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An Industry-Driven Approach to International e-Business Co-operation

Thomas GULLEDGE
George Mason University, Enterprise Engineering Laboratory, Mail Stop 2E4, Fairfax, Virginia 22030 USA

Abstract

International research, development, and implementation programmes for e-Business technologies are difficult to design. Effective implementation requires that the transferring and receiving organisations be integrated as a single team. This paper discusses a successful approach for transferring complex e-Business technologies to Asia to support the development of an aerospace e-Hub. The approach involves joint laboratory development with private companies, universities, and government organisations. The hands-on laboratory work is supplemented with training workshops. The objective is to build relationships and generate ideas in the workshops and follow that with hands-on laboratory-related research and development, and eventually implementation.


1. Introduction

The economy of Taiwan is in transition. Manufacturing industries are moving to other Asian countries and Taiwan is rapidly becoming a "Design and Engineering" headquarters for managing complex supply and demand chains that span international boundaries. Throughout most of the 1990s Taiwan's industrial development policies were focused on industrial automation. Since 1998 there has been a major shift in policy, with many new Industrial Development programmes being focused on e-Business and Global Logistics.

The technology transfer project and the implementation approach described in this paper is one that is sponsored under the current Industrial Automation and e-Business Development plan [http://www.jaeb.gov.tw]. The project helps to enable and accelerate Taiwan's transition into a global hub for managing an extended enterprise that spans the world. In accordance with internal e-Business objectives, the Taiwan government is sponsoring the Boeing Company to build an e-Business Laboratory (for technology transfer) and to organise five workshops (for training) on the following topics:

  • B2B Standards and Dynamic Content Management,
  • Application Service Provision,
  • Enterprise Application Integration,
  • Supply Chain Management and Advanced Planning & Scheduling, and
  • e-Business to Enable Global Logistics.

Boeing has assembled a Team (1) to help with the design and implementation of the laboratory and with workshop organisation and management. The laboratory environment is implemented at National Tsing Hua University (NTHU), the leading technical university in Taiwan, located in the science park city of Hsinchu. The laboratory is designed to foster partnering for technology transfer (or other relationships) between international companies and Taiwan companies. The details of the laboratory, the technology transfer approach, and the workshops are presented in this paper.

 

2. Background

The outlook for e-Business in Asia is improving. A recent Gartner study suggests that e-Commerce growth in the west will slow, but Asia will continue to grow.

Though North America accounted for 59 percent, or $255 billion, of the $433.3 billion in global B2B Internet transactions in 2000, the continent's share is forecast to slip to 52 percent, or $480 billion, this year as the total market reaches an estimated $919 billion. By 2005, North America's grip on world-wide B2B Internet commerce will slip further to 42 percent of the estimated $8.5 trillion world-wide market.

Meanwhile, as the U.S. endures a diminished command over the sector, the Asia-Pacific region (including Japan) will apparently enjoy a rise. B2B e-commerce in the Orient reached $96.8 billion last year, or 22 percent of the world-wide market and Gartner estimates that by 2005 its share of B2B e-commerce will hit $2.4 trillion, or 28 percent of the world-wide total. That's a 6 percent rise over the same period that the U.S. will suffer a 17 percent fall in global market share. This year, Asia-Pacific will generate $220 billion, or 24 percent, of total online inter-company trade [1].

"The key to success of Taiwan's IT industry is the surroundings. The government has emphasised the importance of IT education, human resource cultivation, training, and technology development in spite of economic depression. Were it not for the capital that Taiwan's government has continuously been pouring into the IT industry, the IT industry on this island would not be such a success" [2].

In general, the outlook for Asia is good, and Taiwan holds a special place in the Asian market: It is the "window to Mainland China." Taiwan has excelled in the IT industries, and much of the success has been a direct result of government investment, as noted by Yang Shih-chien, the former Minister for Private Enterprise in the Executive Yuan [2]. The semi-conductor industry in Taiwan is a good example of how this kind of capital investment has paid off. There are other examples, but the point of this discussion is that the Taiwanese government is approaching e-Business with the same type of investment strategy.

3. Managing the Transition

3. 1 The Situation

The Taiwanese business model is extremely complex. The primary customers are in Europe and the United States. Manufacturing is moving off shore to other Asian countries, and in particular, Mainland China. Assembly could also occur by a third party, and in an international location. The logistics model is complicated. There is direct shipment from source to customer, and there is also transhipment. Financial relationships are direct and indirect, with Hong Kong (for all practical purposes) being treated as separate from Mainland China. Taiwan's objective is to position itself as a design and engineering headquarters while managing this complex extended enterprise using e-Business solutions.

The ROC government has responded to this challenge by investing significantly in e-Business solutions and technologies.

3.2 Government Support for e-Business in Taiwan

The government has an aggressive e-Business Programme that is guided by the Industrial Automation and e-Business Steering Committee. The organisation and strategic goals of the programme are presented at http://www.jaeb.gov.tw. The strategies of the programme are:

1. Private sector companies will lead the development of automation and B2B e-Commerce. The government's role will be to assist by fostering the creation of a good network environment and actively work to establish the necessary legal and communications infrastructure.

2. The IT industry will serve as an implementation benchmark for automation and B2B e-Commerce in other industries. Practical implementation of the completed plan will provide an opportunity to uncover and resolve problems within the supply chain. After this implementation model has been established it will be used for promotion of automation and acquisition of B2B e-Commerce in other industries. Related hardware facilities, legal structures, financing, taxing centres, and other matters will be dealt with in accordance with a schedule based on the implementation model.

3. The government will work in co-operation with major local and international firms in providing technical support, personnel training and incentive measures to encourage the participation of small and medium sized enterprises (SMEs) in the plan.

4. The government will establish a mechanism for online procurement and information dissemination in order to lead the way for other industries.

The e-Business Co-operation Project presented in this paper is consistent with these strategies. The project provides the latest state-of-the art training, and the laboratory includes local IT companies working jointly with international organisations to solve supply-side problems that are very important for SMEs.

 

4. The e-Business Technology Transfer Project and its Benefits to Taiwan

Taiwan Service Providers are defining their competitive position in the e-Business market space. The transformation of the Taiwanese economy is underway, and the Service Providers are adjusting to the requirements of B2B e-Commerce. The e-Business Co-operation Project is focused on accelerating the adjustment process, in accordance with the strategies established by the government.

To understand the importance of the immediate benefits, one must understand the structure of the Taiwanese economy. The "engine" of the economy is a broad base of SMEs that are primarily suppliers to domestic and international companies. Hence, Supplier Relationship Management (SRM), as it is enabled by e-Business, is an important topic in Taiwan.

Supplier Relationship Management (SRM) is the utilisation of the latest technologies to build networks of collaborative relationships that bring joint benefits to large companies and their suppliers. Unlike eProcurement, the focus is on joint benefits with suppliers; hence, providing the incentives for suppliers to participate in supply chain relationships. SRM takes Supply Chain Management to the next level, allowing supply chain partners to act as a single business entity in a virtually linked supply chain. Since the Taiwanese economy is comprised mainly of SMEs, these issues are critical to the business base.

But, how should Taiwan's companies proceed with the collaboration aspects of SRM when many of their customers and suppliers are international companies? And, does a "one size fits all" model meet the complex needs of SRM in Taiwan? While no one knows the answers to these questions, they must be investigated and addressed in a logical and structured fashion. The e-Business Co-operation Project is one attempt to address these questions through:

  • Training: An investigation of the latest management and technology techniques as presented in a sequence of workshops, and
  • Technology Transfer: A supplier-side service provider laboratory that allows local companies the opportunity to design, develop, and test new solutions in a neutral environment.

Given this context, the e-Business Co-operation Project provides many benefits to Taiwan. The following obvious benefits are a subset of the total benefits:

  • Build partnerships and establish business relationships with international e-Business solution providers.
  • Learn to develop and implement Enterprise Application Integration (EAI) solutions that are compatible with ERP solutions, including those that are designed and developed in Taiwan.
  • Obtain a comprehensive understanding of electronic catalogue and content management, allowing Taiwan supply chain-oriented organisations to manage catalogues and content at the exchange level.
  • Obtain a B2B demonstration capability, allowing local service providers to understand how their offerings integrate with other B2B environments.
  • Develop a comprehensive understanding of current supply chain and advanced planning & scheduling systems, allowing Taiwan Service Providers to extend their product offerings and consulting capabilities.
  • Establish the capability for obtaining unbiased assessments of international technologies, including strategies for localising or developing similar B2B technologies for the Taiwan market.
  • Develop an unbiased consulting source for B2B technologies, including how these technologies interact with local technologies.
  • Develop a better understanding of Taiwan's competitive positioning in the B2B marketplace.
  • Establish a direct link to international organisations for identifying appropriate technologies to transfer quickly to Taiwan Service Providers.
  • Develop a capability to participate in the international aerospace market via international experience in leading the development in such exchanges.
  • Develop the capability for developing a Taiwan Aerospace Exchange that will allow Taiwan suppliers to participate in global exchanges.
  • Obtain direct training and consultation on B2B applications that are directly related to the aerospace and other industries.
  • Establish an unbiased source for demonstrating B2B technologies, including how these technologies interact with local technologies.

 

5. Main Components of the e-Business Co-operation Project

The project is divided into two parts:

  • The delivery of five e-Business workshops, and
  • The design and implementation of the e-Business Laboratory

These components are related, since some of the workshops leverage the laboratory infrastructure for their delivery. The Taiwan government defined this structure, with a focus on using these mechanisms to add value to local Service Providers through partnering and the development of new business relationships. An overview of the workshops and the laboratory is described in the following sections, and the details of all aspects of the project are located at http://boeingicp.eep.gmu.edu/.

5.1 Workshop Purpose and Organisation

These workshops are organised to provide benefits to Taiwan Service Providers(2). The state of e-Business technology is rather advanced in Taiwan; hence, the workshop material must be cutting edge in order to be of benefit; i.e., routine training (or a well known concept) or marketing material is not appropriate for this type of training workshop. Hence, invited speakers were given specific instructions that the topics must represent new concepts and ideas that are appropriate for the Taiwan economic environment. Special consideration was given to speakers who could provide solutions that are appropriate for SMEs, the engine of Taiwan's economy. These are the companies that must operate in supply chains that distribute across international boundaries.

As previously mentioned, the workshops were required to have a technical focus to support effective training, with marketing presentations always discouraged. Significant networking opportunities were designed into the schedule so the Taiwan Service Providers could interact with the speakers (or representatives from their organisations) so that partnering or other business opportunities could be discussed. The idea was to understand the technical aspects of the opportunities in an open forum that allows Taiwan Service Providers (as opposed to some government agency) to make their own decisions about what is appropriate for their business environment. The e-Business Co-operation Project Team facilitates follow-on meetings as appropriate, but our primary focus was to provide the best possible technical programme, while not interfering in relationships that are purely commercial.

5.2 Workshop Topics and Timing

The workshop topics were selected through interviews with Taiwan Service Providers. The project team interviewed many companies, and while the requested topics covered many areas, agreement was reached on five topic areas.

It is important to note the following about the workshop topic selection process. Since the local solution providers were the beneficiaries of the training, they were encouraged by the ROC government to select the topics. The service providers knew which topics were most important for Taiwan; hence, the project team respected the topics as recommended in the survey. After the survey was completed, the Industrial Development Bureau hosted a service provider workshop. The service providers reviewed the survey results and made additional changes and recommendations for the delivery of the workshops.

While the workshops were designed only for training (not technology transfer), the selected topics had a significant impact on the design of the technology transfer laboratory. Since the laboratory was designed for service providers, and since the survey indicated the topics that were most interesting to service providers, it only made sense to design the laboratory around these topics.

The following training schedule was established by agreement with Boeing and the Taiwan government sponsor:

  • B2B Standards and Dynamic Content Management - 05/2l-05/22 2001
  • Application Service Provision - 06/1l-06/12 2001
  • Enterprise Application Integration - 07/23-07/24 2001
  • Supply Chain Management and APS -07/31-08/01 2001
  • B2B Solutions for Global Logistics -09/1l-09/12 2001

The in-country partners developed the workshop invitation list. Preference was given to local companies that were providing solutions and had expressed an interest in partnering with international companies or implementing international solutions. The workshops received significant marketing in Taiwan, with all of the marketing being handled by the Corporate Synergy Development Centre (CSD), a Taiwanese non-profit organisation that is charged by the government to provide support (training, catalogue hosting, etc.) to large industrial supply chains. CSD also handled all local logistics, but the Enterprise Engineering Laboratory at George Mason University managed the interaction with the speakers.

5.3 The e-Business Demonstration Laboratory

The e-Business Laboratory was designed to allow Taiwanese Service Providers to configure their product offerings so that they can interact in a modern trading exchange environment. To meet this objective, a prototype hub was configured, using existing commercial solutions that were provided to National Tsing Hua University's (NTHU's) e- Business Excellency Centre. The focus of the laboratory is EAI offerings that allow Service Provider interoperability with an exchange environment. The prototype exchange is only used as a demonstration device for supporting these Service Provider EAI experiments.

The laboratory is focused on the interaction between local software solutions and modern B2B hubs. The local solutions, in US terminology, are Mid-Range ERP solutions. Some leading Taiwanese solution providers were identified, and their products were implemented in the laboratory. International solution providers were also identified, and their products were implemented as well. In short, the laboratory focuses on supplier-side integration issues, a key component of Supplier Relationship Management (SRM).

International and Taiwan solution providers worked together to design trading exchange scenarios, or to propose and design EAI solutions for enabling Taiwan products to interact in the modern B2B space. This is the key to the technology transfer. When all parties are working side-by-side, meaningful technology transfer occurs.

The laboratory infrastructure was completed in April 2000. The EAI technologies to support scenario execution were configured and tested in the early summer, and the laboratory was opened in July of 2001 (3). The laboratory was also used to support the workshops (through demonstrations) whenever appropriate.

5.4 Execution Scenario Details

Consider the following hypothetical scenario. Local Service Provider Solutions are implemented in aerospace supplier organisations. These suppliers are executing business transactions with a global mega-exchange through a regional hub. The laboratory-based scenario simulates the interactions among the local suppliers and the regional hub.

The hub was built using packaged software, and the interaction with the hub was managed using a modern workflow-based EAI solution. The business process logic that is configured within the EAI solution manages business document flow, including purchase order receipt, purchase order response, and verification for financial settlement.

The scenario was tailored to the requirements of a large aerospace first-tier Taiwan supplier, Aerospace Industrial Development Corporation (AIDC), and will be continually relined to align with their B2B vision. This vision locates the hub at a major first-tier supplier. The location is important, since supply chain leads do not have incentives to maintain hubs for suppliers. However, first tier suppliers do have the proper incentives. Since first-tier suppliers must do business with many customers as well as suppliers, they are better positioned to maintain a hub. In fact, their position in the supply chain requires that they be able to do business with many large companies as well as their many suppliers. Large supply chain leads usually mandate their business models and have little incentive to maintain hubs. Since suppliers dominate the Taiwanese economy, the three-tiered supply chain scenario makes perfect sense for the Taiwan economy.

The laboratory will eventually be "open," allowing participation from those providers who are willing to support the environments. To initialise the laboratory, five companies participated:

  • Aerospace Industrial Development Corporation http://www.aidc.com.tw
  • Data Systems, Ltd. http://www.dsc.com.tw
  • Proyoung Business Information System Company, Ltd. http://www.proyoung.com.tw/
  • Goldsun Computer and Communication http://www.gsnet.com.tw
  • PROMATIS, GmbH http://www.promatis.de

Other companies will be considered at the completion of the first phase of the laboratory implementation. Hence, at the highest level, the laboratory demonstrates the management of B2B transactions, primarily in flavours of XML, in a multi-tier supply chain relationship. However, the delivery mechanism does not have to be limited to XML. In fact, the laboratory design supports "any-to-any" document swap, and additional options will be explored in later laboratory phases.

The scenario can be extended in a number of ways, allowing service providers to adjust their requirements and realign their products accordingly.

 

6. Conclusions

The e-Business Co-operation Project is a good example of how organisations can work together to add value to private organisations. The Taiwan government sponsors this project, but the focus is building e-Business partnerships in private organisations. In that sense, this project has tremendous value in terms of technology transfer. As opposed to spending large sums of money on public development projects, this approach brings organisations together who can partner to open new markets and add value to society. The e-Business Co-operation Project is a new model for Industrial Co-operation, transferring private sector technologies and solutions to the organisations that can implement them on value-adding projects.

 

7. Notes

(1) The e-Business Co-operation Project Team is comprised of the Boeing Company (USA), Corporate Synergy Development Corporation (ROC), Devco, Inc. (USA), National Tsing Hua University (ROC), and George Mason University (USA).
(2) The term "Service Provider," is a somewhat generic term. In terms of US terminology, it includes software solution providers (including mid-range ERP and extended enterprise solutions), Application Service Providers, and System Integrators.
(3) The press release for the laboratory grand opening is presented as Appendix A

 

8. References

[l] Brown Richard, Gartner: Asia-Pacific Set to Surge, Line56, April 2, 2001 [http://www.line56.com/articles/default.asp?NewsID=2327&ml=2].
[2] Ho Chi-yu, Wang Ying-shun, and Li Chung-wei, Interview with Yang Shih-chien, Taiwan
Formula, December, 2000, pp. 68-71.
[3] AIDC, provided by AIDC EC Division, 2001.

 

9. Appendix A - Laboratory Opening Press Release

FAIRFAX, Va.---George Mason University and Devco Inc. announce the opening of the E-Business Demonstration Laboratory in Taiwan. The laboratory, sponsored by the Boeing Company and hosted by National Tsing Hua University in the Science Park City of Hsinchu, focuses on enabling small suppliers with supplier-side solutions to participate in supply chain relationships.

The companies participating in the laboratory are Aerospace Industrial Development Corp. of Taichung, Taiwan; Data Systems Inc. of Taipei, Taiwan; Goldsun Computer & Communication Ltd. of Taipei, Taiwan; Promatis Corp. of San Ramon, Calif.; and Proyoung Business Information System Company Ltd. of Taipei, Taiwan. These companies, working under the guidance of the Devco-George Mason University project team, have developed and implemented a solution for multitiered supply chain integration using commercially available products.

"The bottleneck in supply chain integration and management is supplier integration," says project technical lead Thomas Gulledge of the Policy Analysis Centre in George Mason's School of Public Policy. "Without willing supplier participation, collaboration along the supply chain is impossible. The E-Business Demonstration Laboratory is focused on solving the supplier-side integration problem using local Taiwanese service provider solutions."

The laboratory is housed in the engineering school at National Tsing Hua University and allows qualified solution providers to test their products in the national demonstration environment. The laboratory design, development and implementation were funded by the Boeing Company as part of an industrial co-operation programme with Taiwan, the Republic of China. The project was developed and is managed by Devco Inc., a company that specialises in technology-oriented industrial co-operation programmes.

"The opening of the laboratory exemplifies a significant accomplishment in fostering industrial co-operation on an international basis, and showcases the talents of highly skilled professionals on the George Mason technical team," says James Grzella, senior vice president of Devco and E-Business Demonstration Laboratory project manager.

The laboratory was opened with a live demonstration of a supply chain scenario and an associated workshop programme that included participants from the laboratory partner organisations -- the Boeing Company of, Seattle; Timogen Systems of Mountain View, Calif.; IONA Technologies of Tokyo; GE Global Exchange Services of Hong Kong; Exostar LLP of Reston; and St. Joseph's University in Philadelphia.