Collaborative working environments for enterprise incubation – The Sekhukhune Rural Living Lab Christian MERZ1, Rudi DE LOUW2, Nina ULLRICH1 1 SAP Research, CEC Karlsruhe, Vincenz-Priessnitz-Strasse 1, Karlsruhe, 76131, Germany Tel: +49 721 69020, Fax: +49 721 696816, Email:
[email protected]/
[email protected] 2 SAP Research, CEC Pretoria, Persequor TechnoPark, Pro Park Building 3, 29 de Havilland Crescent, Scientia, Pretoria 0001, South Africa Tel: +27 12 349-3100, Fax: +27 12 349-3131, Email:
[email protected] Abstract: In rural South Africa, due to their remoteness small and micro enterprises face difficult business conditions and are hampered by developmental impediments. Following the European Network of Living Labs (ENoLL) initiative a Rural Living Lab (RLL) is set up in the economically active region of Sekhukhune, Mpumalanga. The RLL introduces so called Infopreneurs that offer extended collaborative service bundles to the rural enterprises that helps them to reduce high transaction and logistics cost, to upscale supply chain volumes, to release product related market constraints and to share knowledge and know-how. In line with the principles of Living Labs a user centred co-design process is followed that provides a Collaborative Working Environment based on a Service Oriented Architecture (SOA) approach. The technical advantages of a decoupled, multi tiered SOA approach are used to realize measurable impact on local businesses in terms of the improvement of efficiency, competitiveness, outreach to first economies, employment and human capacity. Keywords: (Rural) Living Lab, SMME (Small Medium and Micro Enterprises) incubation, Collaboration, Collaborative Working Environment, SOA (Service Oriented Architecture), Rural Development, C@R (Collaboration @ Rural)
1. Introduction and Objectives In South Africa, Small Medium and Micro Enterprises (SMMEs) are flourishing as a result of modern financial systems and governmental policies supporting entrepreneurship. They form a key element in the government's strategy for employment creation and income generation. Almost 90% of active entities registered at CIPRO (Companies and Intellectual Property Registration Office) are either micro or very small businesses. SMMEs are regarded as important growth engines for economies, especially in emerging economies like South Africa, where they provide about 54% of total jobs (see figure 1). Despite this significant proportion, SMMEs account only for 24% of the South African gross domestic product (GDP) [1]. Especially in rural areas, SMMEs face difficult business conditions and are hampered by developmental impediments that are mainly related to the absence of adequate infrastructures, the disconnection to economically strong regions and markets, difficulties to find good professionals, the non awareness of business opportunities and the missing managerial know-how about financing a business, asset management, accounting or market research [2].
Figure 1: Contribution to Gross Domestic Production and employment with regards to the size of enterprises (Source: [1] p.66)
In order to overcome these impediments and to promote economic development in rural areas, the project Collaboration@Rural (C@R) - an Integrated Project funded by the IST programme of the European Commission's 6th Framework Program [3] - fosters the incubation of SMMEs and their collaboration in rural areas. The project follows the Living Lab approach, a European initiative [4, 5], and applies Collaborative Working Environments (CWEs) as a technological response to the barriers preventing rural development. The South African Living Lab boosting SMME incubation is located in the economically active but rural region of Sekhukhune. It introduces Infopreneurs [6], a kind of e-entrepreneur that act as service agents for SMMEs and apply the collaborative incubation mechanisms to the SMMEs. The objectives of the South African Living Lab are: Reaching a state of sustainable trusted innovation in a user centred co-design process that is mainly driven by the Infopreneurs as the major end-users. Applying the main principles of the concept of Living Labs [4, 5] taking into account the local, African context to support seamless collaboration amongst various stakeholders to enable incubation of SMMEs. Boosting the collaboration amongst SMMEs via incubation mechanism. Introducing an extended collaborative service bundle that will offer amongst others mentoring support, business management tools and business development services. The main impact of this service bundle is to reduce high transaction and logistics cost, to upscale supply chain volumes, to release product related market constraints and to share knowledge and know-how. Enhancing socio-economic development for the rural community Linking 1st and 2nd economies, e.g. mining industry and SMMEs via innovative business models to ensure long-term economic viability of incubation mechanism. In the Sekhukhune area, the C@R project identified several service-oriented, collaborative scenarios for SMME incubation. Four of them are considered as most important, namely [7, 8]: Collaborative Procurement & Logistics (including healthcare procurement) Collaborative Management & e-Commerce (including marketing sub-scenarios) Collaborative Knowledge Sharing, Mentoring & Support (including linking 1st and 2nd economies e.g. via Tender and Contract Services sub-scenarios) Collaborative Spatial Analysis Support Services
2. Collaboration@Rural - Research Approach In order to realize sustainable trusted innovation in a user centred co-design process, the methodology of so called Living Labs is applied. The Living Lab concept was developed
by Professor William Mitchell (MIT Media Lab and School of Architecture). According to Professor Mitchell, user-centric research methods can be used in real life environment to identify and build prototypes, and to evaluate multiple solutions which are needed more and more in constantly changing living environments. In Living Lab contexts, users and developers are co-creating innovations, and users are working and living with these services and applications in their daily life settings. Instead of bringing people to the laboratory, the Living Labs concept aims to ’bring the laboratory to the people’. Three principles of Living Labs are implemented in the following way at the Living Lab site in South Africa: 2.1 Living Labs as context for human-centric innovation Living Labs are implemented as context for human-centric innovation for knowledge society services, businesses and technologies in rural settings. That means involving the user actively in the prototyping, development, testing and validation of the required products and services. In our interpretation not only the directly concerned end-users are involved from the early stage, but also the other stakeholders in the regional value network affected by the Living Labs. For example employees of the local mining sector have been involved in the use case design spanning from higher management to operative administrative staff. On a next level of end user involvement ‘Participatory design’ and ‘Design in use’ sessions are scheduled making use of a support environment called ‘Studio’ [9]. These sessions have been executed on expert level to develop the use cases. In a next step also actual end-users (mainly Infopreneurs) that are currently trained will be involved. Most of the SMMEs in the Sekhukhune area do not have strong technical skills to properly document their needs and wishes, and to ensure their requirements are properly understood. ‘Participatory design’ and ‘Design in use’ methodologies help here. The users are not merely consulted, but collaborating in the development of the system. An iterative process, with rapid design cycles, is used. As such it is similar in some aspects to the ‘agile’ development methodologies [10, 11]. ‘Design in use’ addresses the gap between the expected and actual requirements for technological support. In the ’Design in use’ methodology, user’s behaviour working in real settings is used to re-configure and develop the system. This demands a change of culture in designers and developers to accept users as co-designers, and changes in application as a part of the development process. We have successfully applied the ‘Design in use’ approach with novice computer users on the development of in service teachers in rural areas in South Africa [12]. 2.2 Holistic approach Living Labs is a research methodology for innovation that challenges the whole research and innovation process in real-life conditions by human, social, cultural, organizational and institutional aspects, and has an impact on sustainable service, business and technology development. Thus, we are not talking about just user-centric research or usability research, but about a real human-centric approach. One of the crucial cornerstones is to identify a partnership that is able to cover the necessary skills to do research in a holistic approach and to run the Living Lab. Our partnership for the Sekhukhune Living Lab comprises the following relevant public, private and citizen stakeholders. Public: Council for Scientific & Industrial Research, Meraka Institute Private: SAP Research, the Infopreneurs, local SMMEs, 1st economy players (e.g. mining and retail sector)
Citizen: MPCCs (Multi Purpose Community Centres), rural community members. 2.3 Boosting service, technology and business development Rural living is characterized by widely-distributed activities of work and life. Successfully integrating these activities and multiple roles requires that solutions design is driven by human-centric innovation principles, adapted to the rural requirements. When this happens, RLLs should boost in an all-inclusive way the new service, business and technology development in rural and remote areas, in co-creative cooperation of local people, public agencies and SMMEs. RLLs should also foster the creation of new economic activities, including the creation of new enterprises and new jobs. Our approach very much focuses on business related requirements identification with no predefinition of technology setup, i.e. a top-down propagation of business requirements. As these requirements are constantly changing, change management support is required on a continuous base. This implicates the technology setup in a way that it has to support the collaborative nature of the whole stakeholder value chain. Information and Communication Technologies have to provide Collaborative Working Environments that enables seamless cross organizational business processes. One of the key aspects is to combine both informal (e.g. Blogs, WIKIs, forums, MxIT, Messenger, SMSs) and formal collaboration (e.g. workflow driven, cross organizational ERP (Enterprise Resource Planning) like collaborative applications).
3. Technology Description The C@R project creates Collaborative Working Environments suitable for rural environment activities that are based on an open Service Oriented Architecture (SOA) design approach. This approach has several advantages for the purposes of the Sekhukhune Living Lab that will be discussed in detail in the following sections. 3.1 Service Oriented Architecture Service Orientation is a new computing paradigm that will enable seamless interoperability amongst heterogeneous platforms once it adopts the principles of open standards (e.g. Web Services). A literature study on SOA showed that SOA means different things to different companies and industry sectors. The hardware vendors closely associate their version of SOA with the Operating System and the physical hardware. The application vendors rather associate it with their application offerings and regard the SOA version of the hardware vendors as too low-level. System architecture departments have yet another view, and the business think of SOA-based services as business processes. As there is no agreement on the context, the definitions of SOA differ widely. We look at the definition of SOA [13] from the business processes and associated applications point of view. There are quite a few benefits of this SOA-based approach. Applications tend to be written around a gathering of similar data. For example, we gather all customer data together in a database, write an application to manipulate that customer data, and call it Customer Relationship Management (CRM). The problem is that this data is now contained in an application ’silo’, and other systems now have to integrate to or interface with such a system to access this customer data. The costs of these integration and interfacing issues can contribute significantly to project costs. Changing business needs or environments changes the business rules, and adapting is difficult. These systems tend to be like wet cement when implemented originally, but they become like reinforced concrete when in use for a while. This approach might be fine for big enterprises that have a fixed line of
business e.g. producing automobiles, but is hardly applicable to smaller organizations that depend on their agility for survival. Using a SOA-based approach, this quickly defines the technology and the architecture that should be used. Standard web services using the basic WS-*, WSDL, UDDI, SOAP and XML, together with BPEL and BPM, can be expanded to become so called Enterprise Services. The term E-SOA (for Enterprise SOA) is then used. Orchestration of ERP functionality into new collaborative cross-organizational business processes now becomes easy and provides business agility. A SOA-based development approach ensures: Re-usability of code via open standards Parts of an Enterprise Service can be outsourced, ensuring that businesses can keep focusing on their core processes. Services can be interchanged and new services can be added or developed to address new business requirements in a fast an efficient manner. Because of the flexibility, services can be used in new and unexpected ways. 3.2 SOA enabling multiple, decoupled tiers Because of the SOA-based approach, a multi-tiered architecture is used. The design of the Open Service Oriented Architecture (OSOA) used in the Collaboration @Rural (C@R) project [3] has three layers (see figure 2).
Figure 2: Collaborative Core Services (CCS), Software Collaborative Tools (SCT) and Rural Living Lab applications (LLs)
Collaborative Core Services (CCS) are lower-level services that encapsulate various service components e.g. sending an SMS via the cellular network. These are then used by the higher level, interoperable, reusable and independent Software Collaborative Tools (SCT) where required, e.g. an order was entered into the system, an order number is sent per SMS back to the customer. We use various services in our Collaborative Procurement scenario, for example a service to handle order taking from the SMMEs, another service to combine orders from these SMMEs and combine the order items for various vendors (the actual Collaborative Procurement), and yet another service to place these 'collaborative' orders at the vendors. These services based SCTs are then orchestrated into meaningful applications serving the needs of RLLs, e.g. providing the various scenarios as discussed in the following section.
3.3 The SOA–based approach assist with de-coupled intelligent UIs and Simplification SOA, from its very definition as back-end service calls that do not require any UI (because services can also be called from other services or systems), requires a complete separation of the Business Logic and the UI (User Interface). Traditional software architecture has a tight integration between the user screens and the various back-end calls with strict dependencies. The SOA-based approach has a decoupled UI with loosely-coupled dependencies which can lead to simplified and intelligent UIs, e.g. instead of the user having to fill in 100 fields on a screen. By using business rules and company facts that are constants (thus also creating a more ’intelligent’ UI), we can have a simplified user entry screen that only requires a screen with 20 fields (see figure 3). With the ubiquitous cellular networks and band-width problems in emerging economies this is a blessing, as the UI can be designed with mobile technologies and low bandwidth options in mind.
Figure 3: Comparison of the traditional way of UI coding, the newer SOA-based decoupled UI, and the SOAbased approach with additional simplification services
By addressing the simplification of the user screen, we also managed to address some of the infrastructure concerns in the African context e.g. the cost of bandwidth, using mobile technologies in areas that lack other more traditional infrastructure, as well as user acceptance and training. Another principle learned from the above is that in order to simplify the front-end for the users, the back-end functionality gets significantly more complex, and new paradigms are needed to handle such complexity. Re-use of business functionality assets in heterogeneous system environments e.g. using SAP and Meraka’s InTouchTM [6] can also be addressed by new user interface layers. 3.4 The SOA-based approach combined with a multi-tiered architecture assists the development of large applications As illustrated in Figure 2, the C@R project [3] uses a three-tiered architecture. This is very effective in managing such a large project, as well as ensuring a clear division of work for the various parties involved. Business requirements are gathered by the RLL participants, the technical infrastructure services are developed by the CCSs, etc.
3.5 The SOA-based approach assists in abstraction In order to simplify the front-end for users, the back-end functionality gets significantly more complex, and new paradigms are needed to handle this complexity. The SOA-based approach, together with agile development methodologies, are used in building multiple abstraction layers, all of which assist in dealing with the added back-end complexity.
4. Current Status and Lessons Learned The project started September 2006 and has concluded a systematic analysis of the policy and business context of the Living Labs including the Sekhukhune area. This analysis revealed the key characteristics of the collaborative innovation issues and the key conditions that should be met to result into successful rural innovation systems. The following step was to enter the process of concrete innovations based on the approach of early stakeholder involvement. Concentrating on the collaborative procurement scenario for the RLL in Sekhukhune two rapid prototyping cycles have been concluded considering feedback from different stakeholders. The existing prototype is currently presented to the Infopreneurs to deal with Participatory Design. Similar approaches will be undertaken for the other scenarios in an incremental fashion. In a next step a cross-case analysis is carried out to identify synergies and commonalities amongst all Living Lab instantiations of the C@R project in Europe and South Africa. This analysis also serves to derive a library of services commonly used by the Living Lab applications. In parallel the deployment of the necessary infrastructure in the Living Lab premises (or elsewhere) takes place to instantiate the CCSs and SCTs that will be used for the further development of applications of the Living Labs and to test these components separately. Despite of the early stage of the project there are important lessons learned including the following: Stakeholders: Develop a clear communication strategy to avoid different interpretations of objectives of the project Get the support and buy in of project stakeholders on higher management level Put much effort on change management Enable dedication of human resources and communicate clear responsibilities Avoid copying best practices from industrialized environments, e.g. taking into account traditional versus institutional leadership Enhance skill levels of stakeholders right from the beginning Infrastructure: Cope with basic infrastructure impediments (traffic, electricity, connectivity etc.), e.g. by providing backup solutions Communication backbones are not providing required levels of Quality of Service (i.e. connectivity and bandwidth). The SOA-based approach makes good use of the inferior infrastructure. Reduce WAN traffic to the fullest extend possible (rich media content, caching, acceleration etc.) Make use of existing infrastructure, e.g. on community level (e.g. MPCC) System solution design: Customize functionality to local needs
Simplify and contextualize Human Computer Interaction (supported by SOA approach as UIs are decoupled) Simplify whole software lifecycle management including maintenance and administration Provide professional hosting services and support The SOA-based approach combined with a multi-tiered architecture assists the development of large applications A first fully operational Living Lab based on an integrated platform providing a wide range of defined requirements is expected to be available by early 2008. Because of the iterative approach we are however already starting to reap some of the results in the earlier phases of the project. There are indications that synergies can be drawn from the three other instantiations of Rural Enterprise incubator Living Labs in Frascati (Italy), Turku (Finland) and Soria (Spain) as part of the C@R project [3] that enables networked collaboration amongst European and African Living Labs.
5. Business Benefits The set up of a Living Lab introducing Infopreneurs comprising the implementation of tailored collaborative working environments addresses the problems of rural SMMEs at the core. Whilst often ICT for development projects focus on the introduction of new technologies serving the basic infrastructure needs (e.g. connectivity) our approach is much more business application driven. Applying the principles of Living Labs the solution is a result of human centric development bridging the gap between real world needs and technical inventions creating sustainable innovation. The technical innovation of SOA based, flexible, open and dynamic architectures is a result of clearly identified business needs. It is envisioned that the business model of Infopreneurs increases effective collaboration and productivity amongst 1st and 2nd economy players. It is designed to be fully sustainable and replicable without external funding or sponsoring. Furthermore, it is driven by the private sector without requiring major political or public interventions. Our current research promises that the growth in e.g. the mining sector can be much more propagated to local SMMEs using the incubation models of the Infopreneur Living Lab than predicted. Clusters of SMMEs and networks between 1 st and 2nd economy players form an innovative ecosystem that increases the efficiency and productivity of all participants. The strengthening of local SMMEs have a much broader impact going beyond the borders of communities. The model indicates amongst mining industry global players that there are measurable benefits (i.e. competitiveness increase) on a global scale. In the province of choice (Mpumalanga) the proportion of informal businesses to the provincial population is comparably high [1]. The Infopreneur model has the potential to scale informal businesses up to the level of formality which enhances even more the already relatively high importance of the SMME sector for local employment. Finally there is an added value in the exchange of knowledge amongst SMMEs in virtual communities provided by the C@R collaborative platform. This will measurably enhance the knowledge, skills and capabilities of SMMEs e.g. related to computer literacy. Experience in comparable projects [12] with non computer literate end users has shown that novice users are rapidly adopting nowadays human computer interaction paradigms of e.g. the World Wide Web. In summary the following business benefits are part of the Living Lab introducing Infopreneurs:
Real world need solution for Infopreneurs acting as start up knowledge service based micro enterprises Efficient collaboration amongst SMME networks and clusters with 1st economy players boosting efficiency and competitiveness of small, micro and large economic players Upscale of informal businesses Employment creation Human capacity development
6. Conclusions The key message of this paper is that a Rural Living Lab model is not just a product and service concept, but includes the various dimensions of partnership establishment and operation across the different Living Labs development stages. The South African Living Lab with its SMME incubation has the character of partnership design. The paper identifies the different, mainly technological factors determining the specific characteristics of such partnership designs. To overcome rural barriers to entrepreneurship, a collaborative-based SMMEs incubator in rural areas is created as a facility designed to encourage and, mainly, to facilitate entrepreneurship in rural and remote regions, and to minimize obstacles to SMME business formation and growth, by means of sharing the collaborative services and tools integrated in the C@R platform with the interested entrepreneurs. Even though the project is at an early stage, various lessons have already been learned regarding infrastructure, system solution design and stakeholders. It is highly recommended to make sure that these lessons learned are taken into account when developing future applications and to adapt to the rural requirements. However, it is too early to analyse whether the SMME incubator’s objectives have been met. By involving stakeholders and end-users in developing prototypes for their daily use, we got indications that the proposed concept is the answer for some of Africa’s socioeconomic challenges. The next step is to develop and apply a framework for impact assessment so that results of the SMME incubation will be measurable and benchmarking with other Living Labs focusing on SMME incubation in rural areas will be feasible. Furthermore, the mutual benefits of this cross EU-African collaborative research on the usage of networked Living Labs will be explored, e.g. to exchange best practices, including regulation and socio-economic issues as technological drivers or to do large scale validation of technologies or networked applications in a global context. On the basis of a comparative Living Labs’ analysis, it is planned to identify the situational parameters which require situation-dependent strategies resulting in open and collaborative business innovation models.
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