enabling value net collaboration

Chapter 5

ENABLING VALUE NET COLLABORATION

Grace Lin, Jun Jang Jeng, Ko-Yang Wang IBM Business Consulting Services, IBM Research, IBM Global Services

Abstract: The concept of Value Net collaboration in which enterprises share values/risks

and make business-critical decisions has attracted significant interest. However,

lack of trust and support for cross-enterprise integration for collaborative

decision-making has so far prevented this vision from becoming reality. This

chapter examines the latter issue. Emerging technologies that support Value Net

partners to connect their business processes and enable distributed decision

making will be discussed. These technologies, and the trust they enable, fuse the

boundaries between enterprises and between business & IT. They represent the

critical first step to enable the Value Net to be adaptive and sense and respond to

environmental changes.

Key words: Adaptive Technologies, e-business, Adaptive e-business Integration,

Integration Technologies, Distributed Decision, Distributed Control, on

demand Business, on demand Infrastructure, e-Utility, Value Net, Sense and

Respond, Sense and Respond Value Net, Sense and Respond Value Net

Optimization, Enterprise Collaboration, Business Ecosystem, Business

Activity Monitoring, Fusion of business and IT.

1. INTRODUCTION

The business environment is changing at a rapid pace, fueled in part by

the e-business evolution and in part by competition and globalization. In this

environment, companies must be able to adapt quickly to change if they wish

to compete, survive and thrive. Being adaptive requires specific capabilities,

not the least of which is the ability to recognize events, the status of

customers, partners, competitors, and the global environment. Further, the

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capability must exist to analyze a broad variety of situations that will

ultimately lead to valuable and productive strategic insights. Flexibility will

be demanded, as will be intelligent information and adaptability. Agility will

be a vital component of the enterprise of tomorrow if changes are to be

managed, challenges to be met and a competitive edge to be retained.

This new model demands that participating enterprises in the Value Net

support interconnected and inter-operable business and information systems

that have the ability to “plug and play” at both the business process and IT

infrastructure levels. This requirement fuses the boundary between business

and IT and demands enterprises to acquire capabilities to quickly transform

process changes into IT supports to maximize the value of the IT and enable

new business capabilities. The virtual enterprise requires information sharing,

process inter-operability, and coordinated integration and collaboration

across not just its own organization, but also across all members of the Value

Net. Through information integration, the partners in the Value Net

selectively share critical information and knowledge, such as filtered

demand and supply data, coordinated forecasting, and other key factors that

enhance the enterprise and make it more productive and efficient. As a

consequence, they gain better insight into critical events. The technology

that enables this Value Net interaction is called flexible enterprise

integration.

The Value Net partners can improve their supply chain performance by

taking advantage of the deep collaboration that is enabled by flexible e-

business integration to engage in a level of collective decision-making that

maximizes the performance of the whole Value Net. This collaborative

optimization involves the selective sharing of critical events and information,

the distribution of decision rights, the redistribution of work, and the better

allocation and use of all the resources available in the Value Net.

2. TECHNOLOGIES FOR FUSING BUSINESS & IT

Technologies to fuse business and IT enable enterprises to respond to

environmental changes by adjusting their policies or operational models and

by quickly deploying the solutions supporting these changes. These

technologies can be grouped into the following four categories:

1. Right-time intelligent information: Getting critical information

when it is needed, while it is needed, in the form that it is needed.

Maximize the use of technologies that utilize real-time predictive

and proactive analysis and formal/informal collaboration that will

improve value chain performance.

5. Enabling Value Net Collaboration 3

2. Value Net optimization: The analytic and distributed decision

framework that companies need in order to optimize not only their

internal supply chain, but also to collaboratively optimize the

performance of the Value Net. This will enable the sharing of risks

and rewards between the Value Net partners

3. Adaptive enterprise integration: Technologies that enable

enterprises to connect and reconfigure themselves quickly, and at a

lower cost, to support the integration of processes, data and systems

within and between enterprises.

4. Business process automation technologies: technologies to quickly

transform operational business specification into code or code

components. This is an emerging area that will not be covered in this

chapter.

2.1 Right time intelligent information

The effectiveness of a Value Net depends on its ability to recognize

critical business events “in time” and before competitors. This information

can be gathered by sensors that are planted or configured to probe

operational systems to recognize data and events of interest in business

processes, inventory systems, and on the manufacturing floor. Trends and

events are also generated by processing and mining both structured and non-

structured data, such as text, from across the Internet or the Value Net.

Today’s business intelligent information technologies are capable of

identifying patterns, discovering associations and uncovering implicit

knowledge within a veritable sea of data.

Furthermore, cross-enterprise real-time message systems will alert all

involved parties and allow them to engage in multi-party communication in

real time. These interactions can be pre-programmed into the operational

process and designed to ensure that collaboration happens at the right time

and in the right way. This will help to ensure that the tasks associated with,

or which are triggered by, the collaboration will be quickly carried out at all

the involved enterprises in a manner that enables the quick resumption of

workflows. This level of just-in-time collaboration, which involves all key

enterprise decision-makers, will enable the Value Net to significantly

improve its responsiveness.

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2.2 Value Net optimization

Value Net is a promising business model that enables enterprises to

quickly acquire new or critical resources and competencies at minimal cost.

Companies in the Value Net can pool their resources and capabilities to

create new capabilities or offerings that would individual enterprises might

otherwise find unaffordable. This model also allows Value Net members to

bring the enhanced capability of the whole Value Net, rather than just a

piece of the enterprise, to their clients! Furthermore, small companies can

join forces to create a formidable virtual enterprise that is capable of

competing with much larger companies that might otherwise dominate them.

The Value Net optimization design also enables participating businesses to

leverage each other’s strengths and to collaboratively achieve higher overall

performance levels. It gives the enterprise partners an opportunity to increase

the speed and flexibility of their response and enables a connection with

their partners for collaborative execution. As a consequence, the entire Value

Net can respond to environmental challenges in a much better and more

effective way by utilizing shared capabilities and resources.

2.3 Flexible enterprise integration

2.3.1 Rapid infrastructure and application integration

Today, infrastructure and application integration is a costly and time-

consuming effort. Integrating a package application into any enterprise

environment can cost millions dollars and account for major application

implementation delays and customer dissatisfaction. This area has been the

focus of significant technology development in recent years. on demand,

Web Services, Grid Computing, Autonomic Computing, Legacy

Revitalization, and Integration Technologies are all being vigorously

pursued by technology companies. Their objective is to create capabilities

that will be able to quickly integrate IT systems with other parts of the total

“package” that will, in turn, enable lower integration and system integration

costs, introduce a new level of flexibility, and which will enhance resource

allocation and utilization. Rapid infrastructure and application integration

technologies will enable enterprises to quickly integrate or utilize data,

applications and infrastructures based on an open, integrated, autonomic and

flexible framework. It is a critical foundation of the on demand business.


2.3.2 Flexible Process Integration

One key to the success of the adaptive enterprise is a business design that

will allow operations be created and managed on a common enterprise

business design model. This encourages a disciplined process specification,

which makes the operational management system easier to automate. The

common semantics support of the process, process interfacing points and the

shared understanding provided by a disciplined approach accelerates the

planning and design phases of process improvement. This also greatly

simplifies the implementation of applications to support the process by

enabling the generation or re-use of run-time process components, which are

based on operational specifications. The rapid support of business process

and integration enables the enterprise to respond to change rapidly.

We will discuss more details on the Adaptive Enterprise integration in

Section 4.

2.4 Business Process Automation

Business Process Automation technologies enable enterprise to quickly

implement the business design changes. This requires the enterprise to

rethink how the business operations are defined, how the governance models

are setup, and how the processes are executed. Most efforts divide the

process models into multiple levels (for example, strategy and measure,

operational model, execution, and infrastructure) and develop automatic

mappings among the levels. The success of the business process automation

depends on a common standard for operational business design and business

artifacts. The process standards being developed include: OMG’s

(www.omg.org) UML based Business Process Definition model, WfMC’s

(www.wfmc.org) workflow standards, OASIS’s (oasis-open.org) ebXML

BPSS and BPEL, BPMI’s (bpmi.org) BLML, W3C (w3c.org) Choreography

and RosettaNet PIPs (Partner Interface Processes). These standards vary in

the representation levels and coverages, and most lack the capability to

address business artifacts as the first class objects in the model.

In section 3 and 4, we will focus on the Value Net Optimization and Flexible

Enterprise Integration.

http://www.omg.org/

http://www.wfmc.org/

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3. VALUE NET OPTIMIZATION

All enterprises engaged in business activities with other enterprises are

implicitly participating in the Value Net, whether they realize it or not. The

critical business issue is whether they take advantage of the collective

wisdom and resources of the Value Net to improve operational efficiency.

The benefit of Value Net optimization is obvious, but it does require a

collaborative effort to fully realize its worth. First, Value Net participants

need to build the trust than encourages open, effective collaboration and the

willingness to share selected, filtered business events and knowledge. More

importantly, they need to participate in a collaborative decision- making

process that is designed to optimize the performance of the Value Net. This

requires a distributed decision support system that is built on top of the

adaptive enterprise integration technology. It also requires the trust and

discipline to become engaged at the right time. Below, we will discuss an

adaptive, distributed decision support model that was first reported on in

2002 [Lin et. al. ] called the “Sense and Respond Value Net Optimization”

model.

This Sense and Respond Value Net Optimization model is a hybrid of the

“Sense and Respond” organization change model described in Haeckel

[1999] and the “Make & Sell” optimization model. Under the “Make and

Sell” model, the enterprises optimized their businesses based on demand

forecasts and production-planning (for example, a city bus system). Under

the “Sense and Respond” model, organizations do not attempt to predict

future demands, but rather seek to identify changing customer needs and

new business challenges as they happen. This enables them to respond to

them quickly and appropriately before they disappear or metamorphose into

something else (for example, the taxi dispatching system, as opposed to the

city bus system) [Haeckel, 1999]. The hybrid Value Net Optimization model

we proposed expands the Sense and Respond model to Value Nets and

utilizes supply chain technologies for capability and resource planning. It

also used the adaptive organizational model for the flexible allocation of

resources that would enable optimal decisions through collective efforts.

Using the analogy of the bus and taxi system, it can therefore easily be seen

that any city needs the economy and efficiency of a preplanned mass transit

system and the dynamism of the taxi network. The collaborative decision

support system enables the Value Net to utilize the best of both models.


Figure 1. The Sense and Respond Value Net Optimization Control Model

As seen in Figure 1, each Sense and Respond business unit is supported

by one or more Sense and Respond control agents. These control agents

interact with other agents in the Value Net (either inside or from outside

their own enterprise) in a collaborative effort to optimize the performance of

their own units, and of the whole Value Net.

These agents have the following capabilities:

Sense – utilize sensors embedded in the system or the Internet, to

monitor the status of portfolios, skill deployments, inventory levels,

supplier performance, sourcing, allocation, replenishment policies,

etc.

Detect – analyze the raw data to recognize trends or events and to

identify the causes of alerts.

Analyze – perform risk assessment or a “what-if” analysis to

understand risks and to explore alternatives and their potential impact.

Decide – make strategic or operational decisions based on analysis

and events. For example, the dynamic assignment of tasks,

reallocation of resources and skills, procurement and order

fulfillment.

Negotiate – engage related partners in negotiation based upon

decisions and the results of analysis. Utilize cross-enterprise Value

Net optimization analytical tools to come to an agreement on

universal optimal solutions.

Execute – collaboratively carry out operations and measure results.

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Learn – Analyze the measured results and adjust the rules and

policies as needed to improve the knowledge base and intelligence.

It is important to note that Sense and Respond Value Net Optimization

agents are not designed to replace humans in the decision-making process.

Rather, they are the decision support tools that engage human as needed and

provide critical information “just–in-time” to allow the decision makers to

offer optimal solutions across the entire Value Net.

4. FLEXIBLE ENTERPRISE INTEGRATION

The implementation of the Sense and Respond Value Net Optimization

system relies on the ability to link the data, application, infrastructure,

processes, values and service to all enterprises involved in the Value Net. A

foundation of this support is provided by Flexible Enterprise Integration

technologies. Here we present an example that implements some of the

critical functions needed to support the enterprise integration. This model

can be used for both internal integration and cross-enterprise integration, so

long as the interface points are well defined.

A flexible infrastructure is aimed at providing an integrated platform for

the enterprises in the value net at the business and technical levels. The

flexible infrastructure can be logically categorized into several tiers as

shown in following diagram (Figure 2).

a) Business Platform represents an organizational concept that groups

individual component technologies into technical domains (layers),

where business stands for Flexible Enterprise.

b) Business Services are infrastructure applications that shift responsibility

for certain services out of the application domain into the infrastructure.

Business services provide a set of physically shared components, such as

credit card processing services and application hosting, which multiple

applications can share.

c) Business Commitments are concepts that manifest the level of obligation

between parties in the enterprise. An adaptive enterprise should allow

business commitments to be externalized within specific parameters, so

that they can be configured.

d) Business Capability Patterns are organized concepts that facilitate rapid

mapping from client business requirements to the capabilities that can be

provided via end-to-end infrastructure design. Business capability

patterns structure the system component selection from many platform

layers.


e) Business Platform Adaptors are organized concepts that enable the

accessibility, usability and manageability of technology components

within the platforms.

f) Business Capability Adaptors are organized concepts that enable the

accessibility, usability and manageability of business patterns, services

and commitments. The goal in using them is to provide capability

interfaces to clients

g) Business Clients are an organized concept that refers to either

applications or users that access, use or manage the aforementioned

artifacts.

We describe the above concepts in detail as follows.

Business Platform

There could be several ways of organizing the technologies for a business

platform.

By technology similarity

By architecture domain

By program (i.e., . e-business )

By process

By support group

How to build a Business Platform

Physical. All components dealing with the tasks of physical

connectivity, persistence and computation, including routers,

mobile phones, laptops, desktops, servers, disks, etc.

Functional. All components involved in data processing, logical

storage, data exchanges, transformation and workflow. Examples

include operating systems, relational databases, messaging bus,

application servers, and integration servers.

Interface. The components providing human-to-machine

interaction, such as interaction voice responders, graphical user

interfaces, or machine-to-machine interaction such as application

programming interfaces.

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Business Clients

Business Capability Adaptors

Business Capability Patterns

Business Services Business Commitments

Business Platform Adaptors

Business Platforms

Figure 2: Business Integration Stack.

Business Capability Patterns

Business capability patterns and platforms are fundamental components

of the overall adaptive infrastructure. Patterns are the information, insight,

and experience; the “what is” and “how to” that are common to an existing

class of application or business processes. This information is captured in a

form that makes it easy to re-use with future applications of the same class.

Re-usability is the key to making patterns effective. Patterns come in many

forms: application framework, specifications, template and asset libraries.

Pattern matching is necessary for developing the readiness of business

capability pattern libraries and for their use.

Business Services

Business services are distinguished from the physical infrastructure by

several features. They are:

1. Shared by the structures they support;


2. More static and permanent than the structure they support; and

3. Under different ownership, they have their own life cycles (plan, build,

run, modify, retire).

Examples of business services include network servers and credit card

verification.

The most important work in developing an adaptive infrastructure is to

ensure that key business services with a potential for re-use are shifted out of

the application domain and into the infrastructure. To maximize the re-

usability of the adaptive infrastructure, a high degree of de-coupling between

the lifecycles of both business services and the applications at all stages of

the life cycle is required, including design, build, deploy and upgrade. A

notable example of de-coupling is in Web Services architecture, such as in

the interface of Web Services hard codes with Simple Object Access

Protocol (SOAP) versus HTTP. This method involves very simple protocols.

Universal Description, Discovery and Integration publish/find/bind will be a

standard and is becoming a staple. Web Services Description Language

(WSDL) de-couples the specification and implementation of business

servers.

Business Commitment

A business commitment is an agreement or pledge to do something in the

future. Business commitments are broadly defined as commitments related

to issues. At the run-time, if the agreements or guarantees have been violated,

one business party promises to take action, either to notify related parties or

to remedy the violation. These parties can be internal agents within a

business enterprise, or external ones like business partners, service

requestors, or service providers. Business commitments exist in many forms

and may be business contracts between partners, service level agreements

(SLA) between service providers and service requestors, or an internal SLA

specified by departments within an enterprise. A contract or SLA contains

the terms and conditions to which all parties have mutually agreed. A

business commitment is usually directional, meaning a commitment that has

one initiator and one receiver. For example, in a shipping SLA, a carrier

promises the service requestor to ship goods within X days. On the other

hand, a service requestor promises the carrier to pay the bill within Y days.

During the execution process, commitments may be violated for a variety of

reasons, such as unforeseeable events or a change in the situation of one

party or the other. It is therefore common for both parties to agree to take

certain actions when mutual commitments are unfulfilled. Business

12 Chapter 5

commitments need to be monitored and violations have to be detected.

Otherwise, commitments do not have the binding power to keep parties

together.

A commitment consists of the following entities:

Actions that it will perform and resources (data) that are required.

Resources that are governed by the commitment.

Expectations that the commitment will hold and recognition that each expectation is composed of Situations.

Reponses that bind actions with expectations.

Triggers that initialize the evaluation of expectations.

To execute an action is to perform it; to execute an expectation is to

assert it. A response will be formed in a commitment through the binding of

expectations and actions. Examples of triggers include the arrival of events,

timed events, managed resources status changes, data conditions etc. Some

meta-actions can be defined to perform actions on the commitments

themselves. One type of meta-action involves a commitment to an agent.

This is usually a future commitment, but it can also be used to establish a

past expectation. Another type of meta-action is to put in place an

expectation relationship between agents. For example, an ATP agent expects

an inventory agent to have an inventory level less than a certain quantified

value. If the expectation is violated, action will be taken based upon the

corresponding response that is defined by the ATP agent. A commitment can

be applied to several agents, i.e., those agents share the same commitment.

We can thus define the locus of control for the commitment “C” by defining

a set containing the agents committing to “C” and the resources governed by

“C”. In an adaptive infrastructure, it is assumed that an agent will always

communicate its commitments truthfully to other agents in response to

queries and actions

Adaptors (both Business Capability and Platform)

Business capability adaptors provide connectivity from business clients

to business services. Adaptors enable an application to connect to a

component, perform transactions, and access services provided by that

resource. A connection can be either transactional or non-transactional.


1) Platform event notifications, in which adaptors for specific managed

resources pass to management beans, and

2) Request processing, in which adaptors perform on behalf of

management beans. The most promising Java-based connection architecture

is the J2EE Connector Architecture (JCA) that defines the connectivity

between an Application Server and Enterprise Information Systems (EISs).

Application servers extend their containers and support connectivity to

heterogeneous EISs based on JCA. On the EIS side, resource vendors

provide a JCA-compliant managed resource connector for its EIS. A

business connector can be plugged into an application server. The business

connector and application server then collaborate to provide the underlying

mechanisms -- transactions, security, and connection pooling. Adaptors are

used within the same address space as their application server.

The adaptive enterprise integration technologies is critical in supporting

an enterprise’s ability to rapidly enable the adaptive capabilities to change its

operation models and rules at minimal cost,. It also allows business

relationships to be quickly built through the linking of related processes to

Value Net partners. The flexible enterprise integration technology is a

necessary condition for value net optimization.

5. SUMMARY

Technologies for Fusion of Business and IT are integral to Value Net

enterprises. They enable them to be agile and responsive. Both the Sense and

Respond Value Net Optimization model and the Flexible Enterprise

Integration technology are built on a number of advanced technologies.

Some of these already exist; others are now emerging; and still others need

further development. These are the “game changers” that will fundamentally

change how enterprises will conduct business in the next two to 10 years.

They are deserving of expanded studies.

Additionally, the Sense and Respond Value Net represents a significant

change to the way in which business is conducted and values are managed. It

is an emerging enterprise transformation that also deserves more studies, as

it will take more than technology to achieve realization. It will take, at the

very least, a new and more dynamic level of cooperation, collaboration and

trust.

14 Chapter 5

Regulatory bodies like national and multi-national governments, as well

as other members of global economic and cultural environments, are

extended Value Net participants. Their potential impact on the enterprises of

the future needs to be explored in significantly more detail so that they will

better understood and adequate preparations can be made to meet the

challenges that are sure to come. It is a fundamental fact that we have a

strong need to continue to explore these enterprises as partners in a greater

business ecosystem that interacts, competes, co-exists and co-evolves into a

true and trusted Value Net partnership.

ACKNOWLEDGEMENTS

The authors would like to acknowledge the contributions of the following

colleagues who had either contributed to some of the work discussed in this

paper or have helped to improve the presentation: Alexander Macaulay,

Patrick Baker, Santhosh Kumaran, Roger Gung, Heng Cao, Markus Ettl,

Shubir Kupoor, Steve Buckley, Henry Chang, Nathan Caswell, Anil Nigam,

Patt Romero Cronin, and Jen-Yao Chung.

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