A management and orchestration model for digital business ...

Int. J. Integrated Supply Management , Vol. x, No. x, xxxx

1

A management and orchestration model for digital business ecosystem integration Abstract: In this study the authors seek to build a coordination model for Digital Business Ecosystem (DBE) integration. In particular, the aim is to explore how various types of coordination mechanisms are related to creating value for different stakeholders in a DBE context. The research design combines several data sources and methods. First, a coordination model is built based on existing literature, and generic success factors are identified based on expert interviews. Second, the model is tested by utilizing information gathered from key informant focus groups in global B2B integration. The results illustrate how specific coordination mechanisms related to network management and orchestration could be designed in DBE integration and how they affect the success factors from stakeholder and value creation perspectives. Managers will be able to use the model in designing different network coordination mechanisms to ensure better implementation of B2B integration. Keywords: Digital Business Ecosystem, B2B integration, Management, Orchestration, Success Factors, Stakeholders, Value, Business improvement

1

Introduction

Integration of information systems in supply networks of multiple actors is an increasingly pressing issue. Challenges relate to the dispersed and heterogeneous nature of information, the large number of different actors involved, and the need for conscious coordination of such systems towards a coherent and interoperable whole [1][2]. Information systems are supporting value related managerial activities to support the competence of organizations and developing, steering, interacting and co-operating the business networks [3]. The coordination of relationship building and active interactions in network collaboration are essential in strategic supply network development [4] [3]. The organizational skills and capabilities should be used effectively to support entire network integration. The Information and Communications Technology (ICT) industry used to traditionally rely on independent software vendors creating monolithic, independently operating products. Many large multisite companies are vertically integrated and the delivered systems are complete system stacks which contained everything needed to serve a customer: hardware and software, an operating system and applications [5]. The contemporary ICT industry has gone through many changes that demands for better integration and its coordination. Modern software strongly relies on components and infrastructure from third party vendors and open source suppliers, resulting in multiple heterogeneous systems. To make such systems compatible, integration services are offered to solve the interface definitions, data exchange, business process reengineering, and automated transaction processing [6]. As a part of this development, cloud computing is increasingly used to bring together a set of existing technologies and systems for various business purposes [7]. Copyright © 200x Inderscience Enterprises Ltd.

Korpela, Ritala, Vilko and Hallikas

To this end, digital business ecosystems (DBE) are becoming an increasingly popular concept for modelling and building distributed systems in heterogeneous, decentralized and open information environments [8]. DBE builds on and improves the traditional collaborative environments, such as centralized models (client-server), distributed models (such as peer-to-peer models), and hybrid models (such as web services). It provides an interactive, self-organized software environment that is distributive in nature but presents a unified view of all the business entities. The anticipated benefits include e.g. the cost-effectiveness of services and value-creating activities, which are advantageous to organizations as well as to employees and consumers [9] [10]. Traditional economic and computing theories do not focus on DBE as a separate form of organizing, and they do not provide conceptual models to manage DBE integration. Therefore, the research aim of this study is to formulate a coordination model for DBE integration. The focus is especially on defining success factors in different organizational levels, as well as on the coordination of DBE through two types of network coordination mechanisms - labelled "management" and "orchestration" (following the recent conceptualization of Ritala et al., 2012) [11]. Both types of coordination are needed in order to ensure a successful integration of information; management of relevant actors to formally guide the DBE towards the desired direction and orchestration to facilitate the formation of the ecosystem and to create a common vision and motivation for the actors to pursue common goals. Empirically, this study is based on the insights gathered from world-leading experts knowledge of business-to-business (B2B) integration. Based on the gathered data, we develop key lateral success factors for B2B integration and analyse those in a focus group formed from key industry informants. Overall, the results of this study contribute to the supply chain management literature by putting forward a conceptual coordination model for B2B integration in digital business ecosystems, and providing empirical evidence of its feasibility. The structure of the study proceeds as follows. First, we review the existing literature regarding information systems integration, digital business ecosystems, and the coordination mechanisms in B2B networks. This is followed by a description of the research design and the results of the empirical study. In the end, discussion and implications are put forward in terms of research, practice, and further research directions.

2

Theoretical background

B2B integration, information systems and interoperability Supply chain B2B integration has been defined by The International Centre for Competitive Excellence as ‘‘the integration of key business processes from end user through original suppliers that provides products, services, and information that add value for customers and other stakeholders” [12]. Integration of the supply chain provides increased efficiency and significant cost advantages through waste minimization, the development of new products and services being facilitated by new ways of conducting business based on internet working between organizations and

Digital Business Ecosystem integration management and orchestration model individuals. Important aspects of observation are operational business processes such as manufacturing, purchasing, logistics and financial processes [13]. From the perspective of information systems, B2B integration can be understood as collaboration within supply chain partners using ICT in business interaction, which is the exchange of business documents over the internet within the context of business processes [14]. When the data is processed and communicated automatically, it increases the speed of business interactions, as well as reduces errors and operating costs. Thus, ICT can be used as an enabler to (re)design, manage, execute, improve and control business processes both within and between organizations [15]. Integration can be seen in two phases: first the integration of the supply chain so that production and delivery become a seamless process and second the creation of new business models based on open systems of communication between customers, suppliers and partners [14]. The aim of the information systems integration in the B2B context is fundamentally the interoperability of systems. Interoperability of B2B integration describes the means by which automatic, interorganizational computer-to-computer communication is facilitated. Technical interoperability consists of a selection of communication protocols for actual data sharing, syntax for structuring data during exchange and a paradigm for data sharing [16]. Electronic Data Exchange, EDI, is often used in reference to all paperless document transfer systems. By this definition, EDI includes all the standards, messages, formats, transmission, and software used and without the need for human interference. This should allow separate organizations to share data and coordinate their actions with expediency and efficiency [17] [18]. B2B integration is led by global multisite companies by integration of internal business information. The main motivation is to have real-time information for strategic decision making on the executive level. External integration within a supply chain is driven by business managers and often started within strategic supply chain partners. The main motivation is to have real-time and error-free information to improve business performance [19] [20]. The major problem arises from the different standards that the business is using. Interoperability can be achieved by converting the messages within interorganizational business process communication [21]. External Integration is often executed to outsourced IT service providers, called message operators or intermediators. The need of external integration and huge volumes of business transactions has recently raised this business to a new level. In the last decade, companies have started the improvement of internal business process integration, and as a part of this development, financial integration of electronic payments. Now the focus is characterized to the external integration of the business process on electronic invoicing and even procurement and logistics processes as a whole. The focus is on process transparency across the supply network and the main motivation is to improve the efficiency; to reduce the handling cost of information and to benefit from real-time information [22].


Digital business ecosystems as a context for B2B integration The complex reality of the networked environment in B2B integration cannot be analysed in the firm level, since no organization is able to coordinate alone the development of such a network. Even the big networks are seeking to develop and use common standards for integration. The B2B integration context actually resembles the ecological phenomenon of co-evolution, where “all species evolve in [an] endless reciprocal cycle” [10]. The concept of the business ecosystem was originally coined by Moore [10] [23], who defined the business ecosystem being made up of coevolving interdependent and interconnected actors: customers, agents and channels, sellers of complementary products and services, suppliers, and the firm itself [24]. The key motivation for B2B integration is, according to Santos and Eisenhardt [25], the efficiency required to minimize governance costs, including costs of conducting exchange with other ecosystem participants and those within the individual organization. The interaction capability of an organization with its participants within the ecosystem and with other ecosystems is also essential. Furthermore, according to Santos and Eisenhardt [25], the five main characteristics of the ecosystem have been elaborated: (a) the ability to individually assign the purpose of an ecosystem to its components (participants), (b) the interactions (among and between participants), (c) the development process within an ecosystem (influencing the ongoing evolution), (d) the maturity and stability of an ecosystem and its components, and (e) the effects an ecosystem is causing in terms of results, measurements, changes in size, and composition. Integration of B2B processes will require active collaboration on different levels of stakeholders across organizations in the supply network, including an additional valuecreating software ecosystem [26]. In this study, we utilize the concept of the digital business ecosystem (DBE) to conceptualize such a context. The digital business ecosystem concept was established for the first time in the field of business research in the Lisbon Agenda in March 2000 [27], and further developed by Nachira [28] [29]. A digital business ecosystem improves the traditional, thoroughly defined collaborative environments, such as centralized models (client-server), distributed models (such as peer-to-peer models), and hybrid models (such as web services) and develops them further into its own, holistic model [27]. Some of the anticipated benefits of digital business ecosystems include the cost-effectiveness of services and value-creating activities, which are advantageous to many actors in the ecosystem, including firms, their employees as well as consumers [30].

Potential management and orchestration mechanisms in digital business ecosystems and their role in B2B integration The coordination of various actors in business ecosystems is a central task needed to ensure the achievement of ecosystem objectives [31]. Oftentimes the coordination of business ecosystems is dependent on the activities of one or several “hub actors” that aim to affect the evolution of the ecosystem in various ways [10] [32].

Digital Business Ecosystem integration management and orchestration model

There are several conceptualizations of how networks and ecosystems are coordinated. In this study, following a recent study by Ritala et al.[11], we aim to investigate network coordination mechanisms that encompass the full range of various activities, processes, and resources within the ecosystem. Furthermore, network coordination is seen here to consist of two different, yet complementary mechanisms: management and orchestration. Management mechanisms can be viewed as “coordination by commanding” and orchestration mechanisms as “coordination by enabling” [11]. Therefore, management mechanisms in digital business ecosystems relate to concrete management activities in the network, related e.g. to the delegation of roles and responsibilities, scheduling, and contracting throughout the ecosystem members. On the other hand, as ecosystems are often hard to manage concretely due to the independency of different actors and heterogeneity in their motivations and goals [32]. Therefore, also orchestration-type coordination mechanisms are needed. These relate to “softer” mechanisms related to e.g. communication of a joint vision, motivating activity, and facilitating the actors’ participation in various joint activities. The aforementioned mechanisms of management and orchestration will be used as the basis of the analysis of coordination mechanisms in the empirical part of the study. Therefore, for the analytical purposes of this study, we divide management mechanisms further into two categories, based on the existing literature on business ecosystems and their coordination [32] [33] [11]. The first category relates to delegating of roles and tasks for ecosystem members and setting up schedules. The second category relates to controlling the efficiency of various processes in the network, including those that affect supply and demand. Similarly, orchestration mechanisms are also divided into two categories. The first category includes motivating members to join the network, ensuring knowledge sharing and its mobility, and communicating vision. The second category relates to the enabling type of activities that ensure the stability and longevity of the ecosystem processes and actors. All of these four categories are discussed throughout the remainder of the paper.

A framework for designing the DBE integration management and orchestration model In this paper we especially focus on digital business ecosystems and aim to build a management model and test it. For this reason, we need to design a framework to structure the environment in order to be able to explore the digital business ecosystem integration management and orchestration model. Researchers have various definitions and explanations of enterprise architecture and they differ in terms of their approach and the level of detail. Some have provided specific guidelines, whereas others have specific methodologies and aspects to follow. In the latest developments of cloud computing technologies, software is only one of the components in an information system. Further design is required in diverse areas of the requirements of modelling network infrastructure, server configuration and middleware technologies [34]. Tang et al. provide a model for understanding enterprise architecture through analysing the goals, inputs and outcomes of six Architecture Frameworks (CADM, RM-ODP, 4+1 View Model, TOGAF, DoDAF and the Zachman Framework). Models should take into account the requirements of different business stakeholders for

Korpela, Ritala, Vilko and Hallikas designers; the architecture must be usable by end users, acquirers, the system's owner and operator, etc. Therefore, the architecture should be able to support technical, cost and programmatic decisions [35]. In the literature, there exist very few methods to design and analyse digital business ecosystems. Based on the Zachman Enterprise Architecture [36] [37], the researchers formed a framework for enterprise architecture based on common business elements and value activities (see Figure 1). The framework has six horizontal layers (rows) as defined in Table 1 and six vertical layers (columns) as defined in Table 2. The horizontal layers describe the different common business elements used by the stakeholders involved. The vertical layers describe the value activities to optimize the information value delivery. These framework components are presented in Figure 1. Geary et. al (2002) [38] have presented a supply chain integration maturity framework, which consists of four stages: Baseline, Functional, Internal and External integration. In this framework, the focus is on evaluation of the integration maturity and the supply chain effectiveness. However, the integration of supply networks requires further understanding of business organizations' involvement and usage of different management mechanisms to coordinate integration.

Figure 1. The framework and its elements for DBE integration management and orchestration All the dimensions of the model are introduced in Figure 1 to give a better understanding of the three dimensions; a) common business elements and stakeholders involved, b) value activities and c) management and orchestration mechanisms. Success factors are coded by these three dimensions and sub-elements to be able to validate the digital business ecosystem integration management and orchestration model.


Table 1. Definitions of the horizontal business elements for the DBE integration framework

Table 2. Definitions of the vertical elements for the DBE integration framework.


3

Research Design

Research process The research process had three steps: (i) building the DBE integration coding, (ii) determining the success factors based on the literature review and Expert Group interviews, (iii) establishing a questionnaire for an empirical rating of success factors by Focus Group validation, (iv) exploring the rating results and (v) introducing the DBE integration management and orchestration model. This research is based on mixed qualitative research methods of interviews and focus group sessions. Based on literature, the interviews of experienced standardization experts were conducted to build a questionnaire on success factors. In this study, the focus group was formed from the representatives of the participating companies in the two case supply networks. The focus group members represented two focal firms, their key maintenance partners and service suppliers, 7 industry partners, 6 industry service partners, 4 financial service partners and 2 ICT service partners, and altogether 10 business managers. All the members had an executive or managerial role in their business and their responsibility was to develop collaboration in a digital business ecosystem and B2B integration in their organizations.

i)

Description of DBE integration coding

Based on earlier observations and studies, the research used the DBE integration framework and enhanced the management aspects to formulate a DBE management framework (Table 3). The coding of success factors was based on these three dimensions (stakeholder, value and management). Each dimension was divided according to the framework definitions.

Table 3. Coding the success factors

ii)

DBE integration success factors

Success factors were studied on the basis of literature and the Expert Group interviews, which were transcribed. All success factors were coded according to the DBE integration management model. Several iterative rounds were arranged to find success factors based on the literature and interviews.

Digital Business Ecosystem integration management and orchestration model Success factors are defined in this research as statements or instructions to direct a) why the value creation for the customer and for the supply network is important, b) what common business architecture elements and stakeholders are needed to be involved and c) how to manage the digital business ecosystem by using efficient mechanisms.

iii)

Questionnaire for the Focus Group to examine success factors

Success factors were studied in literature and with Expert Group interviews. The questionnaire was based on the success factors and they were presented as statements and asked using a 7-point Likert scale. Value 1 on the Likert scale denoted that the respondents have not started the actions required and value 7 denoted that they have fulfilled all actions required. The other given values described the maturity for each statement. The final rating was tested by using a web based survey tool (Appendix 1). The answers were given by 10 organizations.

4

Results

Rating the success factors with a focus group The study was conducted between January and April 2012. The results of the evaluation are presented in Table 4, which summarizes the three different management aspects of DBE. Our study attempted to build a DBE integration management model and test the model in a focus group. The main motivation to find new methods and tools was the common need to establish a business driven B2B integration project in the heterogeneous global business environment.

Korpela, Ritala, Vilko and Hallikas Stakeholder involvement

Excecutive Excecutive Excecutive Excecutive Excecutive Excecutive Excecutive Management Management Management Management Management Management Management Management Management Management Management Management Management Management Management IT-expert IT-expert IT-expert IT-expert Stand.- expert Stand.- expert Stand.- expert Intermediatior Intermediatior Intermediatior Intermediatior Intermediatior Intermediatior Service User Service User Service User Service User Service User Service User

SF Rating 1 4,9 2 4,0 3 3,5 4 3,5 5 3,3 6 3,2 7 2,9 8 4,5 9 4,9 10 4,7 11 4,6 12 4,1 13 4,1 14 4,0 15 3,9 16 3,5 17 3,3 18 3,3 19 2,9 20 2,7 21 2,4 22 2,1 23 4,8 24 4,9 25 4,2 26 4,0 27 4,8 28 3,7 29 3,3 30 5,1 31 #REF! 32 4,3 33 4,3 34 4,0 35 3,7 36 4,3 37 4,9 38 3,9 39 3,4 40 2,9 41 2,4

Management and orchestration activities Delegating Delegating Delegating Delegating Delegating Delegating Delegating Delegating Controlling Controlling Controlling Controlling Controlling Controlling Controlling Motivating Motivating Motivating Motivating Motivating Motivating Motivating Motivating Motivating Motivating Motivating Motivating Motivating Motivating Motivating Motivating Motivating Motivating Motivating Enabling Enabling Enabling Enabling Enabling Enabling Enabling

SF Rating 23 4,8 14 4,7 12 4,6 32 4,3 25 4,2 4 3,5 11 3,3 18 2,7 33 5,1 1 4,9 26 4,9 8 4,5 13 4,1 3 3,5 10 3,5 37 4,9 35 4,3 36 4,3 9 4,1 15 4,0 24 4,0 30 4,0 2 4,0 38 3,9 22 3,9 31 3,7 29 3,7 5 3,3 21 3,3 6 3,2 40 2,9 7 2,9 20 2,9 41 2,4 34 5,1 19 4,9 27 4,8 39 3,4 28 3,3 16 2,4 17 2,1

Value activities

Customer Value Customer Value Data Model Process Model Process Model Process Model Process Model Network Collaboration Network Collaboration Network Collaboration Network Collaboration Network Collaboration Network Collaboration Network Collaboration Network Collaboration Network Collaboration Network Collaboration Network Collaboration Network Collaboration Skills and Capabilities Skills and Capabilities Skills and Capabilities Skills and Capabilities Skills and Capabilities Skills and Capabilities Skills and Capabilities Skills and Capabilities Skills and Capabilities Skills and Capabilities Skills and Capabilities Skills and Capabilities Skills and Capabilities Skills and Capabilities Skills and Capabilities Network Value Competitiveness Network Value Competitiveness Network Value Competitiveness Network Value Competitiveness Network Value Competitiveness Network Value Competitiveness Network Value Competitiveness

SF Rating 1 4,9 3 3,5 38 3,9 25 4,2 39 3,4 40 2,9 41 2,4 34 5,1 27 4,8 8 4,5 9 4,1 15 4,0 24 4,0 30 4,0 22 3,9 31 3,7 5 3,3 11 3,3 28 3,3 37 4,9 19 4,9 23 4,8 14 4,7 12 4,6 32 4,3 35 4,3 36 4,3 13 4,1 2 4,0 29 3,7 21 3,3 18 2,7 16 2,4 17 2,1 33 5,1 26 4,9 4 3,5 10 3,5 6 3,2 7 2,9 20 2,9

SF = Success factor Rating = rating results of focus group validation on Likert scale 1-7 1= we have not jet srarted required actions 7= we have executed all required actions

Table 4. Rating results on management and orchestration, stakeholder and value

Exploring the three main aspects of B2B integration The main reason to use three different coding types for success factors is to demand for having a fundamental understanding of B2B integration phenomena by observing the issue from different perspectives. Stakeholder involvement is needed to understand their role in internal and external business management and orchestrating activities. Value activities need to be evaluated to measure the needs and the performance from the

Digital Business Ecosystem integration management and orchestration model perspective of the value network by using six value activity phases. Management and orchestration explain how to supervise the organizational actions in internal management and external network orchestrations.

Management and orchestration by Success factors The total figures of success factors in different phases presents the management activity potential in integration. The total figures of different phases present the importance of impact. The focus group rating will form the current situation. From the graphics Figure 2, we can identify the management activities and the current gaps. Delegating, controlling and enabling are almost equally important, whereas the role of motivating activity is almost double. The biggest gap, more than 50%, can be found in the area of motivating activity. This is clear evidence that the efforts should be placed on motivating activities. In Figure 3, the current rating of each success factor has been sorted within different management activities. Each current gap regarding success factors can be identified on the current performance line. From the graph, the holistic picture can be seen, explaining that the overall gap is still quite big, with a rating from 3 to 5. All management activities need to be improved, with special attention directed to those success factors rated less than 4 on the Likert scale, and focused on indicated management activity.

Figure 2. Current gaps in management and orchestration

Figure 3. Impact of success factors on management and orchestration

Value activities by Success Factors The total figures of success factors in different phases present the value activity potential in integration. The total figures of different phases present the importance of impact. The focus group rating will form the current situation. From the graphics Figure 4, we can identify the value activities and the current gaps. The figures for customer value and data model are almost equal and the total impact is relatively low on integration. The process model activity impact is a little more important and the gap in the current situation increases. The biggest impact and the biggest gap can be found in the activities of the collaboration network and skills & capabilities. The impact of network value competitiveness is rather important and the current gap in its importance is big. This is clear evidence that the efforts should be placed on the activities of the collaboration

Korpela, Ritala, Vilko and Hallikas network and skills and capabilities, not to forget the competitiveness issues of network value. In Figure 5, the current rating of each success factor has been sorted within different value activities. Each current gap per success factor can be identified on the current performance line. From the gap, the holistic picture can be realized, explaining that the overall gap is still quite big, with a rating from 3 to 5. All value activities need to be improved and special attention can be directed to those success factors rated less than 4 on the Likert scale and focused on indicated value activity.

Figure 4. Value activities current caps

Figure 5. Success factors impact on value activities

Stakeholder view by Success factors The total figures of success factors in different phases present a stakeholder involvement potential in integration. The total figures of different phases present the importance of impact. The focus group rating will form the current situation. From the graphics Figure 6, we can identify the stakeholder involvement and the current gaps. Executives and service users have almost equal importance on integration and the gap in the current performance is about the same. Managers have the biggest role, almost double compared to any other stakeholder. The gap in the current performance is the biggest. IT and standardization experts have a relatively low impact on integration and the gap is quite low. The role of intermediates is almost equal to the role of service users and the current gap is relatively low. This is clear evidence that the efforts should be placed on executives and service users, but the involvement of managers is of vital importance. In Figure 7, the current rating of each success factor has been sorted within the involvement of different stakeholders. Each current gap in the success factors can be identified on the current performance line. The graph shows the holistic picture, explaining that the overall gap is still quite big, with a rating from 3 to 5. All value

Digital Business Ecosystem integration management and orchestration model activities need to be improved. Special attention can be directed to those success factors rated less than 4 on the Likert scale and focused on the indicated stakeholder.

Figure 6. Stakeholder involvement and current gaps

Figure 7. Success factors by stakeholder and responsibilities

Maturity frame for management and orchestration The current performances of success factors are listed and sorted according to the Likert scale rating results. The sorting was done according to the current gap of each success factor rated. If the gap is on a low level, it explains that the maturity is on a high level, and the high level rating results explain the potential of competitive advantage. By observation of the sorted results are introduced in Table 5. Management and orchestration maturity on different activities can then be presented and defined in four categories: 1) Operations explaining the importance of delectation activities by executives to nominate the key expert in integration, 2) Knowledge improvement explains the importance of controlling activities by management to collect and share available knowledge on integration, 3) Supply networking explains the motivating activities by the nominated expert to work across organizations and 5) Value and services explains the enabling of the service and tools development to support integration activities to achieve the expected value.


Success factor

Coordination mechanisms

We eliminate and reduce the overall supply chain work, rather than pushing the work down to the supply chain We are working with a collaborative approach with other key players and we have explained the whole model right from the Benefit of using the standard is to us the way that we define it once and use again and again with new partners The leverage of a standard comes by using it over and over and over again We have different user groups which discuss the problems at the same level in other organizations People are coming and leaving the organization, but integration routines remain Our IT experts work together with the users to ensure that processes are working properly and in a timely manner By using standardisation and automatization we get better supply chain visibility We have made sure that key personnel have a good trusting relationship The business managers are responsible to lead the B2B integration Our company is a part of the ecosystem, and our success depends on the success of the entire ecosystem We have made use of experts who are well educated and are experience. We have contact information and always availabe a person who knows how to help effectively to solve problems User groups have regular face to face meetings to discuss the problems and build confidence We have nominated IT experts to support business process planing and the changes required in the software The experts also work together with people in performance level, since this has been found to be the most effective We have defined B2B integraton in easily understandable form by business processes, objectives and benefits We have continious cooperation with our customers and suppliers in B2B integration We are able to get help from partner companies on B2B integration implementations We have realized that we need lot of efforts to engage business partners into B2B integration The future-oriented value-creation to us requires the ability to bridge different experts and specialists together We are able to offer proper process and data test methods for all software developers If we require our business partner to implement the changes quickly, we will offer compensation We have foremed B2B integration community as a user group Standard organizations are providing proper information to technical personnel and other user groups We have senior management buy-in for B2B integration and of course the budget to make all this happen Core value is comeing from an iterative process between key customer, senior management and board members The total cost of supply chain management is the most important factor in the success of our company Our network is able to offer preintegrated solutionsfor SME´s We have an easy B2B integration vision that people can understand Our business managers have takeing the lead for the development of B2B integration Information packages are designed for different user groups, based on their needs Standard organizations are continiously working with companies and collecting new requirements globally We have provided easy to undestand B2B integration information to entire network Our network is able to offer experts to advise the right steps and solutions for SME´s We have to offer the tools to calculate the benefits of B2B integration We are offering financial calculations tools so that any organization can easily make their own calculations We have a identified the key contact person, which serves as a liaison to other organizations key contact persons Our network is able to offer a list of outsourced services for SME´s We have nominated for B2B integration the key contact person who also works as a trainer The key contact person are responsible for all communication, also with the other companies key contact persons

Controlling Enabling Controlling Controlling Motivating Enabling Delegating Enabling Delegating Delegating Controlling Delegating Motivating Motivating Delegating Controlling Motivating Motivating Motivating Motivating Motivating Motivating Motivating Motivating Motivating Delegating Controlling Controlling Enabling Motivating Delegating Motivating Enabling Motivating Motivating Motivating Motivating Delegating Motivating Enabling Enabling

Potential

Maturity

1,9 1,9 2,1 2,1 2,1 2,1 2,2 2,2 2,3 2,4 2,5 2,7 2,7 2,7 2,8 2,9 2,9 3,0 3,0 3,0 3,0 3,1 3,1 3,3 3,3 3,5 3,5 3,5 3,6 3,7 3,7 3,7 3,7 3,8 4,1 4,1 4,1 4,3 4,6 4,6 4,9

Operations

Knowledge building

Supply networking

Value and services

Table 5. Maturity levels towards competitive advantage The relationship of management and orchestration mechanisms to stakeholders and value activities Table 6 groups the identified success factors according to the network coordination mechanisms of delegating, controlling, motivating and enabling. In the left column, the stakeholder most related to specific success factors is identified, and in the right column are the related value activities. First, it seems that the management types of coordination mechanisms – delegation and control – which mostly refer to “coordination by commanding” (see e.g. Ritala et al.)[11], are related to those stakeholders with official management positions, as well as IT experts. In terms of delegating mechanisms, most of the related stakeholders are involved in the management level. The major value activity is focused on organizing and nominating the right people for operation and indicating a proper budget. Controlling is done by the same type of stakeholders, but the value focus is more on performance and effectiveness issues. Second, when examining motivating and enabling mechanisms - i.e. network orchestration mechanisms (ibid.) – it seems that the related stakeholders are much more

Digital Business Ecosystem integration management and orchestration model heterogeneous. For instance, enabling activities are carried out by both management and standardization experts. They are supporting and convincing the network to understand the whole picture of integration, and also convincing the ICT sector to develop and deliver new solutions, especially for SME´s. Network collaboration seems to be related mostly to orchestration-type mechanisms (motivating and enabling). It could be concluded that such mechanisms are socially more complex and scattered, which requires input from a larger group of ecosystem actors. The key value activities are focused on network collaboration by creating and sharing proper knowledge and tools to support knowledge sharing. Skills and capabilities value activities are focused on virtual working across the organisations. Network Value Competitiveness activity is sharing the tools and concepts for organizations to estimate the economic value. Stakeholder

Success factor

Coordination mechanisms

Value activities

Excecutive

We have senior management buy-in for B2B integration and of course the budget to make all this happen

Delegating

Network Value Competitiveness

Management

Our business managers have taken the lead for the development of B2B integration

Network Collaboration

Management

The business managers are responsible for leading the B2B integration

Skills and Capabilities

Management

We have made sure that key personnel have a good trusting relationship


Management

We have an identified key contact person who serves as a liaison to key contact persons in other organizations


IT expert

Our IT experts work together with the users to ensure that processes are working properly and in a timely manner


IT expert

We have nominated IT experts to support business process planing and the changes required in the software

Intermediator Excecutive

We have made use of experts who are well educated and are experienced.

Process Model

Management

Our company is a part of the ecosystem, and our success depends on the success of the entire ecosystem


Management

The total cost of supply chain management is the most important factor in the success of our company


Management

The experts also work also together with people in on the performance level, since this has been most effective


IT expert

The leverage of a standard comes by using it over and over and over again


Intermediator

We eliminate and reduce the overall supply chain work, rather than pushing the work down to the supply chain

Excecutive

The future-oriented value creation to us requires from us the ability to bridge different experts and specialists together

Excecutive

We have an easy B2B integration vision that people can understand


Excecutive

We have provided easy to undestand B2B integration information to entire network


Excecutive

We have to offer the tools to calculate the benefits of B2B integration


Management

We have defined B2B integraton in easily understandable form by business processes, objectives and benefits


Management

We have continious cooperation with our customers and suppliers in B2B integration


Management

We are offering financial calculations tools so that any organization can easily make their own calculations


Management

Information packages are designed for different user groups, based on their needs


Management

If we require our business partner to implement the changes quickly, we will offer compensation


IT expert

We are able to get help from partner companies on B2B integration implementations


Stand. expert

Standard organizations are providing proper information to technical personnel and other user groups


Intermediator

We have realized that we need lot of efforts to engage business partners in B2B integration


Intermediator

We have formed B2B integration community as a user group


Intermediator

We have contact information and Always a person available who knows how to help and solve problems effectively


Service User

User groups have regular face to face meetings to discuss the problems and build confidence


Service User

We have different user groups which discuss the problems at the same level in other organizations


Service User

We are able to offer proper process and data test methods for all software developers

Data Model

Service User

Our network is able to offer experts to advise regarding the right steps and solutions for SME´s

Process Model

Service User

Our network is able to offer a list of outsourced services for SME´s

Management

We have nominated the key contact person for B2B integration who also works as a trainer

Management

The key contact persons are responsible also for all communication with the key contact persons in other companies


Management

People are coming and leaving the organization, but integration routines remain


Stand. expert

By using standardisation and automatization we get better supply chain visibility

Stand. expert

Standard organizations are continiously working with companies and collecting new requirements globally


Intermediator

We are working in collaborative approach with other key players and we have explained the whole model right from the beginning. Our network is able to offer preintegrated solutions for SME´s


Service User

Controlling

Skills and Capabilities Customer Value

Excecutive

Benefit of using standard to us is the way that we define it once and use again and again with new partners Core value comes from an iterative process between key customer, senior management and board members

Customer Value

Network Value Competitiveness Motivating


Process Model Enabling



Process Model

Table 6. Relations of success factors relations to management and orchestration activities, stakeholder involvement and value activities.


DBE integration management and orchestration model Based on earlier observation and focus group valuation, we are able to finalize the DBE integration management and orchestration model as illustrated in Figure 8. The model explains the maturity on the x axis and the complexity of the managed activity on the y axis. The management activities are positioned according to the current order of perfomance; first by using management for internal integration and then using orchestration on external integration. Each management activity size is presented according to the importance of the activity based on the success factor. The graph illustrates also the overlap of activities. The current performance line is based on the rating results of success factor validation. The current performance exists below the line, and the overall potential is above the line. The maturity phases are named according to the activities involved and their relation to management mechanisms. The relative allocation of specific type of management and orchestration activities have been indicated by the size of the sphere. The larger the sphere, the higher the ammount of success factors related to a specific management mechanisms.

Figure 8. DBE integration management and orchestration model


5

Discussion and implications

The aim of this study was to define a DBE integration management and orchestration model and test it. Success factors where defined by a literature review and an interview of an expert group, formed from experts on global standardization. The questionnaire was given to and rated by the Focus group, formed from executives and managers involved in global B2B integration. The results were analysed from three different business perspectives; Management and orchestration, value activities and common business elements forming a stakeholder involvement. The results give a broad understanding of B2B integration in a digital business ecosystem, which contributes to the literature and in practice in various ways, as discussed in the following.

Implications for research In the modern world, where the specialization of operations and disintegration of supply network operations has become one of the major concerns for organizations, the management of these aspects has increased in importance. In addition, the organizational networks have become more complicated, and especially in digital business ecosystems such disintegration is a pressing issue. This has a high impact on the management activities and requires collaboration between the partners, which typically entails more information exchange. Our contribution to these issues is especially in suggesting certain types of coordination mechanisms which help with the integration of digital business ecosystems. Furthermore, building on previous studies [32] [11], we identify mechanisms related to the management style of network coordination, in particular, delegation and control. We also identify mechanisms related to the orchestration style of coordination, motivation and enabling in particular. We suggest that by explicitly recognizing the nature of these different mechanisms, the process of coordinating supply chain and ecosystem integration is much more effective. These issues have been pointed out in recent research on supply chain integration [11]. In fact, the current literature includes some perspectives related to such coordination of supply chain integration. For example, Geary et al. [38] present four levels for supply chain integration maturity based on the earlier supply chain reference framework by Stevens [39]. However, the management of such ecosystem is an extremely complicated and daunting task, and its explicit nature has been quite sparsely discussed. Our study aims to fill this gap by proposing conceptual tools, as well as practically applicable insights, which are discussed in the following. From the managerial point of few, the demand for this study is based on a need for developing B2B integration in the global supply chain network that creates a business ecosystem. Based on the results of this study, the new practical actions will be adjusted. The model and method give practical assets to design, monitor and control heterogeneous digital business ecosystem development. The aim is to build competitive advantage by B2B integration to support real-time economy. The presented maturitybased framework for B2B integration provides practical examples and tools for the identification and assessment of the success factors (the need aspect) behind the integration, and capabilities (infrastructure aspect) required for building an integrated supply chain structure. When presented as a maturity model, firms are able to identify

Korpela, Ritala, Vilko and Hallikas the gaps in their integration effort. This will shape them to understand the stage that they are in at present, and insight into the action points to get further in the supply chain integration. Based on our study, the biggest bottlenecks in the integration do not seem to be technological, rather than business related issues. Capabilities that are the most difficult to achieve seem to be related to the valuation and service aspects of the integration. Success factors were designed by using literature and the interview of experts. The value activities indicate that further studies should be done on success factor development by having a user-centric approach. We should understand better how real-time information supports customer value creation by being imbedded into products and services. This research was executed by high-level experts and managers responsible for global business network B2B integration. However, the research was dominated by one industry domain, and therefore the enlargement should be done to cover a larger population of business sectors. A quantitative survey could provide new possibilities to examine the drivers and relationships between elements of digital business integration management and orchestration.

References 1. 2. 3.

4. 5. 6.

7. 8. 9.

10. 11.

Carayannis, E.G., Alexander, J. & Geraghty, J. (2004) Service Sector Productivity: B2B Electronic Commerce as a Strategic Driver, 1573-7047, No. 4. O. Urikova (2012) Managing Complex Business Services in Heterogeneous eBusiness Ecosystems – Aspect-based Research Assessment, Procedia Computer Science, Vol. 10, pp.128-135. Ritter, T. & Gemünden, H.G. (2004) The impact of a company's business strategy on its technological competence, network competence and innovation success, Journal of Business Research, Vol. 57, No. 5, pp.548-556. Cooper, D.P. & Tracey, M. (2005) Supply chain integration via information technology: strategic implications and future trends, International Journal of Integrated Supply Management, Vol. 1, No. 3, pp.237-257. Cusumano, M.A. (2004) The business of software: What every manager, programmer, and entrepreneur must know to thrive and survive in good times and bad, Free press. Xie, P. & Zhang, H. (2012) Applied research on dynamic electronic business based on Web Services in the construction of MISP, Systems and Informatics (ICSAI), 2012 International Conference onIEEE, pp.1166. Rao, B.T., Sridevi, N., Reddy, V.K. & Reddy, L. (2012) Performance Issues of Heterogeneous Hadoop Clusters in Cloud Computing, arXiv:1207.0894, Hussain, O.K., Chang, E., Hussain, F.K. & Dillon, T.S. (2007) A methodology to quantify failure for risk-based decision support system in digital business ecosystems, Data & Knowledge Engineering, Vol. 63, No. 3, pp.597-621. Iansiti, M. (2004) Keystone Advantage: What the New Dynamics of Business Ecosystems Mean for Strategy, Innovation, and Sustainability (Hardcover), Harvard Business School Press Books. Moore, J.F. (1993) Predator and Prey – A New Ecology of Competition, Harvard business review, Vol. 71, No. 3, pp.75-86. Ritala, P. (2012) Coordination in innovation-generating business networks – the case of Finnish Mobile TV development, Journal of Business & Industrial Marketing, Vol. 27, No. 4, pp.324-334.

Digital Business Ecosystem integration management and orchestration model 12. 13. 14. 15. 16.

17. 18. 19.

20. 21. 22.

23. 24. 25. 26. 27. 28. 29. 30. 31.

32.

Liu, J., Zhang, S. & Hu, J. (2005) A case study of an inter-enterprise workflowsupported supply chain management system, Information & Management, Vol. 42, No. 3, pp.441-454. Nurmilaakso, J.M. (2007) XML-based e-business frameworks and supply chain integration, Helsinki University of Technology. de la Fuente, M.V., Ros, L. & Ortiz, A. (2010) Enterprise modelling methodology for forward and reverse supply chain flows integration, Computers in Industry, Vol. 61, No. 7, pp.702-710. Melao, N. (2009) E-business processes and e-Business Process Modelling: a state-ofthe-art overview, International Journal of Services Technology and Management, Vol. 11, No. 3. Ulankiewicz, S., Henningsson, S., Niels Bjørn-Andersen & Barbara Flügge (2010) Interoperability Tools, Accelerating Global Supply Chains with IT-Innovation, pp.201222. Becker, M. (2012), Electronic Data Interchange (EDI)(Interoperability Case Study), Berkman Center Research Publication, No. 2012-5. Flügge B., Schmidt, A., Raus, M. & Vogel, T. (2010), Standardised Data Models, Accelerating Global Supply Chains with IT-Innovation, pp. 175-201. Vivek, N., Sen, S., Savitskie, K. & Ranganathan, S.K. (2011) Supplier partnerships, information quality, supply chain flexibility, supply chain integration and organisational performance: the Indian story, International Journal of Integrated Supply Management, Vol. 6, No. 2, pp.181-199. Lee Y. (2004) Crafting Rules: Context-Reflective Data Quality Problem Solving, Journal of Management Information Systems / Winter 2003–4, Vol. 20, No. 3, pp.93– 119. Malhotra, A., Gosain, S. & El Sawy, O.A. (2007) Leveraging standard electronic business interfaces to enable adaptive supply chain partnerships, Information Systems Research, Vol. 18, No. 3, pp.260-279. Hoyer, V. (2008) Collaborative e-Business Process Modelling: Transforming Private EPC to Public BPMN Business Process Models, Collaborative e-Business Process Modelling: Transforming Private EPC to Public BPMN Business Process Models, Vol. 4928. Moore, J.F. (1998) The rise of a new corporate form, Washington Quarterly, Vol. 21, No. 1, pp.167. Gossain, S. 1998 Reinventing value: The new business ecosystem, Strategy & Leadership, Vol. 26, No. 5. Santos, F.M. & Eisenhardt, K.M. (2005) Organizational boundaries and theories of organization, Organization science, Vol. 16, No. 5, pp.491-508. Jansen, S. & Cusumano, M. (2012) Defining Software Ecosystems: A Survey of Software Platforms and Business Network Governance, Proceedings of IWSECO, pp.41. Corallo, A., Caputo, E. & Cisternino, V. (2007) Business Modelling Language: a framework supporting interoperability in cluster of SMEs, Digital EcoSystems and Technologies Conference, 2007. DEST'07. Inaugural IEEE-IESIEEE, pp.107. Nachira, F. (2002) Towards a network of digital business ecosystems fostering the local development (Discussion paper), Last Accessed July, Vol. 14, pp.2008. Nachira, F., Dini, P. & Nicolai, A. (2007) A network of digital business ecosystems for Europe: roots, processes and perspectives, European Commission, Bruxelles, Introductory Paper. Maier, R., Passiante, G. & Zhang, S. (2011) Creating Value In Networks, International Journal of Innovation and Technology Management, Vol. 8, No. 03, pp.357-371. Iansiti, M. (2004) Keystone Advantage: What the New Dynamics of Business Ecosystems Mean for Strategy, Innovation, and Sustainability (Hardcover), Harvard Business School Press Books. Dhanarag, C. & Parkhe, A. (2006) Orchestration Innovation Network, Academy of Management Review, Vol. 31, No. 3, pp.659-669.

Korpela, Ritala, Vilko and Hallikas 33. 34.

35. 36. 37. 38. 39.

Ritala, P. (2009) Innovation Orchestration Capability - Defining the organizational and individual level determinant, International Journal of Innovation Management Vol. 13, No. 4 (Dec. 2009) pp.569–591. Tang, A., Avgeriou, P., Jansen, A., Capilla, R. & Ali Babar, M. (2010) A comparative study of architecture knowledge management tools, Journal of Systems and Software, Vol. 83, No. 3, pp.352-370. Emery, C.R., Summers, T.P. & Surak, J.G. (1996) The role of organizational climate in the implementation of total quality management, Journal of Managerial Issues, pp.484496. Sowa, J.F. (1992) Extending and Formalizing the Framework for Information Systems Architecture, IBM Systems Journal, Vol. 31, No. 3, pp.590. Zachman, J.A. (1999) A framework for information systems architecture, IBM Systems Journal, Vol. 38, No. 2, pp.454-470. Geary, S., Childerhouse, P. & Towill, D.R. (2002) Uncertainty and the seamless supply chain, Supply Chain Management Review, Vol.6, No.4 (July/Aug.2002), pp.52-61: ILL. Stevens, G.C. (1989) Integrating the supply chain, International Journal of Physical Distribution & Logistics Management, Vol. 19, No. 8, pp.3-8.

Digital Business Ecosystem integration management and orchestration model Appendix 1. Questionaire to measure B2B integration managment and orchestration success factors Indicate the degree how well you have implemented these practice in to your business 1= we have not started jet the required actions

7=we have accomplished required actions

Sucess factor Practice 1

The benefit of using the standard is to us the way that we define it once and use again and again with new partners

2

The future-oriented value creation to us requires from us the ability to bridge different experts and specialists together

3

Core value comes from an iterative process between key customer, senior management and board members

4

We have senior management buy-in for B2B integration and of course the budget to make all this happen

5

We have an easy B2B integration vision that people can understand

6

We have provided an easily to undestand B2B integration information to entire network

7

We have to offer the tools to calculate the benefits of B2B integration

8

Our company is a part of the ecosystem, and our success depends on the success of the entire ecosystem

9

We have defined B2B integraton in easily understandable form by business processes, objectives and benefits

10

The total cost of supply chain management is the most important factor in the success of our company

11

Our business managers have taken the lead in the development of B2B integration

12

The business managers are responsible for leading the B2B integration

13

The experts also work together with people on the performance level, since this has been the most effective

14

We have made sure that key personnel have a good trusting relationship

15

We have continious cooperation with our customers and suppliers in B2B integration

16

We have nominated the key contact person for B2B integration who also works as a trainer

17

The key contact persons are responsible for all communication, also with key contact persons in other company

18

We have a identified the key contact person who serves as a liaison to key contact person in other organizations

19

People are coming and leaving the organization, but integration routines remain

20

We are offering financial calculations tools so that any organization can easily make their own calculations

21

Information packages are designed for different user groups based on their needs

22

If we require our business partner to implement the changes quickly, we will offer compensation

23

Our IT experts work together with the users to ensure that processes are working properly and in a timely manner

24

We are able to get help from partner companies on B2B integration implementations

25

We have nominated IT experts to support business process planing and the changes required in the software

26

The leverage of a standard comes by using it over and over and over again

27

By using standardisation and automatization we get better supply chain visibility

28

Standard organizations are continiously working with companies and collecting new requirements globally

29

Standard organizations are providing proper information to technical personnel and other user groups

30

We have realized that we need lot of efforts to engage business partners in B2B integration

31

We have foremed B2B integration community as a user group

32

We have made use of experts who are well educated and are experience.

33

We eliminate and reduce the overall supply chain work, rather than pushing the work down to the supply chain

34

We are working together with other key players and we have explained the whole model right from the beginning.

35

We have contact information and always availabe a person who knows how to help effectively to solve problems

36

User groups have regular face-to-face meetings to discuss the problems and build confidence

37

We have different user groups which discuss the problems at the same level in other organizations

38

We are able to offer proper process and data test methods for all software developers

39

Our network is able to offer preintegrated solutionsfor SME´s

40

Our network is able to offer experts to advise the right steps and solutions for SME´s

41

Our network is able to offer a list of outsourced services for SME´s

1

2

3

4

5

6

7