THE CONCEPT AND TECHNOLOGY OF PLUG

AND PLAY BUSINESS

Paul Davidsson

, Anders Hederstierna

, Andreas Jacobsson

and Jan A. Persson

Bengt Carlsson

, Stefan J. Johansson

, Anders Nilsson

, Gunnar Ågren

and Stefan Östholm

School of Engineering,

School of Management

Blekinge Institute of Technology, S-372 25 Ronneby, Sweden.

Keywords: Enterprise collaboration, entrepreneurial business, innovation, intelligent agents, interoperability, match-

making, recommendation systems, virtual enterprise.

Abstract:

Several barriers to turn innovative ideas into growth-oriented businesses with a global outlook are identi-

fied. The Plug and Play Business concept is suggested to lower these barriers by making it possible for the

innovator to plug into a network of actors or potential collaborators with automated entrepreneurial func-

tions. A P2P paradigm with intelligent agents is proposed to realize an environment that manages a dynamic

network of roles and business relations. It is suggested that a critical characteristic of the Plug and Play

Business software is to facilitate trust in-between the actors.

1 INTRODUCTION

The fact that innovations are important to create

both private and social values, including economic

growth and employment is well-known. Innovations

as such are not sufficient for economic growth; there

is also a need to develop the innovation from an idea

into a business. From an innovator’s perspective

there are some common obstacles for realizing the

potential of innovations, such as:

• shortage of time to spend on commercialization

activities,

• lack of business knowledge,

• underdeveloped business network, and

• limited financial resources.

This implies that the innovator requires support to

develop the idea into business, something often seen

as the specific role of the entrepreneur. As Leiben-

stein (1978) explains, entrepreneurs are needed to

search, discover, evaluate opportunities and marshal

the financial resources necessary, among other

things. In some but not all cases, the innovator and

entrepreneur may be the same person.

To play the role as innovator or entrepreneur in

the networked economy requires in many instances a

global outlook. New trade and production patterns as

well as the emergence of new markets point towards

a more efficient use of global resources. Information

and Communications Technology (ICT) already

plays an important role as a facilitator in this devel-

opment. We believe that better economic growth can

be achieved when the innovation and the entrepre-

neur can compete and solve problems on a global

market place. To enable this, there is a need of a

deep understanding of supply and demand in a

global economy.

In order to support the idea of a business based on

global matching of resources to needs, it is important

to facilitate not only for entrepreneurs but also for

mediating actors, i.e., such with new ideas of match-

ing resources on a global scale. We call them Hi-

Know Enterprises, i.e., post-industrial businesses

based on an advanced understanding of supply and

demand in the global economy including, for exam-

ple, global production and distribution systems.

The vision of Plug and Play Business is to de-

velop an integrated set of ICT-tools, in particular for

innovators and supporting business roles. The tools

should support the creation and management of

business despite limited time, business knowledge,

network, and/or financial resources of the innovator.

The innovations considered are not limited to physi-

cal products, but may concern new services as well

as making or organizing businesses in new ways.

Such innovations will be commercialized in the

213

Davidsson P., Hederstierna A., Jacobsson A., A. Persson J., Carlsson B., J. Johansson S., Nilsson A., Ågren G. and Östholm S. (2006).

THE CONCEPT AND TECHNOLOGY OF PLUG AND PLAY BUSINESS.

In Proceedings of the Eighth International Conference on Enterprise Information Systems - SAIC, pages 213-217

DOI: 10.5220/0002469102130217

 SciTePress

competitive and sometimes hostile networked envi-

ronment of today, engaged in complex business

processes, and requiring new forms for collabora-

tion. Together with the autonomy, heterogeneity,

and possibly conflicting goals of the involved par-

ties, this requires ICT-solutions that are able to han-

dle dynamically evolving and distributed business

partnerships and processes that cross the borders of

various enterprises.

2 PLUG AND PLAY BUSINESS

Three important ideas for implementing the concept

of Plug and Play Business are:

• Internet communities: Enterprises join a Plug and

Play Business community by installing the Plug

and Play Business software and by describing and

validating the resources of the enterprise, e.g.,

production capacity, distribution network, intel-

lectual capital, etc. The community is dynamic in

the sense that enterprises may (in principle) join

and leave the community at any time. However,

there may be a need for a specific gate-keeper

that regulates the entering and leaving of the

community, thus making it a semi-open artificial

society.

• Roles: Each member of the Plug and Play Busi-

ness community plays one or more roles, e.g., in-

novator, supplier/provider (of goods, services,

expertise, etc.), distributor, marketer, financier,

seller, etc. An important role in the life cycle of

businesses is the entrepreneur. There is a variety

of definitions of entrepreneur and we have

adopted the classical idea originating from

Schumpeter where an entrepreneur is someone

who turns an innovative idea into a business by

identifying market opportunities (Schumpeter,

1934; Kirzner, 1982). With that definition, we try

to make a distinction between the role as innova-

tor and entrepreneur. One of the purposes of Plug

and Play Business is to automate as much of the

entrepreneurial role as possible, for instance by

using intelligent agent technology, thus increasing

the probability of turning an innovative idea into

a business.

• Crystallization: A member of the Plug and Play

Business community, typically an innovator, may

at any time initiate an attempt to form a collabo-

rative coalition in-between the members. This

process may be viewed analogous to crystalliza-

tion, where a catalyst (innovator) initiates a proc-

ess resulting in a precise form of collaboration,

i.e., the crystal (cf. the formation of a virtual en-

terprise as described below). The main role of the

entrepreneur, which to a large extent is automated

by the Plug and Play Business software, is to

drive this process. It may be a more or less elabo-

rate process starting with just a seed of an innova-

tive idea without any pre-defined business struc-

ture, or it may be a full-fledged business idea with

well-defined needs to be met by potential collabo-

rators.

In order to realize this vision, the Plug and Play

Business technology should include tools that can

enable the different community members to use their

resources efficiently in business solutions (crystals).

This requires for example the following functions

related to match-making activities:

• Finding: To find candidates suitable for a poten-

tial collaboration is an important function. It pri-

marily concerns finding candidates within the

community, but possibly also candidates currently

outside the community. The finding functionality

may include the possibility both for search, based

on specific needs specified by criteria, e.g., role,

type of products, and business model, as well as

for posting general needs or ideas that other

members may suggest solutions and/or resources

for.

• Selection: When a set of potential collaborators

have been found they need to be evaluated. Plug

and Play Business technology should provide the

feature of suggesting actors for collaboration

based on, for example, content-based recommen-

dation (previous interests of actors) and collabo-

rative recommendations (based on preferences of

similar actors). This requires the support for using

track records and potentially support for certifica-

tion schemes of, for instance, the trustworthiness

of the actors. Further, decision support for evalu-

ating trade-offs between a number of characteris-

tics are needed, e.g., trade-offs between cost of

product/service, cost of transportation, and time

to delivery of product/service. Which actors to

choose for the collaboration (i.e., crystallization)

should be based on the evaluation and the esti-

mated value of collaboration with other actors in

a crystal.

• Negotiation: When the catalyst has selected actors

for the necessary roles of the crystal, agreements

between the actors with respect to financial and

product/service agreements need to be settled.

The Plug and Play Business technology should

provide support for different types of agree-

ments/contracts including support for intellectual

property rights.

When the crystallization phase is finished, the Plug

and Play Business technology should provide sup-

port also for the collaboration phase, i.e., the man-

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214

agement of the actual business activities. This sup-

port may be on a quite shallow level, e.g., transac-

tions of information between actors. On a deeper

level, the Plug and Play Business technology should

support and facilitate complex coordination and

synchronization of activities. A wide range of in-

formation types needs to be transferred in an effi-

cient way in order to reduce the administrational

costs of the actors as well as reducing the risk of

inaccuracy in information. The management of the

crystal requires support for controlling the flow of

activities between the involved actors. It concerns

activities with potential long-term consequences

(e.g., initiating product development) as well as

regular business activities (e.g., decisions of produc-

tion and distribution).

There is a set of criteria that should consider dif-

ferent aspects of a cost effective system. Some crite-

ria that should be met by the collaboration-

supporting software are, e.g., interoperability (in-

cluding with the relevant legacy information systems

used by the involved parties), scalability, adaptabil-

ity (handling shifting collaborator needs), independ-

ence (avoiding technological lock-in and high entry-

costs), affordability, simplicity and usability, system

dynamicity (maintaining system functionality, e.g.,

when members are entering or leaving), as well as

security (i.e., preventing unintended exposure of

sensitive information) and robustness in terms of the

resilience of the system, especially when under

stress or when confronted with invalid input. We

discriminate between three dimensions of such col-

laboration:

• The level of collaboration: This is related to the

content and purpose of the exchanged information

with tasks ranging from administrative informa-

tion exchange to complex operations planning.

An example of a simple administrative task is or-

dering and invoicing, whereas a more complex

task may concern making critical information

available to the collaborating partners, in order to

improve operations by better and more efficient

planning and scheduling, i.e., resource optimiza-

tion.

• The number of involved enterprises: The more

parties involved in the collaboration, the more

complex the solutions may be. The simplest case

concerns collaboration between only two enter-

prises (one-to-one collaboration), whereas the

general case involves a large number of enter-

prises collaborating with each other in different

ways (many-to-many collaboration).

• The dynamics of the collaboration: In the simple

static case, the actors involved in a specific col-

laboration are known from the start and will not

change. In a truly dynamic collaboration, on the

other hand, actors may join and leave at any time

with short time to build trustful relationships.

In particular, we believe a critical requirement of the

Plug and Play Business technology is to facilitate

trust in-between the actors. The reason is that the

success partly relies on that members are willing to

contribute with information about their own core

business resources which may include, e.g., intellec-

tual property. Trust can be boosted by enhancing

security. Security problems arise in that the difficul-

ties for guaranteeing that information, which may be

sensitive to one party, is not being misused by other

parties in the network. Also, when many companies

are involved in collaboration, access to available

data is difficult to restrict. Some security features

that help to ensure security and trust in partner selec-

tion and collaboration may be, e.g., identification

and authentication of participants, encryption of

data, access control mechanisms, intrusion detection

capabilities, and possibly some trusted third party

involvement. However, security features must be

carefully considered so that they do not interfere

with agility, dynamicity, interoperability, and low

cost.

In reaching the potential of Plug and Play Busi-

ness, the use of open source software and freeware

components comes well at hand. This suffices for

agile operations since it among other things presents

enterprises with the option to speed up software, and

to share knowledge of security risks and patches.

This also enables participating companies to develop

proprietary functions of the software, and it is also a

form of cost avoidance or cost sharing.

We believe that a fully decentralized paradigm

such as peer-to-peer (P2P) can be a preferable alter-

native for the Plug and Play Business software,

because no central authority determines how the

participants interact or coordinates them in order to

accomplish some task. A P2P infrastructure self-

configures and nodes can coordinate autonomously

in order to search for resources, find them and inter-

act together. P2P being a paradigm that allows build-

ing dynamic overlay networks, it can be used in

order to realize an environment that manages a dy-

namic network of business relations. Dealing with

business sensitive assets (e.g., innovators’ knowl-

edge), searching and retrieval of contents, as well as

discovery, composition and invocation of new ser-

vices, should be made secure and trustable. The P2P

infrastructure realizes an environment in which

every organization can make its knowledge and

services available to other organizations. In a P2P

infrastructure, each organization can autonomously

THE CONCEPT AND TECHNOLOGY OF PLUG AND PLAY BUSINESS

215

manage this task without having to delegate it to an

external central authority.

From a business perspective, the long term result

of Plug and Play Business software will be increased

possibilities for innovators to obtain, e.g.:

• transactional value: effectiveness in finding and

managing business relations,

• scope value: opportunity to carry out business on

a global basis at a lower cost, and

• strategic value: better informed and more adap-

tive to new market options.

From a societal perspective it will increase the pos-

sibilities for economic growth on a global, national

as well as regional level. It may lead to lower barri-

ers to turn innovative ideas into business activities,

especially by less dependence on local concentration

of the different types of resources necessary for

doing business.

3 RELATED WORK

In the networked economy with lower transaction

costs, organizations concentrate more and more on

their core business processes and join temporary

business alliances in order to solve market needs,

thereby forming Virtual Enterprises (VE). In a VE, a

company initiates collaboration by assembling a

temporary coalition of partners and services for a

certain purpose (Petrie and Bussler, 2003). Unlike

their traditional counterparts, VEs are flexible, can

be any size or any type and can reconfigure them-

selves quickly and temporarily in response to vary-

ing market demands. One of the main advantages of

VEs is reduced cost as well as time-to-market. Hi-

Know Enterprises may be treated as the initiator or

catalyst of the formation of a VE. The Plug and Play

Business software is intended as a framework for

integrated ICT-support for implementing VEs that

act in a dynamic networked environment, which also

may be hostile due to sharp competition amongst

rival companies (cf. Carlsson and Jacobsson (2005)).

The idea of Plug and Play Business has some resem-

blance to the work described by Chituc and Azevedo

(2005) in that dynamic collaboration processes for

agile VEs are emphasized. However, they do not

provide an integrated framework as they leave out

crucial aspects, such as, the match-making task and

security management.

Regarding match-making activities, the tasks of

finding and selection (e.g., business partners) has

been the object of a lot of research within the area of

recommendation systems (cf. Adomavicius and

Tuzhilin (2005)). Here, the main idea is to automate

the process of “word-of-mouth” by which people

recommend products or services to one another. So

far, recommendation systems have successfully been

deployed primarily in consumer markets. As most

existing recommendation systems are not developed

for B2B applications, they generally exclude the

negotiation process. However, there is a long tradi-

tion in the area of agent-based systems of studying

this topic (cf. Rosenschein and Zlotkin (1994)), for

instance using the contract net protocol and compu-

tational auctions.

As pointed out earlier, the task of multi-lateral

collaboration and information resource sharing must

be adjusted for a dynamically evolving networked

environment marked by strong competition. In our

view, ICT solutions that support multi-lateral col-

laboration should therefore meet the requirements of

interoperability and scalability as well as security

and robustness. There is no approach available that

meets all of these criteria. It seems that Microsoft’s

BizTalk Server is the most sophisticated solution for

collaboration. However, BizTalk only supports one-

to-one party collaboration, and is currently not fit for

information resource sharing (even though it is

claimed that the next version will contain a limited

extent of such capabilities). BizTalk is based upon a

central server through which all exchanged informa-

tion pass, it uses XML and supports the main proto-

cols for email and http. Also, being a centralized

proprietary client-server solution it has several dis-

advantages, such as, making the actors dependent of

a third party, being expensive and having possible

risks for communication bottlenecks. In enabling

Plug and Play Business technology, one promising

alternative for multi-lateral collaboration is the use

of decentralized intelligent agents. In (Davidsson et

al., 2005), a general wrapper agent solution is de-

scribed based on open source freeware that makes it

possible (in principle) for any business system to

exchange information with any other business sys-

tem. In (Carlsson et al., 2005), further improvements

on the wrapper agent technology are suggested by

addressing security issues as well as an extended,

possibly dynamic, set of involved companies and

higher levels of collaboration (i.e., information re-

source sharing).

3.1 What is New in this Research?

We are not aware of any integrated ICT-tool for

implementing VEs. We argue that the Plug and Play

Business technology remedies this situation and has

the ability to realize the potential of VEs. In addi-

tion, we focus on an important role in a VE that has

been largely ignored, namely that of the innovator.

We believe that tools are missing for supporting the

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216

entrepreneurial activities related to the commerciali-

zation of innovations. Below, we make a technologi-

cal assessment of our approach compared to the

current state of the art:

• Match-making: We believe that a Plug and Play

Business technology can deploy ideas and solu-

tions from existing recommendation systems (in

particular hybrid approaches based on both col-

laborative filtering and context-based systems) in

order to locate and select new partners, and agent-

based technologies in negotiating terms of col-

laboration. However, since match-making activi-

ties typically are based upon incomplete informa-

tion (for instance because potential partners are

not interested in revealing business opportunities

or publishing their business critical information),

aspects of security and trust must also be incorpo-

rated within the task.

• Collaboration: We believe that an agent-based

approach can be used in order to enhance multi-

lateral collaboration in dynamic networked envi-

ronments. However, compared to current state of

the art, the envisioned Plug and Play Business

technology must focus more on cost efficiency,

e.g., by using open source software, meeting cri-

teria such as interoperability and scalability, as

well as providing better support for security and

robustness.

4 FUTURE WORK

Future work on Plug and Play Business will be fo-

cused on developing:

• detailed requirements specifications of Plug and

Play Business software,

• a validated technological model of the Plug and

Play Business software platform,

• partial prototypes indicating the viability of the

Plug and Play Business concept,

• demonstrators illustrating the Plug and Play Busi-

ness concept.

To further support secure collaboration, (automated)

methods for valuating risks and comprehensive

models for secure information asset management

will be addressed ahead. Finally, we will also study

information infrastructure architectures and business

models supporting the implementation of agile and

secure Plug and Play Business communities.

ACKNOWLEDGEMENTS

This work has been funded by the project “Integra-

tion between different SMEs’ business systems”,

financially supported by “Sparbanks-stiftelsen

Kronan”.

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