Implementation of Information Technology in Developing Countries ...

Proceedings of the 32nd Hawaii International Conference on System Sciences - 1999 Proceedings of the 32nd Hawaii International Conference on System Sciences - 1999

Implementation of Information Technology in Developing Countries: Experiences of a Mongolian Internet Service Provider Harvey G. Enns, Sid L. Huff Richard Ivey School of Business, The University of Western Ontario, ([email protected], [email protected]) Abstract Internet Service Providers (ISPs) in developing countries experience great difficulties in the implementation of technologies that provide access to the Internet. These difficulties are due to technical challenges, such as poor telecommunication infrastructure, lack of technological readiness, inadequate technical skills and training, financial barriers, and the like. Oftentimes they require assistance from non-government organizations to successfully implement these types of projects. This paper begins with an overview of the factors that lead to successful implantation of information technology projects in developing countries. A framework is then presented which categorizes these factors into environmental, technical, interorganizational, and intraorganizational components. The paper then reports the efforts of one company in implementing a series of telecommunications projects to allow access to the Internet for Mongolian companies, governmental organizations, and others. The paper concludes by applying the framework developed earlier to illustrate how successful implementation in the developing country context can be explained.

1. Introduction Developing countries are experiencing tremendous pressures to catch up in the worldwide race to install and utilize information technologies such as those associated with Internet access. These countries acknowledge that benefits can be realized by advanced communications technologies, but most citizens lack access to them [3,13]. In the eyes of some, the Internet is an example of the way access to technology contributes to widening the gap between the rich and poor [32]. Developed countries are attempting to help developing countries through research, education, and sharing of information. For example, a recent study by

the European Commission highlighted opportunities for developing countries in the ‘Information Society’ and, in particular, those emerging from the use of Internet applications and satellite communications in areas such as administration, commerce, health, and transport [11]. In spite of the challenges they face, many developing countries are actively participating in the creation of regional computer networks which are connected to the worldwide Internet. The People’s Republic of China, for instance, has created the China Education and Research Network (CERNET). One of CERNET’s key objectives is to promote the creation of information resources for China’s education and research institutes by providing access to advanced telecommunication and computer network technologies, including a link to the Internet [10]. However, organizations attempting to deploy telecommunications networks in developing countries face numerous obstacles, including lack of in-country expertise, lack of resources, and non-supportive regulatory environments. Even more fundamental barriers include inadequate telecommunications infrastructures, lack of a critical mass of potential users, and low literacy rates [32]. Frequently, organizations wishing to establish regional networks connected to the Internet must seek assistance from other quarters. In some cases, governments have been able to step in and help these organizations achieve their goals. For instance, the Chinese national government financially supports CERNET through its State Education Commission [10]. In other cases, non-governmental development agencies support the establishment of within-country or multi-country regional networks. Canada’s International Development and Research Centre (IDRC) has done so with the establishment of its Pan Asia Networking (PAN) initiative, which served as the genesis for the development of the Internet in Mongolia. The purpose of this paper is to document and analyze Mongolia’s Internet development, with special focus on

0-7695-0001-3/99 $10.00 (c) 1999 IEEE

1

Proceedings of the 32nd Hawaii International Conference on System Sciences - 1999 Proceedings of the 32nd Hawaii International Conference on System Sciences - 1999

Datacom, the Mongolian ISP primarily responsible for this development. The remainder of this paper is divided into the following sections. The first section provides a brief literature review that discusses the major issues in implementing information technology (IT) projects in developing countries, and also presents a conceptual framework that summarizes these major issues. The next section provides some general background information on Mongolia and a brief history of telecommunication developments in Mongolia. This is followed by a description of how the IDRC and others assisted Datacom to gain access to the Internet and provide networking services to others in Mongolia. The following section uses the conceptual framework developed earlier to analyze the factors that led to Datacom’s successful implementation efforts. The paper concludes with a brief summary and suggestions for future research.

2. Implementation success factors There are a number of factors that the literature addressing IS implementation in developing countries suggests are important for success to be realized. These are categorized into environmental, technical, interorganizational, and intraorganizational factors.

2.1 Environmental factors Palvia [26] has suggested that studies of the success of global information technology (IT) should seriously consider the inclusion of broad categories of independent variables. These include consideration of the economic, technological, cultural, and political/ regulatory environments. Others have suggested that geography and climate can be important considerations as well [e.g., 14, 20]. The economic environment of a developing nation has a clear impact on the short term and long term success of IT implementation. The economy determines such things as the availability of funds to pay for hardware, software, and technical support [13]. The economy also impacts the demand, in terms of a sustainable customer base, for new IT products and services [13]. In developing nations, the costs associated with IT investments are typically very high, as compared to the cost of labor [20]. This encourages the use of more traditional, labor intensive methods rather than the use of computer-based systems. Governments in developing countries have been encouraged to invest in IT infrastructure in order to contribute to economic growth and participate more fully in global trade [e.g., 12].

However, in many cases, developing countries simply do not have the financial means to quickly improve their telecommunications infrastructure [15,16]. Technological factors, such as the sophistication, or even the very existence, of needed IT infrastructure, are important considerations in the study of telecommunications implementation in developing countries [20]. In the case of CERNET [27], infrastructure issues were extremely important in the implementation of a regional telecommunications network in China. Roche [31] has also demonstrated the importance of the existence of adequate telecommunications infrastructure when multinational companies (MNCs) implement projects in various parts of the world. He found that inadequate host country infrastructure created serious problems for implementers. Culture is also an important element in implementation success [20]. For example, Robey and Rodriguez-Diaz [30] differentiated between national culture and organizational culture, and noted that both are relevant to implementation studies. They suggested that national culture is an important moderator of the relationship between organizational culture and characteristics of the technology on one hand, and the effectiveness of technology transfer on the other. Lind [23] argued that computer applications are culturally bound, and that national culture has a direct impact on implementation failure. Lack of sensitivity to national cultural issues is likely to increase project failure risk and lead to ineffective utilization of IT [20, 28]. The political environment of a developing country is also important from an implementation perspective. If the country’s government severely restricts an organization’s operations, this has negative implications for successful implementation of IT [8]. On the other hand, government policies can create a positive environment for implementation. For example, India’s commitment to develop its telecommunications sector provides an environment conducive to successful implementation efforts [13]. A final consideration is the regulatory environment of relevant IT sectors in a developing country. Frempong [15] found that deregulation of the telecommunications industry was a major factor in the expansion of the telecommunications infrastructure in Ghana. The regulatory environment also impacts the amount of competition in sectors such as telecommunications. Deregulation leads to increased competition, increased services, and decreased costs for consumers in many countries [e.g., 13, 15, 34].

0-7695-0001-3/99 $10.00 (c) 1999 IEEE

2

Proceedings of the 32nd Hawaii International Conference on System Sciences - 1999 Proceedings of the 32nd Hawaii International Conference on System Sciences - 1999

2.2 Technical factors Prior training, whether formal or on-the-job, of individuals involved in an IT implementation project is also seen as a critical element for success. Calhoun et al. [9] found this to be a significant factor in the successful implementation of an IT system in Sudan. Furthermore, Roche [31] indicated that inadequate technical skills in host countries are significant barriers to implementation in developing countries. King and Sethi [21] pointed to the importance of training to overcome skill shortages in order for successful IT implementation to take place in countries such as Venezuela and Taiwan. Some researchers, such as Robey and Rodriguez-Diaz [30], have suggested that the state of a companies existing technological infrastructure is a critical component in successful IT implementation. Huff [17] made the point that an important barrier to the successful use of IT in some countries is the unavailability of adequate software. Other case studies have indicated that the selection of appropriate, sustainable technology is also critical for the success of an IT implementation. For instance, Calhoun et al. [9] found that reliability was more important than ‘state-of-the-art’ hardware in their study of an IT implementation in Sudan. The environment in developing countries is such that it is difficult to find qualified technicians to maintain such equipment. In addition, implementations of IT in developing countries should promote the development of a country’s infrastructure. For example, exclusive reliance on highskilled foreign workers, without the transfer of their expertise to locals, undermines the long term sustainability of the IT infrastructure [9].

2.3 Interorganizational factors Just as with organizations in developed countries, the proper alignment of a firm’s business strategy and its IT strategy affects the eventual success of IT implementations in companies within developing countries [21]. Robey and Rodriguez-Diaz [30] showed that organizational culture also plays an important role in successful or unsuccessful implementation. Studies of implementation should recognize that technology has different social meanings in different cultural settings [e.g., 6]. “Cultural meanings emerge over time as members gain experience with the technology and see its possibilities for supporting certain cultural values and threatening others.” [30, p.326] For example, a new system may represent negative themes (e.g., American imperialism) or positive ones (e.g., economic development and technological progress). Robey and

Rodriguez-Diaz found that a major reason for successful implementation in the Panamanian case was due to organizational culture. The new system was viewed positively because it was compatible with the Panamanian subsidiary’s business culture. In the case of multinational IT organizations, research suggests that it is important to balance the need for local autonomy with the needs for standardization [e.g., 18, 19, 22]. Too much standardization may lead to a stifling of creativity and unrealistic expectations, given the uneven state of technological development in different countries. Thus, King and Sethi [21] found that responsiveness to local issues was a critical success factor in IT system implementation.

2.4 Intraorganizational factors Organizations in developing countries often seek partners to help them accomplish their IT goals. In these cases, it is imperative that the partners are appropriate in terms of their goals and objectives, and what they “bring to the table.” For example, the CERNET project was successfully implemented due in part to a strong partnership between China’s State Education Commission and universities [27]. However, the government is not always a suitable partner; e.g., it may lack the funds needed to assist organizations in developing countries [15]. In addition, the resources the partners provide need to be appropriate. Roche [31] suggested that access to adequate vendor support was an important consideration. Such access is something that appropriate project sponsors could provide. Trust between partners is also seen as an important success factor. Robey and Rodriguez-Diaz [30] found that trust between groups played an important role in the successful implementation of an IT system in Panama. The design and management of the partnership project is also important. The responsibilities of each of the partners should be clarified and committed to in order to achieve effective project management. A common approach is to establish various teams, with each team responsible for a specific part of the implementation task. Assigning the appropriate people to each team is a critical step in this approach [30]. An appreciation for the social context and cultural differences is an important factor in team member selection as well [21].

2.5 Successful project implementation Success is an often-used dependent variable in global IT implementation studies [e.g., 26, 29]. This variable has been defined in various ways, including:

0-7695-0001-3/99 $10.00 (c) 1999 IEEE

3

Proceedings of the 32nd Hawaii International Conference on System Sciences - 1999 Proceedings of the 32nd Hawaii International Conference on System Sciences - 1999

• • • • •

met partners’ objectives [27]; use of the system by subsidiaries [21]; achievement of global economies of scale [31]; effectiveness of a technology transfer [30], and customers demand the new service that the IT implementation provides [13].

The preceding discussion has demonstrated that there are many factors that impinge on the successful deployment of IT in developing countries, and indeed a number of different interpretations of “success” per se. Figure 1 summarizes these considerations. Environmental Factors e.g. climate, political, economic, regulatory, infrastructure, national culture, customers Technical Factors e.g., expertise, internal infrastructure, appropriate & sustainable technology

Successful Project Implementation e.g. met partners’ goals, viable customers

Interorganizational Factors e.g. strategy, organizational culture Intraorganizational Factors e.g., compatible goals & needs, resources contributed, partnership design & management, trust Figure 1: Framework for successful IT implementation in developing countries The paper now turns to a discussion of the country of Mongolia, its geo-political, economic and telecommunications environment. This section also provides a brief introduction to Datacom and a synopsis of the case study.

3. Background on Mongolia 3.1 Geo-Political and economic environment Mongolia is a landlocked country of 1.6 million

square miles situated between China and Russia. The capital city, Ulaan Baatar, located in north central Mongolia, has a population of 600,000. Mongolia’s climate includes warm summers and very cold winters. July’s temperatures often reach +380 C (1000 F), occasionally falling below freezing at night, while during January, temperatures average -260C (-150 F). The population of Mongolia is about 2.4 million people and 60% of the population is under 35 years of age. The literacy rate is over 95% and the official language is Mongolian. Mongolia was part of the Soviet bloc and ruled by the Mongolian People's Revolutionary Party (MPRP), the local communist party, since the 1920s. Multi-party elections were introduced in July, 1990, following independence from the former Soviet Union and a series of pro-democracy demonstrations [33]. In June 1996, Mongolia elected a reformist parliament, largely on the strength of Mongolia’s young voters. The new government committed to the acceleration of privatization, with the goal that 60% of the country’s assets would be transferred to private hands by 2000. In 1989, Mongolia was the first member of the former Council on Mutual Economic Assistance (comprised of countries that belonged to the former Soviet Union) to begin the difficult transition from a centrally planned to a market oriented economy. After the Soviet Union collapsed in 1991, trade and subsidies that had been underpinning its economy disappeared. The industrial sector was hit hard in 1992 by energy scarcity, primarily due to stoppages in coal production, and reductions in petroleum imports. At the end of 1992, Mongolia’s energy supply system was very close to an entire breakdown. During this time, the economy experienced rampant inflation and cumulative production losses of over 20% of GDP. The economy began to stabilize in 1994, when it grew by 2.3 %. This was the first year of growth since 1989. This was followed by growth of 6.3 % in GDP in 1995. In 1995, Mongolia’s GDP was about $395 US per person. Although trade was redirected towards other regions of Asia, China and Russia remained Mongolia’s dominant trading partners. Due to improvements in these economies, Mongolia's economic recovery continued, with annual GDP growth anticipated to be 5-6 % [2]. In 1995, the government continued to privatize and reduce subsidies. For example, the government privatized 40% of the Mongolian Telecommunications Company (MONTEL). The provision of adequate physical and technological infrastructure has been, and continues to be a Mongolian government priority. In addition, the Mongolian government demonstrated its commitment to a market economy by introducing free

0-7695-0001-3/99 $10.00 (c) 1999 IEEE

4

Proceedings of the 32nd Hawaii International Conference on System Sciences - 1999 Proceedings of the 32nd Hawaii International Conference on System Sciences - 1999

trade with its trading partners, in 1997.

3.2 Telecommunications in Mongolia In 1921, Mongolia nationalized its postal and telecommunications services. Between 1923 and 1930, its telegraph and telephone lines were extended with Soviet assistance [35]. Radio broadcasting began in 1934, and television broadcasting in 1967. In the 1980s, the goal of the Ministry of Communications was to create a unified communication system, to include telegraph, telephone, telex, television, and radio. By 1985, there were 420 PTT (postal, telephone, and telegraph) offices in Mongolia. In addition, there were 28,000 kilometers of telegraph and telephone lines and 49,300 telephones. In that year, the Ministry of Communications introduced the country’s first digital data transmission system. Radio-relay lines provided international and inter-city direct-dialing telephone links, and telex lines connected Ulaan Baatar with Moscow and Irkutsk, Russia. By 1989, there were 63,000 telephones in Mongolia [4], a teledensity (telephones per hundred people) of 2.7. By comparison, at that time the teledensity in China was 1.0, in Hong Kong, 50, and in Canada, 60. Also by 1989, Mongolia had 12 AM, 1 FM, and 1 TV (with 18 provincial repeaters) broadcast stations. In addition, there were 120,000 TVs, 220,000 radios, and the country operated one satellite earth station. As recently as 1993, the telecommunications infrastructure was still very limited in Mongolia. That year, a private PC-based network was created to allow email and data exchange between provinces in Mongolia. However, no public sector organization could afford access [7]. In response, the State Statistical Office established an ad-hoc public sector messaging system. The system was able to provide data and e-mail interchange between computers utilizing modems. Later, a new digital telephone exchange was installed in Ulaan Baatar which improved the connections between the State Statistical branch offices and its head office in Ulaan Baatar. The new phone system required five minutes (in part because manual intervention was needed) for a connection to be established, and provided a data transmission speed of 1200 baud, which were both a substantial improvement over the previous system. In 1995, the Mongolian data communications market was deregulated, which resulted in a number of developments [1]. A Mongolian firm called Sansar began providing cable television in Ulaan Baatar. Two Japanese firms and a Mongolian company established the joint venture MobiCom, and created a cellular phone system for Ulaan Baatar to serve 5,000 subscribers. By January 1996, MobiCom began working to extend the

system to the cities of Darkhan and Erdenet. An international tender for the improvement of Mongolia's telecommunication infrastructure was also released in March, 1996. Korea Telecom Company, South Korea's largest telecommunications common carrier, signed a US $4.5 million contract to provide city, domestic and international long distance call services in Mongolia. Nera, a Norwegian group, won a contract worth US $5.7 million for the first stage of a project to develop a digital microwave telecommunications network in Mongolia [5].

4. Datacom 4.1 Introduction Datacom’s roots can be traced to the Research Centre for Automatic Control Systems (RCACS), a research institute that housed mainframe computers for Mongolian government organizations, located in Ulaan Baatar. The RCACS performed economic modelling and data processing for the government, and for industrial applications such as mining and agricultural processing. In 1991, the RCACS became Data Communications Company (DCC), a state-owned agency. The new agency focused on networking and PC activities, and arranged the transfer of the mainframes to the university sector. One of the first applications developed by DCC in 1992 was “PC-Mail,” an electronic mail system designed to transfer messages over poor quality telephone lines. One advantage of PC-Mail was that it allowed messages to be sent in Mongolia's Cyrillic-based script. PC-Mail was able to detect bad telephone lines and adjust data transmission accordingly. In 1993, the first users of PCMail were connected to a network and were able to send messages within Mongolia. At the end of 1993 the government decided to close DCC. However, a group of DCC staff, including Dr. Dangaasuren Enkhbat, bought it from the government, changed its name to Datacom Company Limited (Datacom), and began operations in February, 1994. Dr. Enkhbat became Datacom’s Director General (equivalent to CEO). Initially, Datacom developed small software applications and continued to provide PC-mail services. Spurred on by customer demands, Datacom began work on other initiatives. According to Mr. Chimeddorjiin Bataa, Datacom’s Technology Director, Datacom launched a number of projects, including the transmission of international faxes via the Societe Internationale De Telecommunications Aeronatiques

0-7695-0001-3/99 $10.00 (c) 1999 IEEE

5

Proceedings of the 32nd Hawaii International Conference on System Sciences - 1999 Proceedings of the 32nd Hawaii International Conference on System Sciences - 1999

(SITA) network used for airline communications. In early 1994 Datacom began to develop a plan for establishing an Internet gateway in Mongolia. However, it lacked sufficient funds and technical expertise in some areas. Datacom was a new company, and the Mongolian economy was under great stress, hence there were no internal sources of funding available. At that time, Datacom came in contact with Canada’s International Development and Research Centre (IDRC).

4.2 PAN Mongolia The International Development Research Center (IDRC), a crown corporation instituted by the Canadian Federal Government, had the broad mandate to assist communities in developing countries discover solutions to economic, environmental, and social problems through research. As part of that mandate, the IDRC had established the Pan Asia Networking initiative, specifically to assist Asian countries in the development of their telecommunication network infrastructures. While the PAN structure had been created, no actual development projects had yet been targeted. IDRC officials recognized that they needed to find a strong candidate for their first initiative, since many people would be evaluating the program’s success. The IDRC learned about Datacom in May 1994 when Ms. Maria Ng Lee Hoon visited Ulaan Baatar on an IDRC project. Ms. Ng realised then that Datacom had the potential to be the first successful site in the PAN program. A short time later she proposed that Datacom become the first PAN site, in return for which Datacom would receive technical and financial assistance to establish Internet access in Mongolia. There was some resistance to Mongolia being the first PAN site from others within the IDRC. Mongolia was not one of the original targeted countries. Also, there was no “research” content in the project, just network infrastructure development. But Ms. Ng strongly felt that an IDRC-Datacom partnership would demonstrate PAN’s viability. Ms. Ng then proceeded to develop the justification for Mongolia becoming the first PAN site. She made a second visit to Datacom in August 1994 to assess Datacom’s technical capabilities. She was accompanied by Paul Wilson, a consultant from the Australian-based networking company Pegasus Networks, who had agreed to serve as a technical advisor to the project. He was impressed by the technical capabilities at Datacom at the time and, as a result, the likelihood of success. As Mr. Wilson noted, “They were clearly out there and ready. It was quite

an achievement that the PC-Mail system was all locally developed. They also had a clear awareness that they could adapt PC-Mail to UUCP protocols.”1 Another factor in Mongolia’s favor was that, as a remote country without Internet access, Mongolia offered a chance to study the technical challenges that would be applicable to other countries in the region. Wilson pointed out that the conditions the Datacom staff had to work with were poor, similar to many other developing countries in Asia. Problems included unreliable telephone lines, telephone exchanges based on nonstandard and outdated Russian technology, erratic power, and few computers. Furthermore, Mongolia’s recent move to a market economy made it very reliant on information from other parts of the world and it was prepared to re-connect links with its neighbors. Thus, as a result of the efforts of Ms. Ng, Mr. Wilson, and others, Mongolia was chosen to be the first country in the PAN program. The project, called PAN Mongolia, was viewed as a pilot to determine how IDRC assistance might benefit other developing countries in the area. Dr. Enkhbat pointed out, “IDRC assistance was the key to start this project. The reality is that IDRC's assistance was not the only assistance for us, because there were other sponsors and organisations who helped us. But IDRC was the first one and it was a good example to other people how it [access to the Internet] can be quickly started and developed.”

4.3 PAN Mongolia’s technical development PAN Mongolia was established in September 1994 to introduce the Internet to Mongolia. In October 1994, Datacom installed a dial-up gateway system based on UUCP protocols that allowed for the connection of its domestic system to the Internet. The system initially supported communication via Internet e-mail and newsgroups. Mr. Bataa recalled, “During the initial 2 month testing period the cost of International Direct Dial (IDD) calls were covered by PAN Mongolia. When established in January 1995, we connected with IGC once/day using US callback, this soon rose to twice daily callback dialing as customers demanded faster turn-around of e-mail.” 1 This and some other quotes are based on Geoffrey D. Long’s interview with Dr. Enkhbat, mid-September 1996. Mr. Long is an independent journalist / researcher based in Australia and works under contract with the IDRC.

0-7695-0001-3/99 $10.00 (c) 1999 IEEE

6

Proceedings of the 32nd Hawaii International Conference on System Sciences - 1999 Proceedings of the 32nd Hawaii International Conference on System Sciences - 1999

Also, a bulletin board system, called Magic BBS, was established on the Datacom site, which enabled Internet e-mail and database searching. Mr. Bataa commented, “We chose the BBS as it was easy for Datacom to configure and we wanted to provide these services to our customers as soon as possible. The BBS was also more user friendly than a UNIX system. As well as buying the BBS we bought the source code so that we could produce a Mongolian language version.”2 In 1995, the Datacom staff began to study Internet protocols, software tools, and Unix, to prepare for the implementation of complete Internet access. Datacom’s customers were becoming more sophisticated and were asking Datacom to provide enhanced services, including full access to the Internet. However, even with financial support from IDRC, Datacom’s funds were extremely limited, and knew that it could not afford costly mistakes. The situation was somewhat alleviated when the Mongolian government provided Datacom some additional financing later that year. Dr. Enkhbat recalled some of the initial technical challenges: “I think the most difficult was that Internet required high quality and new equipment. We needed initial investment to switch from our old equipment to new technology, and I think IDRC assistance helped to do this. And of course a difficulty was to learn and to run the new equipment and new technology. For the first two years we struggled to establish the Internet. We spoke with many people, read many books and documents, but we also made many mistakes, for example buying the wrong software and hardware.”

This fund was established thanks to a US Agriculture Department donation of surplus butter. The Mongolian government sold the butter on the domestic market, thus creating a fund for loans and grants that could be used for special projects. Additionally, the National Science Foundation (NSF), based in the US, also agreed to provide funds but stipulated that Datacom should give Mongolia's educational institutions free Internet access during 1996/7. Mr. Bataa acknowledged some difficulties with the newly acquired technology: “We were inexperienced with both UNIX and Cisco routers and found them very difficult, but we knew it was important to upgrade, and all our staff were fully committed and enthusiastic. Access to support and learning materials was very important. There are many very useful materials on the Internet, but without a connection to the Internet you cannot get the materials! We attended INET95 in Honolulu and returned with 5 boxes of computer and networking books!” The next step involved the purchase and installation of satellite communications equipment. The equipment was installed in late 1995. After two months of testing, Datacom’s 128Kbs connection to SprintLink was officially launched on January 5, 1996. This enabled Datacom, through PAN Mongolia, to host Web, FTP (file transfer protocol), and Gopher servers. These activities culminated in the opening ceremony to acknowledge Mongolia's initial Internet node and permanent connection in late January, and the first Mongolian web site in March 1996. Partly as a result of the successful PAN Mongolia initiative, the IDRC has begun similar projects in other countries, including Cambodia and Nepal [24].

4.4 The next steps After looking at various leased line options with different Post, Telephone and Telegraphy (PTTs) authorities in the region, the most economical and feasible connection turned out to be via satellite. A meeting with Sprint concluded in an agreement in June 1995, to cooperate on a 128k leased satellite link via PanAmSat 2 and linked to Sprint in California. A portion of the funding was provided by the Mongolian government, through something called the "butter fund." 2 This and some other quotes are derived from a presentation given by Datacom organizational members on June 13, 1997 at the First Pan Asia Networking Conference held in Ulaan Baatar, Mongolia June 10 - 14, 1997.

Although Datacom had successfully established itself as Mongolia’s first full-featured Internet Service Provider, more work was required. Dr. Enkhbat commented: “The initial PAN Mongolia project goal had been achieved, and we were now asking, what's next? $90 each month for Internet access was very expensive, so the next goal became the introduction of new services at lower costs. We had two main aims: to offer services country-wide, which meant building more infrastructure, and to create more

0-7695-0001-3/99 $10.00 (c) 1999 IEEE

7

Proceedings of the 32nd Hawaii International Conference on System Sciences - 1999 Proceedings of the 32nd Hawaii International Conference on System Sciences - 1999

local content, which meant more cooperation with content partners.” There were a number of reasons that Datacom wanted to move into rural Mongolian communities. Principal among these was that Dr. Enkhbat felt Datacom’s customers in Ulaan Baatar would increase their usage of the existing network if they could communicate with rural communities. He also knew that Datacom needed to provide this service for competitive reasons: if it could not provide full service, a potential competitor would. Dr. Enkhbat predicted that if Datacom got there first, other competitors might be shut out. As he put it, “…no customer would want to have two suppliers of networking services at the same time.” Datacom had a number of options for achieving its goal of providing Internet services across Mongolia. Dr. Enkhbat and his staff decided to explore low cost Very Small Aperture Terminals (VSAT) satellite networks. Dr. Enkhbat had conceived of the idea of extending the reach of Datacom’s network using VSAT technology in early 1996. However, Datacom could not develop the network alone. It was too expensive, and Datacom did not have the necessary experience. The company needed another partner. Dr. Enkhbat discovered that the Neft3 Import Corporation (NIC) was interested in developing a private corporate network. NIC was the principal distributor of oil and gas products throughout Mongolia and operated all the gas stations in Mongolia. Therefore, they had an obvious need to communicate with their operations throughout Mongolia. The arrangement Dr. Enkhbat envisioned was that Datacom would act as implementer/middle-man and arrange for a supplier that could provide a turn-key solution. The other partner would agree to buy network services from Datacom for a three year period; Datacom would service the network. The other partner would also provide the financing and give Datacom access to carry commercial IP traffic during the night, when the partner was not using the system. The planned service would offer real-time e-mail and mirroring of Web sites. In addition, there would be high speed access to local Internet resources. When Dr. Enkhbat approached NIC with the idea, the management of NIC showed interest, but indicated they were also considering other options. In the course of his discussions with NIC, Dr. Enkhbat discovered that NIC’s telecommunications budget was US $1,000,000. During the following months Dr. Enkhbat traveled to a number of potential VSAT vendor sites. These trips

took him to Japan, the United States, Germany, the UK, and India. At about the same time, Dr. Enkhbat discovered that ComSat, based in Washington D.C., was offering a relatively inexpensive solution. After reviewing the technical information that was sent to him, Dr. Enkhbat concluded that ComSat could provide a solution, however, it was not as technologically sophisticated as other options. For example, it could not provide voice communication, only data. The positive aspect of the ComSat option was that it had the potential to provide network coverage to all provinces in Mongolia, within the budget established by NIC. At the end of June, 1996, Dr. Enkhbat met with top managers within NIC. They were interested in the ComSat idea but wanted a number of reassurances that this solution was viable. One of the items that NIC was looking for was full technical documentation. NIC managers also wanted a guarantee that the system would be implemented on time and on budget. Dr. Enkhbat envisioned a two contract situation. Datacom could sign a contract with ComSat for the equipment and installation. In turn, Datacom would sign a contract with NIC which would provide the funds necessary for the equipment and installation, as well as a contract for network services that Datacom would provide. It was a high-risk approach. It was July 20, 1996 and Dr. Enkhbat had to decide on whether he should sign a draft agreement with ComSat. The sales staff stated that the project could be done within the NIC’s budget (the actual quote was just under US $1,000,000). It also appeared that ComSat could deliver a workable solution. The network was to be working within one year of ComSat’s receipt of a 50 % down payment. At the same time, the VSAT network idea was really a “proof of concept” test. If the project was successful, Dr. Enkhbat was considering the possibility of selling this type of system to other Mongolian companies.

5. Datacom case analysis The following section analyzes the case in light of the framework outlined in Figure 1. The analysis examines the environmental, technical, interorganizational, and intraorganizational factors that led to successful projects for Datacom and its partners.

5.1 Environmental factors Environmental factors can both contribute to or hinder the successful implementation of IT in developing

3 “Neft” is the Mongolian word for oil.

0-7695-0001-3/99 $10.00 (c) 1999 IEEE

8

Proceedings of the 32nd Hawaii International Conference on System Sciences - 1999 Proceedings of the 32nd Hawaii International Conference on System Sciences - 1999

countries. However, if the environmental factors that potentially hinder successful IT implementation can be identified and managed properly, the probability of success is enhanced. Mongolia’s climate hinders certain wireless telecommunication technologies. Specifically, VSAT technology is susceptible to interference from rain and snow. NIC and Datacom were very concerned about whether VSAT would work in Mongolia’s harsh weather conditions. This barrier was partially overcome by the selection of a vendor that had experience with these types of conditions. In addition, Datacom’s expertise in working with a poor telecommunications infrastructure was extremely beneficial. The political environment in Mongolia facilitated successful IT implementations. The Mongolian government’s move towards a market economy, the institution of democracy, and privatization laid the groundwork for success. Also, the deregulation of the telecommunications industry allowed Datacom and the Pan Mongolia initiative the latitude to operate relatively unencumbered. The favorable political environment also influenced IDRC’s participation. The IDRC chose Datacom as a partner in part because they anticipated little government interference. Mongolia’s economic conditions posed a large barrier to Datacom’s ability to provide the Internet services desired by its customers. The Mongolian economy was not strong in 1994. The Mongolian government initially had limited capacity to assist Datacom in its quest for Internet access. Nor was the emerging private sector in Mongolia able to commit investment in the project. This encouraged Datacom to seek alternative sources of funding, eventually provided by the IDRC. As economic conditions improved, the Mongolian government gained the capacity to extend loans to Datacom. Additionally, one of the major reasons that the IDRC chose Mongolia as the initial hub for PAN was that Mongolia’s recent move to a market economy was rapidly making it very reliant on information from other parts of the world. At the same time, Mongolia was quickly moving towards re-establishing links with its neighbours. National culture was also an important success factor in the Mongolian context. Mongolia was the first among the former Council on Mutual Economic Assistance to move towards a free market economy. In addition, Mongolia was the first country in the region to establish free trade with all of its trading partners. Thus, the Mongolian culture was open to other Western-originated innovations, such as the Internet. The other barrier Datacom had to overcome was the lack of an advanced telecommunication infrastructure.

Mongolia’s existing infrastructure was unable to support the Internet and VSAT network initiatives. The Mongolian government and MONTEL did not have the financing or capacity to install better land-based infrastructure within the time frame that Datacom faced. The solution was to utilize wireless, satellite technology. Initially, competition was virtually non-existent. This allowed Datacom some time to become firmly entrenched as an ISP, and provided some first mover advantages. When competition appeared in the form of MONTEL, Datacom leveraged their first mover advantages and experience as a networking company in the Mongolian context to establish the VSAT network with NIC. Datacom had some customers but it was questionable whether their customer base would be enough to sustain them if and when IDRC and NSF funding was decreased or eliminated. In July, 1996, Datacom had two basic customer types: commercial users and educational users. The company had about 400 commercial customers. Under Datacom’s NSF funding agreement, they were also responsible for providing Internet access to 20 scientific and research institutes. Cost barriers hindered potential customers from taking advantage of Datacom’s services. The commercial users chose one of two pricing options: $15/month + traffic charge, or $90/month unlimited access charge. Datacom knew, however, that many customers often shared one single unlimited access account to conserve funds. However, at the same time, existing customers were a major force in convincing Datacom to expand its network services. For instance, once the PC-Mail domestic network was operational, customers demanded fax service via SITA, the BBS service, and Internet connections. The establishment of the VSAT network was also demand driven. Dr. Enkhbat expected his customers in Ulaan Baatar to increase their network usage if they could communicate with rural communities. Dr. Enkhbat was determined to provide Mongolia-wide network access, “...even if it meant losing money” in the short run.

5.2 Technical factors Datacom had developed important skills in handling the poor telecommunication infrastructure in Mongolia. The domestic electronic mail system PC-Mail was designed to transfer messages over poor quality telephone lines. Datacom also developed other initiatives which further enhanced their expertise, such as their approach for transmitting international faxes via the (SITA) network. Mr. Baata commented, “At that time International Direct Dial (IDD) faxes

0-7695-0001-3/99 $10.00 (c) 1999 IEEE

9

Proceedings of the 32nd Hawaii International Conference on System Sciences - 1999 Proceedings of the 32nd Hawaii International Conference on System Sciences - 1999

costs between $4-8 per page where as SITA faxes were between $2-3 per page. This proved to be a very valuable and popular service when there was no international e-mail or file transfer.” Datacom’s existing PC-Mail network formed the backbone of the domestic network and was a critical piece in the Pan Mongolia network. Reliable links to this network were required to access PAN Mongolia’s dial-up gateway system, and through it, the full Internet service. Without this backbone it would have been extremely difficult for users other than Datacom to gain access to the full range of Internet services. It is also doubtful that the IDRC would have seriously considered Datacom as a PAN partner otherwise. The specific wireless option Datacom considered was Very Small Aperture Terminals (VSAT) satellite networks. VSAT networks were appropriate because they offered many advantages to countries such as Mongolia, including relatively simple operation, reliability, high availability, small size, and relatively low cost. Numerous developing countries and regions of the world had created VSAT networks in recent years, including South America, China, Eastern Europe, and Mexico (Maral, 1995). Further, ComSat’s implementation of VSAT proved relatively inexpensive, and ComSat itself had experience in a variety of challenging telecommunications environments. The ComSat option had the potential of providing network coverage to all provinces in Mongolia, within the budget established by NIC. Dr. Enkhbat became “...convinced that, technically, the ComSat VSAT system could do the job.” VSAT technology was not leading edge technology, but had been proven in other contexts, and technological improvements made it affordable.

5.3 Interorganizational factors Establishing the first Internet connection was consistent with Datacom’s main lines of business and strategy as a networking solution company. It was also consistent with their desire to be responsive to customer demands. Datacom’s customers continued to ask for enhanced services, including full access to the Internet. “As computer software engineers and computer software developers, our company at first didn't plan [to become involved with the] Internet. We only planned to develop a local electronic messaging network and step by step we became an Internet provider, because the Internet is a world-wide standard and represents bigger and better developed technology.” (Enkhbat)

The VSAT network was also established in response to customer demands, the threat of competition, and Dr. Enkhbat’s vision for the future. He realized that there was going to be room for only one network provider in Mongolia, at least initially, and thus wanted Datacom to be that provider - in part to insure its survival. Datacom’s organizational culture, which centered on enthusiasm for technical work, and persistence in the face of obstacles, was consistent with the Internet and VSAT initiatives. They were the first to establish such services as the country-wide PC-Mail network and the BBS system. They demonstrated a great deal of persistence in training themselves in the necessary hardware and software technologies. For example, when the BBS was established Mr. Bataa pointed out, “We were inexperienced with both UNIX and Cisco routers and found them very difficult, but we knew it was important to upgrade, and all staff were fully committed and enthusiastic!”

5.4 Intraorganizational factors Datacom found that it lacked the expertise and finances to successfully complete projects such as the establishment of an Internet connection, so it sought partnerships with other organizations wherein there was a good fit between the partners’ goals and objectives. The IDRC’s Singapore office wanted to support the development of data networking in Asia, and required an initial project with a high likelihood of success. They wished to leverage the lesson learned there to the other potential sites in the regional network. Mongolia was a remote country with no existing Internet access, and provided the opportunity to study the technical challenges that would be applicable to other countries in the region. Also, the IDRC wanted to work with an organization that had some substantial networking skills. Paul Wilson was able to assure the IDRC that Datacom had the requisite skills. The fit between Datacom’s needs and those of the IDRC was excellent. The compatibility of partner goals was also evident in the implementation of the VSAT network. Datacom wanted to provide Mongolia-wide Internet access for its customers. However, Datacom could not develop the network alone. It was too expensive, and Datacom did not have the experience to implement it. Dr. Enkhbat needed suitable partners, which he found in NIC, which wanted to establish a country-wide private network, and in ComSat. From the IDRC’s viewpoint, PAN Mongolia was to be a prototype for other hubs in the regional network. Hence the IDRC had to balance PAN Mongolia’s need for local autonomy with the IDRC’s needs for a certain

0-7695-0001-3/99 $10.00 (c) 1999 IEEE

10

Proceedings of the 32nd Hawaii International Conference on System Sciences - 1999 Proceedings of the 32nd Hawaii International Conference on System Sciences - 1999

amount of standardization for future installations in the regional network. The solution was to organize PAN Mongolia’s project management team into a technical group and coordination group, each with IDRC and Datacom membership. Trust was also a major factor in the successful implementation of both projects. For example, Datacom’s comfort level with the IDRC rose substantially after it received money from IDRC. Dr. Enkhbat pointed out,

equipment from ComSat. In the summer of 1997, after NIC provided the 50 % down payment to ComSat, Datacom received the first shipment of VSAT terminals and a mini-hub work station. At the same time, Datacom’s staff began to test the equipment as part of the first phase of the VSAT project. By the beginning of 1998, the VSAT network had been implemented in 20 aimaks, or provincial regions, around the country [24].

8. References “IDRC assistance was the key to start this project. We had spoken to a number of development organizations and found one difference when dealing with the IDRC, that the money they promised actually arrived in three weeks while the other agencies just talked.” The VSAT network installation also required trust between the principal partners. For example, Datacom had to trust ComSat’s engineers and other technicians that the VSAT equipment would work in the Mongolian context. NIC also had to trust in Datacom’s ability to accurately assess the feasibility of the VSAT network. They could not afford to waste their budget on an inappropriate solution. And of course, ComSat had to trust NIC that they would be paid in full after the VSAT equipment arrived, the network was installed, and it had been demonstrated to work properly.

[1] Anonymous, Country Report: China / Mongolia, London: The Economist Intelligence Unit, 1996. [2] Anonymous, “Mongolia: Review 1997,” Asia & Pacific Review World of Information, Walden Publishing Ltd. and Janet Matthews Information Services, as reported in LexisNexis, May 1997a. [3] Anonymous, “Gap Between Developing & Developed Countries in Communications Technology Must be Closed, Information Committee Told,” M2 Communications Ltd., 1997, as reported in Lexis-Nexis, May 16, 1997b. [4] Anonymous, CIA World Factbook, 1997, accessed from http://portal.research.bell-labs.com/cgiwald/dbaccess/411?key’=165, May 26, 1997c. [5] Anonymous, Country Report: China / Mongolia, London: The Economist Intelligence Unit, 1997d. [6] Barley, S.R., “Technology as an Occasion for Structuring: Evidence from Observations of CT Scanners and the Social Order of Radiology Departments,” Administrative Science Quarterly, 1986, pp. 78-108.

6. Conclusion The case of Datacom, the first ISP in Mongolia, typifies the challenges faced by organizations attempting to develop and implement new information technology in developing countries. The framework discussed in this paper was developed based on previous studies of IT implementation in developing countries. This framework was found valuable in understanding the key factors affecting implementation success for firms such as Datacom. Additional studies of IT implementation in developing countries is needed to further validate and extend the framework.

7. Postscript On July 20, 1996 Dr. Enkhbat signed a draft agreement with ComSat. That same year he signed a contract with NIC. Datacom was to provide networking services to NIC and NIC agreed to fund the VSAT

[7] Braa, J. and E. Monteiro, “Infrastructure and Institutions: The Case of Public Health in Mongolia,” in Information Technology: Development and Policy, (ed. E.M. Roche and M.J. Blaine) Avebury, Aldershot, UK, 1996, pp. 171-188. [8] Byrd, T.A., C.S. Sankar, and J.D. McCreary, “The Risks Associated with Planning and Implementing Global Information Technology Systems,” in Global Information Systems and Technology: Focus on the Organization and Its Functional Areas (ed. P. C. Deans and K.R. Karwan) IDEA Group Publishing, Harrisburg, PA, USA, 1994, pp. 514-539. [9] Calhoun, C., W. Drummond, and D. Whittington, “Computerised Information Management in a System-Poor Environment,” Third World Planning Review (9:4), 1987, pp. 361-379. [10] CERNET, China Education and Research Network, Organizational Brochure, 1996.

0-7695-0001-3/99 $10.00 (c) 1999 IEEE

11

Proceedings of the 32nd Hawaii International Conference on System Sciences - 1999 Proceedings of the 32nd Hawaii International Conference on System Sciences - 1999

[11] Commission of the European Communities, “The Information Society and Developing Countries: The Role of the European Union,” Commission of the European Communities, as reported in Lexis-Nexis, July 29, 1997. [12] Daser, S., “The Role of Information Technology in Global Marketing: The Case of the New Single Market of the European Community,” in Global Information Systems and Technology: Focus on the Organization and Its Functional Areas (ed. P. C. Deans and K.R. Karwan) IDEA Group Publishing, Harrisburg, PA, USA, 1994, pp. 85-101.

[23] Lind, P., Computerization in Developing Countries: Models and Reality, (London, UK: Routledge), 1991. [24] Long, G., “Why Mongolia,” OnTheInternet, January/February 1998, pp. 34-36. [25] Maral, G., VSAT Networks (Chichester, UK: John Wiley and Sons), 1995. [26] Palvia, P., “Global Information Technology Research: Past, Present, and Future,” Journal of Global Information Technology Management (1:2), 1998, pp. 3-14.

[13] Dhir, K.S., “The Challenge of Introducing Advanced Telecommunication Systems in India,” in The Global Issues of Information Technology Management (ed. S. Palvia, P. Palvia, and R. Zigli) IDEA Group Publishing, Harrisburg, PA, USA, 1992, pp. 116-145.

[27] Parent, M. and H.G. Enns, “CERNET: Managing Internet Growth in China,” Richard Ivey School of Business Case and Publication Services, No. 9-98-E001, 1998.

[14] Ein-Dor, P., E. Segev, and M. Orgad, “The Effect of National Culture on IS: Implications for International Information Systems,” Journal of Global Information Management (1:1), Winter 1993, pp. 33-44.

[28] Raman, K.S., and R.T. Watson, “National Culture, Information Systems, and Organizational Implications,” in Global Information Systems and Technology: Focus on the Organization and Its Functional Areas (ed. P. C. Deans and K.R. Karwan) IDEA Group Publishing, Harrisburg, PA, USA, 1994, pp. 493-513.

[15] Frempong, G., “Developing Telecommunications in Ghana,” IEEE Technology and Society Magazine (15:1), Spring 1996, pp. 23-31. [16] Goodman, S.E., “Computing in a Less-Developed Country,” Communications of the ACM (34:12), December, 1991, pp. 25-29. [17] Huff, S. L., “Managing Global Information Technology,” Business Quarterly (56:3), Autumn 1991, pp. 71-75. [18] Ives, B. and S.L. Jarvenpaa, “Applications of Global Information Technology: Key Issues for Management,” MIS Quarterly (15:1), March 1991, pp. 33-49. [19] Jarvenpaa, S.L. and B. Ives, “Organizing for Global Competition: The Fit of Information Technology,” Decision Sciences (24:3), 1993, pp. 547-580. [20] Janczewski, L.J., “Factors of Information Technology Implementation in Under-Developed Countries: Example of the West African Nations,” in The Global Issues of Information Technology Management (ed. S. Palvia, P. Palvia, and R. Zigli) IDEA Group Publishing, Harrisburg, PA, USA, 1992, pp. 187212. [21] King, W.R. and V. Sethi, “Developing Transnational Information Systems: A Case Study,” OMEGA (21:1), 1993, pp. 53-59. [22] Lehmann, H., “Investigating a Generic Architecture for International Information Systems,” Proceedings of the First Americas Conference on Information Systems, (ed. M.K. Ahuja, D.F. Galletta, H.J. Watson), 1995, pp. 319-321.

[29] Ramanujan, S. and H. Lou, “Outsourcing Maintenance Operations to Off-Shore Vendors: Some Lessons from the Field,” Journal of Global Information Management (5:2), Spring 1997, pp. 5-15. [30] Robey, D and A. Rodriguez-Diaz, “Organizational and Cultural Context of Systems Implementation: Case Experiences from Latin America,” in Information Technology in a Global Business Environment: Readings and Cases (ed. C. Deans and J. Jurison) Boyd & Fraser Publishing Company, Danvers, MA, USA, 1996, pp. 323-337. [31] Roche, E.M., “Managing Systems Development in Multinational Corporations: Practical Lessons from Seven Case Studies,” in The Global Issues of Information Technology Management (ed. S. Palvia, P. Palvia, and R. Zigli) IDEA Group Publishing, Harrisburg, PA, USA, 1992, pp. 630-654. [32] Roche, E.M., and M.J. Blaine, “Introduction: Information Technology, Development and Policy” in, Information Technology: Development and Policy, (ed. E.M. Roche and M.J. Blaine) Avebury, Aldershot, UK, 1996, pp. 1-24. [33] Storey, R., Mongolia - A Travel Survival Guide, (Berkeley, CA: Lonely Planet Publications), 1993. [34] Vargo, J. and R. Hunt, Telecommunications in Business: Strategy and Application, (Chicago, IL: Irwin), 1996. [35] Warden, R.L. and A.M. Savada, Mongolia: A Country Study, (Library of Congress, Federal Research Division, Second Edition), 1991, pp. 168-169.

0-7695-0001-3/99 $10.00 (c) 1999 IEEE

12