A Web Services-enabled marketplace architecture for negotiation process management

https://doi.org/10.1016/j.dss.2004.04.005Get rights and content

Abstract

As the eBusiness environment becomes more pervasive and dynamic, negotiations between companies are required more frequently than ever. Despite its potential value and the progress in research, the adoption of negotiation systems has been slow in practice. We believe one reason for this is insufficient consideration of process management aspects such as process design, description, and deployment. Business negotiations must be approached from the process management perspective since they take place in the context of corporate processes such as procurement or sales.

In this paper, we study system support and automation of business-to-business (B2B) negotiations from the process management perspective. We propose a Web Services-enabled marketplace architecture for negotiation process management and refine it by adding pattern-based process composition. We validate the concept by implementing the proposed architecture using BPEL4WS and evaluating it from various perspectives.

Introduction

Negotiation is an essential business activity for establishing trade relationships and fine-tuning terms and conditions. As the business environment becomes more dynamic, negotiations between companies are required more frequently than ever. Business negotiations often involve multiple issues and multiple parties. The required amount of information processing and communication in those cases can easily exceed a single human being's capability, especially when there are many negotiation issues and partners. Therefore, systems supporting and automating business negotiations have a great potential value. Considering the degree of automation achieved in other business process domains, the importance of managing negotiations to achieve more efficient business operations has become even higher. Since most business negotiations are in the context of corporate procurement or sales process, negotiation systems must be approached from the business process management perspective. However, most of the previous studies on negotiation systems have heavily focused on strategies and decision making, and paid little attention to realistic process management aspects.

Negotiation is a challenging business process for several reasons. First, it is an inter-organizational business process because every negotiation involves at least two companies. Inter-organizational processes have been considered as one of the most demanding business processes to manage due to many issues such as process autonomy, integrity, security, etc. [2], [43]. Second, this process is interleaved with many other internal and external business processes such as procurement or sales. For example, procurement negotiation often needs coordination with various activities such as requisitioning, approval, receiving, inspection, and payment. Similarly, sales negotiation frequently requires interactions with marketing, credit management, production, inventory management, delivery, etc. In addition, negotiation involves collaborative decision making by many stakeholders within the organization such as accounting, marketing, production, shipping, and warehouse departments.

Management of such inter-organizational processes interleaved with other processes is complex. Early research on inter-organizational workflows focused mostly on the integration of small number of tightly coupled business processes [4]. These traditional approaches impose limitations when it comes to dynamic eBusiness. The Internet and the web have changed the requirements for inter-process functionality dramatically. Tying processes together at the back end did not work when multiple processes had to come together through a web interface, e.g., online banking. Time to market and agility associated with higher degree of inter-organizational business interaction demand a level of integration and flexibility way above traditional levels. We view this as one of the major issues in enabling eBusiness transformation in enterprises. Process interleaving concept was introduced by Segev [38] to describe the new requirements beyond traditional integration and workflow. Interleaving is a relative term and denotes a higher level of integration compared to a base state. Its significance is in eBusiness enablement to achieve dynamic “configurations” of various processes in general and customer solutions in particular (see [38], [39] for a more elaborate discussion).

In this paper, we approach corporate negotiations from the process management perspective. We utilize principles from the interleaved processes framework by Segev [38] and the negotiation process framework by Kim and Segev [23], to design an architecture for the support of negotiation processes. First, we analyze negotiations from the inter-organizational business process perspective, and propose a marketplace-based architecture for the definition, execution, and control of negotiation processes. Then, we explain the benefits of using Web Services to manage these processes and show how they can be applied to implement the proposed marketplace-based architecture. Furthermore, to facilitate the generation and modification of negotiation processes, we propose a pattern-based composition of the processes. Finally, we evaluate the proposed solution from various perspectives.

Section snippets

Previous research on negotiation support and automation

Research on computer-assisted negotiations started in the 1980s. The so-called negotiation support systems (NSS) were software tools supporting negotiation activities such as eliciting preferences, evaluating and comparing offers based on the elicited preferences and Best Alternative to a Negotiated Agreement (BATNA), recommending strategies based on case-based negotiation studies, etc. These early studies on NSS focused on various issues including system design [20], usage of NSS in business

Web Services-enabled marketplace architecture

Research on business process management suggests that marketplace-based architecture is a good solution for managing inter-organizational processes such as negotiation processes because marketplace-based links between companies are more efficient than point-to-point links between every buyer and every supplier [2], [54]. Emerging Web Services and Web Services-based process definition standards provide mechanisms for formally defining negotiation processes that can be clearly understood and

Design, generation, and modification of negotiation processes

A business negotiation process is often ad hoc in nature because the relationships between negotiation partners are dynamic and the most appropriate negotiation process is dependent on the specific case. Stohr and Zhao [43] identified five issues in managing ad hoc workflows: (1) ease of generating new processes, (2) flexibility, (3) understandability, (4) information sharing, and (5) processes for decision support and collaboration. The proposed Web Services-enabled marketplace architecture is

Evaluation of the proposed architecture

In this section, we evaluate the proposed architecture from various perspectives suggested in the workflow literature. Sheth et al. [40] envisioned three types for marketplace-based inter-organizational business process management: process portal, process vortex, and dynamic trading process. A process portal manages inter-organizational processes on a one-to-one basis, while interactions between buyers and sellers occur through a third party in the process vortex. Dynamic trading process

Conclusion

In this paper, we proposed a Web Services-enabled marketplace architecture for negotiation process management. The marketplace based architecture is a solution to the problems in managing negotiation processes, whose nature is inter-organizational, ad hoc, and dynamic. The marketplace conforming to the architecture provides the repository of clearly defined and quickly deployable negotiation processes clearly defined based on open standard, as well as the shared ontology and message formats. We

Uncited references

[3]

[5]

[11]

[18]

[27]

[31]

[35]

[37]

Acknowledgements

This research was partly supported by the Intel Corporations and the State of California NGI Program under contract #CEMC/NGI 000104.

Jin Baek Kim received a BSc in Electrical Engineering from Seoul National University and a MS in Industrial Engineering and Operations Research from University of California, Berkeley. He is currently completing his PhD in Industrial Engineering and Operations Research at University of California, Berkeley. He has worked for the Fisher Center for Information Technology and Marketplace Transformation, Haas School of Business as a researcher and system engineer, since 2000. His research interests

References (55)

  • M. Benyoucef et al.

    Workflow modeling of combined negotiations in e-Commerce

  • M. Bichler et al.

    Towards a structured design of electronic negotiations

    Group Decision and Negotiation

    (2003)
  • BPEL4WS,...
  • Business Process Modeling Language,...
  • D. Chiu et al.

    Developing e-negotiation process support by Web Services

  • Collaxa,...
  • P. Dasgupta et al.

    MAgNET: mobile agents for networked electronic trading

    IEEE Transactions on Knowledge and Data Engineering

    (1999 (July–Aug.))
  • L. Esmahi et al.

    MIAMAP: a virtual market-place for intelligent agents

  • A. Foroghi

    A survey of the user of computer support for negotiation

    Journal of Applied Business Research

    (1995 (Spring))
  • A. Foroughi et al.

    NSS solutions to major negotiation stumbling blocks

  • FreeMarkets,...
  • C. Holsapple et al.

    A formal basis for negotiation support system research

    Group Decision and Negotiation

    (1998)
  • R. Hull et al.

    The vortex approach to integration and coordination of workflows

    Workshop on Cross-organizational Workflow Management and Coordination

    (1999)
  • M. Jelassi et al.

    Negotiation support systems: an overview of design issues and existing softwares

    Decision Support Systems

    (1989)
  • N. Karacapilidis et al.

    A framework for group decision support systems: combining AI tools and OR techniques

    European Journal of Operations Research

    (1997)
  • J. Kim et al.

    A framework for dynamic ebusiness negotiation processes

    IEEE Conference on e-Commerce, Newport Beach

    (2003 (June))
  • J. Kim et al.

    Web Services and BPELWS for Dynamic eBusiness Negotiation Processes

  • Cited by (0)

    Jin Baek Kim received a BSc in Electrical Engineering from Seoul National University and a MS in Industrial Engineering and Operations Research from University of California, Berkeley. He is currently completing his PhD in Industrial Engineering and Operations Research at University of California, Berkeley. He has worked for the Fisher Center for Information Technology and Marketplace Transformation, Haas School of Business as a researcher and system engineer, since 2000. His research interests are in the fields of e-Business and supply chain management, especially auction, negotiation, and collaboration support systems.

    Arie Segev is a Professor of Business and Director of the Fisher Center for information Technology and Marketplace Transformation at the Haas School of Business, University of California, Berkeley. His research has been focused on Enabling eBusiness Transformation, including eBusiness process transformation, Mass Customization and Personalization, eNegotiations and eCollaboration, Sense-and-Respond Context-Dependent Process Architecture Design, and Information Management and Quality. Professor Segev has led research projects involving the above topics in various domains including Supply Chains, Customer Interaction, B2B Procurement, and Electronics and Architectural Design Environments. He has published over 120 papers on technology and management issues and been the recipient of major government and industry grants. He holds Bsc and Msc in Industrial Engineering and Management from the Technion-Israel Institute of Technology, and an MS in Operations Research and a PhD in Computers and Information Systems from the University of Rochester. Further information about Professor Segev's research can be found at http://haas.berkeley.edu/citm.

    View full text