1864 A Prototype E-Business Model to Create a Competitive Advantage in SMEs Step 1 R & D Step 2 Product Step 3 Marketing /Sales Step 4 Service Company ICT and Internet infrastructure Human resources Input Output Primary Activities Support Activities Traditional Value Chain What customers want? What is e-business vision? After sale service? Information, Communication, Feedback? Becomes primary activity Figure 2. Traditional value chain design (Source: Hill and Jones, 1998) Goal Time You are here And next year? And next year? And next year? Where should we be next year? An incremental approach to company's development will not work in the e- business world. Why some companies stagnate ? Incremental Approach Goal Time You are here Work backwards Where do we need to be 3 years from now? An e-business vision combines a clear understanding of where you need to be with what needs to be done. W hy some companies grow ? Thinking Ahead Approach Figure 3. E-business planning approach (Source: Kalakota and Robinson, 2001) 1865 A Prototype E-Business Model to Create a Competitive Advantage in SMEs business goal is to focus on cost reduction DQG LQWHUQDO HI¿FLHQF\ &KHQJ /L /RYH & Irani, 2001). Our research showed that SMEs who are able to integrate internally are more successful and employ skilled and knowledgeable staff. Stage 4: Full integration with free information ÀRZEHWZHHQVXSSOLHUVRUJDQLVDWLRQDQG customers7KLVLVWKH¿QDODQGIXOOLQWHJUD- WLRQZLWKDIUHHLQIRUPDWLRQÀRZZKHUHWKH business goal is to create market value and competitive advantage by using the Internet technology. This stage enables supply chain integration and more effective in-sourcing and outsourcing. It also allows for sophisti- cated online business to interrelate internally as well as externally (Van Hooft & Stegwee, 2001; DTI, 2000). SMEs presented in this study have not yet reached this stage of full integration. However, this stage is seen as an essential pa rt of implement ing a n e -bu si- ness strategy. It is important to stress that the four basic elements of e-business integration should not be V HH Q D VD O L QH D US U R F H VV E XW U DW K H UD V WK H ³E X L O G L QJ blocks” of various factors helping SMEs to take a step at a time and when ready. The proposed build- ing stages of integration support the government’s e-business adoption ladder model (Kaplan & Norton, 2003) and contradict Levy and Powell’s (2003) statement that the stage model is inappropri- ate and misguided. In addition, all four elements of e-business integration have been seen as key enablers of a full e-organisational integration that ZLOODOORZIUHHLQIRUPDWLRQÀRZEHWZHHQVXSSOL- ers, the organisation, and customers. In exchange, WKLVZRXOGFUHDWHSUR¿WDEOHJURZWKWKDWSURYLGHV a customer-tailored product and service and add VXSHULRUYDOXHWRWKH¿UP3RUWHU The proposed prototype model is based on our ¿QGLQJVDQGOLWHUDWXUHUHYLHZDQGLWGHWHUPLQHV the strategic elements that translate into an enter- SULVHWKDWLVERWKHI¿FLHQWDQGÀH[LEOHDOORZLQJ the company to adapt, change, grow, and innovate. The relationship between value creation, innova- tion, and integration forms the core of e-business planning. This approach allows the company to take either a short- or long-term solution. The short-term solution is where a company uses existing applications and builds upon them in their own time. The long-term solution is where a company starts over with new applications as the core business. This way, companies with no ¿QDQFLDOVXSSRUWFDQPLQLPLVHULVNVDVVRFLDWHG with an expensive enterprise framework planning and investment approach. CONCLUSION AND IMPLICATIONS In this chapter, we have reviewed the current litera- WXUHJRYHUQPHQWVXSSRU WIRU60(VEHQH¿WVDQG barriers of adopting and implementing e-business strategies in organisations, and proposed a new prototype model, which suggests new ways of creating competitive advantage through e-busi- ness. Guided by the general alignment models and literature review, we presented a prototype model CATE-b that develops an e-business strategy for SMEs. It can be used for SMEs that do not want to take the radical approach to e-business and could build upon their existing technology, and also for SMEs that start over with new applications as a core business. Our proposed agenda builds upon existing capabilities of the organisation and will ensure a SURSHU¿WZLWKWKHVW UDWHJLFJRDOVRIWKHRUJDQLVD- tion as a whole. We expect this prototype model to aid SMEs in taking full advantage of the current publicity surrounding e-business, while avoid- ing projects which can turn out to be costly and disadvantageous. However, we anticipate that RZQHUVPDQDJHUV ZLOOEH IDFLQJVRPH GLI¿FXO- ties while implementing a prototype CATE-b model. For example, many organisations still have 20-year-old legacy IT systems which cannot be discarded, so it makes it harder for organisa- 1866 A Prototype E-Business Model to Create a Competitive Advantage in SMEs tions to integrate. Furthermore, owners/managers PD\H[SHULHQFHGLI¿FXOWLHVVXFKDVHPSOR\HH resistance when attempting to transform an old business design, based on physical realities into a new design rooted in the digital virtual require- ments of tomorrow. Whatever the limitations of the prototype model CATE-b may be, our belief LVWKDWWKHEHQH¿WVDUHJUHDWHUWKDQWKRVHRIIHUHG by alternative models. E-business offers greater operational advances and opens wider markets than traditional business models. SMEs must fol- low the new trend of e-business if they are to stay SUR¿WDEOHDQGFRQWLQXHWRWUDGH/DUJHUHPSLULFDO research, followed by in-depth case studies, will be FDUULHGRXWWRWHVWWKHYDOLGLW\RIFXUUHQW¿QGLQJV and suitability of the prototype model. Our conclusion is that successful managers should anticipate the impact of recent economic and technological changes on their current busi- nesses. Going digital is not a luxury anymore, it has become a necessity. However, digitalisation requires a systemic approach and gradual integra- tion and application depending on the size and the capital available in the organisation. To thrive in today’s dynamic environment, companies must consciously choose the next phase in their growth and evolution. This is the age of continuously as- sessing their e-business processes. The challenge confronting today’s manager is in the creation, execution, and ongoing evolution of a successful e-business plan. So the message to SMEs would be: to be customer focused; value creation is a continuous process; transform business processes into digital form; start small, build on success, and learn. ACKNOWLEDGMENTS We would like to thank all those managers and directors involved in the interviews for their time and generosity. REFERENCES Actinic. (2002). Actinic e-commerce report 2002. Available online at www.actinic.co.uk Afuah, A. & Tucci, C.L. (2001). Internet business models and strategies: Text and cases. Boston: McGraw-Hill Irwin. Ansoff, I. (1965). Corporate strategy. Middlesex: Penguin Books. Apostolou, D., & Mentzas, G. (1999). Managing corporate knowledge: A comparative analysis of H[SHULHQFHVLQFRQVXOWLQJ ¿UPV Knowledge & Process Management, 6(4), 238-255, Part 2. Barney, J.B. (1991). Firm resources and sustained competitive advantage. 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Zhao, pp. 238-260 , copyright 2006 by IGI Publishing (an imprint of IGI Global). 1870 Copyright © 2009, IGI Global, distributing in print or electronic forms without written permission of IGI Global is prohibited. Chapter 6.10 Analysis of Business Process Models in Enterprise Web Services Mabel T. Kung California State University-Fullerton, USA Jenny Yi Zhang California State University-Fullerton, USA ABSTRACT This article reports a series of process-based models for the development of e-business using en- terprise software applications. Merging manage- PHQWW HFK QRORJ \L QZRU NÀRZV \VW HP VLVD FU LW LFD O step to provide service-oriented architecture and on-demand business. We propose a value-ori- ented process technique as a strategic alignment to improve investment value. Our framework focuses on the guidelines for traditional users WRLGHQWLI\WKHVWUXFWXUDOFRQÀLFWVLQLQWHJUDWLQJ :HEVHUYLFHV$FRPSDUDWLYHVWXG\RIZRUNÀRZ models for intra-and inter-organizational process FRQWURO LV SUHVHQWHG 7KLV DUWLFOH LGHQWL¿HV WKH current progress in the adaptability in the de- sign of process models coupled with structural FKDQJHVRIZRUNÀRZYLHZV7KHVWXG\SURYLGHV a resource list of successful implementations for practitioners in organizational management. The research highlights the motivation of market facilitation, expert sharing and collaboration that enable commercial applications to support com- plex heterogeneous, autonomous and distributed information systems. INTRODUCTION %XVLQHVVSURFHVVPRGHOLQJLVDVLJQL¿FDQWDFWLYLW\ in enterprises as e-business and enterprise integra- tion drive the need to deploy business processes online (Aissi, Malu, & Srinivasan, 2002; Weiss & Amyot, 2005; Sewing, Rosemann, & Dumas, 2006). Most business process modeling efforts are knowledge-intensive and require organiza- tions to formalize a large number of complex inter- and intra-organizational processes to fa- 1871 Analysis of Business Process Models in Enterprise Web Services cilitate their ensuing deployment in large-scale ZRUNÀRZV\VWHPVLQHQWHUSULVHSODQQLQJ7DJJ 2001). These management systems need to be integrated with the tools of a process to perform within it: productivity tools, specialized technical support systems, such as CAD systems, graphic packages, enterprise-wide integrated software applications, such as enterprise resource plan- ning (ERP), customer relationship management (CRM), mail systems and other communication systems. When the applications become more modulated and service-oriented, there will no longer be work-alone software. (Cimatti, Clarke, Giunchiglia, & Roveri, 2000). The most common application for process PRGHOLQJFRQWURODQGPDQDJHPHQWLV:RUNÀRZ Management Systems (WfMSs). The technology has become readily available (van der Aalst, De- sel, & Oberwies, 2000; van der Aalst & van Hee, 2002; van der Aalst & Jablonski, 2000; Fischer, 2001; van der Aalst & van Dongen, 2002; Grigori, Casati, Dayal, & Shan, 2001; Herbst & Karagi- annis, 2000; Cook & Wolf, 1999). Commercial ZRUNÀRZPDQDJHPHQWV\VWHPV:I06VVXFK as Staffware, IBM MQSeries, and COSA offer generic modeling and enactment capabilities for structured business processes. Besides stand- alone systems, WfMSs are becoming integral components of many enterprise-wide information systems (Leymann & Roller, 2000). Consider, for example, Enterprise Resource Planning (ERP) systems such as SAP, PeopleSoft, Baan and Oracle, Customer Relationship Management (CRM) soft- ware, Supply Chain Management (SCM) systems, Business to Business (B2B) applications which HPEHGZRUNÀRZWHFKQRORJ\ The introduction of large scale systems such as the ERP system changes the structure of the organization of software applications. This moves from numerous independent software develop- ment procedures to an integrated Web based software framework with components for differ- ent purposes. Although ERP system can improve organization’s performance, standardized ERP system from the vendor such as SAP, need to be customized to be deployed in an organization. It KDVWREHFXVWRPL]HGWR¿WWKHEXVLQHVVJRDOVRI the company. This customization needs the con- tinuous input of end user involvement. In order for the dynamics of the Web services to succeed, the deployment team needs to understand the business processes of the company that can be incorporated L QW R DZR U N ÀRZ G H V LJ Q 7 K HG H VLJ Q OD \RX WF D Q W K H Q be used for discussions with the management and end users to provide better understanding of the processes during changes. &XUUHQWO\ ³(LJKW\ SHUFHQW RI WKH VRIWZDUH that needs to be written has already been done collaboratively” (McKendrick, 2006). It was estimated that in U.S. alone, there would be 55 million user developers compared to 2.75 million professional software developers (Sutcliffe & Mehandjiev, 2004). Because the user developed software may affect the entire organization’s sys- W HP PRU HF KDO OH QJH VD QG FRQ À LF WLV VXH VD UL VHL QD more dynamic state (Bergeron & Berube, 1990). Although the centralized Information Technology (IT) department provides the traditional support of the enterprise-wide system, integration and ZRUNÀRZ GHVLJQ DUH IDU IURP WULYLDO :LWKRXW appropriate policies and control mechanisms, user development cost can be higher than the EHQH¿WLWEULQJVLQ*DOOHWWD+XIQDJHO The cost related to such user software includes poor security, incompatible hardware and soft- ware, inadequate documentation (Davis, 1988), L Q V XI ¿F LH QW YD O LG D W LR Q D QG WH V W L QJ $ O DY L :HL V V 1986; Davis, 1988; O’Donnell & March, 1987), DQGLOOGH¿QHGSROLFLHVUHJDUGLQJDFFHVVWRFRU- porate databases (Alavi & Weiss, 1986). Without DVWUXFWXUHGSURFHVVFRQWUROÀRZRUSROLF\FRO- laborative computing in enterprise wide systems can hardly be effective. This article presents the components of a standardized business process with the empha- sis from the user point of view. The individuals involved in each process have the skills and human capital that complement one another. 1872 Analysis of Business Process Models in Enterprise Web Services Next, a value-oriented framework is proposed as a benchmark for economic assessment. The synthesis and the process-based approach are discussed to align with organizational strategic goals. In this context, the types of inputs, the nature of tasks needed to perform the activity, the sorts of coordination required among the various tasks, and the intended scale of output depend on the internal top management reactions to assess values in the production level as well as the social level among the employees. Lastly, a summary of FXUUHQWUHVHDUFKLQZRUNÀRZPRGHOVSURYLGHVWKH technological and managerial issues involving the current designs in organizations. By combining these different streams of research, our objective is to provide guidelines and structural designs to enable evaluations of process goals to improve the overall value of enterprise Web services. BUSINESS PROCESS A business process is composed of a series of con- tinuous actions or operations that are performed upon a commodity (Childe, Maull, & Bennett, 1994). It is usually initiated by a customer. It must provide results directly to a customer, who may be internal or external to the company. CIM- OSA Standards Committee (1989) has subdivided processes into three main areas: manage, operate and support. The CIM-OSA framework regards manage processes as those which are concerned with strategy and direction setting as well as with business planning and control. Operate processes are viewed as those which are directly related to satisfying the requirements of the external cus- tomer, for example the logistics supply chain from order to delivery. They are sometimes referred to as core processes. Support processes typically act in support of the management and operate SURFHVVHV7KH\LQFOXGHWKH¿QDQFLDOSHUVRQQHO facilities management and information systems provision (IS) activities. Information systems (technologies) make an impact at different levels (Brancheau & Brown, 1993; DeLone & McLean, 1992; Harris, 2000; Powell & Moore, 2002; Seddon, 1997; Andreescu, 2006): system or information level, individual level, group level, organization level, and system or information quality level. When user develops application changes in organizational information V\VWHPWKHVHPRGL¿FDWLRQVZLOODOVRDIIHFWDOOIRXU different levels. Without careful coordination at all levels, the organization will not obtain the possible EHQH¿WWKDWWKHXVHULQWHQGVWREULQJ&RQVLGHUWKH coordination from the process perspective. The collaboration begins in these stages: (1) manage processes are related to organizational level, (2) operational processes are related to system and information level and individual level, and (3) support processes are related to group level LQÀXHQFH Traditionally, project initiatives begin from WKHWRSPDQDJHPHQWOHYHODQG¿OWHUGRZQWRWKH lower level. However, sometimes a project may start from the bottom level with an idea to modify the existing system to improve effectiveness or HI¿FLHQF\RIWKHLUMRE7KLVLQLWLDOLGHDZLOOWKHQ be presented to the tactical middle management level to convert it into higher-level business requirement and redirected back to upper man- agement. Upper management will then judge it based on its strategic direction. If the proposal is approved, it will be sent back to tactical level where it will be converted to a detailed plan on how to perform the project. The project will be divided into sub processes and activities, which will then be transferred to operational level where the implementation takes place. Figure 1 illustrates the hierarchical processes within the infrastructure: • Strategic level: The top level process mainly deals with direction setting, high-level strate- gic planning activities. One common problem with many improvement initiations being less 1873 Analysis of Business Process Models in Enterprise Web Services successful is the lack to the organizational strategy, or the big picture (Rummler & Brache, 1995; Hacker & Brotherton, 1998). 6RPHWLPHVDQLQLWLDWLRQPLJKWEHEHQH¿FLDO in local operation level, but might be malicious for the enterprise-wide strategy. In most IS projects, manage process acts as an overall management that takes ideas about direction based upon business requirement reported from the operational level, decides whether or not to proceed it based on its alignments with the company’s overall direction, and sets the high-level goal for the project. Competitive advantage requires the learning, change and adaptation processes over the time horizon in terms of the availability of resources and the capabilities of the users involved. (Helfat & Peteraf, 2003; Adner & Helfat, 2003). The &(2DQG&,2¶VRI¿FHKDVWKHUHVSRQVLELOLW\ WRGH¿ QHW KHVW UDWHJLFHQWH U SU LVHDUFK LWHFW X UH that provides the infrastructure for activities in each of the business units, the tactical level and the operational levels. Strategic level will decide the organizational level impact from the project. • Tactical level: This level serves as a con- verting or communication level. It performs several critical roles: R Transfers the high level strategy into plans on how to convert an initiated idea into D¿QLVKHGSURGXFW R Serves as a bridge between business perspective and technical perspective R Provides guidance and support at opera- tion level. This level is the most important among all three levels. It serves as a glue to combine strategic and operational process all together. It encourages the creativity of user, and at the same time guarantees the quality and integrity of user development. The level does all the managerial tasks that directly related to the project, for instance, agreement of requirement changes, monitoring project time- table, and quality control. Meeting customer and SDUWQHU GHPDQGV ZLWK SURDFWLYH DQG HI¿FLHQW services, special attention to preferred business alliances such as joint market launches, analyst EULH¿QJV WHFKQLFDO FROODERUDWLRQ RU SUHPLXP customer support, help increase custom satisfac- Figure 1. A hierarchical process perspective (or top-down and bottom-up perspective) Strategic level Tactical level Operational level CEO, CIO, Steering committee Middle manager manage support operation End user . Supporting the e-business readiness of small and medium-sized enterprises: Approaches and met- rics. Internet Research: Electronic Networking Applications and Policy, 12(2), 139-164. Booz Allen Hamilton activity Figure 2. Traditional value chain design (Source: Hill and Jones, 1998) Goal Time You are here And next year? And next year? And next year? Where should we be next year? An incremental approach to. SMEs Jelassi, T., & Enders, A. (2005). Strategies for e -Business: Creating value through electronic and mobile commerce – concepts and cases. Harlow, UK: FT Prentice Hall/Pearson Educa- tion