Virtual Enterprises Autonomy issues

1. Virtual EnterprisesAutonomy issues Jari Veijalainen University of Jyväskylä Finland RIDE’99 panel Virtual Enterprises, March 24, 1999

2. Views on VEs • “VE .. is highly flexible business venture based on the dynamic collaboration of diverse groups using electronic communications to increase productivity and responsiveness and operate with greater agility” in DOD Virtual Parts Supply Base White paper at http://sunsurfer.caci.com/vpsb (according to http://www.templet.org/taiwan/sld003.htm) RIDE’99 panel Virtual Enterprises, March 24, 1999

3. Views on VEs • A form of cooperation of a (distributed) set of legal entities or people combining their core competencies and appearing as one organization to the customer; • heavily rely on modern information and communication systems • hierarchy is flat, no central control functions; • established for a restricted time • from Rittenbruch, Kahler, Bremers: Supporting Cooperation in a VO, ICIS’98, p. 30-38 RIDE’99 panel Virtual Enterprises, March 24, 1999

4. Views on VEs • Important prerequisites seem to be • trust among the partners of a VE is important, because there is no formal hierarchy and control • the ability to build up flexible teams is important, because a VE should be able to react rapidly to market demands • communication, cooperation and coordination need particular attention, because there are no central control functions RIDE’99 panel Virtual Enterprises, March 24, 1999

5. Views on VEs • A virtual company is one where complementary resources existing in a number of cooperating companies are left in place, but are integrated to support a particular product effort for as long as it is viable to do so …. Resources are selectively allocated to the virtual company if they are underutilized or if they can be profitably utilized there more than in the “home” company by... RIDE’99 panel Virtual Enterprises, March 24, 1999

6. Views on VEs • Glodman, Nagel, Preiss: Agile Competitors and Virtual Organizations, 1995, p. 7 (according to Daniel O’Leary, Virtual Organizations: Two Choice Problems, ICIS’98, pp. 145-154) • Thus, rather different definitions have been given and different kind of organizations have been classified as Virtual Enterprises or Virtual Organizations RIDE’99 panel Virtual Enterprises, March 24, 1999

7. Autonomy and control in VEs • Organizational autonomy means that an organization can freely make choices irrespective of the will of other organizations • organizational autonomy manifests itself in many ways in the technical infrastructure, especially in the information and communication systems; one can separate e.g. Design, Communication, Management, and Execution autonomy attributed to systems RIDE’99 panel Virtual Enterprises, March 24, 1999

8. Autonomy and control in VEs • A VE consists of participants that have a separate identity, O-autonomy and thus often heterogeneous systems • how can they agree upon the common process(es) to set up and dissolve a VE? • How can the actual inter-organizational business processes be defined? • How can the technical standards that make communication, cooperation, and coordination possible between their systems be specified? RIDE’99 panel Virtual Enterprises, March 24, 1999

9. Autonomy and control in VEs • The above issues require a Global Designer, a group of humans that settle them • the work of a GD can be organized in many ways like using an international standardization body, special consortium, a group selecting suitable existing standards and options etc. and it largely depends on the nature of the VE and its size; the work can be supported by IT (e.g. groupware), but this is conceptually not important RIDE’99 panel Virtual Enterprises, March 24, 1999

10. Autonomy and control in VEs • The more external control the less autonomy and vice verso • In an extreme case a powerful company can function as a GD and dictate to small subcontractors the business processes and standards to be obeyed • who controls a VE during its existence? How? Is it the customer base? Or some VE participants? Or is there a “democratic” control with appropriate structures of the GD RIDE’99 panel Virtual Enterprises, March 24, 1999

11. Some fallacies • Existence of good IT standards is sufficient for VE (cf. heterogeneity) • no, because there are usually more than one standard that can be used at different levels of system architecture (e.g. protocol stacks) and different participants might push different solutions • no, because standards are often metastandards (like EDIFACT, XML,HTML, IDL) and GD must agree also upon the instance level standards RIDE’99 panel Virtual Enterprises, March 24, 1999

12. Some fallacies • EDIFACT ->concrete message types • IDL -> the concrete interfaces with exact functions and parameters • HTML -> the forms to be used in cooperation • XML: the language to be used in cooperation (like WML) and subsequently the WML pages • process description languages (WfMC) -> concrete standard business process descriptions for the VE RIDE’99 panel Virtual Enterprises, March 24, 1999

13. Some fallacies • Competing companies cannot participate in the same virtual organisation • this is not true, e.g. international banks compete but they cooperate through S.W.I.F.T. to transfer money and provide other financial services • both Nokia and Ericsson take part in WAP-forum although they compete in the world (common vs. conflicting interests) RIDE’99 panel Virtual Enterprises, March 24, 1999