Process-Oriented Knowledge Innovation in E-business

Nengyuan Wang

, Guoqing Huo

, Kecheng Liu

, Rifu Jiang

Management School, Graduate School of Chinese Academy of Sciences,

Zhongguancun East Road 80, Beijing, 100080, China

Informatics Research Centre, The University of Reading, Whiteknights,

Reading, RG6 6AY, United Kingdom

Abstract. Knowledge-intensive business process is vital for an organization to

become more flexible and adaptive in an ever changing environment. Knowledge

innovation is considered as one of the solutions to make business processes more

knowledge-intensive. In this paper, a business process-oriented knowledge

innovation diagram is proposed, which illustrates the relationship between

knowledge innovation and business processes. Two models including “push” model

and “pull” model are introduced in the diagram. Then, the models are expounded

mainly from resource-based view and market-oriented view, respectively. UML,

especially use case diagram, is used in business process analysis, and the method of

Norm Analysis which is adopted from Organization Semiotics is utilized to analyze

knowledge requirements in business processes. In the end, some conclusions are

given. An e-business case of Haier EC is examined for interpreting the models.

1 Introduction

With the emergence of knowledge economy, knowledge has become the primary

economic resource and determines organizational strategic advantages [5]; [11]. The

process-based view argues that business processes are also an important source for

creating and sustaining a competitive advantage [2]; [4]. Further, business processes are

believed the most appropriate conceptual level for delivery of the strategic intent so that

knowledge should be analyzed and conceptualized at this level [4]. As the core component

of knowledge management, knowledge innovation should be analyzed, together with

business processes.

Knowledge can be provided for value adding activities within business processes, and

knowledge innovation behaviors have to be adapted to and serve business processes [10],

2003; [9]. When knowledge is embedded and incorporated into the business processes, as

well as their products and services, knowledge in business processes is accumulated and

optimized continuously which will improve business performance. In the meantime,

business process execution generates new knowledge and enriches the knowledge

Wang N., Huo G., Liu K. and Jiang R. (2005).

Process-Oriented Knowledge Innovation in E-business.

In Proceedings of the 1st International Workshop on Requirements Engineering for Information Systems in Digital Economy, pages 61-70

DOI: 10.5220/0001423700610070

 SciTePress

repository. For e-business, knowledge innovation can also enhance its business processes,

such as increasing the speed, improving the efficiency and extending the services.

The next section reviews the related work. Then a process-oriented knowledge

innovation diagram is proposed and analyzed. Two models including “push” model and

“pull” model are presented later from two different process-based views. UML and Norm

Analysis are adopted for business processes analysis and knowledge requirements

analysis, respectively. An e-business case of Haier EC is examined for explaining the

model.

2 Literature Review

Knowledge innovation (KI) is a new term compared with knowledge management (KM),

which is stated as “the creation, evolution, exchange and application of new ideas into

marketable goods and services for the success of an enterprise” [1]. In this paper,

knowledge innovation is still considered as one of the components of knowledge

management. However, it focuses on knowledge creation and especially its application in

business processes.

The research of process-oriented knowledge innovation is mainly based on the research

of knowledge-intensive business processes and process-based knowledge management.

2.1 Knowledge-intensive Business Processes

Employees need domain-specific knowledge including process-control knowledge, skills

about machines, contingency plans for fault occurrences, and other experiences in order to

perform their tasks effectively [7]. Business process can be characterized in terms of its

knowledge intensity [15]. Knowledge-intensive business processes compose

knowledge-intensive organization, which has the following characteristics: (a) most

valuable asset is intellectual capital; (b) gathering and applying new information and

knowledge is essential for the success; (c) it is flexible and adaptive [14].

2.2 Process-based Knowledge Management

The theory of process-based knowledge management (pKM) is proposed to integrate

knowledge management and process management. PKM initiatives are designed to

provide employees with task-related knowledge in organizations’ operative business

processes, and its strategy addresses the integration of the resource-based view of an

organization with the market-oriented view [8]. The idea of pKM gives much inspiration

of knowledge innovation. However, this theory has two major weaknesses. First, business

process management not only requires a level of process knowledge but also the

up-to-date and newly created knowledge of the business context. Second, it is very

difficult to provide business processes with targeted knowledge in pKM.

3 Process-oriented Knowledge Innovation

3.1 Process-oriented Knowledge Innovation (pKI) Diagram

Process-oriented knowledge innovation (pKI) diagram is introduced to overcome the two

weaknesses. In pKI diagram (Fig. 1), there are two dimensions, including time and

knowledge innovation. Within the coordinate, the upper level focusing on knowledge

creation shows knowledge repositories (KR), in which knowledge is created, being

created or to be created. The lower level focusing on knowledge application describes two

kinds of business processes consisting of “as-is” and “to-be”. Two models called “push”

model and “pull” model are showed in the middle level, which are about how knowledge

is distributed in business processes and how knowledge serves them [10]; [12]; [9].

3.2 The Push Model

At the heart o f the “push” model is knowledge repository. Liebowitz and Beckman

(1998) define it as an “on-line computer-based storehouse of expertise, knowledge,

experience, and documentation about a particular domain of expertise” [6]. Four

knowledge innovation processes (ISAE) can operate on knowledge repository, which

combine to support the generation and exploitation of the firm’s knowledge repository [9].

(a) Identification of knowledge that is not currently part of the firm’s knowledge

repository, but may be important in the future.

(b) Selection of the knowledge that the firm needs for its future products and services.

licensing, purchase of equipment, hiring of staff and acquisition of firms).

(d) Exploitation of the knowledge that have been acquired (for example, by

incorporating into products and services and licensing).

The link between the above four steps and core business processes is very important, as

these are the means for ensuring sustainable productive output of the firm. In “push”

time

to-be

as-is

2…

Push Model:

Knowledge Analysis

Knowledge Application

Pull Model:

Process Analysis

Knowledge Requirement

Fig.1. Process-oriented Knowledge Innovation

Created

To be create

Being created

Knowledge Innovation

2…

model, as is showed in Fig. 1, new knowledge is created and stored in knowledge

repository through the former three steps of ISAE. Then, the knowledge is applied in

“as-is” business process directly. However, some new knowledge requires

correspondingly new processes to implement its application. Hereby, some “to-be”

business processes are constructed.

In e-business, order management process is one of the most important business

processes. Customer demands change very fast so that a firm should identify and select the

new knowledge about their requirements to meet these demands. Most importantly, the

knowledge must be created or acquired in the shortest time, which is vital for any

e-business corporate. Compared with traditional business, e-business firms depend much

more on their response abilities and speed. Therefore, they must build good relationship

with different parties which can make it easier for them to get new knowledge. Similarly,

new products or services must be provided through related business processes as soon as

possible.

During the process of incorporating new knowledge into business processes,

organization learning is an indispensable step by the methods of training, group learning

and self-learning. For the employees in e-business firms, they must be capable to learn and

use knowledge faster.

In conclusion, “push” model is very popular in firms. However, this model looks like

pKM rather than pKI and is discussed by many literature. Thus, this paper will emphasize

on another model--“pull” model.

3.3 The Pull Model

The aim of “pull” model is to build up a holistic understanding of potential knowledge

requirement in and about each business process [3] (Fig. 1). Two stages are required in the

model including business process analysis and knowledge requirement analysis. To

introduce this model, a case of Haier is used, which is the first Chinese enterprise group

with its independent e-business firm. In this paper, e-commerce company of Haier is

called Haier EC.

3.3.1 Business Process Analysis

The objectives of business process analysis are to describe how the firm works, to show

who is responsible for the functions, and to express how actors communicate with each

other. Process analysis is the basis of knowledge requirement analysis. UML (Unified

Modelling Language) is adopted to facilitate business process modeling, which includes

three steps.

Step 1: The first step is the domain analysis. In order to capture the context of a business

process, use case diagram is utilized to describe the internal functions of a firm, each use

case representing one function, all of which compose the whole business domain. For

example, Fig. 2 shows a use case diagram of the B2C order processing system in Haier EC,

which includes four use cases such as browse commodity, place order, order tracking and

shipping. And there are five actors in this diagram, which consist of customer, merchant,

shipping system, payment system and inventory system. The responsibility relationship

between actors and use cases is also illustrated by the lines linking them.

Customer

Select Commod.

Send Orde

Payment

Merchant

Payment

System

Fig.3. The business area of placing order

Place Order

Customer

Browse Commod.

Place Orde

Order Tracking

Shi

Merchant

Shipping

System

Inventory

System

Fig. 2. Use case diagram for an orde

processing business system (

dapted from:

Chang et al., 2000)

Haier B2C

Payment

System

Step 2: To deeply understand the order process, each use case can also be further detailed

in another use case diagram. Fig. 3 describes the detail information of use case of “place

order”. It is showed that another three sub-use cases implement the functions of order

tracking, namely, select commodity, payment and send order. Similarly, each sub-use case

can be decomposed into many activities.

Step 3: To help to understand knowledge requirement of each business process, the

interactive communication among different actors is very important, because information

exchange can be the source of knowledge. During this process, a sequence diagram can

help to break a process into many activities. In the meantime, their relationship is

expressed [12]. Since payment is an essential process for any e-business, it is exampled

here. In Fig. 4, customer, Bank and Haier EC are the related actors in payment process.

First, when a customer selects the commodity and puts it into the shopping basket, he/she

will lead into an appointed bank’s website. Then the bank account and password are

needed to be checked in. When the bank receives and confirms the customer’s information,

it will help the customer fulfill this transaction. After the money is transferred to Haier

EC’s account, the process of placing order is completed.

3.3.2 Knowledge Requirement Analysis

After business process analysis, we have a holistic and detail understanding about the

whole business, and we still need to find their knowledge requirements. In Fig. 4,

information exchange among the three actors represents some knowledge requirements of

business process or activities. To describe knowledge requirements more clearly, the

method of Norm Analysis is adopted. Norm is one term in semiotics theory, which is

similar to “rule”, “constraint” and is also one kind of knowledge. Generally, Norm

Analysis comprises four stages (table 1), including responsibility analysis, information

identification, trigger analysis and norm specification [13].

Custome

Ban

Haier EC

Ask for account information

Receive and

check the payment

. 4. Pa

ment

rocess

Receive and confirm

the information

Enter into bank’s website

Fill account information

Pay for the commodity

Table 1. Four stages of Norm Analysis and its outcomes

Tasks Outcome

Responsibility

Analysis

Identify responsible agents for the Start/finish of “an instance”

Information

Identification

Select type of key information required by “an instance”

Activities/actions effecting the Start/finish of “an instance”

Pre-conditions Conditions for acting and invoking norm

Triggers

Analysis

Post-conditions Resultant after the successful execution of norm

Norm

Specification

Norms specified in the standard construct.

To explain the four stages of Norm Analysis and apply this method in E-business,

payment process is still exampled. As can be learned in Fig. 4, payment application and

payment evaluation are two norms in payment process, for which the customer and the

bank are responsible, respectively. In table 2, for the norm of payment application, the

needed information is the sum of this payment, the account, the password and the

merchant account. As the order processing determines the start/finish of this norm, it

becomes the latter’s trigger. Only if the order is valid will the customer apply the payment.

And when the payment application is finished, an application form will be produced.

Therefore, the pre-condition and post-condition are both clear. Finally, the detail norm can

be written out with specified format, such as the words when, if, then and permitted.

Table 2. Norm Analysis: payment application

In table 3, another norm is presented. Due to the length limitation of the paper, the

analysis process is omitted. Many norms can be brought together, which compose a longer

and more detailed norm (Table 4). The norm represents the knowledge requirements

engendered from business processes.

Payment

application N

Responsible Agent Customer

Info.Identification Sum of the payment, merchant information, personal account

Order processing Trigger

(Conditions Pre/Post)

Valid order Application form

Detailed Norm When the customer decides to buy a commodity in Haier

EC’s e-shop

IF the order is completed by the customer

THEN the customer

Permitted to issue the payment application

Table 3. Norm Analysis: payment evaluation

Payment evaluation N

Responsible Agent Bank

Info.Identification Account, password, balance, merchant account

Evaluate payment Trigger

(Conditions Pre/Post)

Valid payment application Balance decrease

Detailed Norm When the customer provides a payment application

IF the account information is correct and the balance is

enough

THEN the bank

Obliged to complete this transfer

When these knowledge requirements are compared with knowledge repository,

knowledge gap will be found which is the driving of knowledge creation. Thus, from

knowledge application to knowledge creation, “pull model” provides another solution to

knowledge innovation.

Table 4. Norm analysis expression

4 Conclusions and future work

Business process-oriented knowledge innovation diagram aims to improve business

process performance through knowledge innovation, especially making them more

knowledge-intensive. When an organization has enough knowledge-intensive business

processes, it will become more flexible and adaptive. The deliverables of this paper can be

concluded in the following:

(a) Propose the integration between knowledge innovation and business process, and

argue that knowledge innovation must serve business processes;

(b) Put forward process-oriented knowledge innovation diagram which consists of

“push” model and “pull” model. These two models explain the diagram mainly from

Payment application

When the customer decides to buy a commodity in Haier

EC’s e-shop

IF the order is completed by the customer

THEN the customer

Permitted to issue the payment application

Payment evaluation

When the customer provides a payment application

IF the account information is correct and the balance

is enough

THEN the bank

Obliged to complete this transfer

……

resource-based view and market-oriented view, respectively. In the end, they form a

knowledge innovation cycle;

makes it easier to understand the knowledge requirements in business processes.

This paper gives a simple outline of process-oriented knowledge innovation diagram.

The future work mainly covers the research of knowledge representation, role

responsibility analysis, the ways of knowledge creation and knowledge application, and

knowledge innovation measurement.

Acknowledgement

Dr. Lily Sun, from the University of Reading, United Kingdom, gives some important

suggestions when this paper is prepared.

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