Process Simulation for E-Commerce Systems

Process Simulation for E-Commerce Systems

Zhen Chen (University of Reading, UK), Heng Li (Hong Kong Polytechnic University, Hong Kong), Stephen C.W. Kong (Loughborough University, UK), Ju Hong (Hong Kong Polytechnic University, Hong Kong) and Qing Xu (Hong Kong Polytechnic University, Hong Kong)
Copyright: © 2006 |Pages: 8
DOI: 10.4018/978-1-59140-799-7.ch150
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Abstract

As a modern way to conduct business in the global economic environment, e-commerce is becoming an essential component integrated with traditional business processes in enterprises. To reduce risks and increase profits in e-commerce investments and to provide the best services to their customers, enterprises have to find appropriate ways to analyze their e-commerce strategies at the business planning stage. Strategic management tools are designed for enterprises to evaluate their business strategies, and can be used to evaluate an e-commerce business plan, as well. For example, the SWOT (strengths, weaknesses, opportunities and threats) analysis is regarded as a popular way to conduct an e-commerce business plan evaluation, with business environmental scanning based on internal environmental factors (strengths and weaknesses) and external environmental factors (opportunities and threats) (Turban, King, Lee, & Viehland, 2003). To facilitate the application of the strategic management tools, different forms of applications are adopted, such as checklist (OGC, 2004), rating system (UNMFS, 2004), expert system (PlanWare, 2004) and so forth. Among these, computer-driven business simulation tools enable participants to run with virtual business processes, experiment with different strategies and compete with other supposed companies or plans in a virtual business environment. As an example, the Marketplace (ILS, 2003; IDC, 2004) is a business simulator for integrative business courses that provides decision content, including marketing, product development, sales force management, financial analysis, accounting, manufacturing and quality management. Regarding the application of computer simulation in e-commerce, the Marketplace strategic e-commerce simulation is specifically designed, and it illustrates the business concepts of an e-commerce environment, as well (ILS, 2003). For an e-commerce system simulation, Griss and Letsinger (2000) studied agent-based flexible e-commerce systems with an experimental multi-player shopping game to experiment with alternative individual and group economic strategies, and to evaluate the effectiveness of agent-based systems for e-commerce. Both academic and professional practice have proved that using computer simulation is an effective, efficient and economical way for e-commerce business plan evaluation. However, it is hard to conduct simulation based on the flowchart of business processes within the current e-commerce simulation environment as mentioned above. This actually provides a limitation for applying e-commerce simulation. In fact, computer simulation has tackled a range of business problems, leading to improving efficiency, reduced costs and increased profitability since the 1950s (Robinson, 1994). Simulation tools are on the increase in various application areas (Google, 2005) and process-oriented simulation has been increasing in popularity for business management (Swain, 2001). We believe that a process-oriented simulation for e-commerce system evaluation is more directly perceived through the human sense, and our interest is to conduct a quantitative approach to e-commerce system evaluation based on the theory of process simulation. The e-commerce system simulation is an integrative procedure to run a business processes-oriented simulation program based on both internal and external business environmental factors to demonstrate the actual results of implementing an e-commerce business model by using computer-driven software toolkits. The e-commerce system simulation is an effective, efficient and economical approach, and can be used to experiment and evaluate different e-commerce business models or plans. The adoption of e-commerce system simulation can reduce potential risks in e-commerce system development, such as the huge amount of initial investments of time and money, and the long period from business planning to system development, then to system test and operation, and finally to exact return; in other words, the proposed process-oriented e-commerce system simulation can help currently used system analysis and development methods to tell investors in a very detailed way about some keen attentions, such as how good their e-commerce system could be, how many investment repayments they could have and in which area they should improve from initial business plans. The definition of the proposed process-oriented e-commerce system simulation normalizes its procedure to apply a process simulation to experiment with an e-commerce model. In this regard, this article focuses on the adaptation of an e-commerce model into a process simulation environment by using an experimental case study. Results from this article include the conception of e-commerce system simulation, a comprehensive review of simulation methods adopted in e-commerce system evaluation and a real case study of applying simulation to e-commerce system evaluation. Furthermore, we hope that the adoption and implementation of process simulation approach can effectively support business decision-making, and improve the efficiency of e-commerce systems.

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