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• Case Studies

• Overview
• Planet Skin
• NZ Post Electoral Enrolments
• Wakefield Radiology
• Fonterra
• Wards Farm
• Southfresh
• Kenex
• Conclusion and Recommendations

• Research Purpose
• Case Study Format
• Case Study Process
• Case Study Content
• Case Study Firm Selection

In order to address the lack of empirical evidence about the ways and extents to which New Zealand businesses are accruing productivity gains and contributing to growth in welfare, and the ways in which the commercial and policy environments are either nurturing or impeding this development, the Ministry of Economic Development has commissioned a series of case studies.

Research Purpose

The purpose of the study is to examine the use of information and the ways in which ICT investments have been employed to support these uses of information in a sample of New Zealand firms. Individual case studies will provide examples of ICT implementation and use that may provide guidance to other firms on the process of making ICT investments. Collectively, the case studies will contribute to a growing body of evidence of New Zealand firms' use of information and ICTs. Inferences will be made from the case studies about the ways in which the New Zealand commercial and policy environment supports firms in their endeavours to increase productivity and welfare from the use of information and ICTs, and recommendations will be made to the Ministry of Economic Development

Case Study Format

A case study format for analysis has been selected, in accordance with the findings in the literature that productivity and welfare gains are more likely to be detected in micro-economic data from firms than in the macro-economic level in industry, sector and national accounts.

Case Study Process

Data for the case studies will be identified using a combination of publicly available documents, existing CANZ and ISCR research archives, and face-to-face semi-structured interviews with key personnel in each of the case study firms. A schedule of questions used as prompts in the semi-structured interviews is contained in the appendix to this report.

The questions have been derived using the theoretical insights highlighted in the preceding section. The purpose is to learn both the extent of the productivity and competitive advantages gained by the companies from the use of ICTs, and the ways in which these companies have implemented the technologies. The case studies will highlight the uses of both information and ICTs in the businesses, and the incentives and obstacles that the firms encountered in their implementation and use of ICTs.

Case Study Content

The case study of each firm will examine:

1. The firm and its business model, including its primary competitive differentiators, within the context of its industry;
2. Use of information in the firm's business processes;
3. Use of ICTs in relation to the firm's information usage requirements, business model and competitveness;
4. Management of ICT investments, including assessment, planning and implementation, and complementary investments made by the firm in order to capture the benefits of ICTs;
5. The firm's experience with ICT investments, including successes, failures and lessons learned; and
6. The firm-based benefits gained from ICTs, including gains in productivity, market share and competitiveness, and the additional welfare accrued by consumers as a result of improvements in product convenience, timeliness, quality and variety. The distribution of the benefits is also addressed, with the identification of both tangible and intangible benefit accrual to both the firm and other participants (e.g. customers) explored. The extent to which these benefits would be captured in industry and national accounts (i.e. official statistics) is also addressed.

Each case study takes as its pivotal point the ways in which information influences the operational nature of the business, its internal and external communication processes, and the structure of both the firm and the industry in which it operates. Thus, the core presumption of each case study is that use of ICTs is a subset of the all information technologies utilised, and the extent to which any information technology is utilised is determined by the information requirements and usages of the firm. This is consistent with the schema presented in Figure 2.

Case Study Firm Selection

Nine organisations were selected for inclusion in the study. The organisations selected for study were required to be established organisations with a history of use of ICTs of at least two years. The one exception to this is Kenex, which has been operating for only eighteen months. However, the applications used by Kenex are three years old, and the same individuals who now operate the company as a private enterprise developed the applications whilst working for government entities. Hence, the application has a history of more that two years, even though the company has a shorter life.

The only other selection criterion specified by the researchers was that the sample should include at least one firm where use of an ICT has "failed", so that negative as well as positive learning points could be identified. The Southfresh/Freshnet marketplace was chosen in this capacity. The B2B marketplace application was not commercially sustainable when operated by Southfresh, but the software applications developed by Southfresh are now being successfully used by Foodstuffs.

Due to the short time frame within which the case studies had to be prepared (six weeks), candidates were selected from a pool of potential organisations known to the researchers and staff at the Ministry of Economic Development in order to reduce the time taken to gain participant consent. ISCR corporate members Fonterra Co-Operative Dairy Company and New Zealand Post offered the Fonterra group, Courier Post and the Electoral Enrolment Centre as candidates. The CANZ project company Gallagher Group Ltd agreed to participate, whilst MED brokered the agreement of Wakefield Radiology and Southfresh/Freshnet. The remaining three firms: Kenex, Planet Skin and Ward's Farm; were known to individual researchers.

Table 1 describes the size of the firms, industry, and export focus and type of information product of the firms that have been studied. Figure 1 also depicts the purpose and level of technology use within the firms and its impact on competitiveness. These summaries demonstrate that the sample contains a wide variety of firm size, industry sector, export focus, product type and competitive use of ICTs. Thus, the researchers are confident that the findings drawn from the nine case studies are broadly representative of the issues facing most New Zealand companies in the use of ICTs. There is no evidence that the findings are unduly skewed towards the requirements of any specific business type as a result of sample selection. However, as the sample size is small, the authors caution that the conclusions and findings drawn from the analysis, whilst indicative, cannot be taken as proven unless verified by a more extensive research exercise undertaken on a more scientifically selected sample.

Nonetheless, Table 1 shows that the sample contains four small, four large and one medium-sized businesses, using the Statistics New Zealand classification of small businesses having fewer than ten employees, large over 100, and medium between 10 and 99 employees. Although it comprises too many large organisations to be considered representative of the New Zealand business population, the sample provides examples of all the sizes of business represented in the New Zealand economy.

The sample contains three firms that export directly, and cover a range of industry sectors: service, government, manufacturing, agriculture and research and development. There is a slight skewing towards the service sector. However, this is indicative of the size of the service sector in the New Zealand and world economies (up to 70 percent of GDP by some definitions), and further reflects the proportionately higher level of investment in computer capital in the service sector compared to other sectors (Jorgenson and Stiroh, 2000). Furthermore, three of the sample firms produce a product that meets Shapiro and Varian's (1999) definition of an information product (comprised totally of digitisable outputs). Whilst the marketplace that the Southfresh/Freshnet application services deals in physical products, the actual marketplace operation is solely an information exchange function and is fully digitisable. Hence, the researchers consider that it too meets the definition of an information product.

The companies selected cover ICT applications at different levels of business activity, from processes to industry and also encompass those that seek to reinforce existing competitive focus and those that sought to change their competitive focus as shown in Figure1. For example, Gallaghers move to reduce emphasis on make-to-stock and increase their ability to produce more on a make-to-order basis to increase responsiveness and reduce inventory carrying costs.