444 BSC-Based Framework for E-Business Strategy • Customer Retention: 6DWLV¿HGFXVWRPHUV are not necessarily loyal customers. Loyal customers, who repeat their purchases, are YDOXDEOHDVVHWVRIWKHEXVLQHVV:HLGHQWL¿HG customer satisfaction, goodwill, customer SUR¿OH FKDQQHO ÀH[LELOLW\ DQG FRPSHWL- tion as the major determinants of retention. 6 D W L V ¿ H G F X V W R P H U V D U H P R U H O L N H O\ W R U H W X U Q for repeat purchases. Goodwill, the favor or prestige that a business has acquired beyond the mere value of what it sells re- ÀHFWVWKHFXPXODWLYHFXVWRPHUVDWLVIDFWLRQ (Jennings & Robinson, 1996). Companies need to identify and retain customers based RQWKHLUSUR¿OH&KDQQHOÀH[LELOLW\UHIHUV to the availability of distribution channels besides the Internet. According to Reichheld, Markey, and Hopton (2000), the seamless integration of different channels can prove to be valuable. • &XVWRPHU 3UR¿WDELOLW\ Succeeding in customer acquisition, satisfaction and reten- tion does not necessarily ensure the com- SDQ\SUR¿WDEOHFXVWRPHUV7KHIRFXVRIWKH business’s customer strategy, then, should EHRQSUR¿WDELOLW\$OWKRXJKWKHSXUFKDVH PDUJLQLVVWUDLJKWIRUZDUGVSHFL¿FFXVWRPHU initiated cost is not that obvious and tends to be hidden in the customer support, marketing and sales functions. Those costs uniquely traceable to customers include the customer transactional cost, customer service/support cost, packaging delivery and post sales costs. The ratio of the customer purchase margin to the serving cost is revealing when com- pared on an individual customers basis, or by segment or channel basis (Schoeniger, 2003). Figure 3 summarizes this analytic e-CRM perspective. Process Structure Perspective With increasingly competitive global markets, HI¿FLHQF\UHPDLQVYLWDOO\LPSRUWDQW(EXVLQHVV SURFHVVHVPXVWEHWLPHO\ÀH[LEOHDQGG\QDPLF A generic value chain is illustrated in Figure 4, which offers an abstract description of the pro- cesses within any type of business. To be feasible in e-business, the internal process view should FRQVLGHU WKH ÀH[LELOLW\ DQG LQWHOOLJHQFH RI WKH process structure (Hasan & Tibbits, 2000). This view implies that e-business process perspective affects not only internal business processes but also the whole business structure. • Shorter Cycle Time: The notion of shorter cycle time can be directly translated into bottom-line revenue for nearly all compa- nies. General cycle time measures the time to plan and stock (inbound), inventory and Figure 3. E-CRM perspective for e-business strategy 445 BSC-Based Framework for E-Business Strategy scheduling (operations), lead time (order- to-delivery time) and invoice a particular product (outbound). Effective process inte- gration and intelligence can optimize this cycle, measurably reducing inventories and matching market desires. Wherever there are manual and sporadic tasks in the cycle, there are chances for overhead costs, delays, and errors, which can all contribute to a longer cycle. • Improved E-Service Quality: E-service is the glue that holds the e-business process together. According to Voss (2000), customer service generally involves three levels: • The minimum necessary services, such as site responsiveness, site effective- QHVV DQG RUGHU IXO¿OOPHQW 1HWZRUN performance and infrastructure can ensure the basic services customers would expect. • Customer-oriented services, which can promote retention and satisfaction, fall into two categories: (a) informational capabilities: help information avail- ability and interactive communication with the service representatives; and (b) transactional capabilities: order customization and tracking, complete support during ordering process and after purchase period. • Value-added services are extra services such as location sensitive selling/bill- ing or online training. Overall, value- added services provide operational and administrative synergy among other levels of services. • Reduced Overhead: Every dollar saved IURPRYHUKHDGDGGVWRSUR¿W%HLQJDJLOH DQGÀH[LEOHWKHYLUWXDOSURFHVVRIe-busi- ness replaces the traditional product inquiry and physical clearinghouse process and provides greater operating advantages that may lead to reduced overhead. Process in- tegration and intelligence reduce the need IRUDZHOOGH¿QHGRUJDQL]DWLRQDOVWUXFWXUH and often whole layers of staff. As a result, e-business initiatives have resulted in a ÀDWWHURUJDQL]DWLRQDOKLHUDUFK\ZKLFKOHDGV WRKLJKHUSURFHVVHI¿FLHQF\YLVLELOLW\DQG transparency. Figure 5 summarizes this process structure perspective. E-Knowledge Perspective Because success targets keep changing, the company must make continual improvements to survive and succeed in this intensive global competition. Knowledge innovation and manage- ment facilitates continuing business readiness in WKH³QHZZRUOG´RIHEXVL QHVV2 UJD QL]DWLRQVDUH now creating Internet-based knowledge networks to facilitate improved communication of data, information, and knowledge, while improving coordination, decision making, and planning (Warkentin, Sugumaran, & Bapna, 2001). Fig- ure 6 highlights some of the characteristics of e-knowledge networks. Inbound Logis cs Ope ons Outbound Logis cs Marke ng & Sales Customer Service Procurement, Human resources, Technology, Infrastructure Customer needs Iden ed Customer Figure 4. A generic value chain (From Lewis, 2001) 446 BSC-Based Framework for E-Business Strategy This enhanced e-knowledge network will lead WRJUHDWHUEDFNRI¿FHHI¿FLHQF\ÀH[LEOHDGDSWD- tion to market changes, greater customer intimacy, DQGRWKHURUJDQL]DWLRQDOEHQH¿WV,QRWKHUZRUGV the intangible effect of e-knowledge networking LVUHÀHFWHGWKURXJKWKHWDQJLEOHPHDVXUHVRIWKH other perspectives. There are additional implica- WLRQVRIVWDIISUR¿FLHQF\SURFHVVLQWHJUDWLRQDQG process intelligence. • 6WDII3UR¿FLHQF\6SHFL¿FPDQDJHUSUR¿- ciency and employee skills are required in the new competitive e-business environ- ment. The e-knowledge network offers a repository where new knowledge is created and collected while existing knowledge archived in data warehouses is renewed and updated. Management and operational judgment, knowledge, and experiences are shared and managed to facilitate improved communication, coordination, decision making and planning. Also, staff with higher TXDOL¿FDWLRQVFDQZRUNPRUHHI¿FLHQWO\DQG effectively, while training can be utilized to improve their skills and keep them updated with the technology shift. • Process Integration: Process integration enables a company to unify every aspect of its back-end infrastructure and increase responsiveness to changes by integrating disparate business processes. E-knowledge innovation and management facilitates the integration process by creating e-knowl- edge networks that are characterized by automated capture and exchange of rich knowledge to direct the operation of key LQWHUDFWLYHSURFHVVHV7KHÀDWWHQLQJRIWKH organizational hierarchy also contributes to process integration, which leads to higher SURFHVVHI¿FLHQF\YLVLELOLW\DQGWUDQVSDU- ency. • Process Intelligence: Process intelligence facilitates matches between the company’s offering and target customers, competitors, and the current business by automating the decision and action processes and initiating real time analytics of sales and business alert- Figure 5. Process structure perspective for e-business strategy ? Knowledge oriented ? Extensive sharing ? Long-term alliance ? Relies on leading-edge IT such as agents, data miningetc. ? Central to business model ? New organizational forms enabled ? Automated, Intelligent e-Knowledge Networks Figure 6. E-knowledge networks characteristics (Adapted from Warkentin et al., 2001) 447 BSC-Based Framework for E-Business Strategy ing (Park & Park, 2003). The e-knowledge network generates and stores immediate knowledge about internal and external processes, customers and markets, strategic partners, and supply chain partners. Effec- tive communication with trading partners across different platforms can help represent, implement and track the external business SURFHVVHVLQDG\QDPLFDQGÀH[LEOHZD\ (Park & Park). Figure 7 summarizes the e-knowledge network perspective. EBBSC IMPLICATION AND FUTURE TRENDS Figure 8 summarizes the major measures (Square) and the corresponding decision factors (Oval) DQGUHODWLRQVKLSV$UURZ/LQHVLGHQWL¿HGLQWKH proposed EBBSC framework. At the conceptual level, the framework offers e-business managers a big-picture perspective that is critical in generating and evaluating ef- fective e-business strategies. As an illustration, consider an e-business company that seeks to acquire more prospective customers in the next SODQQLQJSHULRG7KHPDQDJHU¿UVWZLOOORFDWHWKH strategic measure of Newcomer Acquisition in the framework and identify the relevant decision factors. As the EBBSC framework indicates, these IDFWRUVLQFOXGHWKH&XVWRPHU3UR¿OH&RPSHWLWLRQ the Marketing mix, and E-service Quality. Next, the manager can formulate a tentative strategy plan. In this case, the framework suggests that the company needs critical information regard- ing the prospective customer population and the competitors. Based on the collected information, PDQDJHPHQWPXVWGHFLGHRQDVSHFL¿FPDUNHW- ing mix and e-service solution. Starting from the market mix or e-service quality, the EBBSC framework suggests the steps to follow to create the mix and quality plan. Having the priority of the strategic objective at each stage, the manager can allocate the available resources more effectively to achieve these objectives. As an innovative and exploratory framework for e-business strategy, the framework offers directions for future endeavors. First, empirical UHVHDUFKLVQHHGHGRQWKHVSHFL¿FDWLRQRIWKHPHD- sures, factors, and relationships in each e-business p e r s p e c t i v e. Su ch ef f o r t w i l l l e a d t o a m o r e p r e c i s e and explicit model that offers e-business manager FRQFUHWH DQG TXDQWL¿HG VXSSRUW LQ JHQHUDWLQJ strategies. The EBBSC framework also can be DGDSWHGWRQRQSUR¿WHEXVLQHVVDSSOLFDWLRQV7KH conceptual framework is feasible and directive in ERWKSUR¿WGULYHQDQGQRQSUR¿W,QWHUQHWXVLQJ organizations. Different performance measures Figure 7. E-knowledge network perspective for e-business strategy 448 BSC-Based Framework for E-Business Strategy ZLOOEHLGHQWL¿HGXQGHUHDFKDGDSWHGHEXVLQHVV perspective, and the corresponding factors and relationships will be updated accordingly. CONCLUSION In closing, this EBBSC framework for e-business strategy contributes to both theory and practice. From a theoretical standpoint, it explains how the adaptation of BSC offers a methodology to formulate and evaluate e-business strategy. The framework also offers an evaluation model for strategic e-business decision support. In prac- tice, it provides a means of identifying business opportunities and threats, analyzing current business capabilities and resources to address the opportunities and threats, and generating ef- fective e-business strategies that would improve RYHUDOO SHUIRUPDQFH DQG SUR¿WDELOLW\ ,Q DGGL- tion, the framework provides a stable reference for companies to understand and manipulate the fundamental changes introduced by e-business initiatives, and it enables e-business managers to plan and allocate resources more effectively and align strategic objectives with performance results. REFERENCES Afuah, A., & Tucci, C. L. (2001). Internet business models and strategies: Text and cases. Boston: McGraw-Hill. )LJXUH6LPSOL¿HG(%%6&IUDPHZRUNRYHUYLHZ Employee Employee trainin g eKnowledge network hierarch y Product q ualit y E - service Quality Marke Revenue Increase Price Reduced Overhead Shorter Cycle Time Newcomer Customer Customer & Market Share Inbound Outbound Sales Cycle Shortened Process Inte Process Intelligence 449 BSC-Based Framework for E-Business Strategy Bakry, S. H., & Bakry, F. H. (2001). A strategic view for the development of e-business. Interna- tional Journal of Network Management, 11(2), 103-112. Chen, L., Gillenson, M. L., & Sherrell, D. L. (2004). Consumer acceptance of virtual stores: A theoretical model and critical success factors for virtual stores. ACM SIGMIS Database, 35(2), 8-31. De, R., Mathew, B., & Abraham, D. M. (2001). Critical constructs for analyzing eBusinesses: Investment, user experience and revenue mod- els. Logistics Information Management, 14(1/2), 137-148. Dubosson-Torbay, M., Osterwalder, A., & Pigneur, <H%XVLQHVVPRGHOGHVLJQFODVVL¿FDWLRQ and measurements. Thunderbird International Business Review, 44(1), 5-23. Hamel, G., (2000). Leading the revolution. Boston: Harvard Business Press. Hasan, H., & Tibbits, H. (2000). Strategic man- agement of electronic commerce: An adaptation of the balanced scorecard. Internet Research, 10(5), 439-450. Horsti, A., Tuunainen, V. K., & Tolonen, J. (2005). Evaluation of electronic business model suc- cess: Survey among leading Finnish companies. Proceedings of the 38 th Hawaii International Conference on System Sciences, HICSS’05 (Track 7, p. 189c). Jennings, R., & Robinson, J. (1996). the relation between accounting goodwill numbers and equity values. Journal of Business Finance & Account- ing, 23(4), 513-533. Kaplan, R., & Norton, D. P. (1992). The balanced scorecard: Measures that drive performance. Harvard Business Review, 70(1), 71-9. Koh, J., & Kim, Y. G. (2004). Knowledge sharing in virtual communities: An e-business perspec- tive. Expert Systems with Applications, 26(2), 155-66. Lewis, W. J. (2001). Data warehousing and e- commerce. Upper Saddle River, NJ: Prentice Hall PTR. Liu, Z., Wynter, L., & Xia, C. (2003). Usage- EDVHGYHUVXVÀDWSULFLQJIRUHEXVLQHVVVHUYLFHV with differentiated QoS. Proceedings of 2003 IEEE International Conference on E-Commerce Technology, CEC’03 (p. 355). Martinsons, M., Davison, R., & Tse, D. (1999). The balanced scorecard: A foundation for the strategic management of information systems. Decision Support Systems, 25, 71-88. Olsson, A., & Karlsson, S. (2003). The integration of customer needs in the establishment of an e- business system for internal service. International Journal of Logistics: Research & Applications, 6(4), 305-317. Palmer, T., & Wiseman, R. (1999). Decouplingrisk taking from income stream uncertainty: A holistic model of risk. Strategic Management Journal, 20, 1037-1062. Pant, S., & Ravichandran, T. (2001). A framework for information systems planning for eBusiness. Logistics Information Management, 14(1/2), 85-98. Park, N. (2002). A shared process model for independent and synchronized e-business trans- actions. Journal of Intelligent Manufacturing, 13(6), 499-510. Park, J. H., & Park, S. C. (2003). Agent-based merchandise management in business-to-business electronic commerce. Decision Support Systems, 35, 311-333. Raisinghani, M. S., & Schkade, L. L. (2001, May 19-23). E-business strategy: Key perspectives and trends. Proceedings of 2001 IRMA International Conference, IRMA’01, Toronto, Canada. 450 BSC-Based Framework for E-Business Strategy Reichheld, F. F., Markey, R. G., Jr., & Hopton, C. (2000). E-customer loyalty—Applying the traditional rules of business for online success. European Business Journal, 12(4), 173-179. 6FKRHQLJHU($SULO&XVWRPHUSUR¿WDELO- ity: Is the customer king or cost? CEO Insights: A Supplement to Chief Executive Magazine, 1-4. Voss, C. (2000). Developing an eService strategy. Business Strategy Review, 11(11), 21-34. Warkentin, M., Sugumaran, V., & Bapna, R. (2001). E-knowledge networks for inter-orga- nizational collaborative e-business. Logistics Information Management, 14(1/2), 149-162. Whelan, J., & Maxelon, K. (2001). E-business matters: A guide for small and medium-sized enterprises. London: Pearson Education. KEY TERMS Channel Flexibility: The convenience and availability of distribution channels other than WKH,QWHUQHWZKLFKFRQWULEXWHVWRLQFUHDVHGSUR¿W and customer retention. EBBSC: A balanced scorecard based frame- work to formulate and evaluate e-business strategy consisting of four perspectives: business model, analytic e-CRM, process structure, and e-knowl- edge network. E-Business Strategy: An elaborate and sys- tematic plan of action intended to accomplish VSHFL¿FHEXVLQHVVJRDOVZKLFKFRQVLGHUVHEXVL- ness multidimensional characteristics E-Capacity: The limit of the e-business company’s ability to produce or perform that is imposed by the equipment and/or available personnel and the network technology and per- formance. E-Knowledge Network: A repository where new knowledge is created and collected while existing knowledge archived in data warehouse is renewed and updated. E-Sales Cycle: The time that elapses between the customer initiating the buying process online, and the point at which a decision is made on which product to buy. E-Service Quality: Customers’ overall perception and experience of the three levels of the service offered in e-business: foundation of service, customer-oriented services, and value- added services. Process Integration: The degree of problem critical information sharing and transmission across different departments and the combination of two or more stages in producing or distributing a particular product. Process Intelligence: The ability of the business processes to perceive and act in the surrounding environments, to respond to the prevailing circumstances in dynamic business situation, and to learn and improve the process with prior experiences. This work was previously published in Encyclopedia of E-Commerce, E-Government, and Mobile Commerce, edited by M. Khosrow-Pour, pp. 64-71, copyright 2006 by Information Science Reference (an imprint of IGI Global). 451 Copyright © 2009, IGI Global, distributing in print or electronic forms without written permission of IGI Global is prohibited. Chapter 2.9 A Design Tool for Business Process Design and Representation Roberto Paiano Università di Lecce, Italy Anna Lisa Guido Università di Lecce, Italy ABSTRACT In this chapter the focus is on business process design as middle point between requirement elici- tation and implementation of a Web information system. We face both the problem of the notation to adopt in order to represent in a simple way the business process and the problem of a formal representation, in a machine-readable format, of the design. We adopt Semantic Web technology to represent process and we explain how this technology has been used to reach our goals. INTRODUCTION Today, the impact of business processes within companies gains more and more importance and provides tools to the managers, and methodologies useful to understand and manage them are a must. It is important to integrate business processes in the overall information system (IS) architecture with the goal to provide, to the managers, the right ÀH[LELOLW\WRDYRLGWKHUHLPSOHPHQWDWLRQRIWKH applications in order to follow the business process changes, and to adapt the existing applications to a different management of the existing business logic. As a consequence the process-oriented PDQDJHPHQWUHTXLUHVERWKWKHDELOLW\WRGH¿QH processes and the ability to map them in the underlying system taking into consideration the existence of heterogeneous systems. It is clear that business and information technology (IT) experts must work together to SURYLGHWKHULJKWÀH[LELOLW\WRWKH,6DQGWKXVWR improve the overall management. The semantic gap between business and IT experts is a problem in the development of an overall system oriented 452 A Design Tool for Business Process Design and Representation to the improvement of the business process. The ¿UVWWKLQJWRGRWRVROYHWKLVSUREOHPLVWRVWXG\ a common language between these two classes of users with very different requirements: • Business experts will focus on the processes and on the direct management of them in order to modify the company work without giving many technical details: A change to the process must be immediately translated in a change to the applications that imple- ment it. • IT experts require more details about pro- cesses and require simplicity in order to XQGHUVWDQGWKHSURFHVVÀRZDQGWKXVDS- plication requirements. Business process design is the middle point between requirement elicitation and Web IS implementation that is between business and IT experts. The tool that supports business process design must be the same for both business and IT users and must answer to two different key aspects: • easy to use with a notation easy to understand and allows to gives all technical details but, at the same time, hiding the complexity to WKH¿QDOXVHUDQG • supports the export of the process design in a formal way in order to give to the IT experts all the process detail that they need. The process description must be machine readable. In our research work we consider these two aspects by two approaches: • the use of a standard notation for business process representation, and • the use of an ontological language that, WKDQNVWRLWVÀH[LELOLW\DQGPDFKLQHUHDG- able feature, is able to express all process complexity in a formal way. In the next section of this chapter we explain the background about the concept of business process management (BPM) and the analysis of several BPM suites, and then we explain the open issue and the possible solutions related to the BPM suites. Next, we present our approach to the business process representation and we provide an overview about business process management notation (BPMN), Semantic Web languages, and about the concept of the metamodel. In the next section we explain what metamodel means and what the main problems are in the meta object facility (MOF) approach. In the section: BPMN Ontological Metamodel: Our Approach to Solve MOF Problems we explain how to solve problems about the classical metamodel approach with the use of the Web Ontology Language (OWL) and then, in the next section, we explain the steps followed to develop the ontological metamodel. Finally, we highlight the future trends about our research work and the conclusions. BACKGROUND Since the 1990s, process management has gained more and more importance in companies. Process PDQDJHPHQWEHJDQWRDI¿UPZLWKWKHbusiness process reengineering (BPR) theory (Hammer, 1990) that allows us to improve company man- DJHPHQWWKDQNVWRWKHDQDO\VLVDQGUHGH¿QLWLRQ of the company’s processes. BPR theory does not give a structured approach to the introduction of the process in the overall IS architecture but the process logic was in the mind of IT experts that were free to implement them. Starting from BPR, the evolution was work- ÀRZLGHDSURSRVHGDQGVXSSRUWHGE\:RUNÀRZ Management Coalition [http://www.wfmc.org]), which is the automation of some companies’ pro- cesses where only people performed process steps. %35WKHRU\DQGZRUNÀRZLGHDDOORZWRWDNHLQWR consideration vertical processes involving a single company department, but process, usually, covers 453 A Design Tool for Business Process Design and Representation several departments (a process may involve also VHYHUDOFRPSDQLHVVR%35DQGZRUNÀRZGRQRW cover the overall company complexity. The traditional vertical vision of the company that locates business logic in functional areas is not the best way to provide the overall vision of the company and to improve process management, so this vision is today abandoned: Managers need a horizontal vision with the goal to manage the RYHUDOOÀRZDQGWRXQGHUVWDQGDQGFRUUHFW²LQ the most rapid way possible—managements er- rors. Obviously, we speak about administrative business processes extended throughout the entire organization where they take place. Actually, the attention is turned to the BPM with an innovative idea that allows us to have a horizontal (rather than vertical) vision of the company and to consider processes where steps are performed both from people and systems. The goal of BPM is to make explicit the process management in the IS architecture. Process logic is, today, hidden in the application level and, often, the way with which this is made is in the mind of the IT experts of the company, and it is not ZHOOGRFXPHQWHG7KH,6REWDLQHGLVGLI¿FXOWWR maintain. A change to the process logic needs a revision to the business logic, and this requires a lot of time and incurs high costs. The processes DUH QRW H[SOLFLW DQG WKXV LW LV YHU\ GLI¿FXOW WR monitor and manage them. There are a lot of BPM suites on the market WKDWWU\WRPDNHH[SOLFLWWKHGH¿QLWLRQDQGPDQ- agement of the processes. A recent study (Miers, Harmon, & Hall 2005) compares different BPM suites (http://www.Fuego.com; http://www. ilog.com; http://www.popkin.com; http://www. ZJOREDOFRPKWWSZZZ¿OHQHWFRPIURPGLI- ferent points of view such as cost, platform, user interface, and so forth. These BPM suites allow us to represent processes and to manage their execu- tion; and they provide administration tools that allow us to manage processes and users involved in the system. Several suites focus on document management and thus on the possibility to man- age, with a high degree of security, documents that are involved in the process, versioning, and so forth. BPM suites also provide a Web applica- tion that allows different actors in the process to load their task and to work with it. In the Web application a single user can view and work with the process and, despite this being visible in the Web, each user has access to only one page and thus information, navigation, and transactional aspects of Web application are not taken into consideration. An important aspect of the BPM suites is the application program interface (API) that allows us to develop a custom application but does not supply any information about design. BPM SUITES: OPEN ISSUE AND POSSIBLE SOLUTIONS The main problems highlighted in the study of these suites are: • WKHKLJKFRVWRIVXLWHVDUHGLI¿FXOWWRDSSO\ in small- to medium-sized companies, and they require high investments both to pur- chase hardware and to train people in the company that will use these frameworks; • ad hoc notation to represent processes that are often hard to read and to understand both from business experts and from IT experts and thus the semantic gap problem is not solved; and • there is a lack of methodology that helps in the transition from process design to the ¿QDO:HEDSSOLFDWLRQ In this study we focus on two of these main problems: high costs and process representa- tion. Small- to medium-sized companies may have several advantages from BPM suite because it helps to control all the company activities in a simple and easy way. Small- to medium-sized companies have several economic problems in . renewed and updated. Management and operational judgment, knowledge, and experiences are shared and managed to facilitate improved communication, coordination, decision making and planning company’s offering and target customers, competitors, and the current business by automating the decision and action processes and initiating real time analytics of sales and business alert- Figure. companies to understand and manipulate the fundamental changes introduced by e-business initiatives, and it enables e-business managers to plan and allocate resources more effectively and align strategic