A METHODOLOGICAL APPROACH FOR MEASURING B2B

INTEGRATION READINESS OF SMES

Spiros Mouzakitis, Aikaterini-Maria Sourouni, Fenareti Lampathaki and John Psarras

National Technical University of Athens, Iroon Polytechniou st, Zografou-Athens, 157 73, Greece

Keywords: B2B integration, readiness evaluation, interoperability, business indicators.

Abstract: In the dawn of 21st century, companies are seeking ways to perform transactions efficiently and effectively.

Enterprises must tackle B2B integration and adoption challenges in the short term in order to survive in such

a competitive business environment of nowadays. However, most enterprises, and especially SMEs, lack the

necessary technical and non-technical infrastructure as well the economic potential in order to efficiently

adopt a B2B integration framework. This paper presents a methodological approach towards measuring the

B2B integration readiness of Enterprises and the development of the software system to support it.

1 INTRODUCTION

In today’s competitive business environment,

companies are seeking ways to perform transactions

efficiently and effectively. The Internet has created a

flexible platform for the buying and selling of

products and services. As businesses recognize the

need for employing efficient methods for the vertical

exchange of goods and services, they are

considering the adoption of functional business-to-

business (B2B) applications and technologies that

allow transactions in "real time.” (Amoroso, 2006)

Modern B2B technologies, such as XML-based

protocols have solved major technical issues of

traditional EDI but due to a vast number of non-

technical adoption barriers, the efforts for business-

to-business integration are still enormous (Gionis,

2007). Although there are some approaches and

guidelines available that address the adoption phase,

most Enterprises, especially the SMEs, lack the

necessary business culture, technical and non-

technical infrastructure and economic flexibility in

order to efficiently adjust to the environment of a

B2B integration framework.

To solve the current issues, we present a

comprehensive framework that measures the

readiness of an enterprise to adopt a multi-enterprise

(B2B) integration approach and, based on the

findings, provides thereafter guided support to the

SMEs with a view to overcoming the related

barriers.

2 METHODOLOGY

2.1 Approach Overview

The proposed methodological approach for

measuring B2B Integration Readiness presents a

research framework and a web-based platform with

an aim to aid the Enterprises, and especially the

SMEs transition to a B2B integration environment.

This approach will provide insight for the B2B

integration adoption phase by:

– Recognizing and classifying common integration

patterns and styles

– Identifying key technical and non-technical

factors that affect the transition

– Presenting a comprehensive methodology for the

assessment of an Enterprise’s readiness to

integrate with other Enterprises

– Identifying aspects that affect the integration

impact

– Developing a “knowledge framework” which

can support the enterprises in their brainstorming

for B2B integration.

The implementation of the proposed framework

involves the following tasks:

a) Modelling an abstract B2B integration

framework

b) Specification of the assessment indicators

c) Design and development of the evaluation

methodology

d) Performance Impact estimation design

298

Mouzakitis S., Sourouni A., Lampathaki F. and Psarras J. (2008).

A METHODOLOGICAL APPROACH FOR MEASURING B2B INTEGRATION READINESS OF SMES.

In Proceedings of the Tenth International Conference on Enterprise Information Systems - DISI, pages 298-303

DOI: 10.5220/0001708002980303

 SciTePress

e) Design and development of the support software

system.

These tasks are described in the following sections.

2.2 Framework’s Methodologies and

Design Scheme

2.2.1 Modelling an Abstract B2B

Integration Framework

Τhe first step in the conception of the proposed

framework is the abstraction of existing and

upcoming B2B integration architectures and

solutions. The abstraction process involves the study

and analysis of the most important both dominant

and promising integration technologies, solutions

and standards. This analysis will lead to a

categorization and classification of the involved

patterns based on both technical and non-technical

aspects of a B2B integration solution. Then, a

generic model will be produced for each possible

abstraction of two or more categories.

The output of this procedure will be a set of

generic enterprise application integration models

covering a broad range of integration styles and

technologies. The value of this process is of high

importance since, on the one hand, it will provide a

generic yet concrete and realistic prototype model

based on which the assessment indicators as well as

other crucial evaluation elements will be created and

maintained, and on the other hand, it will contribute

to the sustainable value of the methodology. For the

purposes of this analysis we consider five integration

levels each with its own specific issue to be

addressed (Giachetti, 2004-2005). The enterprise

integration types are shown in Figure 1.

Figure 1: Levels of Enterprise Integration.

Connectivity. At the network level, the integration

issue is the physical heterogeneity of the hardware,

machines, devices, and their operating systems

found in a physical network. The integration goal at

the network level is connectivity defined as the

linkages between systems, applications, and

modules.

Data Sharing. Data sharing is the ability to

exchange data between two enterprises. There are

two components of this definition. First, the

enterprises must be enabled to exchange data

(technical interoperability). Second, the data

exchanged must be understood by the receiver

(semantic interoperability). This second requirement

is harder to satisfy then the first, because semantic

differences among enterprises are still prevalent.

(Mouzakitis, 2007), (Janner, 2006)

Enterprise Application Interoperability. The

application level, describes the systems used by the

enterprises. The integration goal is interoperability,

which is the ability of one software application to

access/use data generated by another software

system of another enterprise. Interoperability of

software applications is usually achieved by

exposing interfaces of a system to the network

usually with a service-oriented approach and web

services or through application adapters and remote

protocol interfaces, with middleware, with

Enterprise Service Buses, or with other enterprise

application integration (EAI) technologies (Ruh,

2000).

Business Process Orchestration. The business

process level describes the tasks, the manner and

order in which the business processes are conducted.

The problem at this level is that every enterprise has

different approaches for conducting their internal or

external processes, and even worse in some cases,

especially in SMEs there is no formal approach in

managing or conducting business processes.

Integration in this level is usually achieved with

appropriate orchestration and coordination of the

business processes between the enterprises that

agree on mutual adjustments.

Goal Alignment. The organizational level addresses

the way that the three key elements of business

strategy, organizational strategy, design strategy and

information systems strategy must all be aligned

with their B2B integration partners (Venkatraman,

1993).

Since most integration products and standards do not

provide end-to-end interoperable solutions, but

instead they serve only one integration level, as for

example middleware or message broker software,

the abstraction task of the methodology will form

the abstract B2B integration models, by considering

both the individual technologies and their current

application in enterprises nowadays in the context of

a complete integration framework, taking into

consideration all integration levels.

The formulation of the prototype business

integration framework will contribute greatly to

clarifying the purpose, the merits and the goals of

A METHODOLOGICAL APPROACH FOR MEASURING B2B INTEGRATION READINESS OF SMES

299

such a solution, a necessity for the creation of

assessment indicators of high quality.

2.2.2 Specification of the Αssessment

Ιndicators

In order to specify practical and appropriate

evaluation indicators, measurable objectives must be

first identified clearly.

Based on the prototype B2B integration

framework model, a number of goals can be realized

through discourse and negotiation with

representative enterprises, such as seamless data

exchange in automated transactions between

suppliers and partners that is characterized by:

– Maintainability

– Trust and Confidentiality

– Strong Security

– Low Implementation/Integration Cost/Effort

– Low Operational Cost/Effort

– Value-added functionality

– High quality of service aspects, such as speed

and availability.

Regardless of the specific B2B integration to be

used, the current situational status of an enterprise

directly affects one of above mentioned factors

(Ranganathan, 2001), (Mouzakitis, 2007). While full

integration is not always needed to use some of the

exchange's functionality the full value of conducting

business on the Internet and sharing information

with business partners cannot be realized without

integration of exchange technology with production

systems. This is not just a technology issue. The cost

of integration also includes the redefinition of

processes and relationships within the enterprise,

and implementation of these new processes,

including training in and management of them.

Based on the defined measurable objectives the

assessment indicators of the proposed

methodological approach can be created in a

straightforward way. Still though, the indicators

must also be homogeneous and complete. With a

view to ensuring these principles the generic

enterprise model breaks down to the following two

domains:

a) Enterprise Structure

– Leadership and Strategy: This section

includes business plans, strategies, policies,

agreements, ISOs compliance, and Legal

compliance.

– Financial: Including General Ledger, Cash

Management, Accounts Payable, Accounts

Receivable, Fixed Assets Projects

– Internal Management and Support: This

section includes Production Management,

Project Management, Human Resources

Management and Document Management

– Supply Chain and Warehouse

Management: Including Inventory, Order

Entry, Purchasing, Product Configurator,

Supply Chain Planning, Supplier Scheduling,

Inspection of goods,

– Customer Relationship Management: This

section includes Sales and Marketing,

Commissions, Service, Customer Contact

and Call Center support

b) Resources

– Basic Infrastructure: This section includes

building infrastructure, network

infrastructure (LAN, wireless, VPN) and

physical and hardware security.

– Human Resources.

– Documents and Data

– Information Technology Systems:

Including operating system, available

software (databases, CRM, ERP , CMS, E-

procurement, e-business, legacy systems)

and hardware (servers, desktops, routers,

firewall, etc)

By defining these sections the methodology for the

creation of the assessment indicators is depicted

bellow:

Enterprise Structure

Domain

Resources

Domain

Negotiation with Enterprises

and stakeholders

Assessment Indicators

Objectives/Goals

(per Integration Level )

Figure 2: Process for the creation of the assessment

indicators.

Many indicators will be created or removed based

similar research, standards or implementations, such

as e-Business Scorecard applications, the Capability

Maturity Model Integration (CMMI) approach for

the business process section or the COBIT and the

ITIL framework for the indicators of the Information

Technology systems section. After producing the

basic set of the assessment indicators that apply to a

generic model or an enterprise, an extra set of

assessment indicators will be created in the same

way for each business sector with special

requirements.

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2.2.3 Design and Development of The

Evaluation Methodology

The evaluation methodology will contain questions

depending on the business sector of the enterprise. In

both cases, questions represent one or more

assessment indicators. Since most questions refer to

intangible assets, a normalized performance scale

must be defined, and all answers (belonging to

different measures - percentage, numeric, pre-

defined choices) must be transformed to values in

the common normalized scale. In order to achieve

this, for each question different quality points Li are

defined that have corresponding points to the

normalized performance scale. The performance

indicators FID are conflated with given weights wi

in a similar way in order to produce a performance

value for each Indicator Category.

2.2.4 Performance Impact Estimation

Design

Enterprise integration has been found to lead to

improved enterprise performance (Armistead,1993),

(Frohlich,2001),(Brunnermeier,2003). In the context

of the evaluation framework performance impact

means that a B2B integration solution when used in

the enterprise and interdependencies environment

will improve some unit level performance measure.

For example, improved efficiency, improved

effectiveness, improved quality, or other

performance measures are possible. The framework

will provide a rough impact estimation that depends

closely to a vast number of input parameters

provided by the stakeholders in combination with

the B2B integration readiness results. These

parameters are organized as follows:

– Macroeconomics: These parameters deal with

the performance, structure, and behavior of

national and international economy. B2B

integration impact is implicitly affected by the

determinants of aggregate trends in an economy,

such as national income, unemployment,

inflation, investment, international trade and

international finance.

– Legal and Statutory framework: Current

legislation directly affects the performance

impact both in time (audit controls, legally

required fields, messages, documents or even

processes in transactions) and cost (value-added

tax, special taxes, regulation compliance cost,

etc)

– Pricing: Pricing models are not expected to be

solidified because many solution providers are

struggling to understand the value of the

products they offer. However, in general, pricing

structures can include: subscription fees (regular

monthly fees); membership dues (typically large,

one-time investments intended to help the

exchange fund itself); and transaction fees (fees

based on a percentage of the business that is

transacted on the exchange).

– Integration Effort: Integration effort is the

difficulty level of achieving integration and is

measured in terms of cost, time, and amount of

resources that must be used in order to achieve

the desired integration. Integration effort

includes implementation and operational effort

as well as maintenance and support effort. Other

integration issues can include: defining

integration standards, linking data from the

enterprise into the exchange's systems, deciding

the data owner, defining the timing of updates

and levels of secure access to information,

agreeing on decisions that will be made based on

the data and by which partner.

– The Exchange’s Technology Vendor

Relationships: The exchange's technology

vendor relationships provide insights into its

technology strategy, for example, is it using one

technology provider or trying to integrate

solutions across several providers? (Morrison,

2001) If the B2B integration framework is using

one vendor's technology, it may require less

effort to integrate, but the enterprise may not be

getting the best functionality for specific process

areas. Likewise, if the B2B integration

framework is working with multiple vendors and

taking a best-of-breed approach, integration may

be challenging, but functionality is likely to be

better.

– The Exchange's Partnerships and Members:

Many B2B integration solution providers are

building partnerships within different functional

areas and across process areas in an effort to

create a networked end-to-end solution. The

number and the quality of potential partners and

customers that are members of the provided

network can have a significant impact on the

enterprise (Ulfelder, 2004).

The performance impact estimation

methodology is depicted in figure 3.

Provided that an enterprise has completed the

readiness evaluation, the proposed framework can

approximately calculate the performance impact of

moving to a B2B environment by identifying the

new values of performance measures, such as

required time and cost per transaction, Business

Process Interoperability (BPI), quality of service

delivery, availability, etc. In order to achieve this, a

A METHODOLOGICAL APPROACH FOR MEASURING B2B INTEGRATION READINESS OF SMES

301

Figure 3: Performance impact estimation.

number of crucial parameters have to manually be

inputted by a stakeholder, such as the pricing cost of

the B2B integration solution, the number of columns

and length of documents. Thus, the limitation of this

methodology is that its effectiveness heavily

depends on the accuracy and quality of the user

input. Nevertheless, most of these parameters are

usually objective (e.g. price) so the input task is

usually straightforward. Moreover, applications of

the framework are possible where some of these

parameters can be provided by a neutral and trusted

authority.

2.2.5 Design and Development of the

Support Software System

In the context of the proposed approach, a modern

technological platform is developed to support the

application of the methodology in a cost-effective

and easy manner. This platform is an intelligent web

based system which will evaluate the situational

status of a member Enterprise. It will then provide:

– The level of readiness to adopt a B2B integration

solution or to participate in a collaborative B2B

network

– Detailed analysis of the evaluation results

– In depth examination of the weak points that

diminish the worth of the B2B integration

– A practical toolkit that measures the expected

impact based on user input and the evaluation

results.

The system’s evaluation engine is responsible for

calculating performance indicators by transforming

and combining the values of the answers of the

questionnaire as instructed by the evaluation

algorithm. Based on the administrators’ predefined

weights, the indicators FID are conflated to produce

a performance value for each indicator category. The

evaluation algorithms are expected to be different

for each indicator category. After the evaluation is

over, Entrepreneurs can review the associated

comprehensive evaluation reports and identify their

weaknesses. Moreover, Entrepreneurs can

investigate further the assessment results by

providing their own weights per indicator

(subjective evaluation). Furthermore, a practical

toolkit is available for making an estimation of the

integration impact.

3 CONCLUSIONS AND FUTURE

WORK

The primary contribution of this paper was to

propose a research methodology that evaluates the

readiness of an enterprise to adopt a B2B integration

solution and identifies important technical and non-

technical factors that are expected to affect the

impact of the integration technology. The results of

the evaluation can be used in impact assessment of

the integration solution, based on additional user

input.

The methodology, presented in this paper, can

assist enterprises in identifying their weaknesses and

can serve as a guide for establishing an effective

integration strategy. In this way, this approach can

contribute to achieving the full potential of the

multi-enterprise integration. Furthermore, on the

other side, B2B technology vendors and

standardization bodies can benefit from the

knowledge base that is developed around such a

framework, by focusing more on the alignment to

the organizations’ business needs, than technological

excellence.

Future work includes collecting the complete set

of the assessment indicators, adjusting the evaluation

method and proving the framework’s merits by

collecting data and performing statistical analysis to

validate each of the proposed methodologies. Work

is going forward on using the research framework to

understand SMEs B2B integration in the Greece.

Additional findings and results are expected during

the support system’s pilot operation that will be

circulated through further dissemination activities.

ACKNOWLEDGEMENTS

The authors of this paper gratefully acknowledge the

financial support from Greece General Secretariat of

Research and Technology, Ministry of

Development, under the program “Business models

and technologies for automated business to business

transactions”.

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