ASSESSING BUSINESS TRANSACTION STANDARDS

AND THEIR ADOPTION

A Cross Case Analysis Between the SETU and Vektis Standards

Wouter Berends

Department of Business Information Systems, TNO ICT, Enschede, The Netherlands

Erwin Folmer

Department of Information Systems and Change Mangement, University of Twente, Enschede, The Netherlands

Department of Business Information Systems, TNO ICT, Enschede, The Netherlands

Keywords: Business transaction standards, Interoperability, Adoption, Case study.

Abstract: Nowadays businesses increasingly want to be interoperable so that they can collaborate with other

organizations. Interoperability can be achieved through the use of business transaction standards, by which

the organizations that use the standards collectively form a value added network. However the effectivity of

these standards is largely dependant on the number of organizations that have adopted it, and thus it is very

important that the standard conforms to the conditions that organizations have towards adopting these

standards. Building on recent literature describing technical standards (van de Kaa, 2009), we have

constructed a model through which standard aspects can be compared with the adoption conditions that

organizations have. Subsequently cross case analysis methods were used to identify important aspects that

influence the adoption of business transaction standards, as well as the identification of methods by which

the aspects can be adapted by an Standard Development Organization (SDO) so that higher standard

adoption is achieved. This evaluation can give managers and SDO’s a higher understanding on standards

itself and the domain it is supposed to function in. The cases demonstrated that early involvement of

organizations with high market powers (preferably through a federation that represents these organizations)

is important for adoption whereby the development and maintenance of the standard should preferably be

funded by those organizations that have most to gain from broad standard adoption. Furthermore open

characteristics, modularity and efficient business processes are perceived imperative for the adoption of

business transaction standards.

1 INTRODUCTION

Business transaction standards are used by Inter -

Organizational information Systems (IOS) to

increase the level of interoperability amongst

collaborating organizations. Collaborative business

(C-business) describes the interlinked collaboration

of all participants in a value added network (Scheer,

2003) through which organizations agree to work

together as a method for achieving their common

goals. When collaborative business is strived after,

the systems of every party involved must be able to

interoperate. This interoperability can be achieved

through a standard that is recognized by all involved

parties. The advantages that can be derived from

standard use is that documents and messages are

delivered to the target organization in such manners

that they can automatically be processed through

their business processes, without necessarily owning

and controlling the asset. “Through this unique

combination of resources advantage over competing

firms can be established. These unique interfirm

linkages may be a source of relational rents and

competitive advantage” (Dyer, 1998). Because

standards enable interfirm linkages the relational

view as described by Dyer (1998) is applied who has

identified several advantages (relation-specific

assets, interfirm knowledge sharing routines,

complementary resources / capabilities and effective

151

Berends W. and Folmer E. (2010).

ASSESSING BUSINESS TRANSACTION STANDARDS AND THEIR ADOPTION - A Cross Case Analysis Between the SETU and Vektis Standards.

In Proceedings of the International Conference on e-Business, pages 151-156

DOI: 10.5220/0002915901510156

 SciTePress

governance) resulting from interconnecting

resources. Existing standard research suggest that

standard adoption is dependant on the aspects that

that standard have (van de Kaa, 2009), however

most research describe technical standards (like the

USB and IPv6 standards). Research describing

business transaction standards is scarce (Folmer,

2009). Furthermore because of political,

organizational, and economic complexities

(Backhouse, 2003) business transaction standard

development differ from technical standards and

thus indicates that the aspects form technical

standards are not necessarily the same as business

transaction standards. The goal of this paper was to

identify those aspects that are of importance for the

adoption of business transaction standards, and

search for methods through which these aspects can

be adapted by an Standard Development

Organization (SDO) so that higher standard adoption

is achieved. In contrast to van de Kaa (2009) who

developed a framework showing technical standards

aspects through which managers can make a well

informed choice on which standard to use. We argue

that an SDO can also use the aspects to alter the

standard in order to achieve higher adoption degrees

and subsequently achieve higher interoperability.

This was achieved by constructing an adoption

model consisting of adoption factors found in

existing literature. The model was validated by using

cross case evaluation techniques, which was done by

first constructing case descriptions of the two

business transaction standards. Second using the

case descriptions cross case analysis has been

conducted that show similarities and differences

between the two cases. And third using the cases a

determination was made which aspects are of

importance for business transaction standards as

well as making adoption hypotheses.

2 STANDARD ADOPTION

CONDITIONS

Organizations can have multiple factors that

encourage or restrict them for adopting business

transaction standards (i.e. adoption conditions), for

the SDO it is important to know which adoption

conditions are present so that the standard aspects

can be altered in such manners that the standard

complies to those conditions. In order to ascertain

these conditions multiple organizational viewpoints

were adopted whereby the organizational viewpoints

are those organizational types involved in standards.

Krechmer (2009) identified end users,

implementation organizations and SDO’s as those

organizational types that have different viewpoints

towards adoption conditions. The end user

organization will benefit from the business

transaction standard because the application of IT

and complementary organizational resources can

improve business processes / enable new ones and

may ultimately impact organizational performance.

Zhu (2006) identified two business drivers that are

of key influence to the adoption of end user

organizations: Network effects and switching costs.

The implementation organization is the organization

that makes software (in-house or outhouse) that is

compliant to the standard which is developed by the

SDO. The implementation organization ensures that

the end user is able to use the software / standard.

Since our goal is to assess the standard that is used

by that specific software solution, a software

supplier (portability) and maintainer

(maintainability) view has been used and not a

software developer view. The SDO usually is a non-

profit organization that is comprised with members

that have common goals, thus the goal of an SDO is

the development and maintenance of a standard that

service the common interests of it’s members. Zhu

(Zhu, 2006) describes that for an SDO one measure

is key for adoption and diffusion which is

deployment. The deployment of the standard can

subsequently be judged based upon three measures:

Volume, Diversity and Breadth.

3 STANDARD ASPECTS

Following the assumption that the aspects identified

for technical standards are not the same as the

aspects of influence for business transactions

standards, we have identified the aspects that are of

importance when dealing with business transaction

standards. In order to establish a complete aspect

overview that influence the adoption of business

transaction standards, articles that discuss business

transaction standard aspects have been examined.

Starting point was the model by van de Kaa (2009)

who has made a similar model describing factors for

standard dominance specific for network (technical)

standards. Additional aspects were identified

through other literature sources. These articles were

published in the top 25 CS/IS journals

(Mylonopoulos, 2001) and the top 25 International

Business Journals (DuBois, 2000). Second articles

discussing business transaction standard case studies

were used to examine which aspects were mentioned

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relevant to adoption. This resulted in twenty six

aspects that were subsequently subdivided into six

distinct categories derived from Melville (2004), the

aspects are shown in Table 2. The importance of the

Melville model is that it encompasses every domain

(e.g. Focal firm, Competitive Environment and

Macro environment) that Information Technology

have influence upon. By embracing these

categorizations it was possible to conclude that all

aspects have been identified furthermore these

categorizations ensured that generalizations and

aspects pattern recognition can be used when

applying case evaluation methods.

4 CROSS CASE EVALUATION

In order to ascertain which standard aspects can best

be influenced by SDO’s so that higher adoption

degrees are achieved, cross case analysis methods

have been used. These cross case analysis methods

have yielded qualitative results through which an in

depth understanding was ascertained regarding the

standard aspects that influence the organizational

adoption conditions. The standards used for this

analysis were the Vektis (http://www.vektis.nl)

standard and the SETU (http://www.setu.nl)

standard. Whereby the goal of this cross case

analysis was to identify those aspects that are of

importance of standard adoption, and to determine

how these aspects relate to the adoption conditions.

For both the SETU case and Vektis case a

preliminary case description has been constructed

using literature which has been provided by the

SETU and Vektis organizations itself, internet (site)

and Dutch articles. These sources provided a basis

from which an understanding was formed regarding

the dimensions that exist when using the standards.

Because the general goal of this paper is to form

hypotheses and to search for adoption patterns

amongst standard aspects, the second data collection

phase was conducted using separate data collection

methods (Eisenhardt, 1989).

• The data used for the Vektis case study has been

formed through a questionnaire that was sent to

Vektis KEI members. These members represent

both end user and implementation organizations

and are involved with the standard build (43%

response rate). This questionnaire consisted of

open questions derived from literature, aspect

categories and the adoption conditions.

• The data used for the SETU case study was

formed through interviews with TNO

employees, who are involved with the building

and maintenance of the standard. As well as

reviewing documentation provided by TNO.

The following two paragraphs will give short

descriptions of the two standards.

4.1 Vektis Case

Vektis is an organization that is funded by insurance

organizations and ensures that appropriate

information is available for health providers so they

can perform their tasks in conjunction with their

business (chain) partners. One of their activities is to

provide standards for the declaration processes in the

Dutch healthcare domain, by which standard users

are insurers, health offices and health providers. The

prime task of the standard is to provide mechanisms

that show whether individuals are insured and to

provide mechanisms that enable electronic health

declarations. Whenever patients have used services

provided by health providers a billing process is

initiated towards the insurer. These declarations are

transmitted electronically towards the insurance

companies which in turn provide payment towards

the health providers. The transmissions go through

the VECOZO portal that ensures that the overall

communication is conducted in a secure and safe

manner. Vektis is also placed in the Dutch

environment as an independent organization, by

which it’s partners, the Dutch health insurers,

provide it’s financial backing.

4.2 SETU Case

The SETU (Foundation for electronic transactions in

the staffing industry) was founded by the Dutch

federation for the staffing industry (ABU). The

SETU standards serve the process between staffing

organizations and organizations that acquire

personnel through the mediation of the staffing

organizations. The general goal of the standard is to

facilitate electronic transactions between the

organizations within the Dutch staffing industry, to

standardize the business process for compatibility

reasons and to ensure continuity of the developed

standards. The SETU standards are in existence

since the beginning of 2007, since then the standards

handle approximately 10 percent of all timecards.

ASSESSING BUSINESS TRANSACTION STANDARDS AND THEIR ADOPTION - A Cross Case Analysis Between

the SETU and Vektis Standards

153

Table 1: Field case results.

Vektis Setu

IT Resources

The standards are relatively open, whereby the insurance

organizations pay contributions. Standards modules are built

for specific occupational groups, resulting in high

recognition, and increases the adoption amongst those

groups. Furthermore the standards are built using ASCII and

it is not compatible with other standards, however this has

no influence on the adoption. The standards are also

considered easy to use by which Vektis actively encourages

the testing of the standards which is considered important

for it gives a sense of confidence.

Although the standards are open the standards are not as

widely used that software vendors have solutions ready "on

the shelf" which are SETU compliant, this stresses the

switching costs and portability. However many

organizations / software solutions are already compliant to

HR-XML which ensures that lower switching costs and

portability is mediated and also linkages can be made to

international organizations, The standards are built out of

four complementary standards by which organizations can

choose to implement one or multiple standards.

Compl. Org.

Resources

Broad adoption of the standards can mainly be attributed to

cost savings organizations within the healthcare domain can

make significant cost savings through the standards. The

fact that Vektis and Vecozo is funded by insurance

organizations does not affect the adoption of the standards.

However the presence of the KEI within Vektis encourages

good will and reduces misinterpretations and thus has

positive effects on adoption.

The development of the standards is conducted in such a

manner that organizations can participate in the

development. This creates good will and reduces

misinterpretations amongst industry players. Furthermore

organizations within the staffing domain can make

significant cost savings through the usage of the standards

(economies of scale do apply).

Business

rocesses

The standard ensures that the declaration process is

conducted on an unambiguous manner which makes the

adoption of the standard attractive because it can be used to

enhance business processes. Furthermore insurance

organizations also offer to collect the money that is not

covered by the insurance, which creates good will and

makes the declaration process simpler.

The standards ensure that no paper documents (e.g. hour

specifications) will have to be sent towards other

organizations that have converted to the standards. This will

yield burden reliefs through increased processes which can

attract organizations to adopt the standards.

Industry

haracterist

ics

The healthcare declaration processes is highly regulated

within the market which results in high adoption. By which

health insurance organizations do not compete by means of

an effective communication process between chain partners,

they do compete through lower insurance fees and by having

superior customer contacts etc. This means that the health

insurance organizations can collectively endorse / develop

the standards.

When adopting the SETU standards staffing customer

organizations have the possibility of reaching more staffing

companies, and thus giving them more flexibility. This can

have positive effects on the adoption of the standards.

However the staffing industry is one where there is lots of

competition (i.e. the market is not consolidated) and thus

organizations can choose not to convert in order to be

flexible to market changes.

Trading

artners

Insurance organizations collectively have such powers that

they can obligate (by means of contractual agreements) the

usage of the standards, and thus health providers will have

to implement the standards. The high adoption of the

standards has ensured that the programs (that are compliant

to the standards) are relatively cheap and thus lowers the

switching costs.

At this point in time the installed base of the standard is not

of such levels that other organizations automatically feel the

need to adopt, there are several important organizations (e.g.

Randstad, Adecco) within the market that are actively

working for higher adoption of the standards, however they

cannot make the standard use compulsory towards their

partners.

Macro Env.

The standards are not obligated by law, however the

healthcare domain is strongly regulated which is one of the

reasons why the insurance organizations have such powers

in the market. Furthermore respondent stated that when the

government would have obligated standard use adoption

would have gone quicker.

The SETU standards have been added to the comply-or-

explain regime of the Dutch government which pressures

(semi) governmental organizations to convert to the SETU

standards, furthermore expectations are that this regime will

encourage other organizations to follow.

Recently the standard has been added to a Dutch

government “Comply-or-Explain” list that includes

open standards that are mandatory to be used for

each (semi) government organisation for achieving

interoperability (Min_EZ, 2007).

4.3 Cross Case Vektis and SETU

Using the data collected from the SETU and Vektis

standards, a cross case analysis has been conducted

whereby aspects that are important for the adoption

of business transaction standards have been

identified. Table 1 shows the similarities and

differences between the two cases. These differences

between the two cases can mainly be related to the

competitive environment and the macro environment

the main differences are:

• The staff lending domain is not consolidated

resulting on more emphasis on the IT resource

dimension e.g. making the standard more

compatible with other standards.

• Legislation ensures that health insurance

organizations have high domain powers, as a

result the Vektis standards are purely built to

serve the declaration process towards the

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Table 2: Aspects versus organizational conditions.

Standard aspects

End user Implementation

SDO organization organization

Focal Firm - IT Resources 1 2 3 4 5 6 7

1.1 Technological superiority L L L

1.2 Compatibility of standard L & F F L & F L & F L L

1.3 Open standard L & F L & F L F L & F

1.4 Complete set of functionalities L & F F L& F L& F F L

1.5 Customization capabilities L L L F

1.6 Ease of use L & F L & F L

1.7 Deployment strategy L L & F L L

Focal Firm - Complementary Organizational Resources

2.1 Financial strength L & F L& F L

2.2 Complementary goods and reputation F F

2.4 Participation in standard consortia L & F L & F L

2.5 Pricing strategy that attracts customers L

2.6 Customer expectations L

2.8 Management support L L

Focal Firm - Business processes (performance)

3.1 Process management is increased L & F L & F F L

3.2 Business model is extended L & F L L

Competitive Environment - Industry characteristics

4.1 Vertical integration L & F L L & F

4.3 Market is ready L & F L & F

Competitive Environment - Trading partners

5.1 Network externalities L F L & F L

5.3 Big Fish L & F L & F F

5.4 Stakeholders in standard build L & F L

Macro Environment

6.1 Legislation that encourages standard usage F L & F F F

(1 = Network effects, 2 = Switch costs, 3 = Maintainability, 4 = Portability, 5 = Volume,6 = Diversity, 7 = Breadth)

(F= Aspect found in field case (this paper), L = Aspect described in literature cases (earlier work)

• insurance organizations, making the

characteristics of the standard less important.

Table 2 shows the aspects that were deemed

important (after assessing the SETU and Vektis

cross case analysis) per organizational adoption

condition.

5 CONCLUSIONS

The goal of this paper was to identify those aspects

that are of importance for the adoption of business

transaction standards, and search for methods

through which the aspects can be adapted by an

SDO so that higher standard adoption is achieved.

During the cross case analysis it has become

apparent that the main reason for organizations to

adopt business transaction standards is highly

dependant on the powers that exist in the specific

domain. When there are large power differences

amongst organizations, then the SDO should focus

on those aspects that reside in the competitive

environment category (table 2). Whenever there are

low differences then the focus should be towards the

IT resource category (table 2). In all cases it is

important that the standard is developed by a

federation that represents organizational (types)

residing in the domain, as well as basing the

standard on open characteristics. This will give

organizations a sense of ownership and makes the

standard free to use, which is good for adoption.

Furthermore the standard build should be modular

whereby the modules should be based on best

practice business processes, enabling organizations

to only adopt those modules that are of importance

for them. SDO organizations should produce

standards in such manners that it fulfils the

conditions that organizations have set and thus

increase the chance that the standard will be

adopted. Following the conclusions made by (van de

Kaa, 2009) who has made a similar model

describing important aspects for technical standards,

the model described in table 2 can be used by

managers in order to ascertain a deeper insight into

those aspects that are of influence for their

organization and subsequently make decisions which

standard their organization should support.

ASSESSING BUSINESS TRANSACTION STANDARDS AND THEIR ADOPTION - A Cross Case Analysis Between

the SETU and Vektis Standards

155

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