Collaborative Networks and Their Breeding Environments [1st edition] 0-387-28259-9, 978-0387-28259-6

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COLLABORATIVE NETWORKS AND THEIR BREEDING ENVIRONMENTS

IFIP - The International Federation for Information Processing IFIP was founded in 1960 under the auspices of UNESCO, following the First World Computer Congress held in Paris the previous year. An umbrella organization for societies working in information processing, IFIP's aim is two-fold: to support information processing within its member countries and to encourage technology transfer to developing nations. As its mission statement clearly states, IFIP's mission is to be the leading, truly international, apolitical organization which encourages and assists in the development, exploitation and application of information technology for the benefit of all people. IFIP is a non-profitmaking organization, run almost solely by 2500 volunteers. It operates through a number of technical committees, which organize events and publications. IFIP's events range from an international congress to local seminars, but the most important are: • The IFIP World Computer Congress, held every second year; • Open conferences; • Working conferences. The flagship event is the IFIP World Computer Congress, at which both invited and contributed papers are presented. Contributed papers are rigorously refereed and the rejection rate is high. As with the Congress, participation in the open conferences is open to all and papers may be invited or submitted. Again, submitted papers are stringently refereed. The working conferences are structured differently. They are usually run by a working group and attendance is small and by invitation only. Their purpose is to create an atmosphere conducive to innovation and development. Refereeing is less rigorous and papers are subjected to extensive group discussion. Publications arising from IFIP events vary. The papers presented at the IFIP World Computer Congress and at open conferences are published as conference proceedings, while the results of the working conferences are often published as collections of selected and edited papers. Any national society whose primary activity is in information may apply to become a full member of IFIP, although full membership is restricted to one society per country. Full members are entitled to vote at the annual General Assembly, National societies preferring a less committed involvement may apply for associate or corresponding membership. Associate members enjoy the same benefits as full members, but without voting rights. Corresponding members are not represented in IFIP bodies. Affiliated membership is open to non-national societies, and individual and honorary membership schemes are also offered.

COLLABORATIVE NETWORKS AND THEIR BREEDING ENVIRONMENTS IFIP TC5 WG 5.5 Sixth IFIP Working Conference on VIRTUAL ENTERPRISES, 26-28 September, 2005, Valencia, Spain

Edited by

Luis M. Camarinha-Matos New University of Lisbon Portugal

Hamideh Afsarmanesh University of Amsterdam The Netherlands

Angel Ortiz Polytechnic University of Valencia Spain

Springer

Library of Congress Cataloging-in-Publication Data A CLP. Catalogue record for this book is available from the Library of Congress. Collaborative Networks and Their Breeding Environments, Edited by Luis M. CamarinhaMatos, Hamideh Afsarmanesh and Angel Ortiz

p.cm. (The International Federation for Information Processing)

ISBN-10: (HB) 0-387-28259-9 ISBN-13: (HB) 978-0387-28259-6 Printed on acid-free paper.

Copyright © 2005 by International Federation for Information Processing. All rights reserved. This work may not be translated or copied in whole or in part without the written permission of the publisher [Springer Science+Business Media, Inc., 233 Spring Street, New York, NY 10013, USA), except for brief excerpts in connection with reviews or scholarly analysis. Use in connection with any form of information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed is forbidden. The use in this publication of trade names, trademarks, service marks and similar terms, even if they are not identified as such, is not to be taken as an expression of opinion as to whether or not they are subject to proprietary rights. Printed in the United States of America. 9 8 7 6 5 4 3 2 1 springeronline.com

SPIN 11539094 (HC)

TABLE OF CONTENTS CO-SPONSORS COMMITTEES AND REFEREES FOREWORD PART 1. HOLISTIC APPROACHES TO COLLABORATIVE NETWORKS 1

2

3

ECOLEAD: A HOLISTIC APPROACH TO CREATION AND MANAGEMENT OF DYNAMIC VIRTUAL ORGANIZATIONS L. M. Camarinha-Matos, H. Afsarmanesh, M. Ollus REQUEST BASED VIRTUAL ORGANISATIONS (RBVO): AN IMPLEMENTATION SCENARIO B. Roberts, A. Svirskas, B. Matthews MULTI-PERSPECTIVE CHALLENGES ON COLLABORATIVE NETWORKS BUSINESS ENVIRONMENTS C.-M. Chituc, A. L. Azevedo

PART 2. BREEDING ENVIRONMENTS MANAGEMENT 4

5 6

A FRAMEWORK FOR MANAGEMENT OF VIRTUAL ORGANIZATION BREEDING ENVIRONMENTS H. Afsarmanesh, L. M. Camarinha-Matos CO-DESNET: AN APPROACH TO MODELING COLLABORATIVE DEMAND AND SUPPLY NETWORK A. Villa,!. Cassarino COORDINATION OF COMPETENCIES DEVELOPMENT WITHIN NETWORKS OF SMEs X. Boucher, E. Lebureau

PART 3. VO CREATION - FRAMEWORKS TOWARDS A FRAMEWORK FOR CREATION OF DYNAMIC VIRTUAL ORGANIZATIONS L. M. Camarinha-Matos, I. Silveri, H. Afsarmanesh, A. I. Oliveira 8 AN INTEGRATIVE APPROACH FOR VO PLANNING AND LAUNCHING R. Camacho, D. Guerra, N. Galeano, A. Molina 9 THE FORMATION OF COLLABORATIVE CHAINS FOR CONCEPTUAL DESIGN A. P. Volpentesta, M. Muzzupappa

xi xii xiii 1

3

17

25 33

35 49 57 67

7

69 81 89

PART 4. VO CREATION - PARTNERS SELECTION

97

10 A SYSTEMATIC APPROACH FOR VE PARTNERS SELECTION USING THE SCOR MODEL AND THE AHP METHOD F. Bittencourt, R. J. Rabelo 11 THE ROLE OF ENTERPRISE MODELLING IN VIRTUAL ENTERPRISES S. A. Petersen

99 109

VI

12 TOWARDS ONTOLOGY-BASED CNO MATCHING APPLIED TO SQUADS W. Mulder, P. H. H. Rongen, G. R. Meijer

117

PART 5. VO CREATION - OPTIMIZATION

125

13 A MULTI-CRITERIA MATHEMATICAL PROGRAMMING MODEL FOR AGILE VIRTUAL ORGANIZATION CREATION T. Jarimo, U. Pulkkinen 14 HIERARCHICAL MULTI-ATTRIBUTE DECISION SUPPORT APPROACH TO VIRTUAL ORGANIZATION CREATION T. Jarimo, P. Ljubic, I. Salkari, M. Bohanec, N. Lavrac, M. Znidarsic, S. Bollhalter, J. Hodik 15 A MULTI-CRITERIA DECISION SUPPORT SYSTEM FOR THE FORMATION OF COLLABORATIVE NETWORKS OF ENTERPRISES J. A. Crispim, J. P. Sousa PART 6. TRUST MANAGEMENT 16 TRUST BUILDING FOR SMES THROUGH AN E-ENGINEERING HUB Z Ren, T. M. Hassan, C. D. Cater 17 A DECISION SUPPORT APPROACH TO TRUST MODELING IN NETWORKED ORGANIZATIONS N. Lavrac, P. Ljubic, M. Jermol, S. Bollhalter 18 TOWARD WEB SERVICES PROFILES FOR TRUST AND SECURITY IN VIRTUAL ORGANISATIONS A. E. Arenas, I. Djordjevic, T. Dimitrakos, L. Titkov, J. Claessens, C. GeuerPollmann, E. C. Lupu, N. Tuptuk, S. Wesner, L. Schubert 19 A SECURE MODEL TO ESTABLISH TRUST RELATIONSHIPS IN WEB SERVICES FOR VIRTUAL ORGANIZATIONS E. R. Mello, M. S. Wangham, J. S. Fraga, R. J. Rabelo PART 7. VO MANAGEMENT

20 CHARACTERIZING VIRTUAL ORGANIZATIONS AND THEIR MANAGEMENT /. Karvonen, I. Salkari, M. Ollus 21 UNDERSTANDING AND MANAGING SHARED PROJECTS IN SMEs NETWORKS C. L. Villarreal, L. Dupont, D. Gourc, H. Pingaud 22 A GENERIC FRAMEWORK BASED ON MACHINE LEARNING TECHNIQUES FOR VIRTUAL ORGANIZATION MANAGEMENT L. Loss, R. J. Rabelo, A. A. Pereira-Klen PART 8. VO COORDINATION

23 HUMAN SUPERVISED VIRTUAL ORGANIZATION MANAGEMENT A. A. Pereira-Klen, E. R. Klen 24 IMPROVING CLIENT SERVICE RELIABILITY IN COLLABORATIVE SUPPLY CHAINS: A MAS SCHEDULER P. Gomez, R. Rodriguez, R. Ddrio Franco,A. Ortiz 25 SECURITY CONTROLS IN COLLABORATIVE BUSESTESS PROCESSES

127 135

143 155 157

167

175

183 191

193

205

217 227

229

239

Vll

J. Haller, Y. Karabulut, P. Robinson PART 9. NETWORK BENEFIT ANALYSIS 26 AN APPROACH FOR THE ASCERTAINMENT OF PROFIT SHARES FOR NETWORK PARTICIPANTS H. Jdhn, M. Fischer, M. Zimmermann 27 NETWORK ANALYSIS OF TERRORISM DEFENSE ORGANIZATIONS A NETWORK APPROACH FOR DEVELOPING PERFORMANCE INDICATORS /. Borst, J. Baaijens, G. R. Meijer 28 PERFORMANCE INDICATORS BASED ON COLLABORATION BENEFITS L. M. Camarinha-Matos, A. Abreu PART 10. PERFORMANCE MEASUREMENT

247 255

257

265

273 283

29 A PERFORMANCE MEASUREMENT SYSTEM FOR VIRTUAL AND EXTENDED ENTERPRISES J. J. Alfaro Saiz, R. Rodriguez, A. Ortiz Bas 30 VIRTUAL SCORECARD AS A DECISION-MAKING TOOL IN CREATING VIRTUAL ORGANISATION W. M. Grudzewski, A. Sankowska, M. Wantuchowicz 31 TOWARDS PERFORMANCE MEASUREMENT IN VIRTUAL ORGANIZATIONS F. Graser, K. Jansson, J. Eschenbdcher, I. Westphal, U. Negretto

301

PART 11. PERFORMANCE MANAGEMENT

311

32 GLOBAL PERFORMANCE MANAGEMENT FOR SMALL AND MEDIUM-SIZED ENTERPRISES (GPM-SME) M. Alba, L. Diez, E. Olmos, R. Rodriguez 33 COMBINING STRATEGIC, OPERATIONAL AND FINANCIAL PERFORMANCE IN THE VIRTUAL ORGANISATION D. Walters 34 PERCEPTIONS OF VALUE THAT SUSTAIN COLLABORATIVE NETWORKS R. C Beckett PART 12. MODELING AND META-MODELING 35 A META-METHODOLOGY PROTOTYPE FOR COLLABORATIVE NETWORKED ORGANISATIONS O.Noran 36 METHODOLOGY FOR BUSINESS MODEL DEFINITION OF COLLABORATIVE NETWORKED ORGANIZATIONS G. Jimenez, N. Galeano, T. Ndjera, J. M. Aguirre, C. Rodriguez, A. Molina 37 A FOLDING SYNTAX FOR SEMANTIC MODELING H. T. Goranson 38 TOWARDS A META-MODEL FOR COLLABORATIVE CONSTRUCTION PROJECT MANAGEMENT M Keller, K. Menzel, R. J. Scherer

285 293

313

321

329 337

339

347 355

361

Vlll

PART 13. PROCESS MODELING

369

39 SPECIFICATION MODEL FOR THE DEVELOPMENT AND OPERATION OF A VIRTUAL COMPANY IN THE AEROSPACE INDUSTRY B. Odenthal, M Peters, 40 MODELING STRUCTURED NON-MONOLITHIC COLLABORATION PROCESSES W.Picard 41 QUANTITATIVE MODELS OF COLLABORATIVE NETWORKS D. Ivanov, J. Kaeschel, B. Sokolov, A. Arkhipov, L. Zschorn 42 COLLABORATIVE HEALTHCARE PROCESS MODELLING: A CASE STUDY J. M. Framinan, C. L. Parra, M. Monies,P. Perez

379

PART 14. PROFESSIONAL VIRTUAL COMMUNITIES

403

43 THE ORGANIZATION AND BUSINESS MODEL OF A SOFTWARE VIRTUAL COMMUNITY IN CHINA J. Yan, D. Assimakopoulos 44 A CONCEPTUAL FRAMEWORK FOR "PROFESSIONAL VIRTUAL COMMUNITIES" A. Bifulco, R. Santoro 45 MOBILE AND LOCATION-AWARE WORKPLACES AND GLOBAL VALUE NETWORKS: A STRATEGIC ROADMAP H. Schaffers, W. Prinz, R. Slagter PART 15. SERVICE ORIENTED ARCHITECTURES 46 OPEN MULTI-TECHNOLOGY SERVICE ORIENTED ARCHITECTURE FOR "ITS" BUSINESS MODELS: THE ITSIBus ETOLL SERVICES A. L. Osorio, C. Gongalves, P. Araujo, M. Barata, J. Sales Gomes, G. Jacquet, R. M. Bias 47 ENHANCING SUPPLY CHAIN CO-ORDINATION BY MEANS OF A COLLABORATIVE PLATFORM BASED ON SERVICE ORIENTED ARCHITECTURE R. Dario Franco, A. Ortiz Bas, R. Navarro 48 E-SERVICES INTEROPERABILITY ANALYSIS AND ROADMAP ACTIONS A. Tsalgatidou, E. Koutrouli PART 16. INTEROPERABILITY AND ICT INFRASTRUCTURES 49 FEATURE-BASED ANALYSIS FRAMEWORK FOR INTEROPERABILITY IN NETWORKED ORGANISATIONS S. A. Petersen, P. Paganelli, B. Schallock 50 E-BUSINESS SOFTWARE EVALUATION V. Fernandez, R. Chalmeta 51 EXPEFaMENTS ON GRID COMPUTING FOR VE-RELATED APPLICATIONS F. R. Pinheiro, R. J. Rabelo 52 TECHNOLOGY INFRASTRUCTURE FOR VIRTUAL ORGANISATION OF TOOLMAKERS / Mo, R. Beckett, L. Nemes

371

387 395

405 417 425 437

439

447 455 465

467 475

483 493

IX

PART 17. LEGAL ISSUES AND ENTITIES 53 LEGAL SECURITY AND CREDIBILITY IN AGENT BASED VIRTUAL ENTERPRISES F. Andrade, J. Neves, P. Novais, J. Machado, A. Abelha 54 LEGAL RISK ANALYSIS WITH RESPECT TO IPR IN A COLLABORATIVE ENGINEERING VIRTUAL ORGANIZATION r. Mahler, F. Vraalsen 55 INSTITUTIONAL SERVICES FOR DYNAMIC VIRTUAL ORGANIZATIONS H. L. Cardoso, A. Malucelli,A. P. Rocha, E. Oliveira PART 18. LEARNING AND KNOWLEDGE CREATION 56 DIFFERENT VIEW OF LEARNING AND KNOWLEDGE CREATION IN COLLABORATIVE NETWORKS F. M. van Eijnatten, G. D. Putnik 57 A NEW APPROACH FOR E-LEARNING IN COLLABORATIVE NETWORKS D. Gdrla§u, I. Dumitrache, A. M. Stanescu 5 8 SIMULATION GAME APPROACH TO SUPPORT LEARNING AND COLLABORATION IN VIRTUAL ORGANISATIONS M Schwesig, K.-D. Thoben, J. Eschenbdcher PART 19. COLLABORATIVE NETWORKS IN TRANSPORTATION SYSTEMS

501

503 513 521 529

531 539 547 557

59 A COLLABORATIVE NETWORK CASE STUDY: THE EXTENDED "ViaVerde" TOLL PAYMENT SYSTEM A. L. Osorio, L M. Camarinha-Matos, J. S. Gomes 60 TOWARDS A VIRTUAL ENTERPRISE FOR PASSENGER TRANSPORTATION USING AGENTS C Cubillos, F. Guidi-Polanco, C. Demartini 61 THE GLOBAL AUTOMATION PLATFORM: AN AGENT-BASED FRAMEWORK FOR VIRTUAL ORGANIZATIONS F. Guidi-Polanco, C. Cubillos, G. Menga

577

PART 20. OTHER CASE STUDIES

585

559 569

62 BUILDING AN INTEGRATED PAN-EUROPEAN NEWS DISTRIBUTION NETWORK M Schranz, S. Dustdar, C Platzer 63 SUCCESS AND FAILURE FACTORS OF COLLABORATIVE NETWORKS OF SME M. Pouly, F. Monnier, D. Bertschi

597

AUTHOR INDEX

605

587

TECHNICAL SPONSORS:

IFIP WG 5.5 COVE Co-Operation infrastructure for Virtual Enterprises and electronic business

ECOLEAD European Collaborative Networked Organizations Leadership Initiative 1ST IP 506958 project

ORGANIZATIONAL CO-SPONSORS

UNIVERSITAT

POLITfeCNICA poLirtcNiCA

DE VALENCIA

^li^ff#

ii/uNINOVA

New University of Lisbon

UMWiRsiTEn'WM A!M[si:Emi:^

This work has been partially funded by The Ministerio de Educacion y Ciencia of Spanish Govern under grant DPI2004-22263-E and the Polytechnic University of Valencia under grant PPI-04-05."

PRO-VE'05 - 6th IFIP Working Conference on VIRTUAL ENTERPRISES Valencia, Spain, 26-28 September 2005 Conference Chair: Dr. Hamideh Afsarmanesh (NL) Program Chair: Prof. Luis M. Camarinha-Matos (PT) Organization Chair: Prof. Angel Ortiz (ES) Associated events Chair: Prof Ricardo Rabelo (BR) REFEREES FROM THE PROGRAMME COMMITTEE Hamideh Afsarmanesh (NL) Dimitris Assimakopoulos (FR) Americo Azevedo (PT) Eoin Banahan (UK) Jose Barata (PT) Peter Bemus (AU) Peter Bertok (AU) Kirsimarja Blomqvist (FI) Luis M. Camarinha-Matos (P) Wojciech Cellary (PL) Prasun Dewan (US) Frans M. van Eijnatten (NL) Jens Eschenbaecher (DE) Joao Pinto Ferreira (PT) Joaquim Filipe (PT) Myma Flores (CH) Cesar Garita (CR) Ted Goranson (US) Fernando Guerrero (ES) Angappa Gunasekaran (US) Tarek Hassan (UK) Tomasz Janowski (PL) Toshiya Kaihara (JP) Alexandra Klen (BR) Ned Kock (US) Adamantios Koumpis (GR) George Kovacs (HU)

Nada Lavrac (SI) Geleyn Meijer (NL) Jose M. Mendon9a (PT) Arturo Molina (MX) Ugo Negretto (DE) Laszlo Nemes (AU) Shimon YNof (US) Ovidiu Noran (AU) Gus Oiling (US) Martin Ollus (FI) Angel Ortiz (ES) Luis Osorio (PT) Sofia Pinto (PT) Michel Pouly (CH) Kenneth Preiss (IL) Goran Putnik (PT) Ricardo Rabelo (BR) Bob Roberts (UK) Rainer Ruggaber (DE) Roberto Santoro (IT) Hans Schaffers (NL) Weiming Shen (CA) Amit Sheth (US) Antonio L. Soares (PT) Jorge P. Sousa (PT) Klaus-Dieter Thoben (DE) Alain Zarli (FR)

FOREWORD Collaborative networks - towards consolidation Progress in collaborative networks continues showing a growing number of manifestations including virtual organizations, virtual enterprises, dynamic supply chains, professional virtual communities, collaborative virtual laboratories, etc. with a wide spectrum of application domains. The realization that all these collaborative forms represent variations of a more general paradigm has lead to their consolidation into Collaborative Networks (CN) as anew scientific discipline. Contributions to CN coming from multiple reference disciplines have been extensively investigated. In fact developments in CN have benefited from contributions of multiple areas, namely computer science, computer engineering, communications and networking, management, economy, social sciences, law and ethics, etc. Furthermore, some theories and paradigms defined elsewhere have been suggested by several research groups as promising tools to help define and characterize emerging collaborative organizational forms. Although still at the beginning of a long way to go, there is a growing awareness in the research and academic world, for the need to establish a stronger theoretical foundation for this new discipline and a number of recent works are contributing to this goal. From a utilitarian perspective, agility has been pointed out as one of the most appealing characteristics of collaborative networks to face the challenges of a fast changing socioeconomic context. However, during last years it became more evident that finding the right partners and establishing the necessary preconditions for starting an effective collaboration process are both costly and time consuming activities, and therefore an inhibitor of the aimed agility. Among others, obstacles include lack of information (e.g. non-availability of catalogs with normalized profiles of organizations) and lack of preparedness of organizations to join the collaborative process. Overcoming the mismatches resulted from the heterogeneity of potential partners (e.g. differences in infrastructures, corporate culture, methods of work, and business practices) requires considerable investment. Building trust, a pre-requisite for any effective collaboration, is not straight forward and requires time. Therefore the effective creation of truly dynamic collaborative networks requires a proper context in which potential members are prepared to rapidly get engaged in collaborative processes. The concept of breeding environment has thus emerged as an important facilitator for wider dissemination of collaborative networks and their practical materialization. PRO-VE represents a good synthesis of the work in this area, and plays an active role in the promotion of these activities. Being recognized as the most focused scientific /

XIV

technical conference on Collaborative Networks, PRO-VE continues offering the opportunity for the presentation and discussion of both the latest research developments and practical application case studies. Following the IFIP vision, PRO-VE offers a forum for collaboration and knowledge exchange among experts from different regions of the world. This book includes the selected papers for the PRO-VE'05 conference, representing a comprehensive overview of recent advances in various domains and lines of development of collaborative networks. Ofparticular relevance are the topics of holistic approaches and breeding environments management, creation and management of virtual organizations and professional virtual communities, performance measurement and management, benefit analysis, trust management, process modeling and metamodeling, ICT infrastructures and support services, legal issues, and case studies. The PRO- VE '05 held in Valencia, Spain, continues the 6*^ event in a series of successful conferences of PRO-VE'99 (held in Porto, Portugal), PRO-VE 2000 (held in Florianopolis, Brazil), PRO-VE'02 (held in Sesimbra, Portugal), PRO-VE'03 (held in Lugano, Switzerland), and PRO-VE'04 (held in Toulouse, France). We would like to thank all authors both from academia/research and industry for their contributions, as well as the dedication of the program committee members and other reviewers that helped with the selection of articles and contributed with valuable comments to improve the quality of the various chapters. As a result of this cooperative and highly distributed work we hope that the PRO-VE'05 book will become a valuable tool to all of those interested in advances and challenges of the collaborative networks. The editors, Luis M. Camarinha-Matos Faculty of Sciences and Technology New University of Lisbon, Portugal Hamideh Afsarmanesh Faculty of Sciences University of Amsterdam, The Netherlands Angel Ortiz Research Centre for Production Engineering and Management Polytechnic University of Valencia, Spain

PART

1

HOLISTIC APPROACHES TO COLLABORATIVE NETWORKS

ECOLEAD: A HOLISTIC APPROACH TO CREATION AND MANAGEMENT OF DYNAMIC VIRTUAL ORGANIZATIONS Luis M. Camarinha-Matos \ Hamideh Afsarmanesh ^, Martin Ollus ^ New University of Lisbon / Uninova, PORTUGAL,

[email protected]

2

University of Amsterdam,

THE NETHERLANDS,

[email protected]

VTT Industrial Systems, FINLAND,

[email protected]

The wide dissemination and effective materialization of the foreseen benefits of dynamic virtual organizations require a holistic approach to understand, model, and develop the needed infrastructures and tools to support the full life cycle of this organizational paradigm. Under this scope, the ECOLEAD integrated project was launched with the aim of creating the necessary foundations and mechanisms for establishing an advanced network-based industry society. The main underlying concepts, approach and preliminary results of this ongoing initiative are briefly summarized.

1. INTRODUCTION The notion of dynamic virtual organizations (VO) has raised high expectations in various appHcation domains. Among the potential benefits of these collaborative networks, a number of possibilities have been vastly mentioned in the literature, including increased access to market opportunities, sharing risks, reducing costs, achieving business goals not achievable by a single organization, etc. The rapid formation of a VO, triggered by a business opportunity and specifically tailored to the requirements of that opportunity, is also pointed out as an expression of agility, a survival element in turbulent market scenarios. Pursuing these expectations, during the last 10-15 years a large number of R&D projects tried to establish technological foundations as well as operating practices for the support of Virtual Enterprises /Virtual Organizations. This effort is particularly visible in Europe through the European Commission funded programs (e.g. ESPRIT, 1ST, INCO), but also in the USA and other geographical regions (Australia, Brazil, Mexico, Japan, to name a few). Programs such as IMS (Intelligent Manufacturing Systems) also supported various projects in this area involving organizations from various continents. This trend has so far led to an extensive amount of empirical base knowledge that now needs to be leveraged. In addition to the identification of many required components, tools, and the base infrastructure functionalities, awareness is being built and partially studied, even in the traditional collaborative organizations, regarding the fundamental configuration and operational rules, as well as the behavioral patterns that emerge. Nevertheless we are still far from a wide dissemination and adoption of this paradigm. It is now urgent to consolidate and

4

COLLABORA TIVE NETWORKS AND THEIR BREEDING ENVIRONMENTS

synthesize the existing knowledge, setting a sound foundation for the future research and development in this area. In fact, these initiatives, together with practical realizations of many variations of virtual organizations, have generated a large amount of empiric knowledge that is however still disperse and fragmented. The 1ST VOSTER project represented an attempt to consolidate some of this existing knowledge [6]. More recently, in part as a result of initiatives such as the THINKcreative [4] and VOmap [3, 5] projects among others, it became evident that there is a need for investing on more fundamental research towards the creation of a sound theoretical foundation for VOs as well as a more holistic understanding of this paradigm. The ECOLEAD integrated project is an initiative in this direction which aims at creating the necessary foundations and mechanisms for establishing an advanced and networkbased industry society.

2. ECOLEAD AND COLLABORATIVE NETWORKS A large variety of organizational forms of collaboration have emerged during the last years as a result of the many socio-economic challenges faced by society and enabled by the new ICT developments. Advanced and highly integrated supply chains, virtual enterprises, virtual organizations, professional virtual communities, value constellations, virtual institutes, and collaborative virtual laboratories, represent only the tip of a major trend in which enterprises and professionals seek complementarities and joint activities to allow them participate in competitive business opportunities, in new markets and / or reaching scientific excellence for innovative developments. Similar trends can be found in the none-profit / socialoriented contexts, e.g. in incident management, time bank, elderly care networks, etc.) [4]. All these examples are manifestations of the more general concept of collaborative network. A collaborative network (CN) is constituted by a variety of entities (e.g. organizations and individuals) that are largely autonomous, geographically distributed, and heterogeneous in terms of their: operating environment, culture, social capital and goals. Nevertheless these entities collaborate to better achieve common or compatible goals, and their interactions are supported by computer networks. Unlike other networks, in CN collaboration is an intentional property that derives from the shared belief that together the network members can achieve goals that would not be possible or would have a higher cost if attempted by them individually. Collaborative networks of organizations provide a basis for competitiveness, world-excellence, and agility in turbulent market conditions. They have the potential to support SMEs in identifying and exploiting new business potential, boosting innovation, and increasing their knowledge. Networking of SMEs with large-scale enterprises also contributes to the success of the big companies in the global market. Reinforcing the effectiveness of collaborative networks, mostly based on SMEs, and creating the necessary conditions for making them an endogenous reality in the European industrial landscape, are key survival factors. A key question is however, how to guarantee the basic requirements to enable such dynamism and agility for collaborative networks. Among others, the formation

E COLE AD: A holistic approach to virtual organizations of any collaborative coalition depends on some base commonality among its members, including: sharing of common or compatible goals, possessing some level of mutual trust, having established some common or interoperable computer infrastructures, and having agreed on some common policies, codes for practice and value systems, e.g. common policies for business practices in industry-based collaborative networks. Achieving these challenging base conditions is a prerequisite for agility in collaborative networks. Related to the need for agility, another discussion point is whether collaborative networks shall be temporary or long-term establishments. While temporary organizations seem to better fit the dynamics of the market and the variable duration of business opportunities, long-term organizations better cope with trust building processes, and the investment on common infrastructures and code of practice. Some existing interesting and successful experiments have combined both types of organizations in a hybrid network, namely a long-term (growing and permanent) club or cluster of organizations that are willing and somewhat prepared to cooperate, and shorter-term coalitions involving subsets of these organizations that are dynamically assembled in order to respond to business opportunities. In this context, the ECOLEAD vision is that in ten years, in response to fast changing market conditions, most enterprises and specially the SMEs will be part of some sustainable collaborative networks that will act as breeding environments for the formation of dynamic virtual organizations. The fundamental assumption in ECOLEAD is that a substantial increase in materializing networked collaborative business ecosystems requires a comprehensive holistic approach. Given the complexity of the area and the multiple inter-dependencies among the involved business entities, social actors, and technologic approaches, the substantial breakthroughs cannot be achieved with only incremental innovation in isolated areas. Therefore, ECOLEAD addresses three most fundamental and inter-related focus areas - constituting ECOLEAD pillars - as the basis for dynamic and sustainable networked organizations including: Breeding Environments, Dynamic Virtual Organizations, and Professional Virtual Communities. A VO Breeding Environment (VBE) represents an association or pool of organizations and their related supporting institutions that have both the potential and the interest to cooperate with each other, through the establishment of a "base" long-term cooperation agreement. When a business opportunity is identified by one member (acting as a broker), a subset of the VBE members can be rapidly selected to form a virtual organization. Long standing relationships regional clustering being an example - when Figure 1 - ECOLEAD components driven by the willingness to cooperate and anchored on common business practices, form a natural business ecosystem where trust is incrementally built and where ad hoc collaborations can be established. Therefore VBE represents a group of organizational entities that have developed

6

COLLABORA TIVE NETWORKS AND THEIR BREEDING ENVIRONMENTS

advanced preparedness for cooperation, for the cases when specific opportunities arise. Dynamic Virtual Organization are temporary alHances of organizations that come together to share skills or core competencies and resources in order to better respond to business opportunities and produce value-added services and products, and whose cooperation is supported by computer networks. Within a VBE context the VO is rapidly assembled into a business entity enabling the actual collaboration of enterprises and individuals to respond to a specific collaboration opportunity (business oriented or other). The temporary nature of VOs, the needed interorganizational processes, and the potentially diverging objectives of the partners, require the development of a VO management system, which is based on the preparedness created in the VBE and covering the full life cycle of the VO, namely its creation, operation, and dissolution phases. Professional Virtual Community (PVC) represents the combination of concepts of virtual community and professional community. Virtual communities are defined as social systems of networks of individuals, who use computer technologies to mediate their relationships. Professional communities provide environments for professionals to share the body of knowledge of their professions such as similar working cultures, problem perceptions, problem-solving techniques, professional values, and professional behavior. PVCs cannot be dissociated from the underlying business ecosystem of the society, due to their contractual links (socialbounds) with all the consequences at the intellectual property and life maintenance levels. PVCs are one of the most relevant elements for keeping the business ecosystem "alive" and for launching and operating dynamic VOs of the future. The ECOLEAD pillars are supported and reinforced by two horizontal developments: Theoretical foundation. Sustainable development of collaborative networked organizations needs to be supported by strong fundamental research leading to the establishment of Collaborative Networks as a new scientific discipline. Ad-hoc approaches and poor understanding of the behavior of the collaborative structures and processes mainly characterize the past developments in the area of collaborative networked organizations. There is not even a commonly agreed definition for the virtual organization concept. ECOLEAD includes the establishment of a sound theoretical foundation, and a reference architecture at all levels, as a pre-condition for the next generation of collaborative networks. Horizontal ICT infrastructure. Implantation of any form of collaborative network depends on the existence of an ICT infrastructure. In order to leverage the potential benefits of the collaborative networked organization paradigm, more flexible and generic infrastructures need to be designed and implemented. The lack of common reference architectures and generic interoperable infrastructures, together with the rapid evolution of the underlying technologies, represents a major obstacle to the practical evolution of the area. As part of the ECOLEAD foundation, a generic, transparent, easy to use and affordable horizontal infrastructure for collaboration is being designed.

ECOLEAD: A holistic approach to virtual organizations

3. VO BREEDING ENVIRONMENTS 3.1 Aims Traditionally, clusters/associations of organizations are established in a geographic region [1], with the advantage of having common business culture, and sense of community, and typically focused on one of the specialty sectors of the region. What is challenging today is to tackle this restriction, and at best replace it by a new "support-environment" called a breeding environment, that applies effective Information/communication infrastructures to provide common grounds for interaction/collaboration, facilitates the configuration and establishment of VOs, assists with the operation of VOs, introduces new approaches and mechanisms to build trust, defines a collaboration business culture, and the common value systems and working/sharing principles among independent organizations, even firom different geographical regions. Cultural ties and particular human relationships are important motivating factors to start up and form such associations representing the VBE, as the support environment for dynamic formation of VOs. VBE is a regulated open but controlled-border association of its members. It aims at improving the preparedness of its member organizations for joining the potential future VOs, hence providing a cradle for dynamic and agile establishment of opportunity-driven collaborative networks. Proper management of the VBE during its entire life cycle is at the heart of this support environment. Some of the main aims of the VBE can be formulated as follows: - Establish the base trust for organizations to collaborate in VOs, by gathering/preparing the credibility records of organizations, as well as the definition of proper credit-assignment principles. - Reduce the cost/time to find suitable partners for configuration of the VOs. - Assist with the creation, reaching agreements, and contract negotiation for establishment of VOs. - Assist with the dynamic re-configuration of the VOs, thus reducing the risk of big losses due to some organization failures. - Provide some commonality for interaction and "accepted business culture", by offering: • Base ICT infirastructure (for collaboration), thus reducing the set up times during the VO formation. • Cooperative business rules (measured by the developed common metrics to evaluate member's credibility & performance). • Template contracts for involvement in VOs (samples are provided for VOs). • Base ontology for the sector (to be incrementally developed within the VBE). VBE can also serve as the basis for some support institutions (e.g. insurance companies, education organizations, etc.) to provide the so called "life maintenance" facilities to its members.

3.2 Actors and roles in a VBE Organizations or actors in a VBE can include: - Business entities providing products and services to the market that get involved in the VOs to gain quantitative profit. - Non-profit institutions that get involved in the VOs to gain qualitative profit.

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COLLABORATIVE NETWORKS AND THEIR BREEDING ENVIRONMENTS -

VO Support institutions, for example: legal and contractual service providers, companies supporting life maintenance to individuals (e.g. insurance and training companies), ministries, sector associations, chamber of commerce, environmental organizations, etc. Participants in a VBE can play several roles. The following main roles are considered: - VBE member - this is the basic role played by those organizations that are registered at the VBE and are ready to participate in the VBE activities. - VBE administrator - performed by the organization responsible for the VBE operation and evolution, promotion of cooperation among the VBE members, filling the skill/competency gaps in the VBE by searching and recruiting/inviting new organizations into the VBE, daily management of the VBE general processes, e.g. assignment/reassignment of rights to different actors in the VBE based in their responsibilities, conflict resolution, preparation of bag of assets, making common VBE policies, among others. - Opportunity Broker or simply Broker - performed by a VBE actor (a VBE member organization or an individual representing a VBE member) that identifies and acquires new collaboration opportunities (business opportunities or others), by marketing VBE competencies and assets and negotiating with (potential) customers. There is the also the possibility of this brokerage function being played by an outside entity as a service to the VBE. - VO Planner or business integrator - performed by a VBE actor that, in face of a new collaboration opportunity (designed by an opportunity broker), identifies the necessary competencies and capacities, selects an appropriate set of partners (VBE members and even outsiders in case there is not enough competencies and/or capacities inside the VBE), and structures the new VO. In many cases the roles of opportunity Broker and VO planer are performed by the same actor. - VO coordinator - performed by a VBE actor that will coordinate a VO during its life cycle in order to fulfill the goals set for the collaboration opportunity that triggered the VO. Additional roles that might be useful considering in a VBE are: VBE advisor (or an advisory board), VBE Service provider, VBE Ontology provider, etc. In general it is possible that several roles are performed by the same actor. The access rights to the information and support tools available in the VBE management system will depend on the specific role played by an actor.

3.3 VBE life cycle The life cycle of the VBE represents all the stages that a VBE may go through, from its creation stage, to its operation, and possible dissolution. In fact VBE, being a long-term alliance, and considering its valuable bag of assets gradually collected in the VBE, its dissolution is a very unusual situation. Instead, it is much more probable that the VBE goes through another stage, a so called metamorphosis stage, where it can evolve and change its form and purpose. On the other hand, it is the case that only during the operation stage of the VBE, the VO can be created. VBEs by nature are self organizing and can be modeled and represented following the

ECOLEAD: A holistic approach to virtual organizations principles of the Chaordic system thinking [7]. Fig.2 represents the five stages of the VBE Hfe cycles in a chaordic diagram. Life-cycle related functionality

Time

Figure 2 - VBE life cycle in terms of chaordic systems thinking Considering that typically VBEs serve specific sectors/domain and have specific aims, there will be many different sector/domain-dependent VBEs needed to be established in future in order to support the creation of different forthcoming VOs. Therefore, it is important to provide support for all stages of the VBE's life cycle and not only focus on its operation stage.

3.4 VBE Management Management of the VBE during its life cycle is at the heart of the VBE research and development. Due to the fact that there are so far no defined "reference models" for the VBEs, to address their different aspects including their behavior, structure, topology, cultural/legal framework, etc., there are no clear definitions of what exact activities are associated with the VBEs, that need to be supported by their management system. However, several examples of the traditional industry-based VBEs can already be found in practice that can be used as a source of inspiration for our work, e.g. the cases represented by Virtuelle Fabrik [10] and ITESM [8, 9]. Defining a comprehensive and generic "reference model" for VBEs very challenging. Nevertheless, with basis on the initial empiric knowledge that can be gathered from existing cases, it is realistic to gradually define a "reference framework for VBEs", addressing some of the aspects of the reference model for VBEs, such as its behavior, topology, and structure. Furthermore, simultaneous to the definition of this reference framework, our approach is to design a system architecture for the VBEs management, defining models of its components as well as methodologies and mechanisms to support its behavior. Earlier studies performed by several members of the ECOLEAD consortium in some other VO related projects, including: THINKcreative [4], VOmap [5], VOSTER [6], PRODNET [2], etc., are used as the starting point. So far, with the initial studies in ECOLEAD, the following general base required functionality are identified for different stages of the VBE life cycle: Base functionality supporting the VBE creation - This phase includes two main steps: (1) initiation / recruiting, which requires the establishment and setup of a

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COLLABORA TIVE NETWORKS AND THEIR BREEDING ENVIRONMENTS

common base infrastructure, recruiting potential organizations to join the VB, and establish some base ontology / thesaurus of the domain, to establish the vision and strategic objectives of the VBE are defined; (2) VBE foundation, requiring support for parameterization of the used systems, setting up the necessary links, creation of the necessary databases (with initial meta-data / ontology), and populating these information structures. Base functionality supporting the VBE operation and evolution - This phase requires support for: (i) Management of competencies and assets, (ii) Registration of new members (including profiling, characterization of competencies, products, services, etc.), (iii) Assisting VO creation, (iv) Incremental generation / evolution of meta-data / ontologies for the domain / sector, (v) Keeping records of past performance and collaboration processes, (vi) Assessment and assistance tools, (vii) Collaboration support (e.g. newsgroups, discussion forum, common information repositories, etc.), (viii) Management and evolution of working and sharing principles and rules, (ix) Acquisition and management of common knowledge and assets. Base functionality supporting the VBE metamorphosis - This phase will require assistance for the design of the aimed new organizational structure, selection and reorganization of the information and knowledge collected during the VBE operation and that might be transferred to the new organization, analysis and adjustment to the new context, etc. In the case of VBE dissolution there is a need to plan the transfer of its collected knowledge, information, bag of assets to its members or another organization based on defined agreements.

4. VO CREATION 4.1 VO creation and VBE One important issue in collaborative networks is the formation of dynamic VOs/VEs. How can we quickly plan, find partners, and organize them in a collaborative network once a business or collaboration opportunity shows up? Early works assumed that partners could be easily selected from the wide open universe of available enterprises / organizations. This assumption however ignores a number of difficulties: - How to know about the mere existence of potential partners in the open universe and deal with incompatible sources of information? - How to acquire basic profile information about organizations, when there is no common template or standard format? - How to quickly establish an inter-operable collaboration infrastructure, given the heterogeneity of organizations at multi-levels, and the diversity of their information systems? - How to build trust among organizations, which is the base for any collaboration? - How to develop and agree on the common principles of working and sharing? - How to quickly define the agreements on the role and responsibilities of each partner, to reflect sharing of tasks and the rights on the produced results? Perhaps influenced by the developments in the e-commerce area, lately some authors started to consider markets of enterprises / organizations as a source for potential partners. The notion of market would provide means to find organizations

ECOLEAD: A holistic approach to virtual organizations

11

(market directory) and perhaps some normalized profile and even some (minimal) references about those organizations. This is a concept frequently adopted by simple multi-agent based systems for partners' selection. However, when the goal is to find partners for collaboration, the notion of market does not satisfy all necessary features. In order to support rapid formation of consortia it is necessary that potential partners are ready to participate in a collaborative network. This readiness includes common (interoperable) infrastructure, common operating rules, cooperation agreement, etc. Collaboration also requires a level of trust among organizations that is not a typical requirement in a simple market. Therefore, ECOLEAD considers the existence of a breeding environment [2] as a necessary context for the effective creation of virtual organizations. VO creation is the first step of the VO life cycle with the VBE operation phase (Fig. 3). \^ VO \ VO operation creation / & evolution

VO jlssolutior

liillllllllljlllj Time

Figure 3 - VO creation within the life cycle of a VO and a VBE

4.2 VO creation process The following main steps (Fig. 4) have been identified for the VO creation process: Collaboration Opportunity A simplified process view

b.

[co mmm Characteriz.

Rough VO ptanning Pattners search & seledttoo

t.

J MegofiafiDit lOdiaiiedVO \ planning

Collaboration Opportunity -Marlcet-competitive -Society-wort iiwhile

I Contracting VO launching

Figure 4 - Simplified VO creation process

• Collaboration Opportunity Characterization: this step involves the identification and characterization of a new Collaboration Opportunity (CO) that will trigger the formation of a new VO. Collaboration opportunities might be external, originated by a (potential) customer and detected by a VBE member acting as a broker. Some opportunities might also be generated internally, as part of the development strategy

12

COLLABORATIVE NETWORKS AND THEIR BREEDING ENVIRONMENTS

of the VBE. Support tools for CO representation and feasibility analysis are important at this stage. The main actors involved in this step are the broker and the customer). • Draft VO planning: determination of a rough structure of the potential VO, identifying the required competencies and capacities, as well as the organizational form of the VO and corresponding roles. Functionalities to support the structural and topological design of the VO architecture, model the (macro) collaborative process, and assess (simulation) different options are necessary. The main roles involved in this step are the broker and the VO planner. • Partners search and selection: perhaps one of the most addressed topics in past research, this step is devoted to the identification of potential partners, and their assessment and selection. Search mechanisms, assessment criteria, analysis of past performance record and level of preparedness, etc., are among the necessary support functions. This phase requires mainly the VO planer and VBE member roles. • Negotiation: is an iterative process to reach agreements and align needs with offers. It can be seen as complementary to the partners' selection process. Negotiation protocols and mechanisms, decision making process, and forms of representation of agreements are important requirements here. The VO planner and VBE member are the main roles involved here. • Detailed VO planning: once partners have been selected and collaboration agreements are reached, this step addresses the refinement of the VO plan and its governance principles. Assignment of roles and responsibilities, definition of operating rules and further refinement of the (macro) collaboration process are included in this phase. The VO planner and VBE member are the main roles required in this step. Interactions with the broker might also be necessary. • Contracting: involves modeling of contracts and agreements as well as the contracting process itself, before the VO can effectively be launched. Semiautomatic or even automatic mechanisms can be considered for some application domains. This step might be considered in close interaction with the negotiation phase. Main roles involved in this step are the VO planner, the VBE member, the VO coordinator and possibly the broker and the customer. • VO launching: the last phase of the VO creation process, i.e. putting the VO into operation, is responsible for tasks such as configuration of the ICT infrastructure, instantiation of the collaboration spaces, assignment and set up of resources, notification of the involved members, and manifestation of the new VO in the VBE. Main roles required here are the VO coordinator, the VBE member, and possibly the VBE administrator.

5. VO MANAGEMENT The definitions of a VO often assume that a virtual organization behaves and can be managed in some way like a single organization. However, major challenges for VO management come from two characteristics: the temporary nature of a VO and the distribution of operations in independent but interdependent organizations with their own aim, behavior and culture.

ECOLEAD: A holistic approach to virtual organizations

13

To achieve an efficient management of VOs, ECOLEAD takes a broad approach towards VO Management by defining that VO Management denotes the organization, allocation and co-ordination of resources and their activities as well as their inter-organizational dependencies to achieve the objectives of the VO within the required time, costs and quality frame. VO management appHes knowledge, skills and/or tools in order to achieve the VO goals. The management of Virtual Organizations to a large extent deals with humans and it is performed by humans. In most cases the human aspect is considerable as the last decisions about management actions usually are done by the VO managers, who also may imply different management styles. However, it is not always possible to rely on management experience and thus systematic means and tools are needed. The required dynamic management implies that needs of management actions are identified in real time. Consequently, an efficient performance measurement system should also be in place to give reliable, real-time indicators about the performance of the VO. The basic challenge is to develop real time-time performance measurement based management approaches fulfilling the requirements and features of the definition above. The behavior of such a management approach is illustrated in Fig. 5, where the management is considered as a real-time control loop. Expected^ wanted behaviour

Measurement infdnnation collection

..-'-"'Comfjarl^^^-v.,^^ son ^^

I,

t

)

r^Voa

Decision about actions

m

-^

peratiot^al Proc e9$o^>

Figure 5 - VO management illustrated as a control loop The efficiency of a VO can be judged from three different viewpoints: l.The fulfillment of the task, i.e. keeping expected costs, time and quality 2.The efficiency of the VO and the collaboration 3.The efficiency of the management approach and management methods Most of the VO management actions are devoted to ensure an efficient task fulfillment. The indicators for getting this performance are also mostly related to obvious measurements, mentioned above. Actions to maintain or enhance this performance are usually devoted to coordination of activities among the partners in the VO taking into account the challenges coming from the features of the VO. The efficiency of virtual organizations depends heavily on the performance of the partners and their collaboration. This performance may, in addition to the task, depend on the configuration of the VO. The relationship between partner performance and the task fulfillment is not easy to model, nor are there obvious

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COLLABORA TIVE NETWORKS AND THEIR BREEDING ENVIRONMENTS

measurements available. Some of them are also qualitative and perhaps even subjective. However, the virtual breeding environment (VBE) would benefit from information about some indicators or measurements. Such information is essential in the creation of new VOs and is assumed to be collected as parameters in the value system of the VBE. One of the challenges in is to create models for judging and managing partners' performance based on the concrete measurements available and the processes established for the task fulfillment. The aim of the work on VO Management is to develop efficient approaches for this Management. Consequently, also the efficiency of the management itself needs to be understood. Issues like task distribution, coordination principles, incentive systems, information flows, etc have an impact on the performance of a VO. Like for the partner performance, the challenge here is to develop a better understanding of the relationship between management approach and the fulfillment of the tasks given to the VO. This relationship should give the basis for the measurement of the management performance and also support possible actions for enhancement of the management. The approach requires an appropriate monitoring and measurement system. Consequently, the development of a performance measurement system supporting the VO Management is a key activity. This system has to rely on models of the processes to be managed in order to help in identifying the relevant management actions in different situation. The aim of the ECOLEAD project is to integrate the performance measurement and VO Management and demonstrate the performance based VO Management approach. In the dissolution phase of a VO, all valuable outcome from the VO need to be handled in a proper way and given to sustainable entities within the VBE (and PVC if individuals from a PVC are involved). In addition to the outcome of the task fulfillment, which can contain product documents, warranties, IPR rights, etc, the VBE may need information about experiences and the performance of the VO to be considered in the creation of future VOs. Also knowledge about customers and markets, collected during the VO operation, are important in future activities. The experience may be used by future VOs. In order to support such a support such actions, ECOLEAD will focus also on the management of the inheritance of the achievements of VOs. Based on the aimed developments described above, a collection of e-support functions for the management of VOs are being designed and developed.

6. INTERACTIONS WITH PVC Part of the ECOLEAD holistic approach includes the investigation of the interrelationships between the VBE/VO and the PVC. In fact the importance of the "human component" in the formation and promotion of new organizational forms is becoming a more relevant research issue. Analogy is one of the perspectives to exploit. A PVC can be seen as the counterpart of a VBE when the focus is on collaborative networks of professionals. A Virtual Team (VT) is analogous to a VO in the sense that it is a temporary group of people, members of the PVC that get engaged in jointly taking over a business opportunity. Therefore, at a conceptual level, most logical components of the

ECOLEAD: A holistic approach to virtual organizations

15

VBE/VO framework can apply to PVCA^T. Some issues, however, require a different focus in the case of PVC/VT. That is, for instance, the "Hfe maintenance institutions" that seem fundamental for a sustainable PVC, or some support services (e.g. life long training) addressing the needs of humans. Another perspective is related to the interactions between the two classes of organizations when they co-exist in the same business ecosystem. PVC members might be members (employees) of organizations involved in a VBE. This can happen either when the VBE promotes the existence of the PVC or when the PVC exploits additional skills that are not relevant to the core business of the employers. In the first case the VBE might use the PVC as a mechanism to leverage its participation in dynamic markets and boosting innovation, by creating new motivation to their members. In the second case, the competencies exploited by the PVC might be outside the contractual bounds between professionals and their employers, but nevertheless contribute to generate new business opportunities with benefits for all. It is therefore important to better understand: - The role of PVCs in launching / triggering new VOs; - The formation of hybrid organizations VO-VT; - The limits and opportunities of the contractual bounds between PVC members and their counterparts in the VBE; - The possibilities of VTs formed to solve problems of the VBE, VO, or a single VBE member. These are important research issues requiring further work in order to design appropriate support tools and policies.

7. CONCLUSIONS Collaborative networks are already recognized in the society as a very important instrument for survival of organizations in a period of turbulent socio-economic changes. A growing number of collaborative-networked organization forms are emerging as a result of the advances in the information and communication technologies, the market and societal needs, and the progress achieved in a large number of international projects. Nevertheless most of the past initiatives have addressed only partial aspects, failing to understand and properly support the various business entities and their inter-relationships in complex and fast evolving business ecosystems. The ECOLEAD project is pursuing a more holistic approach considering both long-term and temporary organizations as well as networks of organizations and networks of people. A new framework for advance collaborative networked organizations is expected from this integrated project. Complementarity the ECOLEAD project is also addressing the need for establishing a more sound theoretical foundation for collaborative networks in order to turn this growing research area into a recognized new scientific discipline. This paper introduced the approach and current developments towards the stated goals.

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COLLABORA TIVE NETWORKS AND THEIR BREEDING

ENVIRONMENTS

Acknowledgments. This work was supported in part by the ECOLEAD project funded by the European Commission. The authors thank the valuable contributions of their partners in the ECOLEAD consortium.

8. REFERENCES 1. Bremer, C ; Mundim, A.; Michilini, F.; Siqueira, J.; Ortega, L. - A Brazilian case of VE coordination, in Infrastructures for Virtual Enterprises, Kluwer Academic Publishers, Boston, Oct 1999. 2. Camarinha-Matos, L.M.; Afsarmanesh, H. - Elements of a base VE infrastructure, L.M. Camarinha-Matos, H. Afsarmanesh, J. Computers in Industry, Vol. 51, Issue 2, Jun2003,pp. 139-163. 3. Camarinha-Matos, L.M.; Afsarmanesh, H. - A roadmap for strategic research on virtual organizations. In Processes and Foundations for Virtual Organizations, Kluwer Academic Publishers, Boston, 2003. 4. Camarinha-Matos, L.M.; Afsarmanesh, H. (Ed.s) - Collaborative networked organizations -A research agenda for emerging business models, Kluwer Academic Publishers, Boston, 2004. 5. Camarinha-Matos, L.M.; Afsarmanesh, H.; Loeh, H.; Sturm, F.; Ollus, M. - A strategic roadmap for advanced virtual organizations. In Collaborative Networked Organizations: A research agenda for emerging business models, Kluwer Academic Publishers, Boston, 2004. 6. Camarinha-Matos, L. M.; Afsarmanesh, H., Ollus, M. - Virtual Organizations: Systems and Practices, Springer, Boston, 2005. 7. van Eijnatten, F. M. - Chaordic systems thinking chaos and complexity to explain human performance management, in Proceedings of Business Excellence I (G. Putnik, A. Gunasekaran, Ed.s), ISBN 972-8692-08-0, University of Minho, Portugal, 2003. 8. Mejia, R.; Molina, A. - Virtual enterprise broker: Processes, methods and tools, in Collaborative business ecosystems and virtual enterprises, Kluwer Academic Publishers, Boston, May 2002. 9. Molina, A. and Flores M. - Exploitation of Business Opportunities: The role of the virtual enterprise broker, in E-Business and Virtual Enterprises. Managing Business to Business Cooperation (Camarinha-Matos, Afsarmanesh and Rabelo, Ed.s), Kluwer Academic Publishers, Boston, Dec. 2000. 10. Pliiss, A.; Huber, C. - Virtuellefabric.CH - A source network for VE in mechatronics, in Virtual Organizations - Systems and Practices, Springer, Boston, 2005.

REQUEST BASED VIRTUAL ORGANISATIONS (RBVO): AN IMPLEMENTATION SCENARIO Bob Roberts Centre for Applied Research in Information Systems Kingston University, UK [email protected]. uk

Adomas Svirskas, Brian Matthews Business and Information Technology Department CCLRC Rutherford Appleton Laboratory, UK {A.Svirskas, B.M.Matthews}@rl.ac. uk

Evolving e-commerce technologies increasingly enable organisations to participate in different types of network forms or in electronic markets with previously unidentified trading partners. Virtual organisations (VO) take different forms, have varying lifecycles and involve different scope and depth of relationships. This paper examines the literature in terms of the terminology of virtual organisations, the business drivers, the common theoretical concepts and models as well as the enabling technologies. A specific form of VO, Request Based Virtual Organisation (RB VO), is then considered in relation to these VO variants, particularly as realised through the practical work done within the framework of the EU sponsored LA URA project that facilitates interregional zones of adaptive electronic commerce.

1. INTRODUCTION The hterature presents a common theme of increasing competitive pressures on companies exacerbating the need for greater flexibihty, efficiency, responsiveness and innovation. The common theme is one of traditional external boundaries of organisations beginning to blur, often with e-commerce as a key enabler of such change. Such links may take different forms, have varying lifecycles and involve different scope and depth of relationships. The separation between internal and external processes becomes less clear as inter-organisational systems facilitate more co-ordinated exchange and sharing of information and this may involve the innovative use of e-commerce technologies for new organisational arrangements, value acceleration and new value added processes. Request based Virtual organisations (RBVOs) are a special kind of Virtual Organizations, and comprise a cluster of partnering organizations that have totally replaced their vertical integration into a virtual one. By their nature, RBVOs are short-lived entities that are formed with the identification of a business opportunity offered by electronic commerce. This introduction is followed by Section 2 which

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COLLABORA TIVE NETWORKS AND THEIR BREEDING ENVIRONMENTS

examines the business drivers, the common theoretical concepts and models as well as the enabling technologies for VOs. In section 3, the RBVO concept as realised through the EU sponsored LAURA project is introduced and compared to the VO characteristics identified in section 2. Section 4 then expands on the technical architecture chosen to support the RBVO concept in the LAURA context while section 5 concludes with the outcomes of the LAURA project, the realisation of the benefits and the future research ideas. These ideas include trust and security aspect in VO management related areas and are based on choreographed B2B interaction models.

2. A REVIEW OF VIRTUAL ORGANISATIONS (VOs) 2.1 The Business Drivers A recurring theme in the earlier inter -organisational system (lOS) literature is the role of IT as a key enabler for competitive advantage through cementing relationships with customers and by enabling integration forwards or backwards in the industry value chain (Cash and Konsynski 1985, Cash 1985, Johnston & Vitale 1988). Benjamin and Malone (1986) also noted that through electronic networks firms may achieve an integration effect by tightly coupling processes at the interface between stages of the value chain. More recent literature suggests that the broad concept of the virtual organisation has accelerated with the emergence of Internet / Web based communities of common interest and that enterprises are aligning within a series of Value networks' against other groups of enterprises (Bovet & Martha 2000, Bressler & Grantham 2000). The evolution of the B2B Internet environment will increasingly provide the means to integrate supply chain practices and inter-organisational trading processes. Shorter product life cycles, more intensive competition, faster technological change and more specialised markets have led to various kinds of inter-organisation agreements, collaborations and partnerships as firms join together to create partnerships and also incorporate small firms in recognition of their capability for flexibility, responsiveness and innovation (Davidow & Malone 1992, Rhodes & Carter 1994, Hagel & Armstrong 1997, Aldrich 1999). 2.2 Virtual Organisation Terminology A virtual organisation (VO) is described in many cases as a network among organisations while others argue that VOs should not be viewed solely as networks among organisations but as a radical approach to management, or a strategic approach that leads to dynamically re-configurable enterprises (Sieber & Griese 1999, Saabeel et al 2002). Lethbridge (2001) observes that while a member may exercise more power than others within the VO, each member operates as both a member of a VO and as an independent organisation. Lethbridge also notes that each member of a VO may also be a member of one or more other VOs. There is, however, a lack of consistent terminology in the various discussions of organisational networks in the literature, with terms such as virtual networks, strategic networks, dynamic networks, extended networks and value networks.

Request based virtual organisations

19

These different terms are often used as sjoionyms but sometimes also indicate different characteristics related to longevity, purpose and culture. Nikoleris and Johansson (2003), for example, differentiate between virtual and extended enterprises as two emerging forms of dynamic networked organisations. Virtual enterprises are described as temporary consortiums of independent member companies who come together to exploit a particular market opportunity while the focus of extended enterprises is on longer term collaborative alliances. However, the success of both relies heavily on the seamless and effectively facilitated information flow between the participating enterprises and the ability to analyse, measure and improve communication. Timmers (1999) also differentiates between value networks and dynamic markets where the former is characterised by a limited number of long term relationships while the latter involves many relationships over shorter time scales in order to maximise product, price or delivery configurations by selecting appropriate business partners. Marjanovic (2002, p.713), on the other hand, coins the term 'dynamic virtual enterprises' that involves rapid teaming of business partners (in particular small and medium sized enterprises) in pursuit of specific business objectives. "Business partners are linked dynamically (on demand) according to the requirements made by the customer. Thus, partners collaborate on a short term basis (during the VE lifecycle) to solve a particular business problem. Once the problem is solved cooperation ends and the virtual enterprise ceases to exist." 2.3 Technologies for Enabling Virtual Organisations Silva et al (2003), in reference to the implementation of what they refer to as the agile/virtual enterprise (A/VE) model, argue that two main inter related aspects must be met; dynamic reconfigurability and business alignment of the AA^E with the market requirements. In reviewing the offerings of key e-marketplace makers they noted that while all of them still supported EDI, Web Services and ebXML are the most promising technologies for the creation of dynamic collaborative environments and business process integration. Choudhury (1997) examined the evolving issue of inter-organizational information systems from the standpoint of a firm making strategic decisions about inter-organisational (lOS) development. Choudhury addressed the questions of what types of lOS might be useful, and how those lOS might be developed. Three types of lOS are described: electronic monopolies (e.g. supporting a sole source relationship for a product), multilateral lOS (e.g. communicating with a large number of trading partners over a single logical inter-organisational link and electronic dyads (e.g. EDI links between buyers / sellers). However, the increasing feasibility of adopting a peer to peer (P2P) approach for B2B e-commerce offers a new 10 S option. Lee (2004), for example, argues that the need for centralised exchanges decreases through P2P networks and that a P2P architecture offers advantages over exchange based models including avoidance of fees charged by exchanges, reduction in the complexity and expense of networking and the scalability of P2P networks. Lee goes on to suggest that P2P e-commerce can be viewed as a 'dynamic electronic dyad' from the lOS perspective where the buyer/seller dynamically establishes individual logical links with each of a dynamically selected number of sellersA)uyers.

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COLLABORA TIVE NETWORKS AND THEIR BREEDING ENVIRONMENTS

3. RBVO IN RELATION TO THE LITERATURE The RBVO concept encapsulates many of the characteristics described in the broad range of VO literature i.e. the flexible and dynamic reconfigurability of independent companies who come together to leverage on the complementarity of their competencies, products and services to meet market needs. However, while ecommerce may mean that asking for quotes from an increasing number of sellers can mitigate ignorance of the price of a very well defined product, overcoming ignorance of product quality and other supplier capabilities may be more difficult. The RBVO is coupled with the concept of sector specific Service Level Agreements (SLA) to address this issue. Furthermore, organisations participating in RBVO formations can reduce the costs of market search, and benefit from more effective monitoring schemes thus lowering transaction costs. Improved information flows can also facilitate improved planning and more co-ordinated actions to reduce uncertainty. The authors of this paper were engaged in a project co-funded by the European Commission entitled "LAURA - Adaptive Zones for Interregional Electronic Commerce based on the concepts of Request-Based Virtual Organizations and sector-specific Service Level Agreements" (LAURA Project 2004). The LAURA project aims to increase the competitiveness and business efficiency of Small and Medium Enterprises (SMEs) from the Less Favoured Regions (LFRs) of Europe, by introducing state-of-the-art electronic commerce in those companies. This project innovates in introducing the concept of Request-Based Virtual Organizations (RBVOs) that are formed using the concept of sector-specific Service Level Agreements between trading partners. The architecture and technology approach of the LAURA project supports the RBVO concept, builds on opportunities offered by the peer to peer (P2P) approach and utilises the latest e-business standards, such as ebXML. The discovery phase, for example, is implemented using a P2P approach, as a natural form of discovery behaviour. Subsequent phases of search for particular products and potential partners within the identified domains (matchmaking) as well as business conversations use a more conventional approach that innovate by building on aspects of ebXML such as BPSS and ebXML messaging. The distinctive characteristics of RBVO as encapsulated in the LAURA project can be summarised as: A cluster of geographically dispersed organisations either within regions or inter regionally (typically SMEs). Organisations are independent and may belong to different RBVOs simultaneously and at different times. A possibility for an enterprise to discover potential business partners upon demand and advertise itself in a standard way. A range of relationships from transactional to collaborative that vary dynamically over time in response to market opportunities. The P2P architecture provides a flexible topology for virtual formations (JXTA 2004). The ebXML standard provides the foundation for messaging and business process management (EBXML 2003) Business documents are modelled according to the Open Applications

Request based virtual organisations

•

• •

21

Group Integration Specification - OAGIS (Rowell 2002; Flebowitz 2002, Dubray 2001). Support Centres provide a low cost and trust oriented environment conducive to SME involvement and thus improve their competitiveness and business efficiency. Sector specific SLAs provide a means to analyse and measure the performance of participants. Lower transaction costs for geographically dispersed transactions.

4. THE ARCHITECTURE TO SUPPORT RBVO CONCEPTS IN THE LAURA CONTEXT The concept of Virtual Organisation (VO) must be supported by appropriate architectural and technical implementation solutions, as well as suitable operational services, in order to provide its expected value for business partners. In addressing this particular task certain general B2B collaboration aspects were identified which led to the development of a generic architectural framework. Three areas of particular importance were singled out for end-to-end business collaboration; discovery and matchmaking of the business partners, secure and reliable business data transmission and business process specification and enactment. The discovery and matchmaking aspect of the overall B2B problem becomes especially important in the SME e-business context, mainly due to the potential for a great number of collaborative participants, the diversity of their capabilities, the lack of standardisation for product and service description, as well as the absence of mechanisms to harmonise the latter. In order to fully reveal the potential of RBVOs as highly dynamic virtual business formations an innovative approach is taken, which is based on natural trading behaviour pattern, expressing direct interaction between partners. Recent developments in the peer-to-peer (P2P) computing field allow this pattern to be implemented. This approach results in a more flexible topology for virtual formations and bridges the gap between the isolated 'islands' thus forming a business to business grid that widens the possibilities for collaboration and increases their availability to business partners. In the LAURA network context there are two types of peers: • Domain Hubs, acting on behalf of SMEs, which are not capable of using LAURA business collaboration service themselves • Advanced SMEs, using the LAURA collaboration service connected to their back-office and/or ERP systems Project JXTA provides a simple and generic framework for P2P networking and provides a base P2P infrastructure over which other P2P applications can be built. The JXTA Protocols document describes six XML-based protocols that standardise the methods used by peers to discover each other and interact to form peer groups (JXTA 2004).

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•

SME with limited capabilities

Peer-to-Peer interaction using JXTA

^ P

Advanced SME (peer type 1)

RBVO formed by the LAURA peers

g p

LAU RA Domain Hub (peer type 2)

LAURA Domain

(~"j

Country

Figure 1. LAURA Virtual Network based of the concept of peer-to-peer interaction builds on JXTA virtual network (JXTA 2004) conceptual structure The JXTA technology is particularly applicable from the RBVO point of view and especially with regard to the multi-domain nature of the solution. The JXTA Virtual Network, which allows flexible mapping between the physical resources and the logical entities, required for a multi-domain e-business network such as LAURA is shown in Figure 1.

5. CONCLUSIONS AND FUTURE WORK As well as implementing a frilly frinctional software prototype in the five European regions, the Laura Project has successfiilly carried out the establishment and operation of Support Centres enabling regional SMEs to conduct on-line B2B transactions on an intra and interregional level. This reflects the adoption of innovative notions such as the RBVO concept enabled by technology approaches such as EBXML and P2P to meet SME business requirements. The main objective of the deployment partners was the introduction of the LAURA proposed ecommerce solution in the participating regions, at both the operational and technology level. More specifically, they co-ordinated the introduction of ecommerce zones into selected pilot SMEs and, based on their experience of regional business environment, they evaluated the operation of LAURA proposed ecommerce zones. The consortium has also provided a concrete dissemination and exploitation strategy for the project results and the commercialization of concepts, methodologies and prototypes developed in the project. The German LAURA partners have set up a spin-off "e-commerce-express.de GmbH LG" for the

Request based virtual organisations

23

exploitation of the LAURA solution in Germany, which will offer LAURA services and additional back-end support to already running support initiatives relating to ecommerce (www.ecommerccexpress.de). This LAURA based system is marketed as an adaptable solution and an online collaborative commerce system for SMEs with production to order characteristics. The system automates administrative processes with stakeholders in the supply chain and adds eCommerce functions to extend the boundaries and benefit of an SME's ERP system. Some of the ideas and experience gained in the LAURA project will be applied in another EU sponsored project related to dynamic VOs - TrustCoM (Dimitrakos 2004), as two of the authors are working now in the TrustCoM project. The main objective of TrustCoM is to provide a trust and contract management framework enabling the definition and secure enactment of collaborative business processes within Virtual Organisations that are formed on-demand, are self-managed and evolve dynamically, sharing computation, data, information and knowledge across enterprise boundaries, in order to tackle collaborative projects that their participants could not undertake individually, or collectively offer services to customers that could not be provided by the individual enterprises. A novel trust and contract management reference architecture that will enable collaborative work within VOs leveraging the emerging convergence of Web Services and Grid technologies will be constructed. A realisation of the TrustCoM framework will be delivered by means of open-standards Web Services based specifications and a reference implementation. Validation will take place within industrial strength test-beds in the areas of collaborative engineering and provision of ad hoc, aggregate electronic services. Despite the differences of technologies used in the two projects, the set of issues is largely the same in both cases - location of the partners and services, selection of the appropriate services, secure collaboration, business rules enactment, etc. This similarity helps to transfer the knowledge and apply it in a new context. The architecture described in this paper does not explicitly address RBVO management by assuming the overall information about VO to be a sum of the knowledge shared by involved participants and the operation of such community is governed only by business collaborations. While this approach simplifies the architecture and its instantiation considerably, there might be cases when a virtual community needs to be managed more explicitly and the participants need to commit to the policies of such virtual formation as a whole before they can enter bilateral or multi-lateral collaborations. The drivers for such approach may include: higher security and trust requirements, more sensitive business area, stronger audit requirements, etc.

6. ACKNOWLEDGEMENTS The results presented here are partially funded by the European Commission under contract IST-2001-33251 through the project LAURA. The future research ideas arise from the work in TrustCoM project, funded by the European Commission under contract IST-2003-01945. The authors would like to thank members of respective partner organisations of both projects for their valuable input and help.

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7. ElEFERENCES 1. 2.

3. 4. 5. 6. 7. 8. 9.

10.

11. 12.

13. 14. 15. 16. 17. 18.

Aldrich, D.F. (1999), Mastering The Digital Marketplace, John Wiley, Chichester Benjamin, R.I., Malone,W.T. & Yates, J. (1986), Electronic Markets And Electronic Hierarchies. CISR Working Paper No 137. Centre For Information Systems Research, Sloane School of Management, Massachusetts Institute Of Technology. Bovet, D. & Martha, J., (2000), Value Nets: Breaking the Supply Chain To Unlock Hidden Profits, John Wiley, Chichester Bressler, S. E. & Grantham, C.E., (2000) Communities of Commerce, McGraw Hill, new York Cash,J.I. Jr, (1985), Interorganisational Systems: An Information Society Opportunity Or Threat.^ The Information Society, 3(3), 199-228. Cash, J.I. & Konsynski, B.R. (1985), IS Redraws Competitive Boundaries, Harvard Business Review, March-April, 134-142 Choudhury, V. (1997), Strategic Choices in the Development of Inter-Organizational Information Systems, Information Systems Research, Vol 8, No 1 Davidow, W.H & Malone, S.M. (1992), The Virtual Corporation - Structuring And Revitalizing The Corporation For The 21st Century, Harper Collins, New York Dimitrakos, T. et al (2004), TrustCoM - A Trust and Contract Management Framework enabling Secure Collaborations in Dynamic Virtual Organisations. ERCIM News No. 59, pp 59-60, Sophia Antipolis, France. http://www.ercim.org/publication/Ercim_News/enw59/dimitrakos2.html (accessed December 2004). Dubray, J.J. (2001). OAGIS Implementation Using the ebXML CPP, CPA and BPSS specifications vl.O. htip://vvwvv.openapp 1 ications.org/downloads/whiiepapers/framewoi-ks (accessed December 2004) EbXML. (2003). The ebXML Framework, .httpj/Av\BY,d;>.xnil,.o^^^^ (accessed November 2004) Flebowitz, M. (2002). OAGIS 8.0: Practical integration meets XML Schema. XML Journal, Volume 03, Issue 09. http://\vwvv.openapplications.org/ncws/articles/XMl.J"Sept02" OAGIS8FracticalI.ntegrationMeetsXMLScherna.pdf (accessed November 2003) Hagel, J. & Armstrong, A. (1997), Net. Gain: Expanding Markets Through Virtual Communities, Harvard Business School Press, Harvard JXTA (2004). JXTA Technology: Creating Connected Communities. llMplZ^wwwjxta.OTg/pj:{)jecy^^ (accessed February 2005) LAURA (2003). EU Isf-2001-33251 project, http://www.lauraproject.arg Lee, K.J., Peer-to-Peer Electronic Commerce and Intelligent Systems, hllp://space.postech.ac.kr/vod/s011204/pptl 204/pptl 204.pdf. (Accessed August 2004) Lethbridge, N., (2001), An I-Based Taxonomy of Virtual Organisations and the Implications for Effective Management, Developing Effective Organisations, Vol 4, No 1, pp. 16-24 Marjanovic, O. (2002), Supporting Co-ordination in Dynamic Virtual Enterprises, Proceedings of th

15 Bled Electronic Commerce Conference, e-Reality: Constructing the e-Economy, Bled, Slovenia, June 17-19, pp. 712-726, 19. Nikoleris, G. & Johansson, N. (2003), Managing the Exchange of Data in the Extended Enterprise, Ih

20. 21. 22. 23. 24. 25.

Proceedings of 10 ISPE International Conference, Madeira, 28-30 July, pp. 317-321 OFBiz. (2003). The Open For Business Project, htt|:)://www.on>iz.org (accessed November 2003) Rayport J.F. & Sviolka J.H. (1994) Managing in the Marketspace, Harvard Business Review, 72(6) (Nov-Dec)pp. 140-150 Rhodes, E. & Carter, R. (1994), Engineering The Virtual Enterprise, Paper presented at Research Forum, 5 th World Congress Of EDI Users, Brighton, June 14-15 Rowell, M. (2002). OAGIS: A Canonical Business Language. XML Journal, Volume 03, Issue 09. Saabeel, W. et al. (2002), A Model Of Virtual Orgasnization: A Structure And Process Perspective, Electronic Journal Of Organizational Virtualness, Vol. 4, No. 1 Sieber, P., Griese, J., (1999), Virtual Organizations As Power Asymmetrical Networks, nd

Organizational Virtualness And E-Commerce, 2 International VoNet Workshop, Zurich 26. Silva, J.P., Putnik, G.D. & Cunha,M.M. (2003), Technologies for Virtual Enterprise Integration, published in Business Excellence: Performance measures, Benchmarking and Best Practices in New Economy, Univ of Minho Press, pp.706-712 27. Timmers, P., (1999), Electronic Commerce: Strategies and Models for B2B Trading, John Wiley, Chichester

MULTI-PERSPECTIVE CHALLENGES ON COLLABORATIVE NETWORKS BUSINESS ENVIRONMENTS Claudia-Melania Chituc Americo Lopes Azevedo Faculty of Engineering of the University of Porto (FEUP); INESC Porto fcmchituc; [email protected]

New forms of collaboration emerged as response to transformations of the business environment and the rapid information and communication technologies developments. In this context, collaborative networks rise as a powerful mechanism to achieve strategic objectives in a time response, quality and cost effective manner. The aim of this paper is to present the most relevant challenges concerning collaborative networks paradigm analysis, and to advance a multi-perspective approach on collaborative networks (technological, semantic, social and business perspective), emphasizing the importance of the business view that allows collaborative networks to be regarded as combinations of inter- and intra-enterprise business processes. Balance Scorecard is seen as a powerful tool which can guarantee the strategic and business goal alignment within the network.

1. INTRODUCTION The rapid development of information and communication technologies (ICT) and the transformations of the business environment determined new forms of collaboration, such as virtual enterprises, networked enterprises, or professional virtual communities. In this context, collaborative networks (CN) emerge as a powerful mechanism to achieve competitiveness, world-excellence and agility in today's turbulent market conditions, comprising various heterogeneous entities with different competences, but symbiotic interests. This motivated numerous research projects and studies aiming at understanding and implementing this paradigm. Despite the myriad scientific results in the area of business networking and the socalled "collaborative work", the scientific community agrees that more work needs to be done (Camarinha-Matos, et al, 2004). Most studies on CN focus on technological aspects, such as supporting technologies, reference models, frameworks, infrastructures, often neglecting other issues, such as semantic, social and business aspects within CN (or partner organizations). The aim of this paper is to address the most relevant challenges concerning CN paradigm analysis. This paper underlines the necessity to consider a multiperspective approach on CN (technological, semantic, social and business perspective), emphasizing the importance of the business view on CN, that can be regarded as an aggregation of inter- and intra-enterprise business processes. The paper is organized in five sections. After this introduction, the second section presents various types of networks arrangements usually considered by several researchers, and motives for participating in CN. The third section proposes

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a multi-perspective approach on CN: technological, semantic, social and business perspective, with emphasis on the business view on CN. The fourth section addresses issues on business processes in CN and business alignment. The fifth and last section contains the conclusions of the paper.

2. COLLABORATIVE NETWORKS CN represent a valuable and effective approach to achieve strategic objectives in a time response and cost effective manner, with a high level of quality of delivery and customers' satisfaction, and generating value to stakeholders. Current business trends determine a move from vertically integrated companies towards flexible network organizations, where the ability to quickly and efficiently set-up, maintain, develop and dissolve partnerships with business partners networkability - is a critical success factor (Osterle et. al., 2000). In fact, enterprises of all sizes are collaborating in order to fulfill client's demands, meeting their needs concerning cost, time response and quality, integrating various distributed business processes, and making relevant information available to all entities. For the aim of this paper, in a broad sense, CN refers to a collection of heterogeneous organizations with different competences, but symbiotic interests, that join, efficiently combine, and coordinate their collective resources (ie knowledge, skills, capital, assets, etc.) for a period of time in order to achieve a common objective, and use ICT to coordinate, develop and support their activities. The term CN is used in this article to represent collaborative forms such as virtual enterprises, extended enterprises, networked enterprises, professional virtual communities, and other emerging collaborative forms, with similar proprieties. Miers (Miers, et. al, 1997) identified three main types of networks arrangements (Azevedo et al., 2002): 1. Dominant organization with a network of suppliers. This model is often used within large organizations, where one dominant player sets the main rules and uses a network of small firms to meet its needs and those of its customers. In this type of relationship, processes are usually focused on the repetitive supply of a service or product. The terms of the relationship are in general well defined in advance. 2. Co-operative network involves networks of small businesses undertaking together larger projects or services, which in turn may be supplied to larger or more dominant players. Processes are project-oriented and require a trust relationship between all co-operating entities. 3. Virtual teams. This type of network illustrates the trend of most large businesses to have teams managed on a project by project basis (seeking for a more agile structure). Although an attractive option to undertake business, since they offer a number of advantages, CN face several difficulties, most obvious one being of technological nature, and referring mainly to issues such as inter- and intra-enterprise integration or interoperability. Alexakis (Alexakis et al, 2004) identified several inhibitors and challenges for the adaptation of virtual organization concept, such as: clear organization, adequate workforce, finance, communication, loss of competence, development of the partnership, low acceptance, and intellectual property. Since the effort required to integrate heterogeneous entities is relatively high, several benefits must be attained to justify this effort. The literature on collaboration

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identifies some motives and benefits associated with inter-enterprise collaboration: • to increase market share; to increase asset utilization; to enhance customer service - reduction in lead times, customer complains, etc.; to share and reduce the cost of product development; to reduce time in product development; to increase quality of product; to increase skill and knowledge; to enhance skill and knowledge; to have technological gain as participating firm; to achieve economies of scale in production (Lewis, 1990) • to decrease risk of failure of product development (Parker, 2000) • to reduce inventory - in the face of increasing technological complexity and rapid rate product development and obsolescence (Parker, 2000; Holton, 2001) • to gain rapid access to markets (Parker, 2000; McCarthy et ah, 2002) • to increase flexibility; to attain international presence for small and medium size enterprises; to cope with changing dynamics; to have an effective knowledge management (Alexakis et a/., 2004) The authors identified also other motivations for inter-enterprise collaboration: • to have access to resources (skills, knowledge, etc.) that are usually well beyond those of a single player • to learn (gain knowledge) form other participants in the network

3. MAIN PERSPECTIVES ON COLLABORATIVE NETWORKS BUSINESS ENVIRONMENT 3.1 Introduction CN comprise several heterogeneous and world-wide spread organizations, with different ICT solutions. Its power consists of this association of different enterprises and institutions with different aims and different competences, but symbiotic interests, in the form of a CN. CN require tools, models and methodologies to support entities and employees to create just-in-time activity and exploit business opportunities. The research undertaken allows the authors to consider four main perspectives on CN, comprising several aspects of these rich and powerful business mechanisms: 1. technological perspective, referring to technologies for inter- and intraenterprise integration, interoperability, security, authentication, infrastructures supporting business, reference models and architectures, etc.; 2. semantic perspective, referring to semantic integration between business partners (data semantics, behavior semantics); 3. social perspective, which has a special emphasis on social actors (individuals and groups capable of performing activities and of interacting in order to pursue a specific goal); 4. business perspective concerning, among others, business alignment within the network, and inter- and intra-organization business processes. Some other aspects of CN can be also considered, such as cognitive or knowledge perspective. The following sub-sections detail the four above-mentioned main perspectives on CN, with emphasis on the business perspective. 3.2 Technological Perspective CN are usually analyzed from a technical perspective, with focus on aspects such as:

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messages format and content; activities for sending and receiving messages; specific negotiation messages and acknowledgement messages; time-out functionalities and catch-up attempts; supporting infrastructures, reference models and architectures. In the context of CN, technologies such as Peer-to-Peer (P2P), Web services, workflow, semantic Web, intelligent agents, grid are core solutions for enterprise integration and interoperability, streamlining transactions while supporting process coordination and consistency. Despite the relatively high number of infrastructures and ICT solutions claiming to support enterprise integration and the numerous scientific results in the business networking area, more work needs to be done since available solutions are usually cumbersome and lack in flexibility to respond to the most recent technological outcomes, focusing on very specific aspects, and do not guarantee a natural operational environment. They often separate and isolate particular departments, companies, supply chains, authorities, research institutions and each individual of their surroundings (Chituc, et al., 2005).. Although intense research is being carried out on CN or related topics, and numerous distributed information technology infrastructures and distributed information systems architectures are available, the scientific community agrees that questions related to the formalization, conceptual development and semantic integration (namely concerning the formal description of the domain, ontology, behavior, etc.) are fundamental research topics waiting for a consistent development (Camarinha-Matos, 2003). The urgent need for new reference models, frameworks, business ICT solutions is illustrated also by several research projects, such as VOSTER (http://voster.vtt.fi) or THINKcreative (www.uninova.pt/--thinkcreative ). 3.3 Semantic Perspective Semantic perspective has little attention. Bussler (Bussler, 2003) launched as the grand challenge the issue of semantic integration among various organizations. Semantic integration encompasses data semantics and behavior semantics. Data semantics and ontologies are used to establish a formal semantic description of business domain concepts that allow an automatic transformation between them, without a human integration modeler. Process semantics concerns the match between communicating interfaces, so that their executions results in a consistent state after their execution is finished. In this context, when this grand challenge is met, the next (grander) challenge will be: how to achieve self-forming virtual enterprises, that is virtual enterprises where the detection of service providers, as well as their contracting is automated (Bussler, 2003). 3.4. Social Perspective Social network analysis is not a completely new issue. The general theoretical framework of a networked society (Castells, 1996) determined intensive research developing and using networked-centric theories and methodologies. Wellman's work (Wellman et al., 1996) on cooperative work and tele-work is directly based on social network concepts. Gitell's research (Gitell, 2000) also highlights the role of social networks and the use of ICTs to support forms of relational coordination. Despite the current research trends, according to (Soares et al., 2003), little attention has been paid to inter-organizational cooperation and the particular roles of the actors (individuals and groups). Nevertheless, relationships between enterprises will continue to involve people in key managing activities, taking operational.

Multi-perspective challenges in collaborative networks

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tactical and strategic decisions supported by conveniently distributed information systems. 3.5 Business Perspective Business perspective in CN is often neglected. Research on business aspect of CN is scarce, and the fev^ research studies available tackle very specific issues, such as value transactions in collaborative environments (Bititci, et al., 2004) or accounting models of economic relationships in virtual enterprises (Belak, et.al., 2002). CN analysis from a business perspective comprises business relationships within the network partners, as well as several attributes, such as: • competences - refers to the expertise (skills, knowledge, etc.) one organization offers in a certain area/ domain, its capacity to disseminate and better advertise its capabilities, and also to its ways to make other entities discover its skills and knowledge; • availability, which is concerned with its attainability in terms of negotiation, business operation, etc. • cost - that concerns the shared production (development) cost, and also the costs to join the CN • value, which according to (Martinez, 2003) has two components: internal value (i.e. shareholder perspective, where value is synonym to wealth), and external value (i.e. customer perspective, where value refers to clients' satisfaction) functions • and roles allocation and fulfillment. This refers to organizations' functions and roles allocated within the CN, their performance, and functions and roles fulfillment during CN life-time and after their dissolution (i.e. support and maintenance services, exploitation strategies, etc.). • IPR (Intellectual Property Rights) concerns, among others, issues related to the ownership of the information assets in a CN • trust that refers to the confidence among CN partners • security (i.e. security of information shared or exchanged) • business agreements that concerns a (formal or informal) contract among CN partners setting out the terms of the collaboration • quality of service / quality of delivery refer mainly to Service Level Agreement (SLA) that represents a contract between a service provider and an end-user, which stipulates and commits the service provider to a required level of service. • past performance is related to the reliability of the partners considering their past accomplishments • legal issues concern aspects such as risk management, tax payment, etc. • coordination and management. CN coordination assumes a critical role, since a CN comprises heterogeneous entities, with different goals and cultures, but symbiotic interests. • development of new partnerships that could determine the creation of a new CN based on past fruitful collaborations • business alignment. Business alignment concerns one enterprise's business activity performance, within the CN, that should be in line with the activities developed by the rest of the partners. The business perspective is of utmost importance within the CN and it is yet not fully explored, but has implication on technological, social and semantic aspects related to CN. In the context of a business networking environment, a CN can be

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described as a network of business processes (as illustrated in Figure 1) that can be identified, documented, controlled and improved. For the aim of this paper, it was made a distinction between intra-business processes (considered private business processes - PvBP) and inter-business processes (considered pubhc business processes - PuBP).

FMPfa

Figure 1. Collaborative Networks as Networks of Public and Private Business Processes The main research questions inducing this paper are: Question 1: Which business processes (inter- or intra- business processes) should one consider in order to operate the business model underlying the CN? Question 2: How can one achieve an (technological and business) interface between several PuBP and a number of PvBP? Question 3: How is it possible to align different PuBP with the strategic objectives of the CN, and to obtain a win-win situation for all parties involved (partners and end-users)? Which methodology and tools should be used or developed? Question 4: How can one evaluate performance in a business environment supported by a CN?

4. BUSINESS PROCESS ORIENTATION AND BUSINESS ALIGNMENT The process oriented organisation overcomes the problem found in traditional organizational structure where the information flows up the chain so that decisions can be made at the top. In fact, the goal of a process-oriented organization is to facilitate an "optimized" execution of processes. However, such a process approach requires an effective management methodology and framework supported through a precision performance system to measure efficiency (resources consumed within the process) and effectiveness (quantify the ability of a process to deliver products or services according to their specifications). The absence of meaningful goals and the use of wrong measures can drive organizations in the wrong direction. Thus, relevant perspectives and relevant

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objectives have to be selected and an adequate performance management system has to be designed and implemented. Nowadays, one of the trends is to consider a balanced approach to performance measure, namely taking into account past and future performance, financial and non-financial measures, soft and hard performance factors, internal and external indicators, etc. In this context, the Balanced Scorecard (BSC) concept plays an important and unquestionable role. The same applies to CN with probably a deeper interest due to the fact that in this environment interact different entities (autonomous, independent, heterogeneous, etc) which naturally limit the alignment level eventually necessary. The BSC is an approach to performance measurement that combines traditional financial measures and instruments with non-financial measures to provide managers relevant information concerning the activities they are managing. First introduced in 1992 by Kaplan and Norton (Kaplan; Norton, 1992), the BSC concept has become widely known, and various forms of it have been widely adopted around the world. As Kaplan and Norton argue, no single measure can provide a clear performance target or focus attention on the critical areas of the business. The complexity of managing an organization today requires managers to view performance in several areas simultaneously. The selection of these performance measures should be linked to the organisation's strategic goals. One of the important characteristics of BSC design is the clustering of similar types of performance measures into groups (often called perspectives). In fact, BSC can be used, although requiring substantially different design and development processes, in two different applications: 1. Management control. BSC approach offers a holistic but focused view of performance measurement (extended to all business process); 2. Strategic control. BSC monitors the performance of all organisation as it implements activities associated with the implementation of strategic plan. The use of BSC in this context enables managers to establish their strategic objectives across a holistic view of the business, and to define relevant initiatives aligned with the goals defined at higher level. In brief, BSC can be viewed as a multi-perspective strategic communication and performance measurement tool allowing translating strategy to key actions with the alignment of all relevant and critical activities. Concerning CN, the BSC approach can be a powerful framework to guarantee the right strategic and business goal alignment within the network and at the same time can work as a 'performance contract' between all partners involved.

5. CONCLUSIONS AND FURTHER WORK Although there are numerous studies and research projects on collaborative networks (CN), most of them are focusing on technological aspects, undermining or even neglecting business, semantic or social aspects. No single perspective fully portrays or explains the complexity of a CN, this is why a multi-perspective approach should be adopted when analyzing a collaborative business networking environment. Besides underlining the importance of the technical, semantic and social views on CN, this paper emphasizes the importance of the business perspective on a CN that can be regarded as a network of business processes. Thus, questions such as

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COLLABORA TIVE NETWORKS AND THEIR BREEDING ENVIRONMENTS

business process management, performance management and business process alignment are of most importance. In this context, the Balance Scorecard (BSC) becomes a powerful tool supporting a proper strategic and business goal alignment within a CN, while being a 'performance contract' among all partners. Further work is being carried out in order to develop a holistic model on CN, trying to identify major critical success factors. Acknowledgements. The author CM. Chituc would like to thank FCT (Funda9ao para a Ciencia e a Tecnologia) for the PhD scholarship.

6. REFERENCES 1. Azevedo, A.L,; Toscano, C ; Sousa, J.P., "An Order Planning System to Support Networked Supply Chanins". In Collaborative Business Ecosystems and Virtual Enterprises, Kluwer, 2002 2. Alexakis, S.; Kolmel, B.; Heep, T,, "VO in Industry: State of the Art". In Collaborative Networked Organizations: A Research Agenda for Emerging Business Models", Kluwer, 2004 3. Belak,V.; Kolakovic, M.; Kovacevic, B., "Economic Relationships between the Members of Virtual Enterprises". In Collaborative Business Ecosystems and Virtual Enterprises, Kluwer, 2002 4. Bititci, U.S.; Martinez, V.; Albores, P.; Parung, J., "Creating and Managing Value in Collaborative Networks". In Intemational Journal of Physical Distribution & Logistics Management, Emerald Group PubHshing, Vol. 34 No. 3-4, 2004, p. 251-268 5. Bussler, C , "B2B Integration - Concepts and Architectures", Springer, 2003 6. Camarinha-Matos, L.M.; Afsarmanesh, H., "Collaborative Networked Organizations: A Research Agenda for Emerging Business Models", Kluwer, 2004 7. Camarinha-Matos, L., "New Collaborative Organizations and Their Research Needs". In Processes and Foundations for Virtual Organizations, Kluwer, 2003 8. Castells, M., "The Rise of the Networked Society", Vol. 1 of The Information Age: Economy, Society and Culture, Oxford: Blackwell, 1996 9. Chituc, CM.; Azevedo, A.L., "Towards a Self-Forming Business Networking Environment", Proceedings ICEIS 2005 Conference (7th Intemational Conference on Enterprise Information Systems), Miami (to be published in May 2005) 10. Gitell, J., "Organizing Work to Support Relational Coordination". In Intemational Journal of Human Resource Management, 11(3), p. 517-34, Harvard University Press, 2000 11. Holton, J.A., "Building trust and collaboration in a virtual team". In Team Performance Management: An Intemational Joumal, Vol. 7 No. 3-4,2001, p. 36-47 12. Kaplan, R.; Norton, D., "The Balanced Scorecard - Measures that Drive Performance", Harvard Business Review, January-February, p. 71-79, 1992 13. Lewis, D.J., "Partnership for Profit: Structuring and Managing Strategic Alliances", The Free Press, New York, NY, 1990 14. Martinez, V., "Understanding Value Creation: the Value Matrix and the Value Cube", PhD thesis, Strathclyde University, Glasgow, 2003 15. McCarthy, T.M., Golicic, S.L., "Implementing collaborative forecasting to improve supply chain performance". In Intemational Joumal of Physical Distribution and Logistic Management", Vol. 32 No. 6, 2002, p. 431-54 16. McLaren, T., Head, M.; Yuan, Y., "Supply chain collaboration alternatives: understanding the expected cost and benefits". In Internet Research: Electronic Networking Applications and Policy, Vol. 12 No. 4, 2000, p. 348-64 17. Miers, D., Hutton, G. "Technology Futures for the World Wide Web - Business Needs Something Better", htt|x://www.cutter Cutter Consortium 18. Osterle, H.; Fleisch, E.; Alt, R., "Business Networking: Shaping Enterprise Relationships on the Internef, Springer, 2000 19. Parker, A., "Interfirm collaboration and the new product development process". Industrial Management and Data Systems; Volume 100 No. 6; 2000 20. Soares, A.L.; Sousa, J.P.; Barbedo, F., "Modeling the Structure of Collaborative Networks: Some Contributions". In Processes and Foundations for Virtual Organizations, Kluwer, 2002, p. 23-30 21. Wellman, B.; Salaff, J.; Dimitrova, D.; Garton, L.; Haythomthwaite, C , "Computer Networks as Social Networks: Virtual Community, Computer Supported Cooperative Work and Telework", Annual Review of Sociology, No. 22, p. 213-38,1996.

PART^ BREEDING ENVIRONMENTS MANAGEMENT

A FRAMEWORK FOR MANAGEMENT OF VIRTUAL ORGANIZATION BREEDING ENVIRONMENTS Hamideh Afsarmanesh \ Luis M. Camarinha-Matos ^ University of Amsterdam,

THE NETHERLANDS,

[email protected]

New University of Lisbon / Uninova, PORTUGAL,

[email protected]

Effective creation of dynamic virtual organizations requires a proper breeding environment to increase organizations' preparedness. After introducing some basic concepts related to collaborative networked organizations, the concept of breeding environment for virtual organizations is discussed and the key elements and requirements for its support management system are presented. The initial modeling needs and the required functionality are identified. Finally some important open challenges are addressed.

1. INTRODUCTION Collaboration among autonomous and geographically disperse entities is a process that is clearly facilitated by the advances in computer networks and related technologies. A growing number of collaboration networks, including the "classical" virtual enterprises [11],[3], virtual organizations [10], and professional virtual communities [1],[6], as well as new organizational forms [2], are emerging. As a result of intense R&D in this area, new operating and governance rules as well as support environments are being developed. Dynamic collaborative networks able to rapidly form and adapt to changing conditions provide good intuitive approaches to face the challenges of turbulent markets [10]. A key question is however how to guarantee the basic requirements to enable such collaboration. Among others, the formation of any collaborative coalition depends on its members sharing some common (or compatible) goals, possessing some level of mutual trust, having established common (interoperable) infrastructures, and having agreed on some common (business) practices and values. Achieving these conditions is a pre-requisite for agility and integratability in collaborative networks. One discussion point is whether such organizations shall be temporary or longterm establishments. Temporary organizations seem to better fit the dynamics of the market and the typically short duration of business opportunities, while long-term organizations better cope with the trust building process and the investment on common infrastructures and practices. Traditional supply chains and some forms of extended enterprises in stable mass-production oriented businesses are examples of long-term organizations. Some interesting experiments combine both types of organizations: A long-term club of organizations that are prepared for cooperation and the short-term coalitions involving different subsets of these organizations that are dynamically assembled in order to respond to business opportunities. These new organizational forms are early manifestations of breeding environments for dynamic

36

COLLABORA TIVE NETWORKS AND THEIR BREEDING ENVIRONMENTS

virtual organizations and emerge as an evolution of the industry clusters and industrial districts [9], [4], [12], [13]. This paper discusses this combined approach in detail, identifying its components and requirements, and proposing the necessary modeling and functional requirements for a supporting management system as well as extending it with further facilitating component and services. This research is being developed within the framework of the 1ST Integrated Project ECOLEAD which aims at creating necessary foundations and mechanisms for establishing an advanced collaborative and network-based industry society in Europe.

2. BASE CONCEPTS Early works have assumed that partners for a new VO could be easily identified and selected from the wide open universe of available enterprises / organizations, and merged into a collaboration network. This assumption however overlooks a number of important obstacles in this process among which the following can be mentioned: How to know about the mere existence of potential partners in the open universe and deal with incompatible sources of information? How to acquire basic profile information about organizations, when there is no common template or standard format? How to quickly establish an inter-operable collaboration infrastructure, given the heterogeneity of organizations at multi-levels, and the diversity of their interaction systems? How to build trust among organizations, which is the base for any collaboration? How to develop and agree on the common principles of sharing and working together? How to quickly define the agreements on the roles and responsibilities of each partner, to reflect sharing of tasks, the rights on the produced results, etc.? As a basic rule, in order to support rapid formation of collaborative networks, e.g. a business consortium, it is necessary that potential partners are ready and prepared to participate in such collaboration. This readiness includes common interoperable infrastructure, common operating rules, and common cooperation agreement, among others. Any collaboration also requires a base level of trust among the organizations. Therefore, the concept of breeding environment has emerged as the necessary context for the effective creation of dynamic virtual organizations. We define the Virtual organization Breeding Environment (VBE) [9] as: an association of organizations and their related supporting institutions, adhering to a base long term cooperation agreement, and adoption of common operating principles and infrastructures, with the main goal of increasing both their chances and their preparedness towards collaboration in potential Virtual Organizations. A main general aim of the VBE is focused on the transition from point-to-point connections among organizations to a network structure, in order to increase the chances of its member organization's involvement in opportunities for collaboration. Traditionally, breeding environments are established within one geographic region, in the tradition of industry districts, with the advantage of having common business culture and sense of community, as well as focusing on one specialty sector of the region. But, this restriction can today in most cases be overcome by VBEs.

Framework for management of VO breeding environments

37

VBEs primarily constitute two categories of regional and global. While regional VBEs mainly involve organizations (of different sizes) from one geographical region, a global VBE incorporates the involvement of geographically distributed organizations. In this paper, we address global VBEs. Furthermore, both regional and global VBEs can be either single-sector, i.e. specializing in a single focus area, or multi-sector, i.e. covering a number of focus areas. Efficient creation of VOs is the main purpose for the existence of the VBEs. Therefore, the motivation for creation of VBEs primarily depends on identification / creation of opportunities for organization collaborations in certain sector(s). There are two kinds of opportunities pursued by a VBE, namely those that can be identified in the market/society, and those that can be created by the VBE for the purpose of innovation. The main actors in creation/identification of opportunity are either the VBE members who broker the VOs, or the VBE administrator who promotes the initiation of some VOs that seem to be beneficial for the market/society. Establishment of VBEs provides the ten advantages listed and exemplified below, that are further described in the paper: 1. Agility in opportunity-based VO creation • Supporting reduction of needed efforts and complexity, flexibility for VO re-configurability, and cost effectiveness 2. Provision of base effective IC technology infrastructures for VBE members • The common grounds for interoperability / inheritability / collaboration 3. The VBE bag of assets, providing properties of interest for its members • General sharable information/knowledge (e.g. standardized product definitions and processes), software tools, lessons learned 4. Provision of mechanisms, guidelines, and assisting services to both motivate and facilitate configuration and establishment of VOs • Creating system of incentives, mechanisms to create positive reputation, and services for partners search, contract negotiation, etc. 5. Proactive management of competencies and resources available in VBE • Assuring coverage of the needed competency/resources within the VBE 6. Provision of related consulting/life maintenance support for VBE members through its support institutions • Supporting insurance, branding, training, etc. 7. Introduction of approaches/mechanisms to build trust among VBE members • By recording the performance history, and definition of criteria for organizations' trust worthiness 8. Provision of general guidelines for collaboration • Constituting rules of conducts, working and sharing principles, value systems, collaboration ethics and culture, IPR protection, etc. 9. Increasing the chances of VO involvement for VBE members, even from remote geographic regions • Through provision of members' profile in the VBE catalog, including their competencies, resources, products, services, etc. 10. Improving the potential / capacity of risk taking by the VO initiators • Due to the reduction of the VO setup efforts/time, availability of both a wide variety of competency/resources as well as indicators of the level of trust worthiness and past performance of the VBE members

COLLABORATIVE NETWORKS AND THEIR BREEDING ENVIRONMENTS

38

A VBE is a regulated open, but controlled-border association of its members. It aims at improving the preparedness of its member organizations for joining potential future VOs, hence providing a cradle for dynamic and agile establishment of opportunity-driven collaborative networks. As represented in Fig. 1, it is far less costly and much more effective to quickly build a VO in a breeding environment context (branch lb) than through a generalized partners' search (branch 2). In other words, VBEs substantially contribute to the increase of the level of preparedness of their members for participation in potential collaborative processes. Open universe" " o f organizations ^ - ^

o o?,ooO

Oo o O

o o Oo o o

Market trends Competitiveness

"Controlled-border universe" Breeding Environment

Ha: BE members acquisition Cooperation agreement Common infrastructure Stiaring principles

Easiness opportunity

VO partners selection Fast contract negotiation infrastructure parameterization

O

• Wide partners search & selection • Definition of common infrastructures and their parameterization • Sharing principles • Contract negotiation • Cooperation agreement

Figure 1 - Two approaches to the formation of virtual organizations A VBE must have a controlled boarder, but does not need to be closed boarder; namely at any time new members can join the VBE association by complying with its general operating principles. Therefore, there may be different levels of membership defined and supported by the VBE administrator, each corresponding to different set of rights and responsibilities. In principle, different levels of VBE membership may constitute a range, with loose-membership on one end and tightmembership on the other end of the spectrum. For instance, a loosely associated member of the VBE may need to adhere to nothing more than a minimum level of organization "preparedness" that is necessary for getting involved in a VO, and to making some minimum information available to the VBE administration, e.g. about their activities related to the VO. At the same time, typically di fully active member of the VBE contributes to its promotion, growth, and the enrichment of its bag of assets, and can take an active role from brokerage and planning of VOs in a niche market, to being involved in the expansion of the VBE into new sectors, and initiating VOs towards innovation. Similarly, for the formation of a VO that is initiated within the VBE, while preference will be given to the VBE members, it might be necessary to find some external organizations, for example when some skills or capacities are not available inside the VBE. Nevertheless, before becoming a partner in such a VO, an external organization shall be invited to join the VBE, at least at the loosest level (e.g. as a loosely associate member), in order to cover its minimum necessary VBE compliance. In some cases, it may be even desirable (either by organizations or by the VBE administration) that the names of the restricted members (e.g. the loosely

Framework for management of VO breeding environments

39

associated members) of the VBE are not publicized as the VBE members. For instance if the association of an external organization with the VBE is only due to the fact that they are currently involved in one running VO initiated by the VBE, and this membership will not continue after the VO dissolves. In addition to the enterprises, a VBE might include other kinds of organizations (such as consulting/research institutes, sector-associations, governmental support organizations, etc.) and even free-lancer individual workers that represent a oneperson small organization. Furthermore, VBE can include and serve as the hosting environment for some support-institutions that will provide some specialized related services/expertise to the VBE members, such as the legal services, marketing expertise, etc. for the VOs configured within the VBEs, or the insurance services, training support, etc. (also called "life maintenance" support) for the free-lancers involved in the VBE. Members of the VBE are the organizations that are registered at the VBE (traditionally bound to a sector). In summary, organizations in VBE represent: - Business entities providing products and services to the market that get involved in the VOs to gain quantitative profit. - Non-profit institutions that get involved in the VOs to gain qualitative profit. - VO Support institutions, for example: legal and contractual service providers, companies supporting life maintenance to individuals (e.g. insurance and training companies), ministries, sector associations, chamber of commerce, environmental organizations, etc. VBE members must comply with the general VBE rules and policies, e.g. adopting the common ICT infrastructure. At the same time, once joined the VBE, member organizations have access and shall benefit from the following available elements among others: Common information, services, and tools constituting its bag of assets; Common market and distribution channels; Common resource and labor pool; Common VBE cultural ties; Facilities to share the cost of new experiences; Facilities to share lessons learned. A variety of roles can be assumed by a large number of actors in the VBE, where an actor represents either a VBE member organization or an individual representing a VBE member organization [9],[10], Due to the autonomous nature of the VBE member organizations, at different times (or even simultaneously) the same organization may assume different roles, e.g. acting as a VO participant, a VO coordinator, etc. where each role requires assigning different rights/responsibilities within the VBE. Supporting these actors with their roles is a high priority in the VBE, and providing needed information and assisting tools for their support is among the VBE environment challenges. The following main roles are considered for the VBEs: - VBE Member - this is the basic role played by those organizations that are registered at the VBE and are ready to participate in the VBE activities. - VBE Administrator - performed by the organization responsible for the VBE operation and evolution, promotion of cooperation among the VBE members, filling the skill/competency gaps in the VBE by searching and recruiting/inviting new organizations into the VBE, daily management of the VBE general processes, e.g. assignment/reassignment of rights to different actors in the VBE based in their responsibilities, conflict resolution, preparation of a bag of VBE assets, and making common VBE policies, among others.

40

COLLABORA TIVE NETWORKS AND THEIR BREEDING ENVIRONMENTS

- Opportunity Broker or simply Broker - performed by a VBE actor (a VBE member organization or an individual representing a VBE member) that identifies and acquires new collaboration opportunities (of business nature or others), by marketing VBE competencies and assets and negotiating with potential customers. There is also the possibility of this brokerage function being played by an entity outside the VBE as a service to the VBE. - VO Planner or business integrator - performed by a VBE actor that, in face of a new collaboration opportunity (designed by an opportunity broker), identifies the necessary competencies and capacities, selects an appropriate set of partners, and structures the new VO. In many cases the roles of opportunity Broker and VO planer are performed by the same actor. - VO Coordinator - performed by a VBE actor that will coordinate a VO during its life cycle in order to fulfill the goals set for the collaboration opportunity that triggered the VO. A number of other roles might be also useful to be considered in a VBE, including: the VBE Advisor (or an advisory board), the VBE Service Provider, the VBE Ontology Provider, the VBE Expertise Provider (through a support institution) involved in the VBE, and the last but not least is the role of VBE Guest played by an organization outside the VBE that is interested in finding general promotion information about the VBE, either interested to become a VBE member or interested in contacting the VBE in relation to a business opportunity, etc. Because of the d)aiamic nature of both the VBE's environment and its member organizations, the defined roles for member organizations cannot be static. Every role taken by a VBE member organization represents: a set of responsibilities, a set of required rights/authorization, and further requires a set of assisting tools for the actor in that role. For instance, a VBE member, acting in the role of a VO broker, has accepted the responsibility to configure and negotiate a VO, for which it requires a set of access/visibility rights to the information regarding competency/pastperformance of other member organizations available in the VBE, and requires an assisting tool to search for best fit organizations matching the required skills. Considering the rights that need to be associated with every role of an actor in the VBE, it is necessary that the VBE members inform the VBE administrator about every new role they plan to assume (starting with becoming a VBE member organization) in order to request for proper rights to be associated to them. The life cycle of the VBE represents all the stages that a VBE may go through, from its creation stage, to its operation, and possible dissolution (see Fig. 2 for VBE life cycle stages). In fact VBE, being a long-term alliance, and considering its valuable bag of assets gradually collected in the VBE, its dissolution is a very unusual situation. Instead, it is much more probable that the VBE goes through another stage, that we call the metamorphosis stage, where it can evolve by changing its form and purpose. The creation stage can be divided into two phases, namely (i) initiation and recruiting, dealing with the strategic planning and initial incubation of the VBE; (ii) foundation, dealing with the constitution and start up. The VBE creation needs to be properly supported considering the increasing variety of VOs, and the fact that usually every VBE serves a specific sector/domain and has specific aims. In the coming time, there will be a large number of different sector/domain-dependent VBEs needed to be established, in order to better support the creation of different forthcoming VOs. The VBE life cycle stages, as seen in

Framework for management of VO breeding environments

41

Figure 2, include: the VBE creation - composed of the VBE initiation/recruiting and the VBE foundation, the VBE operation/evolution, the VBE metamorphosis, and the VBE dissolution.

I• l l i i i ^llilBiiiflliF VBE VBE VBE VBE VBE

Initiation & Recruiting - planning and incubation Foundation - constitution and start up Operation - the "normal" phase of the VBE existence Evolution - small changes in membership and daily operating principles Metamorphosis - major changes in objectives, principles, membership and/or mergers, leading to a new form of organization VBE Dissolution - when the collaborative entity ceases to exist; Being a long-term entity, this stage of VBE is typically replaced by the metamorphosis stage, preserving the gained knowledge.

Figure 2 - VBE life cycle stages Table 1 shows some effective examples of traditional breeding environments that provide substantial evidence for the need to establish VBE frameworks and the necessity of developing VBE support functionalities. Table 1 - Examples and potentials of VBEs

^Virtuelle ^•• ^ ^Fabrik •

^ I^^ •100

Kiesel Virtec CEFAMOL Virtual Enterprise Networks Yorkshire BipoloTicino ! Virtual Biotech Company PVC Regional Net for Ontario VIRFERBRAS Fenix Cluster Biotechnology cluster 1 Biotechnology cluster i Advanced Business Services Helsinki ICT cluster CARPI Mining Cluster Motorsport Valley Verkko A Automotive cluster Plasttechnics cluster

•Switzerland, • ^ K^

iiiilPlilii«iiii|iii^^ Mechanical industry

>15 >9 136 >25

Germany Germany Brazil Portugal UK

>13 >150 45 >12 >250 411 >160 >6

Switzerland Germany Australia Canada Brazil Mexico USA Canada USA

Services, Environment Manufacturing Plastic moulds IT, Machinery, Bio-tech, eLearning Life sciences Biotechnology Plastics Telecommunications Moulds Electronics, metal & plastic Biotechnology Agro-food, biotechnology Credit, lending, investments

79 2068 40 12 54 >60

Finland Italy Chile UK Finland Slovenia Slovenia

Telecommunications Textile / clothing Mining industry Motor-sport Process industry Automotive industry Plastics

42

COLLABORA TIVE NETWORKS AND THEIR BREEDING ENVIRONMENTS

3. MODELING NEEDS In order to design and develop a management system for VBEs it is necessary to first identify and model the main elements of this collaboration environment. A wide variety of entities and concepts co-exist in a typical VBE environment, as graphically represented in Fig. 3. VBEs include heterogeneous organizations of "";: "^^^ different sizes and a number of support ,-''-^::^jiMi^S^^^^^pi?^^:>. institutions. The VOs are from time to /"' ; ••x^'x--SHilMM^^^BBliil:^-f^ • ^ time created and will interact with the ,/ , , . i i i i i i i i ^ ^ VBE. Furthermore, the VBE ^'^'ll^^^^iBl:x':-'-^iillii^^^^^i£ management system controls the base i•^ B i B I * " : \ ^ ^ running environment enforced by a • W^^^^^mi^:*^^^KSK'*'::j number of policies and regulations, as . liiiiliii^iiiiiliii,./ '• well as providing a set of general ^v' • •^llB^BiBliiSE^^^^^^ ^ common tools, facilities and

i^^^H^fci;'-::^^'^^"

information that constitute the bag of assets for the VBE. Therefore, a large

Figure 3 - Main categories of information in a VBE management system

variety of information and knowledge must be properly modeled, organized, and applied to manage the VBE. For most of the elements in the categories identified in Fig. 2, generic sectordependent/application-independent specifications can be provided, namely a common ontology can be defined for those categories and included in the VBE management system, to be used for all sectors and applications. However, some of the identified elements in Fig. 2 cannot have a common sectordependent/application-independent definition. These elements include the competencies, resources, products and services of the VBE, for which their modeling and ontology need to be handled differently, as addressed below. VBE Products and services specification is widely varied among different sectors. Furthermore, different products or services have different specifications and their respective properties describing each product or service differ widely, and thus their definition/conceptualization (ontology) will be completely different as well. In the best case, if there are standard meta-data / ontology defined for a specific sector for which the VBE is established, these standard models can be stored within the VBE as a part of its general assisting information, in its bag of assets. Otherwise, an alternative approach is needed to generate/define their ontology. For this purpose, some text mining tools can be developed to help discover ontology-related concepts and keywords. The approach planned for the ECOLEAD, semi-automatic mechanisms will be developed to mine and derive concepts from the online corpus related to VBE member organizations, in order to present to the human experts in the sector, assisting them with gradual / incremental building up of such meta-data and ontology for the VBE. Similarly, competencies and resources offered by the VBE are also not easy to generalize. Consider for instance the differences in competency definitions (metadata/ontology) that describe the skills / knowledge / potential of the organizations related to examples provided in Table 1. Furthermore, consider and notice the wide variety and heterogeneity among resources owned, such as facilities/machineries related to different domain/sectors. Clearly neither Competencies nor resources of

Framework for management of VO breeding environments

43

the organizations in the VBE for Healthcare (e.g. hospitals, care centers, Doctors' practice office, insurance companies, ambulance services, etc.) can be defined by the same ontology (specification) that defines these aspects of the organizations in the VBE for production and assembly of bicycles (e.g. the raw material provider, mould maker, paint manufacturer, factory, marketing firm, packaging company, etc.). Therefore, in the above case, only a minimum common meta-data can perhaps be defined and modeled, as the starting point for defining the competency and resources meta-data. This common meta-data includes a generic upper ontology plus some minimum profiling information common to all potential VBE member organizations. From that point on, similar to the product/services, some semiautomatic mechanisms need to be applied to VBE to continuously support the derivation/discovery of its domain/sector meta-data, and incrementally build and expand some common ontology for the competencies (and resources) of the organizations involved in that sector. For instance, semi-automatic mining of on-line texts, either directly through questionnaires and brochures provided by the current VBE members or through their web sites, can discover common elements of the competency related to the VBE sectors. Nevertheless, it is important to notice that for proper modeling of the VBEs information, the development of a strong and detailed ontology for organizations' competency (related to the sector represented in the VBE), as well as the proactive management of this competency catalog are significant. This is due to the need to assist the opportunity brokers and to increase the effectiveness of the search/matchmaking process, necessary for creation of VOs within the VBE.

4. LIFE CYCLE SUPPORT FUNCTIONALITY Defining a comprehensive and generic "reference model" for VBEs is a big challenge. Nevertheless, based on the initial empirical knowledge gathered from existing cases (see examples in Table 1), it is realistic to design the first steps for gradual definition of a "reference framework for VBEs", addressing aspects such as the VBE behavior, topology, and structure. In this direction, in addition to identification of constituting entities and concepts in VBEs that are briefly addressed earlier in the paper, so far a first list of required functionality for a VBE management system is identified in the ECOLEAD in relation to different stages of its life cycle. A subset of this list is addressed below and partially represented in Fig. 4. Base functionality supporting the VBE creation - This phase includes two main steps: (1) initiation / recruiting, which requires the establishment and setup of a common base ICT infrastructure, and establish some base ontology / thesaurus of the domain, once the vision and strategic objectives of the VBE are defined; (2) VBE foundation, requiring support for parameterization of the used systems, setting up the necessary links, recruiting potential organizations to join the VBE (founding members), creation of the necessary databases (with initial meta-data / ontology), and populating these information structures.

44

COLLABORATIVE NETWORKS AND THEIR BREEDING ENVIRONMENTS

Figure 4 - Examples of VBE life cycle support functionalities Base functionality supporting the VBE operation and evolution - This phase requires support for: management of competencies and assets, registration of new members (including incremental profiling, characterization of competencies, products, services, etc.), assisting VO creation, incremental generation / evolution of ontologies for the domain / sector, keeping records of past performance and collaboration processes, assessment and assistance tools, collaboration support (e.g. newsgroups, discussion forum, common information repositories, etc.), management and evolution of working and sharing principles and rules, acquisition and management of common knowledge and assets. Base functionality supporting the VBE metamorphosis - This phase will require assistance for the design of the aimed new organizational structure, selection and reorganization of the information and knowledge collected during the VBE operation, and that might be transferred to the new organization, analysis and adjustment to the new context, etc. Base functionality supporting the VBE dissolution - In the case of dissolution there is a need to plan the transfer of its collected knowledge, information, bag of assets, etc. to its members, or another entity based on defined agreements. Clearly, considering the existing technological approaches, more than one system architecture can be designed for the VBEs, and many different ICT tools and mechanisms can be applied to develop this architecture [8].

5. SOME OTHER CHALLENGES A number of important challenges can be identified in the design and development of a replicable VBE framework, where competency management, value systems, system of metrics, and trust management are among the main elements. Competencies Management: Competencies represent the "capacity" for existing resources plus the available capabilities/skills to perform some task or activity. Competencies are thus the combination of capabilities and capacities. Proper management of the set of competencies is fundamental for a VBE management

Framework for management of VO breeding environments

45

system. The VBE Competency Management System (CMS) shall include a catalog of competencies and a set of functionalities to manage it. In VBE, potential users of the CMS include the VBE Administrator, Broker, VO planner, VO Coordinator, and VBE Adviser. Table 2 summarizes some of the important issues needed to be considered in the CMS. Table 2. Issues in Competencies Management Competencies catalog: - Ontology of competencies / skills - competencies need to be properly specified and organized in some taxonomic structure, supported by suitable navigational interface - Related competencies/ skills must be identified as means for replace-ability or equivalence of skills - Some hierarchy of competencies must be defined and supported for search, for instance the more generalized (e.g. welding) as well as some specializations (e.g. spot welding). - Furthermore, the inter-relationships (e.g. the IS-A, the whole-part, etc.) among competencies / skills must be defined. - Properties aggregation to characterize each competency. - Basic catalog entities manipulation - flexible search (multi-criteria), add, remove, edit, etc. - Internal Core and some non-core - For each member we can distinguish between the core and the non-core competencies. - External valuation of VBE competency - Considering the global market level of the competency of the VBE as a whole. - From an "operational" point of view, how to determine / collect competencies? Automatic? Manual? How to update them? - Dynamic properties? - It may be interesting to consider levels of competencies / skills. For a given competency C, does our VBE master it to the level of setting strategic developments, or is it only able to "follow" what is suggested by a customer, for instance. Competencies Management functionalities: - Competencies appraisal functionality - How "robust" or "sustainable" is the competencies base? - Skills' gap analysis. What if one member leaves? Specific indicators of skill robustness? Skill robustness inside an organization - skill possessed by one employee or part of the "culture" of the organization? How to rate the skills base? - Marketing support functionality - How to "sell" it to the outside? - Identification of strengths and weaknesses? (Dynamic) Identification of new potentials? - Acquisition of complementary skills? Which support functionality? - Intemal competencies & external but "easily" accessible competencies - What is the "unif ? Enterprise? Department? Group? - Relationship to processes and roles - Endorsement / "accreditation" of competencies. Or rating their quality/past performance? - Notion of joint competency (when one specific competency results from the contribution of 2 or more partners, and such competency cannot be provided by a single partner). Or is this represented by the notion of complex competency (see above)? - Others to be determined.

Value Systems. It is commonly accepted that the behavior of an individual, society, or ecosystem is determined by the underlying value system. It is intuitively understood that the values considered in a business-oriented VBE are different from those in a non-profit context (e.g. disaster rescue and incidence management network). Taking the simplified view that the goal of a VBE is to maximize some "attribute" of its value system, within a business context the dominant value is the profit (in economic sense), while in other cases the objectives are altruistic and compensated by the amount of prestige or social recognition, etc. A value system is in essence the ordering and prioritization of a set of values that an actor or a society of actors holds. However, the values that a group or an actor holds may fall into several different categories since the concept of value is multifaceted. In order to define a value system for a VBE, we need to first define the

46

COLLABORA TIVE NETWORKS AND THEIR BREEDING ENVIRONMENTS

characteristics of values that could be represented in a value system. A number of characteristics can be considered for the values of a value system: - Subjective - For an identical context, distinct members may apply different values. - Personal vs. social - The personal values can be applied only to one member (e.g. assets, capacity, and price) while social values can be applied to a set of members at VBE or VO level (e.g. ethical code, cooperation agreements, contracts). - Normative - The purpose of normative values is to define a set of rules ("rights/duties") that contribute to assure the stability and the cohesion of the group since they transmit norms in a persuasive way and present an unquestionable form (e. g. trust, ethical code, and law). - Exchange - The purpose of exchange values is to "measure" the objects exchanged among partners in a certain context and moment. - Dynamic - The values can change along the time. They can fade out, increase their worth or can appear for the first time. - Measurable - The values can be measured using a quantitative or a quantitative scale. Definition of a value system in a VBE context is based on the notion that each product/service requires a set of value creating activities to be performed by a number of actors, forming a "value creating system" through a VO. As a result, value system needs to be defined at the VBE level, to provide: • A regulation mechanism - for instance, to assure social cohesion, to understand members' behavior and to build performance indicators. • A transactions mechanism between partners - such as, to assure an equality utility between objects exchanged. For managerial purposes it is important to identify which values (within list of values) shall be part of the value system for each specific VBE (or application domain). Another related research challenge is the elaboration of some significant performance indicators - for VBE members, VOs, and the VBE as a whole - to be computed through some combination of values / variables of the adopted value system. Also, a related issue is the elaboration of procedures for distribution of profits resulted from some activities in the VBE (and VOs) [7]. System of incentives: The definition of a system of incentives is important for attracting and maintaining partners and members. In general, for business-related contexts, the key incentives to participate in a VBE are business benefits and knowledge. Incentives for members are mainly associated with costs, and some examples could be: (i) Guaranteed participation in a given number of VOs during a given period of time (although difficult to materialize in practice), (ii) A set of basic tools provided in the VBE bag of assets, (iii) On-demand VBE Product and Services, (iv) Tutorials, Courses and Conferences to enhance productivity (and core competencies) in companies, (v) An initial evaluation of the member and a commitment for constructive suggestions/advice to better its status in a given period of time. The development of a set of performance indicators, as mentioned above, can complement these incentives by providing a more objective measure of the benefits of being involved in a VBE. As an incentive for member organizations to become

Framework for management of VO breeding environments

47

more active in the VBE, a set of rules can be defined to collect points (e.g. a broker collects X points when Incentives for government involvement are directly related to the social and economic impact of the VBE. Examples of this type of incentives are the increase in employment rates, increase in gross product, better infrastructures, and SMEs' development. For universities, the key incentives for participation in a VBE are the openness of VBE projects looking for student practices and an early introduction to industry practices. A better link between industry and academia can also be offered in order to improve research results. For R&D organizations, the key incentive is the exploitation of their technological advances. This link between research and market is needed in order to sustain the research and development activities. Brokers are closely involved in materialization of this incentive. Trust management. Trust is a critical antecedent for more efficient and effective communication, collaboration and knowledge creation. In fact innovation cannot be managed hierarchically because it depends on knowledge being offered voluntarily rather than on command. Therefore knowledge creation is social in nature; social exchange is a core process in knowledge creation. Building trust is not an easy task, it requires mechanisms supported by the VBE, and usually takes time. Trust can be generated as an outcome of organization's past/present performance information recorded in the VBE. Therefore, trust is a component of the desired preparedness to participate in VOs. Trust plays an important role in order to create competitive advantage by reducing governance costs (management costs), costs for internalization (acquisitions), transaction costs between organizations, and impact positively in knowledge creation. Trust enables open communication, information sharing, and conflict management in a clear way, and also helps to speed up the contract process [5]. A set of well-estabHshed policies and criteria to follow in collaborative processes can help in creating / increasing trust among partners. Several other challenges need to be also addressed including VBE marketing, ethical issues, management of VBE assets, contracts/collaboration agreements, etc.

6. CONCLUSIONS For competing effectively in today's fast and rapidly changing business environment, organizations must organize people and processes to enhance responsiveness and flexibility and quickly react to a business opportunity. Advanced ICT and recently cutting edge web technologies have enabled new options in organizational structure and manifestations. Boundaries of location, time and individualization, and even organization have become less confining, allowing dramatic changes in the current work environments in form of VOs. The Virtual organization breeding environment (VBE) is an emerging challenging area of research. Most elements comprising VBEs are not yet properly defined, and there are no reference models or reference architectures addressing the constituting elements and behavior of the VBEs. The multidisciplinarity of research on VBEs further adds to its complexity. Consequently, even discovery and identification of VBEs' requirements and proper defmition of this problem area itself becomes challenging. Furthermore, to handle its wide variety of requirements.

48

COLLABORATIVE

NETWORKS AND THEIR BREEDING

ENVIRONMENTS

innovations in several areas are needed. Among others, endogenous to the VBEs, there are four key characteristics of VBEs that need careful attention. First, VBE entails the development of relationships with a broad range of potential partners, each having particular competency, resources, products, services, etc. that complements the others. Second, VBEs shall be regulated by a set of governing rules and principles for participation, and enforced by the VBE management system. Third, life cycle stages of VBEs determine its required functionality and services. And finally, there must be trust between VBE actors separated in space, for effective VO creation and operation. In this direction, ECOLEAD is contributing to the definition and establishment of a framework for VBEs that can be replicable to different application domains. Acknowledgments. This work was supported in part by the ECOLEAD project funded by the European Commission. The authors thank the valuable contributions of their partners in the ECOLEAD consortium.

7. REFERENCES [I] Afsarmanesh H., Guevara-Masis V., Hertzberger L.O., Virtual Community support in TeleCARE, in Processes and Foundations for Virtual Organizations, Kluwer, Oct 2003. [2] Afsarmanesh H., Kaletas B.C., Hertzberger L.O., The Potential of Grid, Virtual Laboratories and Virtual Organizations for Bio-sciences, in proceedings of 28th Conference on Current Trends in Theory and Practice of Informatics, SOFSEM 2001, Piest'any, Slovak RepubHc, 2001. [3] Afsarmanesh H., Camarinha-Matos L.M. Future Smart-Organisations: a Virtual Tourism Enterprise, in proceedings of 1st International Conference on Web Information System Engineering - WISE'2000, Hong Kong, China, 2000. [4] Bremer, C ; Mundim, A.; Michilini, F.; Siqueira, J.; Ortega, L. - A Brazilian case of VE coordination, in Infrastructures for Virtual Enterprises, Kluwer, Oct 1999. [5] Blomvist, K. - Partnering in the dynamic Environment: The role of trust in asymmetric technology partnership formation, PhD thesis, Lappeenrant University of Technology, 2002. [6] Camarinha-Matos L.M., Afsarmanesh H., TeleCARE: Collaborative virtual elderly care support communities, in The Journal on Information Technology in Healthcare, Vol. 2, Issue 2, London, Apr 2004, pp 73-86, ISSN 1479-649X. [7] Camarinha-Matos, L.M.; Abreu, A. - A contribution to understand collaborative benefits, in Emerging solutions for future manufacturing systems. Springer, 2004. [8] Camarinha-Matos, L.M.; Afsarmanesh, H. (Ed.s) - Collaborative networked organizations - A research agenda for emerging business models, Kluwer, 2004. [9] Camarinha-Matos, L.M.; Afsarmanesh, H. - Elements of a base VE infrastructure, J. Computers in Industry, Vol. 51, Issue 2, Jun 2003, pp. 139-163. [10] Camarinha-Matos, L.M.; Afsarmanesh, H.; Ollus, M. (Ed.s) - Virtual Organizations: Systems and Practices, Springer, 2005. [II] Garita C , Afsarmanesh H., and Hertzberger L.O., The PRODNET Federated Information Management Approach for Virtual Enterprise Support, in Journal of Intelligent Manufacturing, vol. 12, pp. 151-170,2001. [12] Mejia, R.; Molina, A. - Virtual enterprise broker: Processes, methods and tools, in Collaborative business ecosystems and virtual enterprises, Kluwer, May 2002. [13] Plliss, A.; Huber, C. - Virtuellefabric.CH - A source network for VE in mechatronics, in Virtual Organizations - Systems and Practices, Springer, 2005.

CO-DESNET: AN APPROACH TO MODELING COLLABORATIVE DEMAND AND SUPPLY NETWORK Agostino Villa and Irene Cassarino Dipartimento di Sistemi di Produzione ed Economia dell 'Azienda Politecnico di Torino, c.so Duca degli Abruzzi, 24, 10129 - Torino (Italy) Phone: +39-011-564.7233;fax: -564.7299; e-mail: agostino.villa(a)polito.it

Present evolution of multi-firm supply chains and industrial districts urges to have at disposal procedures and methods for the organization and management of a collaborative DEmmid & Supply NETwork (CO-DESNET. The crucial point in organizing and managing such networks is "to assure good collaboration among partners": interactions among the firms as well as the connecting information pattern have to be designed accordingly. The presentation of a new model of a CO-DESNET is the scope of the paper: based on this model, conditions verifying how collaborative operations of the firms included in the network will occur, are derived.

1. INTRODUCTION In several European countries, groups of Small-Mid scale Enterprises (SMEs) aim to cooperate together, forced by the globalization of markets. The result of these agreements usually is a Demand & Supply Network (DESNET), which is structured as an "extended virtual enterprise", i.e. a temporary network of several firms which decide to cooperate together in a common given value chain for a limited time horizon. A special interest of the industrial bodies is reserved to networks of firms characterized by "co-operation agreements" signed for a finite time horizon, and stated such that each firm could partially interact with the other network partners (i.e. each firm could also have a proper market share, thus involving in the network only a part of their own core business). The resulting new DESNET can have a finite life and it does not completely reduce the autonomy of any component firm, because each one can still produce items for proper clients, and then operate in a proper market segment (Villa, 2001). More precisely, all the enterprises which agree to be included into a DESNET and then be active inside the same supply chain, must sign an agreement to co-operating together in defining common production plans for specific products. The design, organization and management of a "temporary DESNET' requires to apply new models of the network operations, based on the concepts of the multi-agent organizations (Zheng & Possel-Dolken, 2002) and defined in formal terms according to the theory of large-scale dynamic systems optimisation (see Sethi & Zhang, 1994). Depending on above mentioned requirements, a DESNET will be here formally

50

COLLABORATIVE NETWORKS AND THEIR BREEDING ENVIRONMENTS

stated as a virtually connected chain of service stages, each one containing either a firm or a set of parallel firms, each firm with its proper autonomous decision-maker, denoted "agenf (Huang and Nof, 2000, Farantin et al, 1998, Yung & Yang, 1999): each agent aims to cooperate with the others, but also wants to obtain the best profits for his own enterprise. Each service stage is connected to the upstream stages and to the downstream ones through a virtual marketplace (Wellman, 1993): it means that each firm will negotiate contracts for producing goods with downstream (buyer) firms as well as contracts for acquiring materials with upstream (supplier) firms. This negotiation opportunity is a qualifying character of a DESNET. Since each firm aims to gain its own best income, it utilizes the DESNET to which it belongs as a frame within which a "good negotiation" can be performed. Here "good negotiation" means that an agreement between each pair of "consecutive agents" (belonging to two consecutive stages of the chain) can be found such as to satisfy both agents, because both aim to being cooperative but, at the same time, want to make profits: then the desired agreement should assure a sufficient income to both of them. The concepts above introduced allow detailing the real problem now facing supply chain designers and organizers (Villa, 2002): under which conditions does an individual enterprise find convenient to sign a temporary agreement for becoming a partner within a multi-agent DESNET? Industrial experience suggests that this is a multi-faced problem depending on economic, technological and managerial considerations (Simchi-Levi & Kaminski, 2000). This paper will approach the problem according to the management point of view. And the goal is to develop a model of the multi-agent management problem in a DESNET such as to analyse how cooperation of partners could be enforced. The paper contents are as follows. Section 2 introduces a model of the problem of managing interactions among the component firms of a DESNET. Section 3 will discuss the inter-firm negotiation problem, in order to derive conditions which can motivate cooperation among firms. The Section 4 will summarize final considerations about a collaborative management of local autonomous agents.

2. MODELING THE DESNET MANAGEMENT PROBLEM The proposed model of a DESNET is based on the idea that such a networked industrial system consist of an "open commercial system" within which two component firms interact together by exchanging material and financial resources. For each material resource (i.e., parts of a common final family of products), a proper market place exists on which this resource is negotiated through a proper monetary value, between the supplier (i.e., the resource producer) and a customer (i.e. the purchaser who will utilize the resource in its own production sequence). In a DESNET, considering the complete production cycle of a final product, each buyer will purchase at least a resource to apply his own manufacturing operations in order to transform it into a new item with more added value, to be sold in a downstream market place. So, the principal functions of any component firm are: purchasing, transforming (through either manufacturing or servicing), and selling of items. In

CO-DESNET: an approach to modeling supply network

51

as the European a Collaborative DESNET (denoted in the following C0-DESNET\ project to which the paper is referred), this set of dynamic commercial interactions occurs into a co-ordinated protected industrial network. Partners indeed are connected together through collaboration agreements, which reflects into effectiveness of the commercial negotiations. These agreements should give each component firm a sufficient assurance of economic survival, by suitable management of usual "hard" business relations between large-scale and small-scale firms. The model presented in the following aims at allowing an easy but correct evaluation of costs and advantages of the above sketched regulated industrial system. To this aim, a CO-DESNET composed by 4 enterprises, belonging to 2 different stages, is considered, together with a final customer. Two market places, one internal and one between producers and the final customer, define the interactions among the agents. At the material input stage, two firms (denoted by index n=l,2) produce parts to be sold to the two firms belonging to the following stage (denoted by index n=3,4). These last ones apply final operations to transform parts into products, to be sold to the final customer. The customer's exogenous demand is denoted hy At. Each agent n is modelled by a production optimisation problem: to maximize the firm profit (i.e. the difference between selling return and production costs) with respect to produced volume and price, under the constraints describing the inventory dynamics and the production capacity saturation. The model for the first stage component firms n=l,l is as follows: min J „ = I ( - P „ , , X „ , , + c„/„,,,^ + r„7„,,)

(1)

In,.F=I.,-^.F+Yn,-X„,,

(2)

y..,^c„

(3)

Xn,Jn,,.FJ„.nP.,^^

(4)

where the following notations have been used, for the first stage component firms n=l,2, (all referred to time period t): Pn,t is the price to sell items fi:om supplier n to the second-stage buyers; X n^t is the volume sold fi:om supplier n\ Y^^t^ the volume produced by supplier n\ I n,t,F, the output storage of finished parts at supplier n\ Cn, the storage unitary cost; r„, the production unitary cost, and C„, the production capacity of supplier n. Referring to the second stage component firms, n='3,4 (denoted as "buyers"), the related models are as follows:

^ CO-DESNET is the acronym of the Coordination Action (CA) project n° IST-2002-506673 / Joint Call IST-NMP-1, supported by the European Commission, Information Society Directorate-General, Communication Networks, Security and software, Applications, under the coordination of Politecnico di Torino, Prof A. Villa, and with EC Official Dr. F. Frederix. This paper refers to research results developed for preparing the CA proposal at Politecnico di Torino.

52

COLLABORA TIVE NETWORKS AND THEIR BREEDING ENVIRONMENTS

Q,Z,W,D

,

j^3>j

^n,,P=InJ-l,P+K,t-D,,t

(7)

K,^C^

(8)

Zn,J„,,pJr,^M^K,nS^^O

(9)

with the following notations: g„^ is price to purchase items by buyer n from the firststage suppliers at the internal market place; Z n,h the volume purchased by buyer n; D n,h the volume sold by buyer n to the downstream final client; A t, the external demand from final client; Wn,t, the volume produced by buyer n;I n,t,p, the output storage of final products produced by buyer n; I n.t.M> the input storage of parts to be used by buyer n\ St, the unitary price for selling final products during period t; Cn,p, the unitary cost of final products storage and C„M is the unitary cost of input storage of parts. Since the four enterprises belong to the same CO-DESNET, the network model is completed by introducing some conditions regulating interactions among the partners. I. Conditions stating that production volumes must be balanced with internal and final demands: I-a. All parts produced by firms in the upstream stage have to be purchased by firms of the second stage:

(10)

I ^„, = I Z„, «=1,2

n=3,4

I-b. The final client demand has to be fully satisfied: YD„,-A,=O

(11)

II. Conditions stating that prices of parts in the internal market place have to be balanced: 2,/

0(12);

P,, - e , , =0(13);

Q,^, - ^ 4 . = 0 (14).

III. Condition stating that the production volumes of the firms belonging to a same stage have to be balanced according to the respective efficiency:

±ix„r-±ix,,,r=o

(15)

CO-DESNET: an approach to modeling supply network

53

IV. Condition stating that the volumes of final products sold by the firms belonging to the final stage, to the end customer, have to be balanced according to the respective efficiency:

-L(D3,,)^--J-(D,,)^=0

(16)

Note that these last two conditions state the effective collaborative rules for the enterprises belonging to a CO-DESNET. In practice, the agreement to be a network partner states that each firm agrees in producing, for the network needs, by using its own production capacity at a rate which must be balanced with the capacities of the other network partners: no enterprise will receive a demand for products "unbalanced" with respect to the others. In addition, conditions (12) to (14) will impose an equilibrium on the network internal prices. The global management problem results from the whole set of conditions (1) to (16) above stated. It consists of a large-scale non-linear optimization problem: existence of an optimal solution can be proven according to standard optimisation theory results (Brandimarte & Villa, 1995). By applying Lagrangian relaxation, the complete optimisation problem can be split into four optimization sub-problems, all interrelated together, each one linked to a component firm n, namely: - for the firm?2=7 min n , =Y.{-Pu^n,t + CiA,.,F + ^i^M + (17) + «,^i.+r/-^K?+(^.-^.)i'i,) - for the fivmn=2 (18) ^2

- for the firm ^2=J

(19)

J ^3 C for the firm n=4

54

COLLABORATIVE NETWORKS AND THEIR BREEDING ENVIRONMENTS min n , = I(Q4,Z,, + r,W,, + c, •^ ^4,P-^4,t,P

1 r

~ ^t^4,t

~

^t^4,t

1

(20)

+'7,77-P4,,r+( semiconscious j \knowledge; ^Xc./

Low Low

High TACIT DIMENSION

Figure 1.- Knowledge spectrum (Leonard and Sensiper, 1998)

An integrative approach for VO planning and launching

83

3. REFERENCE MODEL FOR VO PLANNING AND LAUNCHING The purpose of the reference model presented in this work is to provide guidelines for VO planning and launching activities. The reference model integrates the elements involved in VO creation in a three dimensional structure. First dimension represents the VO life cycle (Creation, Operation & Evolution and Dissolution). In this reference model only VO creation stage is included, this stage is divided into two sub-stages: Planning and Launching. Second dimension consists of four modelling views. These views provide the basis for the creation of a multidimensional model in order to represent the interactions of the VO elements involved in creation process. Third dimension establishes how the knowledge, generated during the process of VO planning and launching, is captured, shared and exploited. Three knowledge domains are included that act as filters to structure planning and launching knowledge. 3.1 First dimension: VO planning and launching within VO lifecycle This dimension has a direct relationship with VO lifecycle (Creation, Operation/Evolution & Dissolution); within this dimension five main activities are included, the activities are: (1) Analysis of Business Opportunity, (2) Partners selection, (4) High WBS (Work breakdown structure) and (5) VO Setup. Methods, tools and models are customized according to the characteristics of the VO for each activity. It is important to select suitable methods and tools that support this dimension, some example of IT tools are: (1) Web-enabled project management tools, (2) Workflows, (3) simulation tools and Matchmaking engine. 3.2 Second dimension: VO modelling. This dimension is composed by four modelling views based on GERAM, these views support the creation of a multidimensional model (VO model). The modelling views are: 1) Resource: This view represents all the resources (Human, Technological, etc.) employed by the processes developed by the Virtual Organization in order to achieve their objective. 2) Organization: Represents the responsibilities, authorities and relationships of all the entities involved in the Virtual Organization. 3) Functional: This view represents the behaviour of the entities involved in the processes developed in the life cycle. 4) Information: This view represents the information and knowledge structure among the entities involved in the Virtual Organization, and the relationships among these entities. To enable the creation of a VO model an enterprise modelling language is needed. In this work Unified Modelling Language (UML) is the language that will support the creation of the models for each modelling view. Examples of IT tools that enable the creation of this model are: ARIS Toolset, UML and IDEF modelling tools, among others.

84

COLLABORA TIVE NETWORKS AND THEIR BREEDING ENVIRONMENTS

3.3 Third dimension: VO knowledge management. Third dimension estabhshes the mechanism that supports knowledge management during VO planning and launching, to enable knowledge capturing and sharing among VO partners. Three knowledge domains are defined based on the work of Fischer and Rehm (2004). The purpose of the knowledge domains is to act as filters for the knowledge generated during VO planning and launching. Through the action of these domains it will be possible to display in a structured way the knowledge among VO partners, here is a brief description of the three domains: Organizational Knowledge: This domain includes all knowledge related with VO structure, members profile, roles, competencies, authorities and available resources. Procedural Knowledge: This domain includes knowledge which represents the way the VO's work; this can be procedures, member's responsibilities, business processes, etc. Operational Knowledge: This includes knowledge related with the status of the activities been developed within VO, can be Gantt Charts, quality inspections reports, etc. To enable knowledge capturing and sharing among members it is important to translate knowledge domains characteristics into specific IT tools; examples of these tools are Object-Oriented Databases and Ontology Managers. 3.4 Reference Model Relationships among dimensions Important elements in the reference model are the relations that exist between the dimensions. Figure 2 depicts how planning stage activities (First dimension) are developed and how knowledge domains (Third dimension) capture the knowledge generated during these activities. For facilitate and enable knowledge exchange among VO members it is important to create a knowledge repository based on the knowledge domains mentioned in section 3.3, the knowledge repository should be able to allow distributed access to the VO members involved in planning activities. This knowledge repository will capture and share the knowledge generated during planning and launching activities. The relationship between these two dimensions is guided by planning activities because the knowledge to be captured in the domains is generated during the activities of the first dimension.

An integrative approach for VO planning and launching

85

Business Opportunity

VO operation plan

Figure 2. - Description of the relationships between reference model dimensions The relationship between first dimension (Planning and launching activities) and second dimension (modelling views) are based on the models required for each activity. Each activity required in VO planning and launching should be accompanied by a set of models according to the four modelling view (information, organization, function and resource). The purpose of these models is to represent the interaction of VO members and define the resources required to develop planning and launching activities. Third and Second dimensions have a relationship based on the UML diagrams used to build the VO model, this diagrams are related to the knowledge domains. Knowledge domains support VO modelling by providing diagrams developed during past VO models that can be used in order to enhance the creation of new models.

4. STUDY CASE: VO PLANING AND LAUNCHING IN lECOS COMPANY lECOS (www.iecos.com) is a broker company located in Monterrey, Mexico who has three main competencies: Supply Services, Engineering Services and Construction Services. The study case analyzed on this work is using lECOS Supply Services (lECOS-SS) division. lECOS-SS identified a Business Opportunity related with the fabrication of Aerospace Maintenance Tooling (inspection equipment). This product has different components. The components are mainly machined and plastic injection parts. Following the description of the reference model for VO planning and launching is described in each dimension according to lECOS characteristics. First dimension was developed based on VEM-Virtual Enterprise Methodology (T011e, 2004) as a basis for VO planning and launching. This methodology was adapted according to

86

COLLABORA TIVE NETWORKS AND THEIR BREEDING ENVIRONMENTS

lECOS particular characteristics (See table 1), including 4 main stages: (1) Analysis of Business Opportunity, (2) Partners selection, (3) High WBS and (4) VO setup. A detailed description of each activity is presented in table 1. Table 1. - lECOS Study Case planning and launching methodology stages. 1 Methodology Stages

Analysis of Business Opportunity

VO Specific Sub-Stages

Description

Analysis of Cluster Members capabilities

Seven Virtual Industry Clusters were analyzed and two of them where identified as possible sources of suppliers \

Drawings analysis

All product related drawings were analyzed and comments about product characteristics were captured

Identification of required Based on product characteristics, manufacturing processes were defined processes

the

required

Partners selection

Evaluation and selection Two clusters were analyzed, within these cluster two of members competencies members were selected according its capabilities i

High WBS

Product Work Breakdown Using a project management tool, the product was break Structure down into specific needs that VO members should accomplish. VO Structure Definition During this stage four activities were developed: Members role definition, quotation process, Definition of contractual issues and operating rules. This stage established the VO project plan, to develop VO Project Definition this plan several activities were developed: Project strategy definition, implementation plan development, definition of project schedule and project plan development among VO members

p/0 Setup

A VO model was created in order to represent the interaction of VO elements. To create this model four UML diagrams were developed: 1) Use case diagrams to represent organizational view, the use case diagram was used because for this study case it was required to identify how the VO members are involved in VO planning and launching activities; 2) Activity diagrams for functional view, representing how planning and launching activities were developed and which members was responsible to develop an specific activity; 3) Class diagrams to represent resource views of all members involved in the VO; 4) Sequence diagrams for information view that represent information exchange among members. Through the integration of these UML diagrams was possible to build a multidimensional model (VO model) which represents how VO members are involved in planning and launching stages. The type of diagrams used depends of the modelling requirements defined for specific VOs. Figure 3 shows how UML diagrams were integrated in lECOS Aerospace Product VO model.

An integrative approach for VO planning and launching

1

87

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/

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Or§anl2saiNon view

Fur>CliOii RFC4 RFC5 DO2

Design Office Agent

Figure 3. Expressions of interest. At the end of this recursive process, a Design Request Network is formed. It is possible to use a hypergraph to represent this logical structure. In this hypergraph, a node is associated with RFC, while a hyperarc is associated with a DO that has expressed interest in responding to the RFC associated with its head. In the hypergraph, there is a special node associated with a RFCdummy foi" which no answer is required. In figure 4, we have represented a particular Design Request Network in which no DO expresses an interest in the RFC3 (request of a compressed air engine). It follows that the first DO will not be able to produce a solution to RFCo, notwithstanding an expression of interest to do so.

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Figure 4. The Design Request Network The definition of this hypergraph is essential to the extraction of all logical structures of Virtual Enterprises that are able to generate a new concept to respond to the initial RFC. At the end of the process, the Market Broker Agent has also collected all the information about substructures of VE which cannot be successfully completed. Figure 5 shows clearly how DO2 -DOe -DO7 and DO3 -DOg can form two VEs capable of producing a concept responding to the initial RFC. This example has shown how structured aggregations of distributed design offices may emerge in a conceptual design market. Such aggregations are eligible candidates to form a VE. Starting from this point, the phase concerned with Product Concept Functional Descriptions should be executed. Only those aggregations which succeed

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after this phase would be able to activate managerial procedures aimed at forming a VE. ~

Figure 5. The Conceptual Design Network

6. CONCLUSIONS AND FUTURE WORK We have presented a collaborative approach and a support MAS for the formation of a VE in a Conceptual Design Knowledge e-market. By adopting such an approach, the functionality of a new product and the structure of a VE which is capable of designing it, take shape in a circular way. In particular, we have focused on collaborative and distributed analysis of the first phases of the design activity which lead, on the one hand, to the identification of DOs and informational exchanges which take place between them, and, on the other hand, to the definition of possible functional architectures for the product. A fundamental feature of the proposed approach is the guarantee of an adequate level of mediation security among the DOs involved in the processes which we have considered to occur in the Conceptual Design Knowledge e-market. Finally, it is important to point out that the results of the present study may be used for further investigations in order to: give a complete formal definition of logical structures and processes which arise in the formation of VEs in a Conceptual Design Knowledge e-market; • indicate a feasible implementation of the proposed MAS architecture, on the basis of emerging technologies, such as business objects and peer to peer; this problem is strongly felt by researchers and software producers who are involved in collaborative commerce along a Design Chain {Dhbrown.com, Ptc.com,...); define economic models and negotiation protocols for Design Chain management in a design phase, successive to the phase treated in this paper.

7. REFERENCES 1. Davenport T., Prusak, L., Working Knowledge, (Harvard Business School Press, 1998). 2. Hao Q., Shen W. Wang L., Towards a Cooperative Distributed Manufacturing Management Framework, Computers in Industry, vol. 56, pp.71-84, (2005). 3. Rodgers P.A., et al.. The Management of Concept Design Knowledge in modem product development organizations. Int. Journal of Computer Integrated manufacturing, vol. 14, n.l, pp. 108-115, (2001). 4. Strader T. J., Lin F., Shaw M.J., Information Infrastructure for Electronic Virtual Organization Management, Decision Support System, vol. 23, pp. 75-94, (1998). 5. Ulrich K., Eppinger S., Product Design and Development, (McGraw-Hill, New York, 1995). 6. Volpentesta A., Muzzupappa M., N. Frega, S. Rizzuti, Product Design Data Modelling for Review Process Management, J. of Engineering Design, vol.15, n.l, pp.53-67 (Taylor&Francis Ltd, 2004). 7. Volpentesta A., Muzzupappa M., Identifying Partners and Logical Structures for VEs Oriented to Conceptual Design, submitted for publication. 8. Weigand H., Van den Heuvel W.J., Cross-Organizational workflow integration using contracts. Decision Support System, vol. 33, pp. 247-265, (2002). 9. Yamamoto H., Ohta T., Development of a knowledge market based on reputation, and absorption of uncertainty in electronic commerce, Proc. of the 5th World Multi-Conference on Systemics, Cybernetics and Informatics, vol.8, pp. 394-399, (2001).

PART^VO CREATION - PARTNERS SELECTION

A SYSTEMATIC APPROACH FOR VE PARTNERS SELECTION USING THE SCOR MODEL AND THE AHP METHOD

Federal

Felipe Bittencourt, Ricardo J. Rabelo University of Santa Catarina, BRAZIL f e ] b i t @ d a s. u f s c. b r, r a b e ] o @ d a s. u f s c. b r

This paper presents an approach to help VE managers in the selection of the most s u i t a b l e e n t e r p r i s e s to compose a VE (Virtual E n t e r p r i s e ) . Applying the Analytic Hierarchy Process (AHP) method having as basis metrics p r e s e n t e d in the SCOR model, the VE manager can have a more robust view upon the p a r t n e r s ' i m p o r t a n c e and bill of m a t e r i a l ' s items c r i t i c a l i t y in a given business opportunity.

1. INTRODUCTION The enterprises have faced markets in constant changing, global competition, and shorter and shorter technologic cycles. With the popularization of the Internet and the proliferation of the electronic markets, the ability to have competitive advantage and to survive in so dynamic markets, depends on its organization flexibility, information availability, effective coordination of decisions and actions, and permanent or sporadic relations with other enterprises willing to face new business opportunities (Pereira, 2000). Besides that, looking at reducing costs and other correlated objectives, like changing fixed cost to variable and reducing its assets, many enterprises are allocating some of its less critic activities to third part firms (ATKeamey, 2003). The concept of Virtual Enterprises (VE) emerges from this scenario. Actually it is relatively new in the literature and very new yet in terms of industry acceptance. A VE is a dynamic, temporary and logical aggregation of autonomous enterprises that cooperate with each other as a strategic answer to attend a given opportunity or to cope with a specific need, and whose operation is achieved by a coordinated sharing of skills, resources and information, totally enabled by computer networks (Rabelo et al, 2004a). Many efforts have been spent by the scientific community in order to address each new dilemma that the Virtual Enterprise paradigm brings up. Since VEs are composed of autonomous entities and firequently created with short and medium term objectives, the process of creating VEs must be carried out with more and more agility while the global cost for that must be minimized (Davulcu et all., 1999). However, the VE creation is a complex problem. The traditional ways enterprises

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select their suppliers are no longer adequate at all in a VE scenario regarding the weaker trust among newer partners, the metrics used to evaluate them, and the need for a much quicker selection of them out of potential dozens of candidates. In this sense, this paper proposes a systematic approach to assist the so called VE Manager in the selection of the most suitable partners for a given VE. For that, the SCOR model and the AHP (Analytical Hierarchical Process) method are applied in a combined way once the enterprises have bid for a given proposal. This paper is organized as follows. Chapter 1 has highlighted the new trend for collaborative work and the need for more agile selection of partners. Chapter 2 stresses a bit the problem of VE partner's search and selection. Chapter 3 introduces the proposed systematic approach for partner's selection. Chapter 4 comments some results already achieved in terms of prototype implementation. Finally, Chapter 5 presents some conclusions.

2. PARTNERS' SEARCH AND SELECTION PROBLEM Nowadays there is a clear trend towards business collaboration. Enterprises are building long term relationships in order to benefit from preferences or exclusivity when bidding to an item. It is assumed that enterprises should help to each other improving their own processes in order to beneficiate both sides, even if it demands a short term effort (Neverwire, 2002). Here trust arises in importance. In very concrete terms, collaboration in a trustful environment involves the sharing of principles. One perspective of these principles involves the sharing of metrics to measure the partners' performance and the way they are measured and understood. On the other hand, in a more volatile relationship, usually done among partners who are collaborating for the first time and perhaps will no longer work together again, it is quite difficult to guarantee a minimum basis of trust. Under this perspective of trust, some works divide enterprises into two main groups (Neverwire, 2002): large enterprises, and SMEs. The first group uses to work in a Collaborative Commerce environment. They build long term relationships with their suppliers and eventually with their suppliers' suppliers, providing low tax financing for raw-material purchase, production line improvement, employees training, etc. In this group there is time for establishing common principles and rules, including continuous improvement and learning processes. The second group, generally represented by SMEs, use to focus more on a Market Oriented approach, where transactions are only an exchange of goods for payment. Usually this is about the singular delegation of a task from a buyer to a seller. Enterprises stay autonomous and do business per individual transactions. There are no formal agreements binding the seller to the buyer. It might have some kind of cooperation between them, but this lasts only until that business opportunity is finished. This kind of relationship requires from enterprises to be more agile and flexible as a way to guarantee their survival in the increasingly competitive environment. In this group there is not much room for establishing wider principles of trust, which makes them to be connected via a fragile line of common conduct and sometimes working with a not recommendable level of risk. More recently, and perhaps as a third / hybrid group, there is the Virtual Breeding Environments (VBE) (Camarinha et al., 2004). In general, VBEs can be

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seen as an evolution of the classic concept of cluster of enterprises. A VBE is a group of enterprises from any sectors that decides to make part of a long-term collaborative community where they can benefit from each other in common business opportunities, in the sharing of technologic knowledge, in training activities, and many other advantages. Nevertheless, for partners' selection purposes, the key aspect here is that they share the same code of conduct on how to make businesses together as well as on how they can be evaluated. Despite these common rules, enterprises keep autonomous for leveraging businesses with outsiders, both working with long term relations with a given large enterprise and to make businesses with other SMEs opportunistically. When partners should be selected to create a Virtual Enterprise, this is made using the same decisions that purchase departments take daily when selecting bid suppliers for the involved products. The purchasing literature states that selection and management of the right supplier is crucial to obtain the desired level of quality, comprising delivery time, right price, the necessary level of technical support, and the desired level of service. According to (Dobler and Burt, 1996), buyers must take six important supplier-oriented actions in order to satisfy these requirements: 1. Develop and maintain a consistent supplier base; 2. Address the appropriate strategic and tactical issues; 3. Ensure that potential suppliers are carefrilly evaluated and that they have the potential to be effective suppliers; 4. Decide whether to use competitive bidding or negotiation as the basis for source selection; 5. Either select the appropriate help or be the team leader responsible for this task; 6. Manage the selected supplier to ensure it ftilfills the order's requirements. A considerably number of firms does this by the means of suppliers' performance measurement programs that are based on metrics. Metrics are used to evaluate past performance of processes in order to take control actions or only to do benchmarking (Goranson, 1999). There are hundreds of metrics that can be applied to select partners. One of the most comprehensive set of metrics is provided by SCOR (Supply-Chain Operations Reference model). What are the most suitable metrics to be applied to and upon a given set of suppliers for a given business? Do suppliers implement metrics in the same way? Are there semantics conflicts on how to interpret them? Are there some metrics more important than others for that given business? If so, how much important are they? Can I also make some qualitative analysis instead of a purely quantitative computation? These are examples of answers that a manager should have for a proper selection of VE partners when using metrics. Actually, the suppliers' evaluation varies in nature, criticality, complexity, and monetary value of the purchase to be made. Seeing the literature, it seems there is a clear lack of supporting methodologies to help managers in those decisions. Besides that, it has been observed that several works make that analysis focusing on adequate metrics for each process/partner of the chain or VE instead of considering the VE as a whole. Aiming at contributing to this problem, next chapter presents the proposed approach to assist VE managers in the partners' selection. It considers the VE as a

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whole as well as that in a VE scenario every business opportunity is per se different from one to another hence requiring a careftil analysis about the metrics to be used.

3. THE PROPOSED SYSTEMATIC APPROACH When a partner is clearly better then its competitors the selection becomes a very simple task. However, practice shows it is quite rare. The choosing of the best partner is becoming complex and complex as modem business requires the application of a number of metrics against partners simultaneously with metrics having different degrees of importance (weights) in each business. The identification of the key metrics and their respective weights is typically accomplished by a committee of individuals involved in the purchasing. Regarding the difficulty to assign weights to metrics, this work applies the Analytic Hierarchy Process - AHP - method (Zahedi, 1986). Three important assumptions are considered in this work. The first one is that all enterprises would belong to a given VBE, so VEs are to be created based on a VBE's rules. The second one is that, as a VBE, the SCOR model was chosen as the source of metrics that cold be applied in the partners' selection and evaluation. The third one is the existence of a global historical database (HDB) in the VBE, which would contain an historic of all the transactions among the VBE members, keeping the metrics' set updated and contributing to measure the performance of each of the enterprises. In general, the proposed systematic approach is carried out in ten almost totally sequential steps, within which the AHP method is used. Actually, these steps fit the main phases of the VE creation life cycle: collaboration opportunity characterization, rough VE plan, partners' identification, negotiation, detailed VE planning and VE launching (Camarinha et al., 2005). i) Business Opportunity Specification (BO): This phase is characterized by the identification of an opportunity to do business with the enterprises inside the VBE related to a given product. The enterprise which has identified this BO, by default, will act as the VE manager and so will be responsible for searching and selecting the partners that match the product's global specifications. ii) Bill of Materials fBOM): Having on hands he BO's specifications, the VO manager is provided with its BOM in order to compose a preliminary VE plan. It is through this BOM that the potential partners will be found, ranked and later selected. This VE plan must embody all the aspects to attend the BO, from the delivery and transport service (when necessary) to the last level of product decomposition. iii) First Call for Tenders; By means of using BOM it is necessary to find suppliers interested and capable of supply each of its items. Calls for tender containing basic (but essential) information about the product's parts, dates, price limits and other preferences are spread out over the VBE (partners search phase) and potential / interested partners can make a bid for them. The sending of only basic information is interesting as it avoids enterprises to receive a bunch of unnecessary information

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(and sometimes huge ones in the case of CAD models) for their preliminary analysis. Besides that, some pre-processing in the VBE's members list can be made considering the members' profiles so that even this basic announcement can be sent to potential members only. iv) Analytic Hierarchy Process (AHP): In parallel to step iii, the VE manager should evaluate the criticahty of the ROM's items m the context of every / specific BO. For that, the Analytic Hierarchy Process (Zahedi, 1986) is applied. The VE manager is then assisted with the AH? method in order to 1) assign a v^eight for the product's parts and then for the partners, 2) to choose the most suitable metrics and weight them 3) to assign a weight for the metrics' scales. Figure 1 illustrates part of the idea / process. The FBTextile is a product composed basically of four parts: buttons, embroidery, fabric and labels. The VO manager assigns (in a subjective way) the levels of importance (in the form of weights) to each product's part. Besides that, (s)he selects the most suitable metrics for each part. In the case of buttons, the metrics would ho price, quality and delivery date. These metrics in turn should also have different levels of importance considering that specific BO. For instance, the VO manager assigns 55%, 20% and 25% for those metrics, respectively. Finally, each metrics has some specific ranges that will be used to classify the bidders. Having all these weights settled, the VE manager can realize, for instance, that, considering the weights of the buttons and of the delivery time, if s(he) could find some partner who can deliver buttons at the contracted date with at least 95% of certainty, then 1.2% of the whole "success" of the VE is "guaranteed".

Figure 1 - The Analytic Hierarchy Process to weight a Virtual Enterprise iy.l) Weighting the importance of each Supplier: Comparing the different possible VEs that can be formed with the bidders is not an easy task. Suppose we have a configuration where the supplier of Buttons, in Figure 1, is an outstanding enterprise, but the Fabric quality of another supplier is very poor. In another configuration, the Button and Fabric suppliers are both good, but not the best. Which the configuration is the most suitable to address the BO? The AHP method is used here to weight the importance of each kind of supplier, and the result is that the Buttons supplier is responsible for 10% of the BO success.

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iv.2) Choosing the Best Metrics to evaluate each Supplier: A common problem faced by the enterprises when doing business is the lack of standardization among the metrics used to evaluate the processes. It is recommended that the decision makers from all the enterprises get together to create, discuss and analyze these metrics, trying to foreseen thefixturebusinesses that will be carried out among the VBE participants. The SCOR model presents a comprehensive and huge set of metrics (called "criteria" in Figure 2) and respective ratings that can be used in the partners' selection. Anyway, the VBE Board can decide to use some additional particular metrics regarding its specificities. Metrics should be selected and agreed by the VBE members, prior to any business, no to only as a mean to provide fiirther evaluations, but also, and extremely important, as a mean to have decision criteria transparent and homogeneous so reinforcing trust building. Metrics must reflect the success factor, the competition basis, of the given sector, which is more and more customer-driven (Raynor, 2003).

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