February 13, 2009 9:29 00215

Journal of Information & Knowledge Management, Vol. 7, No. 4 (2008) 267278

c World Scientic Publishing Co.

Empowering SME Users Through Technology Innovation:

A Services Computing Approach

Wei Dai
School of Information Systems
Victoria University, Australia
Wei.Dai@vu.edu.au
Lorna Uden
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Faculty of Computing, Engineering and Technology

Staordshire University, The Octagon, Beaconside
Staord, ST18 0AT, UK
l.uden@stas.ac.uk

Abstract. Web-based technologies are now quite wide-
spread, and this paper relates how traditional information and
communications technologies such as those associated with
SME users can be coupled with Internet technologies in oer-
ing e-business solutions. SME users are traditionally not well
resourced and do not have adequate computing infrastruc-
ture within their local work environments. The paper pro-
poses an online information services infrastructure with the
core services oriented technology as its basis, packaging vari-
ous information resources behind the scenes. The online infor-
mation service infrastructure invokes relevant sophisticated
IT services only if necessary, and consequently delivers vir-
tual technology capacity to SME users. The proposed trans-
formation and changes within SME work environments will
be minimal and should bring little interruption to the exist-
ing operations. An experiment has been carried out accord-
ing to such visions. The experiment shows the eectiveness of
the online applications integration through adaptive services,
and an innovative knowledge driven model for economic use
of information resources. The research aims to provide a basis
to understand the potential benets, barriers and solutions to
integrate the traditional SME environments with leading-edge
online services.
Keywords: Services computing; small and medium enterprises;
supply chain management; service oriental architecture; knowl-
edge management.
1. Introduction
There are many millions of small and medium enterprises
or SMEs all over the world. In Europe, it is estimated
that the 19 million SMEs make up over 95% of the enter-
prises. SMEs generate a huge share of the GDP and are
a key resource of new jobs as well as current employ-
ment. They are also a breeding ground for entrepreneur-
ship and new business ideas. The European Commission
(EU Report, 1998) has recognised the importance of SMEs
267
in society. SMEs are acknowledged as the largest group
of businesses in Europe. This is because two-thirds of
all European employment is provided by companies with
less than 250 employees. Despite being smaller in size,
researchers (USHER, 2006) believe that SMEs tend to
create the innovation that drives most of the economy.
The small business sector is very important to most
economies, generating signicant wealth and employment.
SMEs contribute hugely to the economy of a country. As
of July 2006, nearly 140 million SMEs around the world
employed 65% of the total labour force. Entrepreneur-
ship and SMEs have emerged as the engine of economic
and social development throughout the world (European
Commission, 2003b).
A new economy has emerged around the world in the
last two decades of the 20th century. This phenomenon
is characterised by two interconnected events: the glob-
alisation of markets, rms and activities, and the dif-
fusion of information and communication technologies
(ICTs) and the Internet. This technological infrastruc-
ture allows for unprecedented speed and complexity in the
management of the economy (Piscitello & Sgobbi, 2003).
The Internet-based business applications have reduced the
costs of information-intensive activities, such as communi-
cations management, sales and marketing. These oppor-
tunities especially favour small and medium enterprises
(SMEs). The advantages provided by ICTs compression
of space-time distances and reduced the role of economies
of scale in information intensive processes and down-
sized some competitive barriers that historically aected
smaller companies as compared to the larger ones.
For SMEs to remain competitive it is important that
they embrace Information and Communications Technolo-
gies (ICT) as their contribution can be further enhanced
 February 13, 2009 9:29 00215
268 W. Dai and L. Uden
and strengthened by its use. ICT has been increasingly
transforming modern businesses by enabling rapid, reli-
able and ecient exchange of large amounts of informa-
tion. According to Asia-Pacic Development Information
Programme (APDIP) (2007), ICT can empower SMEs
to participate in our knowledge economy by facilitating
connectivity; helping to create and deliver products and
services on a global scale; and providing access to new
markets and sources of competitive advantage to boost
income growth. It is generally accepted that ICT enhances
SME eciency and broadens market share both locally
and globally, and reduces costs. Because SMEs play a
major role in national economies, this can translate into
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positive results in the form of job creation, revenue gen-
eration and overall country competitiveness.
Despite the obvious benets ICTs can bring to SMEs,
many countries, especially developing countries have been
slow to adopt them. In order for SMEs to have a competi-
tiveness advantage, SMEs must be encouraged to embrace
ICT in e-business. This paper begins with a brief review
of ICT for SMEs. It is followed by discussion of supply
chain integration for SMEs. In Sec. 4, we propose an inte-
grated ICT solution to help SMEs in establishing them-
selves in the highly competitive supply chain sector. The
paper concludes with suggestions for further work.
2. ICT for SMEs
The dynamics of SME business markets are determined by
four key factors (USHER, 2006). These include suppliers,
buyers, products and services. E-business oers several
benets to the above four factors. For the suppliers,
entrance to online trading by SMEs helps them reach
new markets, reduce the supply chain, improve processes
and corporate/brand image, reduce costs and dierentiate
their products and services against competitors. For the
buyers side within SMEs, cost reductions are common in
Internet trading and are generally paid for through sav-
ings in infrastructure such as shortening of the delivery
chain, reduction of expensive shop/outlet, as well as an
increase in sales throughout. SMEs benet from the low-
ering of entry barriers to markets as a consequence of
e-business. E-business is often cited as the SMEs gate-
way to global business and markets.
According to the head of the cabinet of Mrs Red-
ing, the member of the European Commission responsi-
ble for Information Society and Media (Strohmeier, 2006),
ICT can oer young entrepreneurs the chance to become
business tycoons in a relatively short time. Strohmeier
(2006) believes that ICT policy is a key element of the
EUs strategy for growth and jobs and this policy is
framed in the i2010 initiative for a European Information
society. The EU now counts six member states in the top
ten ranking countries, according to Strohmeier (2006).
What makes these countries more competitive is that
these are the countries that focus their investments on
research and technological innovation. These countries
have well-developed infrastructures and they have intro-
duced sucient exibility to support the functioning of
the markets. There is general consensus that faster growth
during the last decades was related to higher investments
in ICT. Strohmeier emphasises that the highest perform-
ing countries that have been more innovative in ICT
products and services and more active in adopting such
innovations in other sectors of the economy, in particular
in the services sector. The EU is expecting a 75% increase
in investment in ICT research under FP7 by 2013.
The new wave of ICT no longer just enables us to do
new things, but it shapes how we do them. New technol-
ogy means new ways of doing things. There are new ways
of getting the benets out of technology. Investment in
ICT research is a must if we are to stay in on the global
economy and survive. In order to support investment in
innovation and research in ICT, the EU has ensured sup-
port from two main nancial instruments for the next
seven years. The rst is ICT in FP7 and the other is ICT
in the competitiveness and innovation programme.
The use of ICT also makes management of supply
chains more ecient. Real-time communication and B2B
transactions can reduce information asymmetries between
buyers and sellers, and help bind closer relationships
among trading partners. The Internet provides an eec-
tive tool for communication between B2C transactions
by providing consumers with better services and allow-
ing their needs to be monitored more accurately, as well
as facilitating new product development.
ICT can benet SMEs in three main ways:
(1) increase productivity in the production process,
(2) increase eciency of internal business operation and
(3) connect SMEs more easily and cheaply to external con-
tacts, whether locally or globally. UNDP-APDIP (2005)
gives some concrete examples of how ICTs can benet
SMEs. These include:
decrease wastage in the production process;
improve inventory management systems;
improve accounting and budgeting practices;
improve communication within dierent departments
within the rm;
reduce communication costs and geographic barriers
with global suppliers and clients;
link to local and global supply-chains and outsourcing
opportunities;
learn and share new business practices;
 February 13, 2009 9:29 00215
Empowering SME Users Through Technology Innovation: A Services Computing Approach
simplify government services such as business registra-
tion and tax ling;
introduce new methods of payment through e-
commerce;
expand client base through e-marketing (e.g., web sites,
portals and mailing lists).
Evidence from research shows that the use of
advanced Information and Communications (e-business)
Technologies (ICT) by small rms makes a strong contri-
bution to their productivity and protability. About 80%
90% of the benets attributed to e-business are derived
from business to business transactions as well as from sav-
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ings resulting from making internal business process more
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productive.
Despite the fact the SMEs make up more than 95%
of market participants, and contribute around 50% of
direct value added or production, they are still relatively
under-represented in the global economy. SMEs only con-
tribute between one quarter and one third of manufac-
tured exports and account for a very small share, usually
less than 10%, of foreign direct investment (FDI) (Hall,
2002; Sakai, 2002). Research conducted by Hadjimanolis
(2000) suggests that the size of the rm has impact on
availability of resources, including ICT.
The main reason attributed to the smaller SMEs
being globally inactive is that international activities
expose SMEs to a more complex and risky business envi-
ronment, for which, compared to larger rms, SMEs are
relatively unprepared and less well-resourced. The key fac-
tors preventing the adoption of the leading-edge or sophis-
ticated technological solutions by SMEs are related to:
high cost of purchasing hardware and software, as well
as IT maintenance;
poor communication infrastructure;
inexperience in integrating ICTs into the business
process.
OCED (2004) listed the following points as the bar-
riers to SMEs taking a global role in competitiveness.
Competition policy, legislative and regulatory frame-
works, telecommunications infrastructure, research and
education policy all contribute to SME preparedness or
lack of preparedness for globalisation.
Barriers can concern, inter alia, intellectual property
rights; political risks; corruption and rule of law issues.
They can relate to the entire range of business oper-
ations, having implications for business and organisa-
tion models, managerial and technological capability;
and innovative capacity.
269
3. Supply Chain Application for SMEs
Many traditional information and communication tech-
nologies (ICT) were developed at a time when the use
of Internet technologies was not widespread. They are
normally based on mature and stable technologies and
practices. In the era of electronic business (e-business),
however, business operations with business alliance part-
ners are often conducted through networked activities
with Internet technologies fullling an enabling role to
meet the communication and collaboration requirements
of e-business. In this paper, we relate how some tradi-
tional information and communications technologies are
coupled with Web-based technologies to gain leverage in
oering e-business solutions.
Network-attached storage (NAS) (2000) dened a
supply chain as an association of customers and suppli-
ers who, working together yet in their own best inter-
ests, buy, convert, distribute, and sell goods and services
among themselves resulting in the creation of a specic
end product. A supply chain includes all of the capabilities
and functions required to design, fabricate, distribute, sell,
support, use, and recycle or dispose of a product. They
also dene an integrated supply chain as an association of
customers and suppliers who work together to optimize
their collective performance in the creation, distribution,
and support of an end product. According to NAS (2000),
the objective of integration is to focus and coordinate the
relevant resources of each participant on the needs of the
supply chain and to optimize the overall performance of
the chain.
Technologies help organisations to better manage
their supply chains. Supply chain management appli-
cations built on technology platforms have enhanced
the ability of organisations to integrate their processes
through collaborative information sharing and planning
(Charles et al., 2001). The use of integration technologies
such as EAI and Web Service help support the integration
of supply chains. Companies can anticipate customers
desires and meet their demands with supply chain inte-
gration. A companys competitive advantage depends in
large measure on the adaptability and agility of its supply
chain (Chen et al., 2004).
The aim of the supply chain is to link dierent func-
tions and entities within and outside the company from
raw materials to manufacturing, distribution, transporta-
tion, warehousing, and product sales, joining together
a large number of partners and customers like manu-
facturers and parts suppliers, logistics suppliers, whole-
salers and retailers (Zaremba et al., 2004). SMEs should
achieve greater coordination and collaboration among
 February 13, 2009 9:29 00215
270 W. Dai and L. Uden
supply chain partners known as supply chain integration
to remain competitive.
Integration is an important issue for SMEs. Enter-
prises are seeking ways to integrate their applications at
both intra- and inter-organisational levels (Chen et al.,
2004). SMEs are not only seeking ways to integrate
the disparate systems within the organisation, they also
moved to extend the whole domain beyond the bound-
aries of the organisation to include their suppliers, trading
partners and customers (Charlesworth et al., 2002). Inte-
grating SMEs systems with their customers and trading
partners will give SMEs greater competitive advantages to
compete with the larger companies or their competitors
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(Chen et al., 2004). The emergence of supply chain inte-
gration is therefore undoubtedly a critical component to
strengthen competitive advantage of both suppliers and
their customers.
To be competitive, a rm must have the ability to
acquire the goods and services it needs just when and
where it needs them, at a favourable price, and with
acceptable payment and delivery terms. The rm also
needs to directly manage the ow of goods through its dis-
tribution networks in a cost-eective manner. This can be
achieved through integrating their supply chains. There
are several benets of implementing supply chain integra-
tion (Chen et al., 2004).
It can lower the costs of labour, increase exibil-
ity, achieve faster response times and cut down the
occurrence of errors on paper-based operations, reduce
unauthorized buying outside preferred supplier agree-
ments, and reduce stocking, hence achieving competi-
tive advantage.
Automating processes also can shorten the cycle
time from ordering to distribution, thus resulting in
enhanced production ability and increased eciency.
Suppliers can also benet from supply chain integration
as this will shorten the business transaction cycle, lower
capital cost in stocking, lower labour costs, increase
eciency, enhance accuracy and give a faster handling
time and speed of delivery.
Adopting supply chain integration can help SMEs to
standardise production, which can result in improved
quality control, improved eciency and shortened pro-
duction time.
Automating processes can shorten the cycle time from
ordering to distribution, thus resulting in enhanced pro-
duction ability and increased eciency.
Despite the obvious benets of supply chain inte-
gration in businesses, there is very little evidence that
this has been realised. According to Frome (2002), the
main problem is to convince suppliers to participate in
electronic integration. To make the integration process
worthwhile, businesses must maximise supplier partic-
ipation without disrupting their supplier relationships.
Smaller suppliers in particular need special attention
because using an electronic solution means a change in
behavior from the status quo of the fax machine. An
organisation where a cooperative attitude towards sup-
pliers, and the subsequent individual attention, is rmly
in place, a successful supplier integration eort is consid-
erably higher.
However, the technologies to support the integration
of the supply chains are much harder for SMEs. This is
due to:
lack of nancial resources and technological ability
(Burns 2001);
the maturity of integration technologies (e.g., EAI and
Web Service);
lack of cases in integration technologies adoption in
SMEs has made the problem even worse for SMEs.
The main problems facing SMEs today is the lack of
knowledge, expertise and nancial resources to carry out
in-depth research in order to appropriately assess the cur-
rent and potential market situation with regards to prod-
ucts and consultancy services in international markets.
SMEs are not only seeking ways to integrate the dis-
parate systems within the organisation, they also moved
to extend the whole domain beyond the boundaries of the
organisation to include their suppliers, trading partners
and customers (Charlesworth et al., 2002).
In this paper, we propose an integrated ICT solution
infrastructure to help SMEs in establishing themself in
the highly competitive supply chain sector. The solution
infrastructure aims to:
connect SMEs more easily and cheaply to external con-
tacts whether locally or globally;
make management of supply chains more ecient;
allow real-time communication and B2B transactions
that can reduce information asymmetries between buy-
ers and sellers, and help forge closer relationships
among trading partners;
provide an eective tool for communication between
B2C transactions by providing consumers with bet-
ter services and allowing their needs to be monitored
more accurately, as well as facilitating new product
development.
We focus in the following sections on the infrastruc-
ture and processes for successfully transferring technology
into SME environments.
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Empowering SME Users Through Technology Innovation: A Services Computing Approach
4. The Solution Strategy
The need to connect incompatible enterprise systems has
increased so greatly that many companies have recently
shifted their ICT focus from development to integration
(Meehan, 2002). The PHOENIX research program aims
to leverage the service-oriented infrastructure for appli-
cations integration in order to build and generate user-
centric solutions and business specic applications.
On-demand solutions, including improving business
intelligence or nding better delivery channels in the sup-
ply chain of an organisation, are produced through con-
trol coordination and collaboration of various services
provided by the involved business entities via an intel-
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ligent broker to link service requestor with providers.
Without such integration, SME users will be restricted to
only individual or partial solutions within the local work
environments, which may severely limit the productivity,
problem-solving eectiveness and impact on cost.
The research program aims to innovative applications
combining traditional and leading edge technologies that
include application packages and products and services
from leading vendors .
The increased use of online information services will
see Web-based client programs gradually replace tradi-
tional application user interface programs. Development
standards will also become more unied, and portals will
play an increasingly important role in oering user inter-
face services.
4.1. Core technology
A set of core technologies have been developed, tailored
and expanded to meet the demands of various application
requirements and support information resources develop-
ment and management. The technologies present them-
selves as services within Service Oriented Architecture
(SOA) in the following categories:
(A) Knowledge Management Services
These are the services supporting a range of funda-
mental knowledge management requirements, knowledge
creation, acquisition, maintenance and execution. The
knowledge is physically stored as Business Logic Mod-
ules (BLM) in the form of loosely coupled information
sources (e.g., XML les, etc.) which are loaded dynam-
ically according to application requirements. Users with
authorities are allowed to manage the content of BLM
through knowledge creation, acquisition and maintenance
services. The ultimate aim of knowledge management is to
apply knowledge in problem solving. The knowledge from
BLM is therefore responsible in automated processes guid-
ing the problems solving and integration processes within
271
a business model, which includes the overall processes for
coordinating available resources (e.g., integration process
within SOA) and the detailed process for a specic task.
(B) Data Management Services
These are the services providing access to the on-line
information sources and can include query statements
for retrieving the information of interest, e.g., on-line
data storage and retrieval, regardless of volume, structure
and location once the request is specied. The request
often comes as a result of running knowledge management
services.
(C) Task Management Services
These are the services facilitating requirements descrip-
tions from users and transforming them into executable
computing tasks. Complexity of the tasks ranges from
simple to complex. The services therefore provide bridges
linking business requirements with IT solutions. The
requirements obtained are captured and analysed as ser-
vices to be used to link to the other services.
(D) Information Services
Information services involve the analysis of the use and
performance of designed artefacts to understand, explain
and very frequently to improve on the behaviour of
aspects of service systems. Such artefacts include
but certainly are not limited to algorithms (e.g.,
for information retrieval), human/computer interfaces
and system design methodologies or languages. An
information service identies relevant descriptive and
explanatory insights (i.e., content, use, value, and rev-
enue), meta-requirements, and meta-designs. It also serves
as a mechanism of informing users the solution processes
and outcome of solutions.
(E) Communication Management Services
These services are dedicated to integrating existing appli-
cations and functions as services, taking the leverages
of existing communication infrastructure (such as those
oered by commercial vendors or open source commu-
nity) into the service-oriented architecture. The services
are responsible for interactions with external technolo-
gies that are in the form other than services, e.g., Enter-
prise Information Systems (EIS), legacy systems and well-
established software applications (or packages) from large
corporation environments. The services provide key links
of the core technologies with surrounding or external tech-
nologies. The strength of core technology also depends on
the leverage it tasks from the existing resources e.g., the
 February 13, 2009 9:29 00215
272 W. Dai and L. Uden
high-powered solutions currently mainly available to large
corporations. The services operate in an on-demand fash-
ion, i.e., connections only made when necessary.
Core services take the leverage of international
Open Service Gateway Initiative (OSGi) initiatives (URL:
http://www.osgi.org/) and are implemented with the
extended plug-ins technology (Dai and Liu, 2007) for
applications, eciency and exibility.
4.2. Engagement with business
community
The solution framework aims to establish eective com-
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munication mechanisms to receive feedback and require-
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ments in time into the development environment and to
assign business proactive roles in managing information
resources from existing local environments. The require-
ments on business side of computing resources will be
kept to the minimum, e.g., with low capacity comput-
ers, mobile devices etc. The framework takes into con-
siderations the following key points for engagement with
business community:
user-centric adaptive application environment where
information resources are dynamically packaged accord-
ing to business needs;
services management by assigning business proactive
roles in maintaining services quality and managing the
selection process of candidate services.
Figure 1 summarises the services oriented solution
architecture for SME users. The solution architecture
focuses on the adaptive nature of the proposed core tech-
nology. SME users engage with the technology framework
Fig. 1. Adaptive services computing framework.
in the following perspectives: (a) task descriptions of var-
ious SME requirements; (b) knowledge management for
having the basic business logic in place; (c) data manage-
ment by having the necessary business data stores in place
(e.g., products and sales).
The solution framework will take care of the auto-
mated solutions itself, such as applying services to specic
problems once engaged in providing services to the users.
The technology requires almost minimum comput-
ing resources and associated training for business owners
and the users as the sophisticated computing involving
specialised resources takes place elsewhere across the net-
work, and is only used when required.
The proposed framework aims to give SMEs greater
competitive advantage to compete with the larger compa-
nies or their competitors (Chen et al., 2004). It is heavily
reliant on the use of existing applications and infrastruc-
ture such as the Internet communication infrastructure
and the potential associated resources as well as the facil-
ities oered by open source vendors and products vendors.
The framework takes the leverage of sophistica-
tion and the advanced processing capability of leading
providers and presents friendly SME-tailored lightweight
front-end to SME users. The ultimate aim is to allow SME
users to share similar IT capacity to large corporations
and consequently increase productivity.
5. Online Information Integration
Infrastructure
An important development strategy in the PHOENIX
research program is to build up collaborative online
 February 13, 2009 9:29 00215
Empowering SME Users Through Technology Innovation: A Services Computing Approach
problems solving capability that is tailored to match users
specic tasks. This is accomplished through online appli-
cation integration in response to users needs on demand.
For SME users who are not well resourced and do not
have adequate computing infrastructure within the local
work environments, the online infrastructure takes care
of the dynamic resource packaging behind the scenes, and
invokes the relevant sophisticated IT services only if nec-
essary. The infrastructure requires minimum computing
resources for SME users such as Internet connections and
web browsers. The following sections describe the physical
details of the infrastructure using a reference model pro-
posed by Britton (2001). The model contains three tiers:
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presentation layer, application server layer and an enter-
prise information services layer.
5.1. Presentation layer via web-based
browser
The main function of this layer is to provide a unied
view of results delivered by dierent applications that
users view on browsers, and at the same time accepting
requests from users. User interactions with the presen-
tation layer are facilitated with the core technology ser-
vices on Task Management. The implementation of the
presentation layer takes the leverage of existing portal
infrastructure (Firestone, 2003) in delivering collaborative
information services. The presentation layer aims to pro-
vide information rendered in convenient forms for SME
users to consume.
Common ways to render information content include
HTML, plug-ins, applets, and portlets (Britton, 2001),
which are pluggable user interface components that pro-
vide a presentation layer and produce dynamic informa-
tion displayed on the portal. Portlets provide content to
the Web browser and also import services oered by the
core technology and associated applications in order to
provide a bridge to the middle application server tier of
the infrastructure. A Web server hosts the presentation
layer.
5.2. Services management application
server layer
This layer provides intelligent services management
capability consisting of system services that control the
operations and functionality of the integration infrastruc-
ture. At this layer, Business Logic Modules (BLMs) that
are maintained by SME knowledge management activi-
ties can be loaded on-demand. Therefore, the business
rules that trigger possible application integration oper-
ations are executed. The application server applies busi-
ness solution logic and delivers the results back to the Web
273
server before the results are sent to the users browsers.
An application server usually works in an n-tier envi-
ronment because it performs dierent roles at dier-
ent levels. The core technology components at this layer
are Goal Directed Inference (GDI) and Event Driven
Inference (EDI), which provide various knowledge or
business logic execution services. In conjunction with
other services such as knowledge acquisition, develop-
ment and maintenance, services supporting higher-level
online knowledge management requirements from SME
environments are therefore established. The system ser-
vices oered at this layer need to coordinate with busi-
ness services in order to complete a business specic
solution.
5.3. Enterprise information services
layer
This layer contains enterprise information systems (EIS)
such as CRM systems, database systems, and legacy
systems (Britton, 2001) which can be located across com-
pany boundaries oering potential integration opportuni-
ties via a layered infrastructure of portal services. Much
of the software resources at this layer are only accessi-
ble to the large corporations. However, the services ori-
ented adaptive infrastructure is capable of working with
services or third party application packages in any com-
plex conguration. Due to its intelligent problem solving
model, eective use of online information sources (e.g.,
accurate online information retrieval) and real-time infor-
mation service delivery empowered by its dynamic plan
generation and execution capability are all included as
the key features for SME users.
At this layer, activities are controlled by the integra-
tion knowledge (originated by BLMs) that guide the core
services of Communication Management to support appli-
cation integration processes by choosing and invoking the
appropriate EIS or services in response to the application
tasks received from the Web server of the portal front-end.
It is also used to deliver solutions back to the portal. The
knowledge driven approach ensures that users requests
and information services are processed and delivered intel-
ligently. SME owners and users can manage business data
stores for this layer through the core Data Management
services available within the infrastructure.
The proposed infrastructure is comparable to an
architecture proposed by Firestone (2003), and the infra-
structures management components play a similar role
to that of the articial information manager layer in
Firestones Portal for an Application Integration frame-
work. The currently deployed services (in the form of
Web services) are more scalable and exible through
the infrastructures unique dynamic management and
 February 13, 2009 9:29 00215
274 W. Dai and L. Uden
control mechanism than Firestones framework as the core
technologies are designed to work collaboratively with
existing applications including commercial products and
tools.
6. On-Line Supply Chain Integration
for SMEs: Case Study
6.1. Application scenario
Brown Ltd., is a division of an international engineering
group, specialises in medical devices. Its market is becom-
ing very competitive. To survive, Brown Ltd., needs to
improve its performance. Many of the processes at Brown
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Ltd. are fragmented a situation which is compounded
by the policy of treating each product line as a mini-
business. This makes it dicult to co-ordinate customer
handling or to take costs out by sharing back-oce sys-
tems. The company is carrying too much inventory and
habitually missing its delivery targets. Each of the busi-
ness units was trying to improve its own performance but,
without being able to look across the entire division, lit-
tle wholesale progress was possible. No one had previously
considered the entire sequence of activities, from market
intelligence right through planning, sourcing, manufactur-
ing, delivery and servicing. We decided to concentrate on
stabilising and standardising processes across the entire
business. The end-goal is to transform a series of unco-
ordinated businesses into an integrated, market-focused
entity in rm control of both its own supply chain and
its protability. This involves looking at the feasibility
of sharing services across the organisation and will also
develop a supporting ERP implementation.
rde r
at io n/ o
Info rm
Supplier1
Producer 1
Supplier2
Producer 2
Supplier 3
Producer 3
Supplier 4
Fig. 2.
Here we examine how the PHOENIX framework
works for Brown Ltd. The objective of using PHOENIX in
this case is to facilitate prot gains of Brown Ltd., while
matching business requirements according to its business
model and logic.
In Fig. 2, the general market operations are described
where business (or trading) partners participate along
supply chains performing buying and selling roles. For
instance, the buyers might be from hospitals, emporiums,
retailers, and private clinics.
In the traditional business operation model, each
product line is considered as a mini-business that requires
the dedicated resources to support its operations. This
operation model with the view of regional market net-
work leads to a series of uncoordinated businesses with
wasted resources and overheads.
With the help of the PHOENIX framework, we can
coordinate and optimize not only the Line of Business
(LOB) as a mini-business with various participants but
also across product lines.
The Knowledge Management (KM) service mod-
ule of PHOENIX plays a key role in handling business
logic. Business logic or business process information can
be eciently mapped into the PHOENIX business logic
modules, which can be dynamically integrated into the
run-time problem-solving model through plug-ins. Conse-
quently, no additional programming or software develop-
ment eort is required once business requirements change,
therefore leading to cost saving for businesses.
SME owners or operators are responsible in their
own business data stores that contain, for example, prod-
ucts and sales information. The Data Management (DM)
Phoenix
control centre
de
r
or d
Buyers
o n/o e r
ati
or m
I nf
Hospital
er
/ord
tion
rm a
In fo
Brown Ltd Health Care
Phoenix
Retailers
Private Clinic
Application scenario for Brown Ltd.
 February 13, 2009 9:29 00215
Empowering SME Users Through Technology Innovation: A Services Computing Approach
service module of PHOENIX, as requested by the KM
module, retrieves the data to assist analysis and decision-
making. DM is also used by PHOENIX to establish initial
data stores through aggregation of the detailed informa-
tion (e.g., provided through Web by the participants in
the supply chain).
The PHOENIX Task Management service module is
responsible for receiving purchase orders from buyers and
transforming them into internal technical representation.
It provides a similar service for suppliers when sending
purchase order acknowledgements.
The Information Service module advises the SME
users of the appropriate way of using PHOENIX facil-
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ities, and keeps them informed of solution status (e.g.,
similar to monitoring services) and solution outcome,
(e.g., the participating suppliers who are working on the
orders).
When the orders of the buyers reach to Brown Ltd.,
along with various requirements, the requirements lead to
the operation of multiple LOBs that have some common
operations and processes. The customer orders will also
require Brown Ltd., to produce further orders with dier-
ent suppliers.
According to the task received (e.g., a purchase
order), PHOENIX generates solution plans for potential
supply chains. A solution model is developed and consol-
idated including the choice of the appropriate suppliers
and providing coordination services among them.
The solution model coordinates the relationships and
resources usage among various participants along LOBs.
For each LOB, it can perform cross checking from global
perspectives considering the common supply chain pat-
terns and identify the points to cut down the cost and
resources usage through an optimized model.
For example, there are two medical buyers that both
require the material aluminium. Under the proposed solu-
tion model, a combined order will be issued leading
to potential cost savings. When volumes are building
up from various buyers, the benets will become more
obvious.
Once the optimisation model is nalised, it delivers
the order to the selected vendors. After conrmation with
the vendors, purchase order acknowledgements are sent
back through Brown Ltd., to the buyers.
Moreover, PHOENIX can also help the Brown Ltd.,
at management level. With the guidance of the PHOENIX
services, the company leaders could possibly learn bet-
ter of the market resources status and the manufacturing
capability, which may help in improved requirements fore-
cast and decision making.
Up to this point, the solution model transforms a
series of uncoordinated LOBs for Brown Ltd., into an
275
integrated, market-focused entity with rm support and
control of both its own supply chain and protability.
6.2. SME application enviroment
The application tasks of buying and selling within SME
work environments are supported with the integrated pro-
cesses via the proposed online information services infras-
tructure where a dynamic supply chain is established
according to participating entities business priorities. The
infrastructure seamlessly links SME environments (e.g.,
through Web browsers) involving the participants from
individual customers, retailers, distributors and suppli-
ers. In particular, consumers can order products and
goods online with the preferred retailers. Retailers order
products from their distributors when their stocks fall
to a certain level. Distributors may order products from
the suppliers (e.g., manufacturers) to meet any arising
business requirements from the retailers. Suppliers only
conrm the purchase order if the prots are justied
according to business logic. For one distributor, there
could be more than one supplier. Application details can
be found from Dai et al. (2007).
The case study serves two main purposes: (1) illus-
tration of online application integration process for SME;
and (2) the inuence of SME users for e-business integra-
tion. In the case study, SME participants from dierent
platforms with dierent operational protocols are able to
share and interact with global resources such as those sup-
ported by the core technology. More importantly, the tech-
nolgy can link them to their preferred business partners
whether they are SMEs or a large corporations. Another
aspect of this case study is to illustrate the role of integra-
tion knowledge where SME users may have direct control.
Each business has its own business logic that determines
its priority under various circumtances, e.g., how to han-
dle a potential business request. By consolidating all the
needs of the participating business entities, a business deal
along a specic delivery channel will be completed. The
integration and coordination process is all assisted by the
proposed technology as described in Fig. 3.
In the diagram, the interactions including connec-
tions and communications among the supply chain entities
are according to the BLMs associated with relevant busi-
ness entities. The relevant BLMs are loaded in dynam-
ically by a Goal Directed Inference (GDI) Web service
according to the current task it is attending to. The con-
tent of the loaded BLM will advise GDI WS the preferred
business entities it should deal with. Users in individual
SMEs can authorise or decline a business deal according
to the recommendations made by the online services they
are using. The unique role of the integration knowledge
 February 13, 2009 9:29 00215
276 W. Dai and L. Uden
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J. Info. Know. Mgmt. 2008.07:267-278. Downloaded from www.worldscientific.com
Fig. 3. Knowledge driven supply chain integration for SME.
consisting of individual BLMs to support information
resources integration and the access of information ser-
vices for SME users is illustrated in this case study. Deeper
research for systematic integration of SME knowledge into
an automated suppply chain was described in Gou et al.
(2007).
7. Conclusion
Advanced and sophisticated IT solutions are mainly avail-
able to large corporations. Barriers exist for SMEs to
access those technologies that are currently serving the big
rms. In this article, we have attempted to establish an
eective and economic IT services platform to assist SMEs
adopting leading-edge technology in their local work envi-
ronments, which is normally only accessible to the large
corporations. To achieve this objective, we have outlined
some aspects of the needs and barriers of SMEs. We then
looked at the technology innovation and solution strat-
egy, and described the key aspects of the proposed online
information service infrastructure that can be made read-
ily available to SMEs.
An experiment has been carried out on a dynamic
supply chain scenario where participating SME entities
work with business partners (whether large or small)
supported with the proposed online information service
infrastructure.
The experiment shows the eectiveness of the online
applications integration through adaptive services, and
an innovative knowledge driven model for economic
use of information resources. The research aims to
provide a basis to understand the potential benets,
barriers and solutions to integrating the traditional
SME environments with leading-edge online services.
The proposed online information service infrastructure
has been presented as a vehicle to assist accomplishing
the mission. The research is associated with the applied
research program PHOENIX, more information can be
obtained at http://www.sta.vu.edu.au/PHOENIX/
phoenix/index1.htm. It is hoped this preliminary work
will impact on strategy on both technology providers
and consumers in the decision making processes, and
eventually moves towards more eective channels link-
ing technology invention and innovation with the SME
community.
Acknowledgments
The authors would like to thank Paul Hackett of GS1
Australia Supply Chain Knowledge Centre for construc-
tive feedbacks and advice. Contributions from PHOENIX
2007 IEEE SCC Contest Team are hereby acknowledged.
The authors would like to thank Miss Lou Xiaocui of Bei-
hang University who helped prepare the PHOENIX case
study.
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 February 13, 2009 9:29 00215
278 W. Dai and L. Uden
Wei Dai is a member of faculty sta and Director of
PHOENIX Research Program with School of Informa-
tion Systems, Victoria University in Melbourne Australia.
He is the Adjunct Professor with the Department of
Information Management, Beijing JiaoTong University,
Beijing, China, and also an Adjunction Professor with
Software College of Beijing University of Aeronautics and
Astronautics (Beihang University). He worked for about
ten years with Australian Government research organis-
ations including Commonwealth Scientic and Industrial
Research Organisation (CSIRO) and Telecom (now Tel-
stra) Australia Research Laboratories (TRL), in Mel-
bourne Australia as research scientist. Since then, he
by THE UNIVERSITY OF WESTERN ONTARIO on 04/12/15. For personal use only.
J. Info. Know. Mgmt. 2008.07:267-278. Downloaded from www.worldscientific.com
worked with a private IT industry from 2000 to 2001 as a
Senior Engineer and Project Leader responsible for com-
mercial data management products development where
he gained valuable commercial experiences in conjunction
with his research expertise in systems integrations and
automated knowledge management. In 2007, Dr. Dai led
a research team to participate the IEEE Services Com-
puting competition and won the 3rd place in an award
through a SOA research prototype for integrated solutions
in the e-business sector. Dr. Dai serves as a member of
Program Committee of several IEEE international con-
ferences. He was the invited as Plenary Speaker at The
2008 IEEE International Conference on Service Oper-
ations, Logistics, and Informatics (IEEE/SOLI2008) in
Beijing, 2008.
Lorna Uden is IT systems professor in the Faculty of
Computing, Engineering and Technology at Staordshire
University in the UK. She has published over 120 papers
in conferences, journals, chapters of books and workshops.
She co-authored the book, Technology and Problem
Based Learning, published by Ideal publishers. Dr. Uden
is program committee member for many international
conferences and workshops. She is on the editorial board
of several international journals. She is visiting professor
and research scientist to several countries. She has been
keynote speaker at several international conferences. She
collaborates widely with colleagues from Australia, Fin-
land, Italy, Slovenia, Spain, South Africa, Taiwan and the
USA.