Process-Oriented Knowledge Innovation in E-business
Nengyuan Wang
1
, Guoqing Huo
1
, Kecheng Liu
2
, Rifu Jiang
1
1
Management School, Graduate School of Chinese Academy of Sciences,
Zhongguancun East Road 80, Beijing, 100080, China
2
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
Copyright
c
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.
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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.
(c) Acquisition of the knowledge that has been selected (for example, by R&D,
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
P
1
P
2…
P
n
KR
1
KR
2
Push Model:
Knowledge Analysis
Knowledge Application
Pull Model:
Process Analysis
Knowledge Requirement
Fig.1. Process-oriented Knowledge Innovation
Created
To be create
d
Being created
Knowledge Innovation
P
1
P
2…
P
n
KR
3
63
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.
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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
r
Payment
Merchant
Payment
System
Fig.3. The business area of placing order
Place Order
Customer
Browse Commod.
Place Orde
r
Order Tracking
Shi
pp
in
g
Merchant
Shipping
System
Inventory
System
Fig. 2. Use case diagram for an orde
r
processing business system (
A
dapted from:
Chang et al., 2000)
Haier B2C
Payment
System
65
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 customers 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
r
Ban
k
Haier EC
Ask for account information
Receive and
check the payment
Fi
. 4. Pa
y
ment
p
rocess
Receive and confirm
the information
Enter into bank’s website
Fill account information
Pay for the commodity
66
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 latters 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
1
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
67
Table 3. Norm Analysis: payment evaluation
Payment evaluation N
2
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
N
1
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
N
2
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
……
68
resource-based view and market-oriented view, respectively. In the end, they form a
knowledge innovation cycle;
(c) Introduce the method of Norm analysis into knowledge requirement analysis. This
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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