A research agenda for collaborative commerce Arian ZWEGERS1 and Jens ESCHENBÄCHER2 1 Baan, Baron van Nagellstraat 89, 3771 LK Barneveld, Netherlands Tel: +31 342 428051; Fax: +31 342 428648; Email: [email protected] 2 BIBA, Hochschulring 20, 28359 Bremen, Germany Tel: +49 421 218 5532; Fax: +49 421 218 5610; Email: [email protected] Abstract. This paper discusses a research agenda for collaborative commerce. Collaborative commerce is the collaborative, electronically enabled business interaction among an enterprise’s internal personnel, business partners, and customers throughout a trading community. It can be seen as a potential evolutionary path of e-business. The research agenda in this paper presents ideas from the human and organisational, business processes, and applications and infrastructure point of view. From an organisational perspective, enterprises have to establish proper relationships with partners, establish trust among partners, and deal with contract management issues. Inter-enterprise business processes need to be defined per industry, and need to be supported by workflow management applications. New network-centric applications are needed in addition to integration infrastructures which deal with interoperability issues. Joint research is needed to address the mentioned issues.

1. Introduction One of the trends in the global market is the increasing cooperation among enterprises during the entire product life cycle. This is related to business drivers, such as the need for cost reduction, flexibility, focus on core competencies, and so on. The result is anything from a rather stable alliance between partners as in a supply chain or supply network to a more transitory cooperation as in a virtual enterprise. Current supply networks and virtual enterprises can be seen as the initial implementations/realizations of a new business model, namely of ‘collaborative commerce’. It should be considered as a business model rather than a solution that can be offered by vendors. It benefits an enterprise by extending the enterprise’s visibility and cooperation throughout the value chain. The objective of this paper is to define a research agenda (or ‘research task list’) for collaborative commerce. A number of research issues are identified that have to be solved before enterprises can truly adopt c-commerce practices. Solving these issues will improve industry’s capability to collaborate, and hence its competitiveness. Although these issues are quite interrelated and should be dealt with in a holistic way, this paper classifies them into three main areas, namely organisational aspects (including people-related aspects), business processes, and applications and technology. This paper is organised as follows. The next section explains briefly the ideas behind collaborative commerce. Section 3 is the core of the paper and presents the research topics in collaborative commerce. These research topics could surely be an issue in future industrial research activities. A discussion concludes this paper.

2. Collaborative Commerce Nowadays, three major movements put additional requirements to enterprises: globalisation, outsourcing, and mass customisation of products. Organisations have expanded their scope to become really global, and differentiate their patterns of cooperation to encompass collaborative activities. Outsourcing and a focus on core competencies requires better collaboration, synchronization of processes, and appropriate handling of time and distance constraints. Customisation demands make-to-order manufacturing, better demand visibility, and more flexibility, in general, in order to execute faster and more efficiently. Closer collaboration with partners is required by globalisation, outsourcing, and customisation. Nevertheless, it is apparent that enterprises will have to adopt approaches such as ‘collaborative commerce’ (or ‘c-commerce’) to remain competitive in most industry segments [1, 2, 3]. The Gartner group gives the following definition: ‘C-commerce is the collaborative, electronically enabled business interaction among an enterprise’s internal personnel, business partners, and customers throughout a trading community. This trading community can be an industry, industry segment, supply chain or supply chain segment.’ [1] (see [4] for a discussion on different interpretations of the term ‘c-commerce’) Perhaps the most essential element of collaborative commerce is the extension of an enterprise’s knowledge assets to include those outside the enterprise. When intellectual capital is leveraged across enterprises, the benefits of c-commerce can be realized. Sharing intellectual capital and combining core competencies with partners are the major ingredients of collaboration. C-commerce should be considered as a business model rather than a solution that can be offered by vendors. It benefits an enterprise by extending the enterprise’s visibility and cooperation throughout the value chain, thereby contributing to the realization of virtual enterprises. Figure 1 gives an overview of some of the differences between ‘traditional’ e-commerce and c-commerce business models. Component Supplier

End User

OEM

Retailer

Component Supplier

Contract Manufacturer

Distributor

Reseller

Infrastructure End User

End User

Figure 1 From E-Commerce to C-Commerce [5]

End User

Infrastructure

Distributor

End User

Manufacturer

3. Some research topics on collaborative commerce 3.1 Introduction This study focuses on three different but interrelated categories of research issues. Before an enterprise can leverage c-commerce for external collaboration, it must have the applications, business processes and organisational structures internally which can cope with the demands of external transaction processing and collaborative interaction. A number of research issues are identified that have to be solved before enterprises can truly adopt c-commerce practices. This paper classifies them into three main aspects: • organisational aspects, including people-related aspects, • business processes, • applications and technology. These three aspects of c-commerce are interdependent and as such should be dealt with in a holistic way. 3.2 Organisational and people related issues Several issues, related to organisations and people, play an important role in the move to c-commerce. Amongst others, enterprises have to establish proper relationships with partners, establish trust among partners, and deal with contract management issues. Unlike a closed, enterprise-centric supply chain planning situation, in which the constraints are known and resources can be controlled, successful c-commerce initiatives strongly depend upon the development of collaborative relationships. These collaborative processes are focused on streamlining communication between supply chain partners, while improving trust and breaking down barriers to sharing information. So-called ‘channel masters’ control the supply networks in which they participate. They become the natural leaders for development of communication standards and collaborative pilots. Enterprises operating as channel masters can either force channel partners into collaborative business processes, squeezing profitability from trading partners, or develop win/win processes. These enterprises need to act as benevolent dictators, with a focus on the efficiency of the entire supply chain, and need to establish proper relationships among its partners that benefit all. The way to set up (and dissolve) win-win relationships among partners is not clear. It requires new business models, and new economics, for example sharing profit margins rather than cost margins. It also requires a different mindset within companies that have to be convinced that sharing profits is part of a business model that proves more viable in the long run. A prerequisite to establishing collaborative relationships among partners is trust. As a major prerequisite for every cooperation activity, trust is recognised as an important issue by various authors. For instance, a four-level risk-trust hierarchy was developed by CTP to help enterprises understand and manage the interplay of risk, interdependency, and trust in the networked economy [6]. Another four-level model of trust by Sabherwal [7] has been adopted by Van den Berg and Van Lieshout [8], who discuss trust in e-commerce and present measures to increase it. However, literature pays little attention to ways to establish trust among partners, ways to deal with unknown partners, and determining whether a potential partner is not only competent but also has the skills to cooperate. As a consequence, one of the few ways to solve this problem is to have trials with partners before intensifying the activities. The extent to which independent, trusted third parties such as brokers or certification agencies might solve this problem is unknown. Operating in an environment with frequently changing relationships leads enterprises to rethink their way of working regarding contract management. The characteristics of virtual

enterprises require enterprises to change their way of working from that of tightly connected legal entities bound together by volumes of contractual documents to ad hoc casual relationships that are still based on contracts but with a stronger focus on intellectual property protection and valuation. A range of legal issues are beginning to emerge. This is mainly due to the lack of a solid contractual base to govern the electronic exchange of information and documentation within and between such virtual enterprises. Examples of emerging legal issues are proof of receipt of electronic data (such as drawings and emails), ownership of information, intellectual property and access rights, and company versus project information. The EC project eLEGAL (IST-1999-20570) addresses these types of issues and aims to define a framework for specifying legal conditions and contracts to enable a legally admissible (exclusive) use of information and communication technology in project business [9]. ALIVE (IST-2000-25459) and Octane (IST-1999-20553) are other EC projects in this area. Vendors such as diCarta and I-many already provide commercial contract management solutions. Research should point out how contracts should be defined in a very short time, and how to deal with liability, especially if a range of service providers (xSP’s) is involved. 3.3 Business processes In collaborative relationships, inter-enterprise business processes need to be defined, for instance based on reference models. In an enterprise-centric supply chain management situation, the constraints are known and resources are controlled. In a c-commerce environment, however, it is crucial to define and develop collaborative relationships and processes. These inter-enterprise processes are focused on streamlining communication among partners collaborating in a supply network or virtual enterprise. Specific industries need solutions that support their business processes. They need reference models and supporting technologies for inter-enterprise business processes. Software vendors and academia should provide these reference models for each industry and perhaps even for each industrial segment. In addition, reference models should take into account various business models, e.g. different manners and degrees of outsourcing, the existence or absence of service providers, and so on. In addition to the definition of inter-enterprise business processes, workflow management applications are required to manage the execution of these processes. However, different enterprises deal with workflows differently. The way an enterprise processes a sales order might be different from the way another enterprise deals with it. Nevertheless, partners in a virtual enterprise or supply network share the responsibility for the execution of inter-enterprise business processes. When enterprises distribute a process among them, the resulting workflow logic could be very conditional. Managing interenterprise workflows will in general require an event-driven process rather than a synchronised sequencer. Research should determine whether current intra-enterprise workflow engines are suitable bases for inter-enterprise business process management applications, how to deal with differences in ‘workflow logic’ among enterprises, and how to orchestrate cross-enterprise workflows. 3.4 Applications and technology Current applications focus on single-tier environments, and provide limited support for complex partner relationships. Solutions available in the market today, such as Supply Chain Management applications, typically address cooperation within ‘paired relationships’. The latter means that companies are inclined to optimise the relationships with their closest suppliers and customers in a one-to-one fashion. Only the cooperation

between an enterprise and its closest suppliers or customers is considered. The supplier’s suppliers and the customer’s customers are not taken into consideration. Although the logistics management of an enterprise towards its direct partners might be optimised, the overall supply chain is far from optimal. C-commerce requires new software applications and new technologies. New applications need to provide real-time information and visibility, and need to have a network-centric focus. Figure 2 illustrates an integration infrastructure linking collaborative applications, legacy applications, and packaged applications (such as ERP II) among themselves and with the systems of suppliers, customers, and service providers. Legacy apps. New apps.

Intraenterprise

Integration Infrastructure

Packaged apps.

Customers and e-markets Apps. in autonomous divisions

ASPs and other outsourcers

Suppliers and e-markets

Figure 2 Applications and technologies [10] Various collaborative applications are needed to monitor, manage, and optimise the inter-enterprise business processes. Think about – for example – collaborative project management (see for instance [11]), collaborative order fulfilment planning, supply chain event management, collaborative product development, extended relationship management, cross-enterprise workflow management, and so on. In order to enhance these applications, a range of new technologies is derived from fields such as distributed artificial intelligence, complexity theory, economics, etc. However, still a lot of research and validation in practice needs to be done. For all collaborative applications (and extended relationship management in particular, see [12]), it is paramount to obtain a network-centric focus. Research in supply chain event management applications should find out how to deal with disturbances in a supply chain so that an adaptive supply network can be obtained. For instance, intelligent agents may be used to minimise the consequences of disturbances. Inter-enterprise project management needs to be capable of determining critical paths and progress across a (possibly quite large) network of subcontractors, and sub-subcontractors. Various flows and relationships among partners need to be made visible, for instance material flow, cash flow, information flow, and contractual relations. In addition, virtual enterprises carrying out inter-enterprise projects need to be quickly set up and easily modified during operation. Product lifecycle management applications should deal with product lifecycle information that is distributed over many enterprises. A recent study in the electronics industry [13] shows that collaborative order fulfilment planning is one of the most promising but also one of the most demanding collaborative applications. An essential element of collaborative order fulfilment planning is that it aims to optimise sourcing, forecasting, production, sales, and logistics for a supply network in an integral manner. An order does not follow a predefined route, but it is planned and optimised at the moment it is captured. Order fulfilment is optimised based on capacity,

costs, profits, speed, and other constraints, while taking into account capacities, utilisation rates, costs, distances, and durations of the entire supply network. As such, it is close to realising the principles of ‘Profitable-to-Promise’, extending well-known concepts such as ‘available-to-promise (ATP)’ and ‘capable-to-promise (CTP)’. Compared to these concepts, Profitable-to-Promise optimises on profits, includes distribution aspects (realising ‘Available-to-Customer’ or ‘Capable-to-Deliver’), and takes alternative Bills of Materials into account [13]. A next step for Profitable-to-Promise (and for ATP and CTP for that matter) would be to adopt a supply network-wide view rather than the current enterprisecentric view. Related to Profitable-to-Promise is the term ‘Enterprise Profit Optimisation’, which is used to describe solutions that perform profitable supply-demand matching [14]. The basic idea here is that each customer order is ‘steered’ to appropriate configurations using pricing in such a way that maximises overall company (or network) profits. A supplier may not want to meet a customer’s requested delivery date and quantity even when supply is available, but prefers to wait for a customer who is willing to pay a higher price. Visibility into plant operations is needed for the execution of inter-enterprise business processes. Without that visibility, the synchronisation of production activities in a manufacturing value network can become faulty and misleading. For example, to produce an adequate ‘Profitable-to-Promise’ statement, visibility into real-time plant capacity based on actual and planned shop floor utilisation is required. Applications need real-time input and processing capabilities. These applications should be capable of real-time event monitoring and handling alerts. Current initiatives in Supply Chain Event Management aim to provide these capabilities. Nevertheless, current applications provide insufficient visibility from the shop floor to the supply network. Related to the previous point is the issue of making decisions. Once sufficient visibility has been obtained, the ways decisions are made within supply networks might need to be improved. Professor Hau Lee claims ‘there is still so much to do in order that the decisions that members of the supply chain make will be significantly better than before’ [15]. He considers five aspects in which supply chains can improve decision-making, namely decision mechanics, processes, rights, sciences, and measurement. The current role of ERP systems will change in a c-commerce environment. Current ERP systems act as the back-office transaction processing systems which focus on enterprise optimisation in a domain which is usually restricted to manufacturing and distribution. In a c-commerce situation, the role of ERP systems will be to provide the information in such a way that inter-enterprise business processes can be executed and a particular company can participate in a virtual enterprise or supply network. ERP systems need to be changed in order to act as a main source of (real-time) information that can be made available to partners including employees, business units, suppliers, and customers. Other applications, such as collaborative planning, collaborative project management, and collaborative product development applications, should use the information supplied by the ERP system to manage and optimise collaboration with partners. At the moment, ERP systems are insufficiently open to disclose their information. ERP vendors are struggling with componentisation to open up their products, to align releases, and to differentiate their systems for different industry segments. An integration infrastructure should be able to provide the mechanisms allowing companies to expose internal data to the outside world, to enable inter-enterprise business processes, and to connect to the various physically distributed legacy applications and systems (see also Figure 2). According to [16], an integration infrastructure should consist of four layers, namely Connectivity, Transformation, Routing, and Process Management. The first two layers provide for data exchange and syntactical and semantic application integration. The latter two layers add intelligence and support for business processes, and are insufficiently mature within current commercial integration infrastructures.

New XML-based standards for web services, such as SOAP, WSDL, and UDDI, offer new ways to fill in these layers. In addition to these standards for message definition and exchange, standards for process definitions as well as exchange sequence definitions are proposed, such as WSFL, XLANG, ebXML BPSS, BPML, and WSCL. However, Fensel and Bussler claim that still important features are missing in all of these frameworks, and that loose coupling and scalable mediation of web services in an appropriate modelling framework is essential [17]. They developed a Web Service Modelling Framework (WSMF) which provides a conceptual model for the development and description of web services. Research is needed to fill in the WSMF framework. Last but not least is the issue of interoperability of enterprise applications. Organisations are increasingly required to participate in virtual enterprises and supply networks. One of the requirements of these participants is the desire to have diverse local solutions that better suit their unique local conditions. Every enterprise, although willing to cooperate and interoperate with others in order to fulfil the common goals of the collaboration, insists on: • preserving its rights to local choices and solutions (e.g. local models, mechanisms, and proprietary enterprise applications), • protecting its proprietary information, which includes part of its information that it will not share, and • provision of special access rights to a part of its information only to those other enterprises that either it can trust or it is obliged to provide information by contract. This causes a tension between the obvious needs for cooperation among organisations (which would call for adoption of some common standards), and the suitability of certain proprietary solutions that can more readily meet local conditions. This tension is an important factor in interoperability. In other words, even if there are global (c-commerce) standards sufficient for every business need, there will always be incompatible systems out there – either by choice or because of legacy. Dealing with the issue of interoperability is far from trivial. Partial solutions might come from the domains of enterprise modelling, enterprise application integration, and ontology engineering. 4. Conclusions This paper presents a number of issues which require further research before the ideas of collaborative commerce can be realised by industry. The list does not intend to be exhaustive; many more issues can be thought of. However, it does give an impression of the complexity of the research domain involved. Collaboration is needed to address the mentioned research issues. It will definitely take a considerable effort to address them. In the spirit of collaborative commerce, it will take collaboration between a range of disciplines, from psychology to industrial engineering, from ontology engineering to complexity science. In addition, organisations who are competing among themselves in the market might need to cooperate in here. Especially, enterprise application solution vendors should consider joining forces and carrying out joint pre-competitive R&D to address some of the topics on the research agenda. C-commerce will enter the daily business of a company in an evolutionary fashion. Only if enterprises accept that cooperation will be more beneficial for them will they go in this direction. In the computer industry, companies such as Dell have already set-up very efficient supply networks. Consequently, it can be expected that if companies get the business processes, human and organisational issues, and the applications for a collaborative environment in order, new business and work opportunities will evolve. This could be very beneficial for every industrial sector.

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