Matching Process Requirements with Information Technology to Assess the Efficiency of Web Information Systems Arno Scharl
[email protected]
Judith Gebauer
[email protected]
Information Systems Department Vienna University of Economics, Austria
Fisher Center for IT & Marketplace Transformation University of California, Berkeley, USA
Christian Bauer
[email protected] School of Information Systems Curtin University of Technology, Australia
Forthcoming in Information Technology and Management Last revised: 2/29/2000
Abstract Emerging information technologies play an increasingly important role, not only to automate tasks within organizations but also to provide the infrastructure to facilitate communication across organizational boundaries, to implement one-to-one marketing strategies, or to manage business relationships. Web Information Systems (WIS) provide a platform that can help establish and manage customer relationships in ways that were not feasible with traditional business models and architectures. They facilitate the delivery of customized content to end consumers, reflecting their unique needs and individual preferences. In order to establish electronic commerce as a new business paradigm, corresponding changes in information technology, organizational structure, and the corporate value chain are critical. This paper proposes a conceptual model to support the task of balancing flexibility needs with the specific requirements of electronic transactions.
1. Introduction Responsiveness and organizational flexibility are becoming key issues in a world of increasingly dynamic and global business environments, where companies see urgent need to focus their business activities on customer preferences in order to be able to respond instantly to constantly changing demands. Simultaneously, overall costs and operational efficiency have to be taken into account [7, 12]. Emerging information systems provide unprecedented support for business processes, in particular in cases where they reach beyond organizational boundaries [11, 15, 40]. Based on Internet technologies, more and more virtual marketspaces are being created that are transforming the role of customers in fundamental ways. „Individual customers can act, if they choose to, as the analyst, the portfolio manager and the broker” [13]. After initially providing a rather simple, one-directional medium to disseminate information, Webbased systems are now covering the entire cycle of business-to-consumer (B2C) and business-to-business (B2B) transactions. In this paper, we focus on the role of WIS in business-to-consumer relationships to target individual customers. Being characterized by interactivity, dynamic updating, hypertextuality, and global presence, WIS closely resemble electronic catalogs [36], which include any Web-page „that contains information about the products and services a commercial entity offers” [46]. WIS represent a subcategory of mass information systems that typically support on-line information retrieval and routine tasks by way of self-service for a large number (thousands or millions) of occasional users who are spread across many locations [21, 22]. Compared to business-to-business applications such as Electronic Data Interchange (EDI), horizontal and vertical trading hubs, or inter-organizational information links, WIS address individual end-consumers. They differ from systems that facilitate consumer-to-consumer (C2C) transactions such as Market Maker (formerly known as Kasbah; http://maker.media.mit.edu/) or eBay
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(http://www.ebay.com/), in that they are used by corporations as a non-mediated way to reach prospective customers [51]. Available WIS technologies can be categorized into four stages according to their technical sophistication and ability to support interactive communication, knowledge management, and decision processes of variable complexity: Static WIS, basic interactions, flexible automation and distributed process control (section 4 provides a detailed description and analysis of these four stages). Comprehensive support for the different phases of business transactions requires the availability of the full range of communication technologies. Adaptive systems that reach beyond the automation of operations are necessary to manage ever more complex products and the changing requirements of highly demanding customers. They open up opportunities, but their long-term sustainability still requires economic efficiency. This paper proposes a conceptual evaluation model to balance the desired flexibility of individualized customer relationships with the requirements of electronic transaction processes. In the following section 2, we outline the structure of business transactions and their specific feedback requirements, prior to introducing the evaluation model in section 3. Section 4 then applies the model to the development process of constantly evolving WIS, before section 5 integrates the previous parts and provides an outlook of how new technologies impact efficiency considerations.
2. The Structure of Electronic Business Transactions In a very general sense, business transactions describe the exchange of goods and services. Similar to Gebauer, Schmid and Lindemann, and Ware et al. [17, 44, 50], we distinguish between three core phases of a transaction: information, negotiation, and settlement. In the first phase, customers identify and evaluate their needs and sources to fulfill them, while potential sellers arrange to provide their goods and identify potential customers. To a large extent, these steps evolve around the exchange of information, hence the term information phase. Subsequently, prospective customers and sellers negotiate the terms of a deal by jointly identifying possible solutions with the goal of reaching a consensus, usually in the form of a contract. Eventually, the contract is executed and goods and financial compensation are exchanged according to the conditions stipulated in the negotiation phase. Gutman, Moukas, and Maes [20] identify six fundamental stages guiding consumer behavior: need identification, product brokering, merchant brokering, negotiation, purchase and delivery, as well as product service and evaluation. While stages one to five can be subsumed under the three phases outlined above, stage six (product service and evaluation) introduces a new aspect. This stage deals with all corporate activities that are related to a business transaction but take place after the actual delivery of the product. Given the increasing complexity of products and the importance of after-sales support in today’s buyer-dominated markets, we incorporate it as a fourth phase into our transaction model as depicted in Figure 1 (adapted from [44]). A large amount of information is being processed and communicated between the participants of electronic markets. Catalog data, third party product evaluations, buying contracts, and shipping documents are being exchanged in addition to basic information about offerings and requests. It is usually not feasible for companies to acquire all necessary information via direct communication with customers. Frequently, implicit information about consumer preferences and needs is obtained without active participation of the customers and most often without their knowledge. Observations of customer interaction and reports of market research institutions are the most important sources of implicit customer information today but need to be complemented by explicit forms of communication such as customer surveys or focus groups. The table at the bottom of Figure 1 contrasts the importance of implicit and explicit forms of data gathering with the phases of electronic business-to-consumer transactions. Organizations that are unable to capture and exploit available customer information will inevitably loose competitiveness in the on-line economy [2]. Explicit forms of communication include all information that is consciously provided by the users of the systems. This information can either be submitted interactively on-line (e.g., questionnaires submitted
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via electronic mail, on-line forms via CGI-scripting, or more sophisticated approaches) or gathered from past records and off-line user surveys. Implicit communication between merchants and buyers is facilitated throughout all four phases of a transaction via methods such as detailed transaction log files or persistent client state HTTP cookies (HTTP = Hypertext Transfer Protocol). Implicit ways of gathering behavioral data and user preferences are usually less obtrusive than their explicit counterparts, which require customers to actively provide information beyond the direct needs of a transaction [4]. Compared to traditional, off-line transactions, WIS extend the possibilities of implicit communication quite significantly. They offer new ways to improve the effectiveness of marketing activities and help establish individualized customer support.
Figure 1. Phases and communication patterns of electronic market transactions
3. Evaluating Web-based Infrastructures In this section, we introduce an evaluation model to assess the overall efficiency of a process throughout its lifetime taking into account short-term effects from the automation of operations as well as the impacts on process flexibility and customer value. The approach is based on a conceptual framework that has been introduced by Gebauer [17]. In the following, we first outline the original model before we introduce an extension that accounts for the specific situation of Web-supported business-to-consumer relations.
3.1. Minimizing Overall Process Costs – Automation versus Flexibility The model provides a generic tool to assess the organizational structure of business processes. Business processes represent corporate subsystems that serve a certain task (output), which is assumed to be constant thereafter. The framework adds to traditional methods of assessing organizational process structures - e.g., by measuring lead times and operation costs [24]. It supplements established methods of evaluating costs and benefits of information systems, which are often applied independently from the process changes that accompany them [25, 38, 39]. In a broad sense, the deployment of process infrastructure refers to all initial activities that are then leveraged for day-to-day operations. It includes organizational measures such as the design and introduction of order forms, the opening of an office for customer service, the establishment of a production line, or all measures of standardization [9]. Infrastructure-related measures often refer to the flow of information and imply the introduction of additional communication channels, the set-up of appropriate database connectivity, or the development of on-line ordering systems.
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In the following sections we focus on the information infrastructure to set up Web-based applications. Throughout its entire lifetime, the information infrastructure has a substantial impact on process efficiency by simultaneously determining the levels of process automation and flexibility. The objective is to choose an infrastructure that maximizes the efficiency of a process throughout its entire lifetime (see Figure 4). In cases where output is held constant, this means minimization of the overall costs (input) required to achieve this output. Infrastructure-related activities determine the costs of day-to-day operations, such as processing individual customer requests. They also define the period that the infrastructure is valid for. Day-to-day operations can be divided into two groups, standard situations and exceptions [28]. Standard situations allow the use of the infrastructure in its intended way. Especially in cases where a task is fully automated, this ensures low costs of operation and high short-term efficiency. Exceptional situations prohibit the use of the infrastructure at justifiable costs. Activities have to be handled “manually” and require internal adjustments or extended negotiations. Exceptions also apply to situations where the infrastructure provides poor results that have to be improved ex post in order to match desired standards. The more flexible a system, the lower the costs that unforeseen situations will cause. Figure 2 provides an overview of the model and the assumed interrelations between its elements. The long-term efficiency of a process is determined by all three kinds of expenses (infrastructure, standard operational costs, and exception management) throughout the entire period that the infrastructure is used. The length of the period plays an important role and is determined, among others, by the dynamics of the process environment. This time factor is usually not included in the assessment of process performance.
Figure 2. Corporate task and process parameters It is assumed that the expenses necessary to build up a certain level of process infrastructure mainly depend on three features of a task (also triggering feedback reactions): complexity, internal process structure, and uncertainty. Task complexity is determined by the number of sub-processes and organizational units, their potential interdependencies, and their interactions with the process environment. A flexible infrastructure processes complexity ex ante, and thus reduces it for later operations. The task structure also determines requirements regarding infrastructure quality. Picot and Reichwald distinguish three types of tasks [37]. Routine tasks occur regularly in similar form, like wage accounting or ordering processes. Due to their high predictability, it is straightforward to structure and automate them even in complex environments. At the other end of the scale, innovative tasks (e.g., in the context of strategic management) limit automation in terms of determining operational steps ex ante. They require high flexibility. The third form, administrative tasks, reveals a combination of the mentioned characteristics and requirements. Uncertainty results from the instability of dynamic process environments, and from the difficulty to predict the behavior of the organizational elements. The probability and extent of changes play a central role.
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Predefined rules weaken uncertainty, since specific patterns of behavior are prescribed for certain situations. The more difficult it is to predict developments and future situations, the more expensive it is to build up a valid infrastructure. The model reveals a certain trade-off between long-term and short-term efficiency and supports the assumption that there is an “optimal degree of integration” – i.e., a balance between complete automation and maximum flexibility with no structuring at all. The framework demonstrates the need for process design to determine the optimal ratio between expenses for infrastructure and operational activities, simultaneously considering standard situations, changing requirements, and possible exceptions. Analyzing the characteristics of the task helps to predict requirements and to estimate infrastructural costs for different levels of complexity.
3.2. The Notion of Customer Value – Impacts on Process Results The assessment model introduced above can be applied to assess different forms of information infrastructure with regards to their impact on overall process expenses. It assumes a constant level of output. With regard to WIS, this assumption seems insufficient. In addition to relatively low investment requirements, most companies design and implement WIS to leverage the technology's high popularity among potential customers and to deliver additional customer value [34]. By extending traditional forms of customer support, innovative Web technologies add substantial value to business-to-consumer transactions. They increase both the output level and the (information) product's quality. This also refers to product representation, corresponding services, or the automated packaging with complementary goods (nonproduct quality). In order to account for these effects we extend the original model by introducing the notion of value that is delivered to the customer (customer delivered value). This parameter includes the total costs for the consumer and the quality of products and services perceived by the market participants (market-perceived quality), which is again based on product and non-product quality (Figure 3). By eliminating redundant data entry, improving navigation functionality, streamlining user interfaces, or limiting the need to search for suitable product alternatives the level of total costs for the consumer can be lowered. Besides hard dollar figures, time savings should be taken into account. The term "integrated communication" is frequently used to describe the combination of different marketing instruments for analyzing and manipulating information retrieval, decision processes, and usage patterns of active and potential customers [5]. With the customization of WIS, companies hope to identify new customers and tailor products and their representations to the needs of existing customers [31]. According to Kotler and Armstrong [29], this target can be expressed by maximizing the customer delivered value, which is calculated as the difference between the Total Customer Value (Product, services, personnel, image values) and the Total Customer Costs (Monetary, time, and energy). Cleland & Bruno, and Gale [10, 16] present similar approaches, defining customer value as the market-perceived product and non-product quality, divided by the price of the product. Figure 3 summarizes these approaches and provides the customer-oriented extension of the assessment model.
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Figure 3. Customer delivered value Due to the immaterial, non-tangible, and transitory nature of services and due to the fact that production and consumption take place synchronously, the value of product-oriented market research in the traditional sense is drastically reduced. The focus on products has to be replaced by an in-depth analysis of customers and target groups including personal needs, preferences, and expectations [26]. Analogous to traditional markets, we can assume that WIS customers buy products and services from the (information) provider that they believe offers the highest customer delivered value.
3.3. Maximizing Overall Process Efficiency In the following, we combine the two parts of the assessment model introduced above. We discuss the effects that emerging Web-based applications have on the overall efficiency of business-to-consumer processes. Economic efficiency refers to situations where either the output of a system is maximized for a given input (output efficiency), or the input required to reach a certain output is minimized (input efficiency). With the emergence of WIS, the value that can be delivered to consumers has been increased significantly. The combined model allows to set up information infrastructures in a way that minimizes overall process costs (input) for a given level of customer value (output). This means maximizing input efficiency. The model can also be used to help justify the use of WIS in situations that are not resulting in overall cost savings. In cases where the use of WIS improves the output of a process, however, overall efficiency can still be increased. The highest level of output (customer value) that can be reached with a given input (WIS infrastructure) determines the maximum output efficiency.
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Figure 4. Integrated framework to assess alternative process infrastructures Figure 4 provides a graphical overview of the combined model. The triangular markers on the left side of each object depict the effects that an investment in WIS infrastructure is likely to have on the parameters of the model. The symbols (+) and (-) indicate assumed relationships between the different task and process parameters. The investment in infrastructure increases the input (total costs) of a process and thus tends to lower its overall efficiency. This effect can be offset in two ways: through lowering the total costs for operations, or by achieving higher customer value (output). Often, both effects apply simultaneously. Besides the general strategy of a company, a variety of factors have an impact on this balance, such as size, organizational structure, or the business sector's specific characteristics. In cases where the level of output (customer value) remains constant, the investment in infrastructure is justified by lower costs for day-to-day operations - i.e., lower expenses for standard operations or an increased range of situations that can be handled with the new system. Interactive Web components allow customers to submit orders, instead of having to talk to a customer representative or send in orders per postal mail, which then have to be rekeyed. Extending the standard marketing brochure by providing comprehensive product and company data on-line increases the range of situations that can be handled electronically. This enables customer representatives to focus on the most difficult customer questions. The impact on overall efficiency is positive in cases where the overall cost savings offset the initial investment in WIS infrastructure, over the period that the WIS is being utilized. If the effect on overall costs is positive (infrastructure-related costs plus changes of operational costs), overall efficiency can still be improved through a sufficiently high increase in customer delivered value. For Web-based applications, this effect is often more important than the effect on overall cost savings. As pointed out above, emerging technologies allow the management of customer relationships in ways that were not feasible before (see next section). By increasing the customer delivered value, compa-
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nies hope to tighten customer relationships, to open new markets, and to increase switching costs. All these effects tend to have a positive impact on the overall business volume.
4. Evolving Technologies for Flexible Process Control New technologies such as WIS have the potential to reach a higher level of automation without compromising the overall efficiency of business processes. Since the emergence of the World Wide Web in 1991, adaptability has been an inherent feature of WIS and provides the vertical dimension of Figure 5 (the stages S1 to S4 in Figure 5 are described in the corresponding sections 4.1 to 4.4).
Figure 5. Evolution of the WIS infrastructure [23, 41] Successful WIS design strategies, techniques and tools need to match changes in communication models as they are commonly used. These processes follow predictable curves as they move from innovation to maturity. The acceptance and adoption rate of customers follow similar curves and track the technology itself [47]. Each stage of the WIS evolution shifts the focus and the timing of design and user feedback analysis into a new context. Figure 5 visualizes these changes and the implications for design (D), feedback analysis (A), and negotiation (N).
4.1. Static Applications without Transaction Support In the first stage, stand-alone servers deliver simple hypermedia compound documents subsequently being displayed by the browser. In this early stage of Web development, user feedback is disregarded, resulting in unidirectional information flows from the server to the client. As core business processes cannot be supported with this technology, the effect on standard processing costs is neglectable. Potential customers benefit in the information phase of the transaction but have to use traditional sales channels to place an order. Nevertheless, the design efforts necessary for such WIS can be quite substantial in scale and require a planned, organized and structured approach. Such methods have been suggested in the works of Bichler & Nussser, Isakowitz, Stohr & Balasubramanian, Nanard & Nanard, and Scharl [6, 27, 35, 42]. Bauer and Scharl provide a classification of various academic and commercial methodologies [1, 41]. The develop-
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ment process follows the rather simplistic model depicted in Figure 6, which consists of only two phases: design and implementation. The design process is usually supported by a corresponding design method and a suitable graphical tool – e.g., the Extended World Wide Web Design Technique (eW3DT) and WebDesigner as depicted in Figure 6 [41, 42]. Due to a lack of (formal) feedback channels, redesigning WIS following this model usually requires substantial investments in infrastructure.
Figure 6. Static WIS design and implementation
4.2. Basic Interactions The planned analysis of user feedback starts to change the underlying business and communication models. While arguably every hypertext system represents an interactive form of communication and therefore must contain some kind of (low-level) information feedback loop (Figure 7), the distinction between the first two stages is based solely on the processing of application-oriented (high-level) feedback. Depending on the sub-model (Stages 2a-2c), the analytical process covers methods for gathering implicit and explicit feedback. Traditional fields like demand-oriented market research or empirical social research together with the corresponding statistical processing provide a sound background for utilizing the acquired information. Gathering, reporting, and visualizing of implicit feedback usually require more sophisticated approaches [43]. They are still underutilized in many commercial Web applications despite the availability of an extensive array of suitable software solutions [32]. Not providing methods for the structured analysis of explicit and implicit sources of feedback represents a serious shortcoming of prevalent WIS design methodologies.
Figure 7. Integrated feedback cycle for developing dynamic WIS The emergence of interactivity requires an extended development process that introduces formal feedback on the basis of WIS usage patterns (e.g., the sequence of HTTP requests of individual users) and its subsequent analysis. The resulting feedback cycle heavily relies not only on the visualization of data but, even more important, on sophisticated data mining capabilities, maintenance mechanisms ensuring
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consistency of the underlying databases, and on statistical methods to aggregate available information and derive significant correlations. Most available development tools, however, do not support such an integrated feedback cycle or the handling of exceptional operations. Only standardized forms of settlement are feasible, with practically no adequate mechanisms for real-time negotiations during the preceding agreement phase. It is the last transaction phase, after-sales, that benefits most from the interactive nature of the improved communication model and by the organization's ability to target related efforts more precisely.
4.3. The Road to Flexible Automation This section tries to answer the question whether it is possible to automate transactions on a larger scale and increase the organization's flexibility at the same time. In the third stage, the concept of adaptivity is extended beyond visual design by building systems with parameterized functionality, which promotes reuse of documents and their embedded link structures. Customized text and graphics, for example, may be attached to an existing directed graph of links [8, 54]. Available attributes and preferences of registered users are stored in profile databases and incorporated into WIS using simple rule-based constructs. Granting different access privileges according to IP domain, personally addressing customers with dynamically generated documents, or determining purchase conditions according to user category are typical scenarios which require sophisticated server-side database and application interfaces. Keeping track of user interactions and reasoning about the user's intentions [33], adaptive solutions avoid redundant repetition, facilitate navigation, and increase the customer delivered value. With reduced barriers between productive and dispositive data processing such as market analysis, Web-tracking, or data warehouses, the widespread consideration of dynamic user models for customizing WIS will become a necessity for every serious commercial project. In the advanced scenario of stage three, user feedback is processed instantly within the expected system response time. It goes without saying that scaling such a task with traditional tools and architectures becomes difficult to handle considering exponentially increasing numbers of on-line users. Therefore, adaptive technologies like neural networks, genetic algorithms, natural language generation [33], case based reasoning [14], or related soft computing approaches are propagated in stage three. Incorporating methods that originate from these established fields increase the functionality of deployed applications, independent of the complex infrastructure being necessary for mobile agents in stage four. However, they are still based on the same, slightly advanced network information infrastructure of the preceding stages one and two, but improve communication and transactions with dynamic responses generated on-the-fly. Adaptive applications of stage three cannot be designed without a clear understanding of the appropriate parameters on which the adaptive behavior relies on. The definition of these parameters requires a detailed economic and socio-behavioral analysis as well as an assessment whether it will be technically and economically feasible to gather and use the required information on a large scale. The adaptability of stage three applications is a prerequisite for electronically handling all four transaction phases, from information to after-sales, via a common platform (WIS) and without the need to refer to other media or traditional communication models. Nevertheless, an optimum between the main cost categories can be difficult to determine. While the costs of the infrastructure necessarily increase, the costs for standard operations are reduced substantially. Furthermore, although the costs for exceptional operations may increase, the extended area of validity ensures that only very few cases have to be handled manually. Web developers usually employ visual development methods and tools for the creation of real-time commercial applications. Such methods are derived from prevalent WIS modeling methods by extending their functionality with immediate responsiveness and dynamic site management. Integrated tools for designing and analyzing WIS are a necessity in this stage (“A & D” in Figure 5). They generate the hypertext documents including customized link structures and are required to incorporate many new additions to the repository of Web technologies, such as methods derived from research on artificial intelligence, data mining, (dynamic) user modeling, or advanced knowledge representations. The term implementation in this context denotes document presentation – i.e., the rendering of HTML (Hypertext Markup Language)
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or XML (Extensible Markup Language) documents in contrast to their structure or content. The move from HTML to XML is likely to significantly affect the customizability of WIS documents [49]. Whereas HTML as presentational markup language imposes a lowest common denominator for document rendering and inextricably mixes presentation and representation (content and structure), XML as a semantic markup language is extensible, validatable by external modules, and provides self-documenting tags [18]. The separation of semantic meaning attached to markup and document presentation is responsible for the XML's excellent adaptability. By being interpretable by both human operators and computers, XML documents provide an incremental path to flexible business process automation, whereby certain tasks are gradually transferred to digital agents of stage four (see next section, Distributed Process Control [19]).
Figure 8. Adaptive sub-processes responsible for document generation and presentation While not necessarily being visible to the customer, the internal processes undergo a dramatic change. Based on a central user model (e.g., stereotype or domain overlay models), the WIS is automatically (re-)designing and presenting the documents without human intervention, which is depicted as a set of secondary (automated) development cycles in Figure 8 within the boundaries defined by the primary (manual) development process. One of the basic differences to the preceding stage is the higher frequency of this automated feedback cycle for instant response.
4.4. Distributed Process Control More ambitious efforts in stage four focus on digital agents, especially for information retrieval [48] and complex negotiations. These agents promise to increase flexibility further and to change the inherent characteristics of electronic commerce radically. They are characterized by a number of attributes which determine their usually cooperative behavior [45]: Proactivity and reactivity (ability to initiate processes and react to internal or external events), intentionality and goal-orientedness (ability to actively choose appropriate methods for pursuing a certain goal), adaptivity (ability to learn and adapt to changes in the environment), autonomy (ability to act in an independent manner without direct intervention by the principal), and mobility (ability to migrate between different information systems within the boundaries of complex software environments). The enhanced functionality of autonomous agents negotiating with each other over a network requires rethinking, reinventing, and rebuilding virtual business and communication models. The distinction between standard and exceptional operations becomes less relevant as individual negotiations provide maximum flexibility. Principal-agent relations replace the traditional client-server approach with agent software acting as client and server at the same time [23]. Digital agents consider the principal's preferences, employ predefined and standardized coordination mechanisms, and adapt to the situational re-
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quirements of their tasks. The “request-response” model predominant during the first three stages and the underlying protocol (HTTP) will be dissolved by the direct interaction of equal partners in an agentdriven communication network environment. Nevertheless, every innovation in this specific segment will have to provide backward-compatibility and interoperability to enable seamless integration [30]. The described development becomes most apparent in the automation of complex negotiation mechanisms and models for commercial applications. The communication model dominating stage four, therefore, does not refer to design or analysis any more, but replaces these traditional concepts by the term negotiation (N). Negotiation processes between business entities are characterized by high degrees of unpredictability, complexity, and strategic importance to organizations [3]. It can be assumed that a number of design methodologies for commercial utilization will be made available with the progress of this technology. With full negotiation support, the seamless integration and effective automation of all transaction phases finally becomes a reality.
Figure 9. Dual feedback loops connected via standardized transaction environments The transformation of the client/server-infrastructure into an agent environment with multi-lateral interaction between independent participants requires the extension of the modeling approaches to include Web development at both ends. Figure 9 incorporates the feedback loops for the development of two (commercial) negotiation systems interacting via a brokered electronic market. The developers on both ends will complete the same cycle of design, implementation, usage, and analysis for optimizing the agent’s behavior. The design of a negotiation agent deals with the same challenges as the WIS from earlier stages, but has to additionally address the complex infrastructural requirements of transaction agents and, most importantly, to fulfil the principal's strategies. The implementation of agent infrastructure initially requires a substantial investment. To compensate for this, the cost parameter for exceptional operations is practically eliminated from the assessment model. In the usage phase agents are less passive compared to earlier stages of WIS evolution, actively identifying negotiation partners in their specific transaction environment. It is the usage phase were the agents and their underlying development loops are tangent to each other, with their interaction facilitated by a WIS infrastructure for electronic markets. Following the usage phase, principals will evaluate the agent and critically review negotiation processes and their outcomes. Insights gained in this analysis phase will then be incorporated into the design specifications of the next agent.
5. Conclusion In this paper, we presented a conceptual model to describe, analyze, and evaluate the economic impacts of Web Information Systems (WIS) on corporate business processes and their overall efficiency. The different phases of a market transaction – information, agreement, settlement, and after-sales – were discussed
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with a special focus on technical infrastructures based on evolving WIS. The architectures that are available to date range from simple, associatively linked collections of static hypertext documents to adaptive, customizable, integrated solutions and agent-based negotiation support. While the information phase is supported by practically every WIS, reaching a mutually satisfactory agreement is generally more challenging in both technical and organizational terms (see Figure 10). Information systems belonging to one of the first two stages fall short in providing the necessary mechanisms. In stage three explicit agreements become feasible. But only the digital agents of stage four enable real-time negotiations on a truly individual level (as compared to a predefined set of conditional offers, which is typical for stage three). As far as infrastructure requirements are concerned, settlement is easier to accomplish. Standardized solutions are already common in stage two, but offer a limited area of validity and are considerably enhanced by customized process control in stage three. Characterizing the aftersales phase is not easy, as related activities are very heterogeneous and range from simple electronic mail services to sophisticated electronic helpdesks or complex electronic maintenance manuals. Due to their limited functionality and broadcast characteristics, stage one solutions can only supply static information, while interactive dialogues and customized services become possible with the implementation of higherlevel technologies.
Figure 10. Support for electronic market transactions by evolving WIS infrastructures For smaller entities, the initial investment required to set up the infrastructure might have a prohibitive effect. Large organizations, however, are likely to benefit from simultaneous improvements in both, input and output efficiency. In many cases, the investment in infrastructure is offset by significant cost reductions for standard operations and – due to the increased flexibility – less need for the handling of exceptional operations. On the output side, the customer delivered value is pushed to a higher level by increasing the quality of existing products and services, and by providing additional features that are not feasible without WIS technology.
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