Interorganizational business process reengineering is a logical extension of discussions of the potential for interorganizational systems to fundamentally redefine relationships among buyers, sellers, and even competitors within an industry. This paper presents a model of the relationship between technological and process innovations and describes the interdependence of these two forces. This model is used to explain the inconsistency in the literature regarding the benefits of EDI and other interorganizational systems, which are described as providing strategic competitive advantage in some papers and as providing little or no benefits for implementing firms in other articles. The framework describes the importance of merging technological and process innovations in order to transform organizations, processes, and relationships.
Over the past few years, various electronic market systems have been introduced by market-making firms to improve transaction effectiveness and efficiency within their markets. Although successful implementation of electronic marketplaces may be found in several industries, some systems have failed or their penetration pace is slower than was projected, indicating that significant bathers remain. This paper analyzes the economic forces and barriers behind the electronic market adoptions from the perspective of market process reengineering. Four cases of electronic market adoption--two successful and two failed--are used for this analysis. Economic benefits are examined by investigating how the market process innovation enabled by information technology (IT) reduces transaction costs and increases market efficiency. Adoption barriers are identified by analyzing transaction risks and resistance resulting from the reengineering. Successful deployment of electronic market systems requires taking into account these barriers along with the economic benefits of adoption. The paper presents suggestions based on these case studies, which are relevant to the analysis, design, and implementation of electronic market systems by market-making firms.