Social Networking Technologies to Implement Adaptive Business Networks

Bali Zeng, James Dong, Ananth Srinivasan

Department of Information Systems and Operations Management University of Auckland Business School

Auckland, New Zealand

Abstract-In this paper we present a proposal for the utilization of social network technologies to implement adaptive business networks. Organizations are increasingly

reliant on models of coordination and cooperation. Traditional approaches to defining and implementing business processes are deficient in addressing cross organizational models. We propose that such models can be usefully supported by social

networking technologies that have rapidly grown to be effective platforms for collaboration among individuals.

K�ords-Adaptive Business Networks, Social Networks,

Business Process Modeling

I. INTRODUCTION AND PROBLEM STATEMENT

Internet technologies have evolved rapidly over the last few decades in terms of enabling collaborative efforts among individuals and organizations. In the organizational context, terms such as business networks, supply chains, collaborative computing, etc., clearly imply that organizations will need to function cooperatively to optimize their performance. In this context, the provision and consumption of services by cooperating organizations is of particular interest given the growth of services as major components of national economies. The role that internet technologies can play to foster such cooperative organizational environments is an important and exciting area of study.

A particularly useful way to conceptualize cooperative and cross-organizational structures though a technological lens is the application of service oriented architectures (SOA). Provided that business processes spanning organizational boundaries are adequately defmed, the SOA approach allows for the design of a technical solution embedded within a business network. The challenge of such an implementation lies in our ability to understand how processes within such a network need to be defined, what the consequent requirements are, and what technologies can be used to effectively implement these requirements.

One recent development in the understanding of the organizational framework described above is the growing interest in what has come to be known as the field of Service Science. In particular, the core of this thinking rests on the notion of a service system which encompasses organizations, humans, technologies and processes that work cooperatively to co-create economic value to all participants in the system. The guiding principle of this approach is that collaboration involves the creation and delivery of services that enhance organizational performance across multiple cooperating

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partners. The enablement of a service system is accomplished (in part) through the deployment of appropriate technologies that facilitate effective collaboration and exchange.

In the context described above, the following issues arise and we seek to address them:

• What are the demands placed on service systems to enable collaborative business processes?

• How can such processes be defmed?

• What are the appropriate internet-based technologies that can be brought to bear on organizational structures so defined?

In this paper, we develop key ideas related to these issues and describe a framework to outline how modern internet based technologies can adequately support the demands of service systems.

II. ADAPTIVE BUSINESS NETWORKS

Business networks are built on the basis of two or more related business relationships to primarily gain competitive advantage and thereby improve organizational effectiveness. [1]. The primary drawbacks of traditional business networks include simplistic partnerships, limited information sharing, slow and inflexible decision making and centralization of power and control [2]. A key approach to overcoming these limitations is to design these networks to be flexible and adaptive [3], [4], [5]. These ideas are embedded in terms such as "Adaptive Complex Architectures" (ACE) [3] and "Adaptive Business Networks" (ABN) [5]. Heinrich et al. [5] also describe the steps needed for moving from a traditional business network to an adaptive business network. Several problems arise when organization tries to implement the ABN concept. In this section we develop the key concepts that underlie ABN and discuss the implementations problems that are associated with the concept. In the following section we propose the application of a particular internet based technology namely social networking the resolution of these problems.

A. ABN: Key Features

The ABN is an advanced business network. It is defmed as a customer demand-driven network that enables companies to work together by flexible and loose links, and adapt to meet the needs of customers [5]. A widely used

enterprise software system describes ABN as an integrated and flexible network, that all members can quickly respond to customer needs through real-time collaborative processes and enhanced automation [6]. Our use of the term ABN reflects both dimensions: ABN as a customer-driven business network allows members to synchronize responses and adapts to changing marketing conditions, through flexible business relationships and real-time communication. Heinrich and Betts [5] summarize the characteristics of an ABN as targeted communication, collaborative relationships, instantaneous timing and minimized bullwhip effect. The features that are key determinants of the success of an ABN are: adaptability, learning, agility, and collaboration. We elaborate on these features.

1) Adaptability: It is the ability of members of the network to adapt to changing environmental conditions by exhibiting a high level of awareness and investing adequate levels of resources [7]. Awareness refers to the knowledge ability of firms; resources, in this context primarily refer to the generation of relevant information. The issue is particularly complex in an ABN because of the need for coordinated action among several members of the network.

2) Learning: The learning ability plays a key role in adaptability because it significantly influences awareness [7]. In an ABN, members can learn from their day-to-day activities, collective knowledge, or experience of partners to increase their awareness. From Figure 1, learning is not only a process from visibility (planning or sensing) to adaptability (responding or execution), but also is a series of steps leading to the generation of collective intelligence. We argue that ABN members can achieve adaptability from visibility based on the learning process.

Learning Process

Figure 1: Learning process. (Adapted from Heinrich et al [5] and SAP [6])

3) Agility: This is another critical derminant of a successful ABN. It refers to the ability of a network to quickly respond to changes in the environment [8]. Lin,

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Chiu and Chu [9] point out that the agility refers not only to responsiveness, but also includes flexibility for implementing new processes. Collaborative relationships, process and information integration, and market sensitivity all affect the degree of agility exhibited by the organization.

4) Collaboration: Business networks are defmed as a series of interdependent relationships between internal and external members that are closely connected and in cooperation with each other to create customer value [7]. The key benefits of collaboration include gaining market share, reducing cost and improving quality [10]. In collaborative relationships, members play two roles: coordinating partners and participating partners [5]. Coordinating partners are the focal members who take responsibility to collect new members, leverage existing resources and create new value [11]. Participating partners are product or service providers of coordinating partners who share the core values of the network.

B. Some ABN Models

1) Smart Business Networks: One of the models of ABN implementation is the so called Smart Business Network; it builds on the principles of social networsk. The Smart Business Network is based on a combination of individual intelligence in the network because individual intelligence is limited, but smart behaviour from many individuals is unlimited [2]. The key abilities of Smart Business Network are described as "pick, plug, play and disperse". For example, members of SBN are ready to jump into action (pick) and to combine rapidly (Plug) to meet the requirements of a specific situation (play). On completion, the participants are dispersed to "rest" while, perhaps, being active in other business networks or more traditional supply chains. The SBN requires fast connection and disconnection with a member; the selection and execution of business processes across the network and establishing decision rules and embedded logic within the business network.

2) Adaptive Supply Chain Network: All members belonging to the whole supply chain such as customers, suppliers, logistics providers and others, are enabled to sense, in advance, changes to demand and supply conditions and respond intelligently with the support of an Adaptive Supply Chain Network (ASCN). ASCN is not only demand driven, but can also leverage its assets to impact demand where appropriate [6]. The ASCN requires closely knit relationships and effective communication for reducing the risk of bullwhip effects.

3) Business Ecosystems: Peltoniemi and Vouri [12] propose that different businesses can share fundamental properties to contribute to the formation of a complex adaptive business system. The business ecosystem consists of large number of members from various related firms, that include cooperating firms as well as competitors. Hence, the business ecosystem adapts to variable environmental

conditions based on interactions among a sizable membership. The adaptive business ecosystem requires the emergence of loosely defmed business relationships by firms that are comfortable with the principles of self organization.

4) Business Process Management: BPM uses various formal methods, techniques and software to defme, create and manage operational processes [13]. It is an inclusive appraoch that involves various resources, such as humans, firms, applications, documents and information. An effective BPM approach requires simplified processes, appropriated information, cross-functional and cross organizational communication. [14].

C. Implementation Challenges of ABN

Challenges to implementing an ABN have been explored and discussed in the literature. First, because information in the ABN is typically unstructured, fmding the right information at the right time may be difficult. Second, an ABN depends on shared goals by the membership. When individual member goals are in conflict, the effectiveness of the ABN suffers. Third, the complexity of an ABN depends on the nature of the applications and processes that are built into the network. The lack of uniformity in understanding the functioning of the network by all members presents an implementation challenge. Finally, the bullwhip effect in a chain means that some members are more adversely affected by dynamic customer driven changes.

These challenges highlight some specific aspects that need attention when trying to implement an ABN. Resources need to be current and shared seamlessly among members. Rules to manage shared resources need to be established and agreed upon. Due to the emphasis on sharing resources, legal agreements among members need to be established. Membership in the ABN needs to be flexible allowing for relationships that are loosely coupled within the network. When individual member goals change over time, the ability of the ABN to dynamically change membership is important. The emphasis here is on accruing value to the network. Communication among members is vital to the continued success of an ABM. Communication should be in real time enabling quick dissemination of information throughout the network. The model that represents the full array of processes and applications across several member organizations must be understandable by all members in the ABN. An overly complex model of the ABN can be a inhibiting factor to full participation by all members of the ABN.

Based on the observations above, several requirements for the successful implementation of ABNs can be outlined. The sharing of resources must ensure that they are comprehensive and current. Standards and policies to ensure the smooth exchange of resources among members of the network are necessary. The network needs to be sufficiently large to ensure that there is a critical mass of contributing members. Further, the membership should have sufficient variety to provide value to the network as a whole. Loose coupling in the network will ensure that the network is

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dynamic allowing for members to associate or disassociate with the network as needed. Effective communication in the network means that it is targeted, uses multiple channels, and is in real time. All of these characteristics will ensure that members of the network have access to up to date information to facilitate agility in their business processes. The model of the ABN needs to be stable and relatively lightweight. This ensures the model is easily understood by members in the network and increases the potential of widespread contribution adding value to the network. The challenges, issues and requirements outlined above are summarized in Table 1.

Table I: Challenges, Issues, and Requirements for Adaptive Business Networks

Challenees Issues Requirements Limited resources Resources Comprehensive

Resources are out resource base

of date Up-to-date

No permission to resource

access resource Agreements

Massive but Resource unstructured categorization resource

Tight and long- Relationships Loose coupling term relationship

Quick connect and Low value disconnect partners

Focus on high Conflict of interest value members

Uncertain target Communication Targeted communication

Ineffective communication Multi-channel

usage

Real-time

Bullwhip effect communication

Minimize bullwhip effect

Complex Model Lightweight applications and model processes

User maintained Lack of user models friendliness

III. SOCIAL NETWORKING

Bott [IS] defmes a social network as consisting of groups of people who socially interconnect with each other based on shared relationships, such as friends, relatives or neighbors. Almost SO years later, Brezillion [16] defines a social network in the current technological context, as groups of people connected by a computer network. Bott's defmition is based on relationships driven by proximity and kinship; today's social network has broken geographic or kinship

boundaries due to technology. The key features of social networking today is the presence of technology; i.e. they are online communities where relationships are facilitated by powerful and widely available computer based tools.

Potts, Ormerod, Cunningham & Hartley [17] identify several themes that characterize relationships in social networks. Regardless of whether relationships are strong or weak, close or distant, all members of a social network can have equal access through real time participation in a dynamic network. The power of social networking technologies is that it allows access to members of a network through the use of simple on line tools and technologies. The result is the integration of information based resources from a variety of sources that are readily available.

Tichy, Tushman & Fombrun [18] describe three key components of a social network: information, transfer processes and virtual communities. First, social networks consist of specialized data, information and knowledge which members use to attract other members' attention or to exchange for creating value [16]. Second, transfer processes refer processes that involve exchange. Members may exchange, information, goods or services in a social network. Third, virtual communities as a part of social network, enable members with mutual interests and affinity to communicate through messages, chat groups, events, blogs or forums and other online tools [16] Online social tools enable the efficient discovery of networks whose members share common interest.

Oinas-Kukkonen, Lyytinen & Yoo [19] summarize features of social networks as follows: they are rich data, real-time collaboration tools, unprecedented opportunities and significant individual network awareness. Social networks are composed of rich data, information, and knowledge which are frequently updated and rapidly transferred among members. In social networks, members are keen to share information and knowledge, extend existing networks and find suitable partners for such continued exchange. For example, a typical progression of activities may start with a blog to show preliminary ideas leading to an exchange of opinions with other members in a forum, fmally resulting in the building of a website as a virtual community where members have common interests around a theme [16]. Real-time collaboration tools can support typical activities involving transfer, exchange and sharing of data, information, and knowledge with minimum cost. Social network can bring unprecedented opportunities to their members. The ability of a social network to dynamically expand its membership presents unforeseen opportunities for individual members to acquire new knowledge around a particular theme that defmes the network. The low cost of online social media is particularly attractive to organizations interested in wide area broadcasts. Finally, social networks can significantly increase individual network awareness. Exchange in a social network is multi-directional. The ripple effect of introducing a new fact leverages the network effect of disseminating it through the membership in the network.

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IV. BUSINESS IMPLICATIONS OF SOCIAL NETWORKING

Social networks as digital platforms provide a useful capability for inter-organizational collaboration and innovation because of its ability to connect information and people in cost and time effective ways [19]. In this section we explore a few examples of the use of social network technologies in business contexts.

Wiki as a concept represents the largest online database consisting of encyclopedic information and knowledge. !he ubiquitous browser in the workplace not only prOVIdes universal access to this knowledge base; updating of the information is dynamically facilitated by the ability of readers to edit it. Small businesses particularly like to use Wikis as online content management systems to build their brands and sites, or as a tool for managing internal documentation and project flow.

LinkedIn.com drives both business and social experiences (such as information about current jobs, previous job positions, general interests, joined community) into a social network for business value creation. Through LinkedIn, members readily create business contacts, fit into categories representing specialized co�unities, . and developing online business events through SOCIal experience sharing. The technology highlights the merging of social experience sharing with business networking through the use of technology.

Amazon.com is not only a online-shopping website, but it also plays a social network role for its members. It encourages members to enroll into different virtual communities depending on their interest in books, authors, hobbies, electronic products, etc. Members also can view other members' reviews and recommendations, discuss their problems, and help each other thereby encouraging. a business function to be shared by members of the onlme community.

SAP Developer Network as a social community platform, encourages customers to share their experience and expertise, and discuss problems for solving their S� problems. SAP established the social network for growmg their market share by enlisting the power of social networking.

These are a few examples of how social networking technologies have been effectively utilized by businesses to enhance performance. However, much of the emphasis has been on creating communities of customers as opposed to business partners. Our aim is to extend the notion of useful virtual communities as an implementation model of adaptive business networks.

V. SOCIAL NETWORKING AS AN IMPLEMENTATION

MODEL FOR ADAPTIVE BUSINESS NETWORKS

In this section we propose that social networking can serve as a useful implementation model for adaptive business networks. Earlier we highlighted the issues and challenges that confront ABN implementation. We believe that the characteristics exhibited by social networking environments are well suited to addressing many of these challenges. The

key challenges involve appropriate resourcing, flexible relationships, effective communication, and a light weight

model of the network. Table 2 below sununarizes how these challenges are addressed

Table 2: Social Networking as an Implementation Model for Adaptive Business Networks

Requirements of ABN Role of Social Network in ABN Effect

Relationships Connectivity Creation of core values in the

Loose coupling Quick connect/disconnect network

•

• Quick connect and Community formation

disconnect Monitoring membership • Finding high value Finding high value partners

partners Retention of members

Targeted communities

Dynamic growth of the network

Resource Networking Ready access to a critical mass of

• Comprehensive resource Currency of information members contributing to the knowledge base

• Up-to-date resource Mass appeal

• Agreements Open resource

• Categorized resource Data matching

Instantaneous transmission

Communication Interaction Effective communication

• Targeted communication Online service

• Multi-channels Multi-media usage

• Real-time Facilitation of continuous interaction

• Minimized bullwhip effect

Model Integration Integrated, stable and lightweight

• Lightweight model Social platform platform

• User maintained Business processes integration

Social interaction to retain users

ABNs demand flexible business relationships with the ability to establish (and disestablish) connections on short notice to maintain high value partnerships. Social networking technologies are ideally suited to achieve these objectives. They encourage the dynamic creation of a network of shared mutual interests. Further, the ability of members to engage or disengage with a community is a built in feature of the technology. Community formation in this context means that core values are defmed and maintained by the members of the network. It is possible that the sense of affiliation that members feel with the network will change over time. The technology facilitates rapid discovery, growth, and ongoing maintenance of the network.

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The success of an ABN rests on the network having access to comprehensive and up-to-date resources. Further, uncategorized resources make it difficult for members to find necessary information. ABNs primarily need quality in the resources and this is preferred over quantity. Social network technologies enable the collection and categorization of large quantities of information from members thereby addressing both quality and quantity.

In order to have high quality communication, members need to interact with the network in a targeted manner to build high value relationships and obtain necessary information. Social networking technologies support the use of multi-channels to communicate in real-time regardless of

location and application platform. These features can help an ABN to achieve effective communication and minimize the bullwhip effect that is common in a supply chain.

Choosing social networking as the platform to integrate various business processes, members, communication tools and applications make ABN user friendly. This is a major contributor to the retention of membership in the network. This light weight model is not only effective in terms of maintenance but is also a cost effective way to implement an ABN.

VI. SOCIAL NETWORKING WORKING WITH ADAPTIVE

BUSINESS NETWORKS: AN IMPLEMENTATION ARCHITECTURE

AND ROADMAP

Dale [10] summarizes the top three business outcomes of ABN as gaining market share, reducing cost, and improving quality. Our argument is that ABN lacks the ability to fully achieve these expectations of participating members. Social networking technologies can fill this gap for ABN, meet the requirements and address the problems/issues that we identified above. In this section, we propose an architecture (Figure 2) and ABN-social networking implementation roadmap (Figure 3) for the implementation of ABN using social networking technologies. The business outcomes can be achieved through a phased and iterative approach described in the roadmap.

In the proposed architecture, the ABN operations of Plan, Execute, Sense and Respond interact with social networking through four key activities: Connectivity, Integration, Networking and Interaction. These key activities meet the requirements for addressing the problems and issues identified in Table 1 and Table 2. The connectivity of social networking maintains flexible business relationships among stakeholders, and their involvement in ABN. Integration facilitates the collaboration of business processes among stakeholders on social networks and provides a stable social platform to drive business value. Networking provides access to stakeholders. It collects resources for ABN members' intelligence activities. Members can easily access comprehensive and up-to-date resources based on predefmed agreements. These resources can help ABN members to improve accuracy with respect to planning, effective execution, high level of awareness for sensing, and quick response to changes required by internal and external networks. The interaction of social networking provides multiple and simultaneous communication channels that are able to effectively transmit up-to-date information and resources between external and internal ABNs. This enhanced communication provides not only visibility but also utilization of information to increase business values (e.g. reducing the bullwhip bullwhip effect for ABN business processes). The four key activities in social networking interact with each other for ABN as outlined in Figure 2 below.

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Learn

Business Values

ABN Layer'

Social Netwol'king Layer'

Stakeholder's

Figure 2: The architecture of ABN and social networking integration

Like any other enterprise-wide projects, the implementation of ABN with social networking would be hard to achieve with a big-bang approach. We propose the adoption of a phased and iterative approach. Four phases are proposed in the roadmap.

• Level 0, ABN does not take the advantage of social networking at this level. This level describes the status quo in most organizations.

• Levell, ABN exposes business processes using social network technologies.

• Level 2, ABN uses the social network to sense the environment based on the feedback about exposed business processes.

• Level 3, social networking is used by ABN to take action regarding changes required based on the information collected through the Execute and Sense phases.

• Level 4, ABN invites participation in their business planning using social networking. At this level, ABN is fully integrated with social networking.

ABN

Levell �: Level2 � Level 3 �: Level4 �

< Social Network ) �-------------' Figure 3: A roadmap for the integration of ABN and social

networking

VII. CONCLUSIONS AND ONGOING WORK

In this paper we discuss how we can bring the power of social networking technologies to effectively implement the concept of adaptive business networks. As a phenomenon, social networking has rapidly evolved into a technology driven environment that encourages the dynamic formation of virtual communities with mutually shared interests. This growth has largely been defined around the interest of individuals. In this paper, we argue that organizations can also be beneficiaries of this movement. Business networks are an essential part of how modem organizations work. The challenge that these organizations face essentially focus on proper coordination and maintenance of relationships. Social networking technologies have gone a long way in addressing these issues.

In our work, the next step is one of implementation of these ideas. For example, business process modeling is now a widely used methodology for formalizing the defmition of how organizations need to address their major operations. Technology based tools have been developed and deployed in order to assist with this activity. Based on our ideas, we propose the term "Social BPM" which relies on the application of social networking technologies to address the problems associated with collaboration and coordination in a business network. We believe that the integration of social networking technologies with traditional BPM methods is the next significant step in the evolution of networked organizations.

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