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Computer Networks and Multimedia Techniques in Development of Virtual Organisations and E-Commerce

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Uniwersytet Gdaski

Summary

The study presents the dynamic development and integration of computer net-works, multimedia and infomedia, as well as their application in virtualising busi-ness (virtual) organisations activities. On the background of characteristics of net-works, multimedia, virtual organisations (VO) types, functioning and information systems (IOS), the authors discuss their interrelations and progressing global inte-gration which created conditions for OV effective functioning on the global scale. The two-level nature of VO management systems and information systems has been shown together with the necessity of continuous reengineering of business processes in order to retain the competitiveness of OV and their partner enterprises. More-over, the article discusses latest directions and forms of reorganising processes in OV, as well as IT systems (R-3) and tools (ALE) optimising these processes.

Keywords: Integration, Computer Networks, Multimedia Techniques, Virtual Organisation, e-commerce, Management Information Systems

1. Concept and factors of computer networks, multimedia and e-market development

In the last decade, IT, telecommunication, television and other media of electronic information transfer are more and more commonly used in processes of products and services exchange (hereinafter referred to as products) in countries representing the high level of economic development.

Multimedia devices make it easier for computers and users to contact the surrounding via various media. The group of basic media includes image, sound, electromagnetic waves (radio and optical), heat waves, laser rays. The group of most common multimedia devices includes telephone, telefax, television set, tape recorder, video machine, video camera, CD ROM player, magnetooptic disc drive, computer telex, computer modem, audio-visual presentation system (panel, projector), foreign language learning multimedia system, stationary scanner, information terminals, i.e. electronic measuring and diagnostic instruments of control lines (RTG devices). All these devices are connected to the computer by multimedia cards, i.e. sound cards, video cards, cards used to connect recording devices based on optical discs, fax cards, modem cards and other (Majakowski 1994). Multimedia cards make it possible for the computer to process information presented in various forms of expression. The co-operation of multimedia devices with other similar devices and with the computer system, as well as computer processing of data supplied by multimedia devices is served by a general and dedicated multimedia software (it uses data transfer and processing standards regardless of the multimedia devices type), as well as dedicated software (which not always uses information processing and transfer standards, but co-operates with

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particular multimedia devices). The co-operation of multimedia devices with single computers and local networks does not satisfy the needs of global business development entirely. The rapid development of network computer techniques made it possible to integrate various hardware platforms, to create a global computer network and to use it for acquiring information in various forms (text, image, voice) from the contemporary organisation’s surrounding. Not only global integration of network environments has taken place (everyone connect with everyone), but also significant and inseparable integration with multimedia is observed. In effect, some network solutions could not exist without multimedia and vice versa. ISDN (Integrated Services Digital Networks) can be given as an example with its terminal which performs the role of a computer working in a large network, a fax machine, a cable TV receiver, a teletext provider, a computer directory and a phone. These solutions have reduced the cost of telecommunication and cable installations and they have provided the user with the simultaneous access to particular functions of the network which includes multimedia solutions and therefore have been used in videoconference systems.

The combination of these various techniques enabled one to create global, multimedia, interactive network information systems used to transfer data, image and sound. A new branch originating in the combination of information technology and telecommunication has been given the name of telematics and the combination of telematics, television and other electronic media has led us to infomedia [Ritz].

On the other hand, the application of open information systems enabled introduction of electronic data interchange (EDI), initiating the inter-organisational exchange of information and such new forms of relationships as B2B – Business to Business, B2C – Business to Customer, C2C – Customer to Customer), B2A – Business to Administration. These innovations made it possible to include suppliers – producers – agents – clients (recipients) in one, common value chain and to create inter-organisational communication (see: Figure “Global Chain”). But the greatest development of physical links between organisations has been brought in by the Internet, with the electronic mail, the Web network service, the Intranet (Internet used in organisation’s internal co-operation, integrated with its own IT solutions). The implementation of network services referred to above provided business partners with conditions for informational co-operation in the field of buying, selling, manufacturing, plans of further co-co-operation, development and research, market trends. This is how the “one to many” communication model typical for electronic hierarchy is replaced with the “many to many” communication model and Internet, Web and multimedia have transformed from communication and marketing channels into the Marketspace. But these changes require marketing reorientation and adjustment to new multimedia, building infrastructure for e-commerce, introducing mechanisms where advantage is taken of multimedia’s unique features (C. Olszak, Multimedia ...). The e-commerce infrastructure should include a data transmission security system for the Web network service, a possibility of using the Internet/Web global network in entering and performing virtual commercial transactions. Moreover, the infrastructure should provide the possibility of publishing dynamic on-line catalogues of contents and contain a system of the created contents rules based on network navigation principles and facilitating circulation of information (Hoffman, Novak 1996).

The increasingly common use of infomedia in product exchange has become a basis for development of electronic markets (EM), i.e. IT systems within telecommunication networks connecting many of those who offer (products and services) with those who buy. EM enabled the offerers to reach a very wide circle of potential clients, while the buyers – to chose from among

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numerous and diversified proposals1. EM made the traditional buy-sell transactions between market participants much easier, faster and more efficient, mainly - according to B. Schmid – due to two mechanisms of product flow ordination – the hierarchy (corporations) and the co-operation [17]. The concept or market replaces co-co-operation. Therefore, the product flow can be co-ordinated by the hierarchy or by the market in economy. The hierarchy co-ordinates the product flow from the supplier to the recipient via a controlling and supervising instance which also determines the nature of proposal arbitrary. The buyer can not make a free choice of a supplier here, he is encouraged by the supervising instance to co-operate with the indicated contractor [Ritz D., Schmueckel P]. Thus, the hierarchy imposes the source of purchase on the buyer as a rule, because it strives for binding clients more tightly in order to eliminate the competition or to build strong market entrance barriers for the competition. This is why most EM develop as a result of evolution, under the influence of market forces and originate in electronic hierarchies.

1 D. Ritz defines the electronic market as „an intellectual construction encompassing the entirety of interactions between

market participants related to the market transaction’s electronic support " [Ritz D]. S. Klein and Th. Langenohl define the electronic market similarly, stressing that this is the entirety of relations in the exchange between market participants with potentially equal rights. All processes of interactions between the participants (players) of exchange are supported by market’s IT systems built in the electronic market. IT market systems consist of a dispersed or open communication net-work. Thus, electronic markets are hybrid systems ensuring human co-operation with the computer in order to achieve the intended goals. See: [Klein S., Langenohl Th.,]

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SUPPLY DEMAND COLLECTING INFORMATION NEGOTIATION LIST OF PARTNERS CONTRACT INFORMATION SUPPLIERS CLIENTS

Source: authors’ analysis based on: Schmid B., Electronic Market in Tourism, (In:) http://www-iwi.unisg.ch/cc/genpubs/enter/index.html COMPUTER PHONE FAX PRINTERS CONTRACT EXECUTION

TERMS AND TIME LIMITS

PHASE III PHASE II PHASE I PARTNERS POTENTIAL - PAYMENTS

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In practice, the electronic hierarchy is identified with systems connecting a single offeror (responsible for system development and maintenance, as a rule) with numerous buyers or a single buyer with numerous suppliers. For the first time, such systems were used in the 70-ies in tourism, for the purpose of booking and execution of orders. They made it easier (in some cases – even possible) for the buyers to purchase products, but at the same time they made them dependent on one supplier. American Airlines were a classical example of a hierarchy like this – they made their APOLLO booking system available to travel agencies to book these lines’ flights only. The well-developed electronic market is free from such restrictions now, as it offers a huge amount of various proposals to the buyers, in many cases exceeding the possibility of unproblematic choice. This is a “many to many” model, where the buyers, wishing to choose an optimum proposal need to use consulting companies that offer such assistance as personalised decision-making support, intelligent filters or client preference profiles [8].

On the other hand, the flow of products on the market co-ordinates the demand and the supply that determine the nature, the amount, the price, the time and the manner of the given product delivery. The buyers make a free choice of proposal here, according to their preferences, skills and financial resources.

The co-operation, as the second element of market activity co-ordination (beside the hierarchy), applies to processes of buyers’ searching, comparing and choosing an optimum solution (offer) via electronic media. As it has already been mentioned, these activities are increasingly difficult and time consuming in the market structure and less expensive and easier in the hierarchy. The hierarchy and the co-operation is most fully reflected in costs of market transaction’s particular phases, this group including the phase of collecting information (phase I), the phase of negotiation (phase II) and the phase of contract execution (phase III). These relations are presented on fig. 1.

Potential market partners, their individual proposals and the demand are identified in the phase of collecting information. As a result, the necessity to collect data about goods available on the market (products and services), their suppliers and terms of purchase as an input to this phase. On the other hand, data characterising the potential end clients, the current market situation, the business and technological trends represent the desired output.

In phase 2 – on the basis of information collected in phase 1 – trade contacts with potential transaction (market) partners are established and legal bases of transaction (the concept, the delivery and payment terms, the after-sales servicing and after-warranty servicing) and contract are defined.

Phase 3 – the last one – includes payment for exchange of products and services, i.e. execution of arrangements made in phase 2 and conclusion of further contracts that determined the transaction execution (supply, subcontracting, insurance, etc.). As far as material products are concerned, this implies a number of activities, such as packing, storage and transport, insurance and customs duty. The physical exchange of products is accompanied by financial operations and circulation of information. Consequently, the phases referred to above become integral parts of the co-ordination process in market systems and electronic markets (EM)become information systems aiding the phase or the function of co-ordination within market systems. Thus, co-ordination systems exceeding the company are involved here, as they are used – on equal rights – by partners who represent both the demand and the supply as well.

EM are considered omnipresent, since they are available to any user of telecommunication networks, at any time and place. This ensures inexpensive and easy access to market information

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and at the same time – an open technical platform creating conditions for e-commerce development.

2. Global e-markets as a factor of commerce development

The contemporary commerce, similarly as production, is subject to processes of globalisation, therefore its further development requires global data and inter-organisational information systems. IT and telecommunication, i.e. telematics, more and more often together with infomedia, provide a convenient technical platform for creating and operating inter-organisational systems. The advantages of using inter-organisational systems emerge, when these serve development and exchange of information between various organisations, instead of internal exchange only. Inter-organisational systems facilitate market transactions, improve the quality and the pace of information flow, expand the conceptions and the goals of organisations’ offices automation.

Inter-organisational systems and e-commerce expand on the construction business, the sector of finance and insurance, production and logistics, transport, tourism and other areas of activity. But they are most conducive to business development by means of marketing and e-buying (see: fig. 2).

The technology in the broad meaning of the word – in terms of business and of the necessary technical platform as well – is the basic factor of e-commerce development. These functions are performed by markets, EDI, the Internet, particularly after WWW has been established and e-mail. But EDI has the strongest influence on the rapid development of electronic markets. As a particular type of IT system, it ensures inter-organisational, electronic exchange of standardised business messages within open IT systems of organisations effecting the exchange when executing co-operation contracts. Thus, EDI enables companies to exchange rates and prices, orders, invoices, payments and other elements in the automated manner, by means of a standard electronic message accepted in exchange partners’ IT systems. Therefore, EDI is the principal step of transaction automation in business, on the condition that partners accept and apply the standard form of message developed by the UN and known as UN/EDIFACT (Electronic Data Interchange for Administration, Commerce and Transport). EDI applies to the syntax of information being exchanged and not to the methods of exchange between partners, the latter being dependent on the communication technology and its requirements concerning the exchange band width, the service standard and security. In many areas of message transmission according to EDIFACT international standard, CCITT e-mail transmission standard with X.4002 protocol has been accepted. Other standards, of a national coverage as a rule, such as PTTs or VANs for example – much less effective and more expensive, are also used, but they are of a secondary importance.

2 CCITT – Comite Consultatif International Telegraphique et Telephonique, the International Consultation Committee for

Telegraphy and Telephony, which issues telecommunication standards. X.400 – technical recommendations for message service system. PTT - Post, Telegraphy and Telephony (CCITT member). VANs - Value Added Networks.

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IOS EDI UN/EDIFACT ANSI X.12 X.400 INTERNET E-COMMERCE E-MARKETS ELECTRONIC HIERARCHIES AND NETWORKS aplikacje systemów informacyjnych

w niezaleĪnych organizacjach application areas institutional and technical platform structure of authority telecommunication message transfer message standards technology

Source: Klein S., The Strategic Potential of Electronic Commerce - An Introduction for Beginners, (In:) WWW: http://www-iwi.unisg.ch/iwi4/cc/ genpubs/ecintro.html

Fig. 2 Components of e-commerce strategic potential

3. Interdependencies between development of e-commerce, electronic markets, EDI and Internet

When in 1993, a new network was established - World Wide Web (WWW) called “the world-wide cobweb”3, the Internet has become an important tool of e-commerce development for many enterprises, since it creates a virtual platform, where all types of products and services are offered and payments are made (by means of credit cards) in electronic form. To use the Internet effectively in business, organisations need to develop an adequate strategy which answers the following questions:

1. Will the Internet provide the e-trade environment which will be different in market terms? 2. Is it enough to follow the Internet and its potential, or is it necessary to have a strategy of using this medium with company’s concrete internal determinants and its surrounding’s determinants taken into consideration?

3 World Wide Web (WWW) is a set of pages containing, except for information typical for a common book, illustrations,

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To solve these problems, it may be helpful to analyse the areas closely related to the Internet application. This is about platforms of electronic markets, relations with clients, supply policies and inter-organisational relations, as well as improvement of company’s internal structure and activities.

The emergence of new platforms of electronic markets requires a sort of reengineering, i.e. re-defining mechanisms that have been used in electronic exchange, marketing, payments and service security so far. Moreover, the user should define and describe the potential of new hypermedia – WWW and integrate any previous EDI solutions with the Internet. These solutions change traditional relations and responsibilities of particular employees significantly, particularly in servicing payments and in retail outside the giver business sector. New, surprising opportunities of marketing and advertising development keep emerging in the Internet all the time. As an example, WWW can be given – it enables one to use new mechanisms of seller-client interactions, changing the client’s role in business essentially. WWW enables the client to choose information in a selective manner and to have an active influence on product customising to his/her individual needs. This new trend, known a prosumer conception (producing consumer), means that client’s influence on products, services and experience related to their production increases immensely. Thus, various services offered in WWW, due to the application of hypermedia and newsgroups, can be combined or integrated in various manners to improve relationships with the clients, mainly through providing search options to them4 and using the information made available in this way and creating new ways of co-operation and interaction with producers and product suppliers. At the same time, new technologies can be used to design products and services that are able to use the potential of the global communication infrastructure and e-markets. These changes will revolutionise the traditional distribution of work and will force companies to introduce more efficient and effective systems of producing and selling.

Telematics and the Internet are more and more present (mainly due to WWW) in the structures of processes and operations dispersed much within autonomous organisational units (e.g. at various latitudes) of national and international companies, changing their nature and relations and consequently – meeting market’s variable requirements. This applies in particular to outsourcing and dispersed production structures, i.e. business-business relations and retail, although a significant part of the latter is effected outside the Internet in organisations using other networks or in virtual organisations.

Similar changes are observed in companies’ internal structures, or to be more precise, in traditional operations and activities of companies making use of the structural potential resulting from dispersed activities of organisations using computer networks, e-mail, remote networks (telework, teleconferencing), WWW, EDI and other elements. EDI enables companies to redesign the logistic chain and production, or even the entire business chain.

WWW is much less expensive for those searching information than for their suppliers5. But suppliers have to keep seeking ways of regaining the outlays on the maintenance of their pages in the network (although these are lower than in case of traditional marketing media). The proven

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The group of preferable search engines facilitating the access to document titles or headings, contents, indexes and catalogues keeps increasing in the Internet. The group of those most popular search engines includes: The Open Text Index, Alta Vista, WebCrawlerSearching, Deja News, Excite, Lycos, NlightN, WhoWhere, Yahoo, Nexor, W3Search En-gines, Infoseek, Einet, SearchList, Inktomi, URouLette, [4].

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methods of these outlays return include replacing previous internal activities in the area of supply, control of orders and invoicing policies with interaction and electronic transactions. For example, the closed cycle of EDIFACT messages with product suppliers enables companies to use these messages automatically in generating new messages, without re-writing those sent by the partners. This means that EDI has to be integrated with internal applications of IT systems. This is why more and more sellers provide EDIFACT interfaces and converters to their partners and in the last resort – multiple import-export functions. Moreover, companies providing free of charge telecommunication connections to their clients may consider the advisability of publishing information for clients, FAQ answers or e-mail conferences in WWW. These solutions can reduce phone conversations significantly and cause a reduction of the client service costs. Thus, EDI and WWW services can be regarded as complementary or supplementary. EDI focuses on standardised business transactions, while WWW applications – on multimedia information transmission (text, image, sound). EDI penetration into WWW will accelerate its diffusion with e-commerce.

But EDI and e-commerce require close co-operation and co-participation of business partners. This implies the necessity to expand the strategic thinking about the company far beyond its limits, without excluding designing and regulation of inter-organisational relations. Moreover, the nature of existing competitive relations changes too. The companies that have been competing so far, begin creating groups, sequences or networks of relations, becoming virtual organisations as a result, because they function as is they were single, independent companies. It is impossible to derive benefits from the new constellation of competition without using EDI technology and reengineering business processes at the inter-organisational level, including the relationships with the public sector. In this context, the use of standards is not in conflict with deriving benefits from competition, if EDI use in business is considered in strategic terms and if its technical qualities are taken into account in company organisation (internal and external).

One may state in more general terms that the following relations exist between e-commerce in the Internet and EDI:

1. the Internet can be used for sending EDI messages, since there are EDIFACT standards that are sent via e-mail in the form of electronic messages;

2. EDI applications may be created by means of WWW (in the client-server architecture), which provides to the user an easy and friendly interface and generates EDIFACT messages in a transparent manner, e.g. order or payment-related. As a result of this solution, EDIFACT applications reside in the information provider’s system and the client is seeking access to the Internet and to the WWW search engine;

3. EDI and WWW complement each other, as EDI applies to standardised business transactions, while WWW applications – to multimedia information transmission.

4. E-market participants

Offerers, buyers, agents and producers of ITT equipment providing hardware and software necessary to enter and execute electronic transactions participate in the electronic market, similarly as in the traditional exchange of goods and services (Fig.2).

The group of e-market participants includes:

1. suppliers (producers of primary services) and other organisations providing other primary services;

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2. end clients;

3. agents and regional organisations selling or participating directly or indirectly in creating specialised services or packages;

4. ITT equipment producers and suppliers, who provide the hardware and software necessary to enter and execute transaction by means of electronic media.

Production, distribution and consumption of various primary and supplementary services can be illustrated easiest on the example of tourism. Thus, designing packages or combining several types of primary services in order to create an offer constitutes the essence of the production process. As a result of these activities, such products are created as flights to certain places with accommodation and sight-seeing tours, escorted travels, regular travelling packages with full accommodation and boarding, special products (sports, training and recreation, sightseeing and other). The primary services are accompanied by expanding supplementary services, such as tourist information, consultancy and sale of accompanying services.

ELEKTRONIC MARKET STRUCTURE AGENTS IT PRODUCERS SUPPLIERS RECIPIENTS

Source: Ritz D., Schnueckel P., 1990. Oekonomische Aspekte elektronischer Maerkte - eine Bestandesaufnahme aus betriebs- und volkswirtschaftlicher Sicht, Institut fuer Wirtschaftsinformatik HSG, St. Gallen.

Fig. 3 E-market participants in tourism

The latter activities are of an interregional or even intercontinental nature and represent the domain of travel agencies. The demand for regional services (sale only) is partly satisfied by regional associations, foundations and chambers of tourism. Interregional products are generated mainly by tour operators, while services of a local coverage are provided by local tourist societies and primary suppliers of primary services.

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The Polish tourist business focuses its long-term activities on development of five strategic tourist units, i.e. touring, active tourism, transit and cross-border tourism, stationary tourism and agritourism.

5. Business Workflow in making business processes more flexible

For globally co-operating PP, the location plays a secondary role – the most important thing is to have an appropriate infrastructure and tools providing unlimited and business process oriented communication in the future.

The increasing competitive pressure makes organisations shape their business processes in a more transparent and flexible manner. Functionally oriented traditional organisational structures and distribution of work make the effective flow of processes impossible. Numerous analyses show that the real processing takes a minimum part of the total time of processes. These processes data “hog” office desks, delaying further processing. The situation is made sharper by time-consuming queries, doubled work and the necessity to involve new workers taking the process over. The traditional approach distorts the picture of general interrelations between processes in the organisation and the degree of their processing. Therefore, innovative organisation introduce Workflow technology which enables flexible management and active control of business processes. Business Workflow of a German company, SAP AG, supports these activity in their entirety. Workflow mechanisms meet all specific, individual needs of organisations by means of process-oriented integration of standard modules of R/3 integrated management system. They include additional optimising options that, adequately to organisation’s nature, aid and accelerate business processes by means of ex-application techniques, tools and services. Information and process flow automation, active combination of work stages and flexible implementation of organisational structures are the basic services of Business Workflow. These services combine individual work courses with business processes reflected in R/3 and provide necessary information and documents that are delivered to adequate work places in due time and according to real needs.

6. Final comments

Globalisation of production and exchange has become a realistic challenge due to development and integration of ITC, multimedia and infomedia, as well as emerging extended virtual organisations and use of IOS. The latter function at two levels in the global network environment which integrates various, compatible technical and software platforms.

The Internet and the Intranet integrated with multimedia and infomedia play a special role in development of virtual organisations and IOS. But these activities have to be accompanied by continuous reorganisation and adjustment of business processes to variable needs and requirements of co-performers, market and product buyers. Reengineering, outsourcing, virtualisation, orientation to Workflow and TQM give virtual organisations opportunities of flexible adjustment to environment constant changes. Strategic alliances and contract co-operation have become possible due to the rapid development of Internet, Intranet and Web network service. The effective use of these networks, the Internet in particular, requires one to re-orient and re-define the mechanisms that have been used in electronic exchange, marketing, production policies (prosumer and marksumer) and in relationships with the clients so far.

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These challenges change functional relationships and distribution of work, as well as business process servicing functions. This forces traditional organisations and virtual organisations to introduce efficient, effective and productive systems of production and sale, as well as open, inter-organisational IS. The business co-operation is more and more aided by informational co-operation of virtual organisations and PP. Globalisation and integration lead to development of global e-markets and e-commerce and of global economy which enforces co-ordination of virtual organisations’ activities in various parts of the world and regular observation of competitors and clients’ varying preferences. Both Internet and Intranet support these activities effectively.

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BERNARD F. KUBIAK, ANTONI KOROWICKI Uniwersytet Gdaski ul. Armii Krajowej 101 81-824 Sopot

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