Historically businesses used to organize themselves in terms of Functional Areas. More focus was laid on the activities and tasks performed by each functional area and how to optimize these activities within that functional area. Each functional area was responsible for carrying out specific Business Functions as per its defined activities distribution. Such a view of an organization can be seen in Table-1. As the prime focus of businesses was to serve the customer, this very structure had inherent flaws. Customers were never interested in knowing how functional areas are laid out, rather they asked for quality of products and services.
Organizations started thinking in terms of business processes instead of business functions. Hammer & Champy (1993) defined a business process as “a collection of activities that takes one or more kinds of input and creates an output that is of value to the customer”. Typical examples of such processes include Customer Orders, Buying Raw Material from Suppliers, and Delivery of Goods to Customers etc. The major advantage of this approach was that it focused the organization from customer’s perspective where the customer could be internal or external. Since the process can span across different functional areas (customer order has to go through sales, accounting, procurement and distribution), efforts had to be made to optimize business functions to better support the process. Thus a new paradigm of process oriented business organizations came into existence.
Rationale for Organizations to Collaborate
Walter & Petr (2000) have defined the term collaboration as “working together”. As per newer developments in terms of technology and business orientation, businesses now have to enhance their footprints into global markets and develop better ways to compete. Concepts such as e-Commerce and virtual organizations have lead business processes often cross organizational boundaries (Hongxiu et al. 2007). Management concepts such as Business Process Management, developed to better align organizational processes towards customer needs have shifted their focus from intra-organizational process management towards inter-organizational process focus. An inter-organizational process as defined by Birgit Hofreiter (2008) “is an organized group of related activities carried out by multiple organizations to accomplish a common business goal”. Such processes may include Raw Material Purchasing (supplier’s involvement), Goods Shipment (transporting agencies involvement) and Sales (customer’s involvement).
Initial Approaches Used to Achieve Collaboration
Concepts such as Electronic Data Interchange (EDI) were developed around mid 1960s in order to enable organizations exchange information with one another. The main aim was to eliminate paper based data exchange amongst organizations. This approach was based on structured data representation (mutually agreed amongst the business partners) in order to exchange business information (Sladek & Wolski, 1996). This approach had an inherent flaw that as many alliances were made with various businesses, different EDI interfaces were encountered due to lack of one universal standard. In 1970’s, efforts were made to sponsor a shared EDI system, but the problem persisted due to different scope limitations and standards between various sectors of one industry and their respective EDI systems.
Role of Business Modelling
Concepts surrounding Business Process Collaboration can never reach their full potential in case of data centric cooperation methodology mainly because it cannot capture the dynamics of the collaboration, nor it can encapsulate the necessary structures representing the collaboration. This gap could only be filled by a mechanism powerful enough to serve the complex need of documenting business structure and dynamics within and across organizational boundaries, in relation to process flows (Corallo et al., 2007). A model is a simplified abstract view of a complex reality. Talking in terms of business domains, model has the power of representing how different concepts and business functions inside the business are laid out (business model) and how relevant business requirements are being met by the information system (software model). Therefore, Business Modelling, having relevant elements to capture various details, can be one candidate mechanism to be employed in order to meet the needs of understanding complexities involved in inter-organizational collaborations. Since we are focusing on “process oriented” collaborations, the model type that would be most appropriate in this context would be Business Process Models.
Business Process Modelling
It the lights of rapidly changing business environment, organizations have embarked procedures to deal with change through an approach called “change management” (Giaglis & Doukidis, 1996). Business Process Modelling (BPM) has a widespread use while dealing with any of the change management or business process management needs. Different tools and techniques have been proposed for carrying out business process modeling (UML Activity Diagrams, BPMN, Petri Net, IDEF3 etc). Within the context of modelling inter-organizational business processes, Business Process Models seems to be a perfect fit in order to analyze process flows and dependencies. Further classifications within the Business Process Models are also available to represent different granularity of business process model (Kavakli, 2004).
Possible Challenges to BM Approach
Local choreography is the term that can be used to define how a certain business models its processes in terms of interaction with its business partners. Since this is modelled from the organization’s local perception of the interaction, the choreography is called “local choreography” (Hofreiter 2008). In case of inter-organizational collaboration, to achieve end to end process synchronization, local choreographies should match amongst the business partners. Most of the times, that is not the case since a local choreography is developed in-house with the organizational perspective. More challenges can be faces in terms of understanding the complexity of such business processes that span beyond the organizational control. The process interdependencies in terms of resources across several organizations can also add towards the challenge of inter-organizational business process modelling (Giaglis & Doukidis, 1996).
In order to resolve the problem of incoherent local choreographies, the concept of “global choreography” has been introduced. A global choreography explains the interaction from a neutral perspective and can potentially serve as an agreement between the collaborating partners to derive its own local choreography based upon the generally accepted global choreography (Hofreiter 2008).
