Parker, Arun Sundararajan, and Marshall Van Alstyne was held in Paris. The session I was asked to chair had four great presentations:

Ta-Wei Wang, Karthik Kannan and Jackie Rees. Investors Perceptions on Information Security Incidents

Atanu Lahiri, Rajiv Dewan and Marshall Freimer. On the Pricing of Wireless Services: Application Pricing versus Traffic Pricing

Ashish Agarwal, Pei-yu Chen and Tridas Mukhopadhyay. Beyond Simple Plug and Play: Theory of Alliances in the Software Industry

Mei Lin, Xuqing Ke and Andrew Whinston. Ad-Supported Duopoly Competition: Advertise Selectively?

Abstracts and papers can be downloaded here.

WeB 2008 In Paris

Both Andy Whinston (University of Texas), Vikas Krishna (IBM Almaden Research Center) and myself had the honor to held key notes at the very interesting pre-ICIS workshop WeB 2008 - this year in Paris.

Here is the summary of my talk.

The Value of Smart Business Networks: Experiments and Experiences


Organizations are moving, or must move, from today’s relatively stable and slow-moving business networks to that open digital platform where business is conducted across a rapidly-formed network with anyone, anywhere, anytime despite different business processes and computer systems. The disadvantages and associated costs of the more traditional approaches are caused by the inability to provide relative complex, bundled, and fast delivered products and services. The potential of the new business network approach is to create these types of products and services with the help of combining business network insights with telecommunication capabilities.

The “business” is no longer a self-contained organization working together with closely coupled partners. It is a participant in a number of networks where it may lead or act together with others. The “network” takes additional layers of meaning – from the ICT infrastructures to the interactions between businesses and individuals. Rather than viewing the business as a sequential chain of events (a value chain), actors in a smart business network seek linkages that are novel and different creating remarkable, “better than usual” results.

In this presentation we discuss the latest research results undertaken by different actors in the Smart Business Network Initiative (SBNi). The results of experiments and experiences show that there are several critical capabilities that determine the value of smart business networks. We discuss three components. Firstly, the number of nodes that an actor can “see” from a specific position in the network is important. With a larger network horizon a company can take a more advantageous network position depending on the distribution of the network horizons across all actors and up to a certain saturation point. Secondly, the way that a business network has the ability to “rapidly pick, plug, and play” to configure rapidly to meet a specific objective, for example, to react to a customer order or an unexpected situation (for example dealing with emergencies). Quick connect and disconnect capabilities combined with product, service, and process modularization is crucial. Thirdly, the way flexible decision making is supported with a service-oriented architecture. With the help of business network dashboards managers are able to improve their strategic and operational decision making.

Online Reverse Auctions

Ulad Radkevitch defended on October 10, 2008 his PhD thesis entitled "Online Reverse Auctions for Procurement of Services".

Here follows the text of my "laudatio":

"It is a privilege for me to be the first one to congratulate you with your PhD degree. Ulad congratulations! And co-promotor Otto Koppius is joining me in congratulating you with this result. We are proud that you made an excellent contribution both to theory and practice resulting in not only a dissertation but also publications such as in Decision Support Systems.

You started your time at Erasmus Univeristy with an internship with professor Ron Lee. During that internship we met and we had a discussion about the pro’s and con’s of executing a PhD project. The result was that you applied in 2003 to the PhD project 'The Impact of Reverse Auctions in Business Networks'.

From the beginning you were happy with this topic and very focused – you had already yourself some experience about the role and impact of online reverse auctions. However, the beginning was not easy. Developing a coherent research proposal with a coherent conceptual framework was a struggle but the comments of the external reviewers were positive, helpful and rewarding. The result is an empirically coherent dissertation.

The first part of your thesis (chapter 2, 3 and 4) deals with in-depth analysis of transaction data of online marketplaces like eLance and RentaCoder. In your dissertation you write on page 84 'To extract data from the website of the online marketplace we used Kapow RoboSuite. A web extraction agent; Microsoft Excel and SPSS were employed at the stage of data processing and analysis'.

I know that this one liner does not fully reflect your enormous efforts to develop a very sophisticated agent system that extracted data from web sites. I remembered that during that period I walked into your office and that your computer was running day and night to get thousands of transactions from these markets. In total 14,086 events are analyzed in these three chapters (and that is just a selection of the data set you build). But you did not only build, test and run the software but also set up good relationships with the people of these markets for example with the founder of RentACoder.

The second part of your thesis the case study of a construction project in Amsterdam was also a challenge. Jan Siderius – founder of Negometrix suggested this case to analyse the impact of online reverse auctions in detail. It is one of the first studies that follow such a project in great detail and you did show that you are able to execute both quantitative and qualitative studies at a very high quality level. With the help of Wouter Vermeer you were able to cope with Dutch language barriers and the typical (sometimes) unwritten rules of the construction industry.

Doing research is important but also presenting research to the outside world is a critical aspect of PhD research. I think one of the highlights of your PhD project was the presentation at ICIS in Milwaukee in 2006. In preparing the presentation I remembered we had some very intense discussions ( I really had to act here as the tough supervisor) but your performance at ICIS was just great. Afterwards we enjoyed a beer tasting evening in one of the typical Milwaukee bars.

Otto Koppius and I have excellent memories about our discussions (ranging from topics such as the essence of Snir and Hitt’s work and how to do better; the design of a new bachelor course on IT outsourcing; or the impact of online reverse auctions on the performance of industries worldwide). But also about your cohesive role you played in our department as a socially conscious person; new faculty members were introduced by Ulad in the Rotterdam scene and other cities in Europe.

Overall, you have shown via hard work, discipline, and intellectual curiosity that you are now an independent thinker. That is a key asset in today’s world that is complex and volatile. I am sure you will use this asset in a wise way. All the best."

One can download Ulad's dissertation at the ERIM website.