TRECS: Developing a Web-based e-commerce Business Simulation 1

TRECS: Developing a Web-based e-commerce Business Simulation 1 Craig M. Parker School of Management Information Systems, Deakin University 221 Burwood Highway, Burwood, Victoria, Australia, 3125. Tel: +613 9244 6924 Fax: +613 9244 6928 Email: craig.parker@deakin.edu.au John Liman Singapore Network Services 31 Science Park Road, SNS Hub, Singapore, 117611 Tel: +65 778 5611 Fax: +65 778 5277 Email: johnliman@sns.com.sg Paula M.C. Swatman Interactive Information Institute, RMIT University 110 Victoria Street, Melbourne, Victoria, Australia, 3000. Tel: +61 3 9660 3586 Fax: +61 3 9660 2387 Email: paula.swatman@rmit.edu.au Abstract A challenge for e-commerce educators is the development of teaching tools and environments which provide tertiary students and business people with practically-based opportunities for learning about the business potential of e-commerce. Business simulation approaches to e-commerce education are a particularly effective way in which to provide students with these pedagogic opportunities. What is less certain, however, is how computerised systems can be used to improve the effectiveness and ease of operation of these e-commerce business simulations. This paper provides an overview of an e-commerce business simulation called TRECS (Teaching Realistic Electronic Commerce Solutions). It then discusses the results of an investigation into the way in which a Business Simulation Management System (BSMS) and a Student Business Application (SBA) can improve the ability of TRECS facilitators to coordinate and use this simulation environment. The paper then describes preliminary results concerning the development of a Web-based version of TRECS, which incorporates the features of the Windows-based BSMS and SBA systems. 1 This paper was published in the proceedings of "CollECTeR'98" -- 2nd Annual CollECTeR Conference on Electronic Commerce, Sydney, NSW, September 29.

Introduction Small through to large organisations worldwide are becoming increasingly aware of the need to be more competitive and effective by performing their business operations using electronically-facilitated means that is, e-commerce (see, for example, Centre for Electronic Commerce 1996; Parker 1997; Poon and Swatman 1997a; Poon and Swatman 1997b). The technologies which enable e-commerce include electronic mail, the Internet, the World Wide Web, and EDI (see, for example, Doukidis et al. 1998; Swatman et al. 1996; Vogel et al. 1997). We therefore believe that it is essential for students graduating with degrees in Information Systems to have a sound understanding of how e-commerce can achieve these benefits both from a theoretical and a practical perspective. Research into the design and development of effective approaches for teaching students (in addition to business professionals) is therefore essential. The importance of this objective has been demonstrated by the efforts of a number of e-commerce researchers who are investigating the potential of practically-based approaches to EDI and, more generally, e-commerce education (see, for example, Joyce 1998; Niedzwiedzinski 1995; Petric et al. 1996; Wagenaar 1992; Wrigley 1993). We subsequently developed a laboratory environment called TRECS (Teaching Realistic Electronic Commerce Solutions 2 ) which requires groups of students to adopt the role of a company from a fictitious kitchen appliance manufacturing industry. The companies simulated in TRECS form a supply chain from raw materials suppliers to retailers. The students operate these organisations by exchanging EDI-based business documents (such as purchase orders and invoices) and electronic mail (or email) via the Internet to complete their company s procurement activities. (See Parker and Swatman 1995; 1997; Parker 1997 for a more introductory discussion on how TRECS works and is used.) The proof of concept and the potential effectiveness of this business simulation approach for teaching university students about e-commerce was demonstrated over a five year period (1993-97), during five Australian action research cycles with (primarily) Information Systems students. Some of the Australian students also had the opportunity to trade with identical companies operated by participants from the University of Maribor, Kranj, Slovenia (Parker and Swatman 1995; 1997; Parker 1997). The hermeneutic 3 nature (see, for example, Susman and Evered 1978; Jönsson 1991) of this research project allowed us to incorporate a number of improvements and extensions to the laboratory design after each study. Despite the success of TRECS (Parker 1997), two problems with the business simulation prevented us from turning TRECS into a professional teaching environment (Liman 1997): configuring copies of the commercial EDI software for each of the student organisations required considerable time from the TRECS facilitator prior to the start of the business simulation; and operating the service facilities associated with the business simulation (for instance, the bank, warehouse and freight forwarder) was also a time consuming task for the TRECS facilitator. 2 Formerly known as TREAT (Teaching Realistic EDI and Telecommunications). 3 Hermeneutics refers to the development of an understanding of information (and social situations) resulting from repeated reinterpreting of the text (or situation) based on what was learned in the previous analyses.

We employed the systems development research method (Nunamaker et al. 1990-91; Parker et al. 1994) to investigate whether a Student Business Application (which is integrated with an EDI system) and a Business Simulation Management System (or BSMS, which automates the roles of the service facilities) would address these problem areas (respectively). We studied the impact of these systems using volunteers: four Honours students and one Masters student who had not taken part in TRECS. This approach enabled us to generate indicative support for our view that the BSMS and the Student Business Application (SBA) improved the effectiveness and ease of operation of the business simulation; and to provide confidence in the use of these systems during a formal e-commerce subject. Two educators who had had experience facilitating TRECS were also involved in this evaluation, so that we were able to obtain their feedback concerning the improvements to the business simulation. As in previous years, feedback concerning TRECS was elicited from all participants through observations, verbal comments from participants and responses to questionnaires which were completed by students at the conclusion of the simulation. e-commerce and, in particular, the Web has provided simulation game designers with an innovative way in which to implement and operate their education environments. Although the development of such environments is relatively new, examples include: THE INTERACTIVE PATIENT, where medical students use the Web to diagnose and formulate treatment plans for simulated on-line patients (Lehmann and Hayes 1998); ICONS (Government and Politics, University of Maryland 1998) and SOLSYS (Department of Anthropology, Northern Arizona University 1998), which use the Internet and/or the Web to facilitate participant communication; and SECTOR 001, where participants use the Internet to participate in an interactive game (United Space Federation 1998). We are currently developing a Web version of TRECS which combines the functionality of the BSMS and the SBA. This work is providing useful insight into the possible ways in which the Web can be utilised for the development of e-commerce business simulations and other practically-based educational environments. This paper will: provide a brief overview of TRECS; summarise the findings resulting from our investigation of the effectiveness and importance of using the BSMS and the Student Business Application during an e- Commerce business simulation; and describe the way in which we are using the Web to implement a version of TRECS which will be accessible via the Internet using a standard web browser. Overview of the TRECS Business Simulation The simulation game which is played during TRECS is based on an imaginary kitchen appliance manufacturing industry. Participants in the game adopt the role of a company within this industry and trade fictitious input materials and end-products with their respective suppliers and customers. Figure 1 illustrates the various organisation types comprising TRECS and shows which of the company types interact with each other.

Retailer Frypan Manufacturer Kettle Manufacturer Toaster Manufacturer Plastic Components Supplier Raw Materials Supplier Metal Components Supplier Figure 1: TRECS Company Types and their Trading Relationships The simulation environment also has one bank, warehouse and freight forwarder (which are operated by the TRECS facilitator) for the entire international game to avoid the complexity of currency and product transfers between service facilities of the same type (for instance, between two warehouses). Players use these facilities to exchange goods/funds with their trading partners and manufacture their products by sending a business document to the facility to request a particular service, such as a Production Order to the warehouse to initiate their manufacturing activities. The retailer and raw materials supplier (see Figure 1) are also service facilities which are operated by the TRECS facilitator, so that the availability of raw materials and the overall customer demand for kitchen appliances can be controlled as desired. In addition, our previous experience with TRECS (see Parker 1997) has shown that it is necessary for the TRECS facilitator to operate these two service facilities. This conclusion was reached because when students operated these service facilities we found that it took too long, for example, for price information to propagate along the supply chain from the raw materials suppliers to the retailers. Participants are also required to complete other activities associated with operating their assigned organisation: setting prices for their end-products, while taking into consideration the various expenses of running their company (including freight forwarding and manufacturing costs). Participants therefore compete with companies of the same type for market share; predicting customer demand for their end-products and, consequently, purchasing enough input materials to manufacture these end-products; and exchanging EDI-based documents via the Internet to complete the procurement activities comprising a simulation trade cycle. Examples of the types of business documents exchanged include Price Catalogues, Purchase Orders, Invoices, Despatch Advices, Production Orders and Remittance Advices. TRECS can also be extended as desired to give participants opportunities to experiment with other e-commerce technologies, such as the World Wide Web. For example, we found that

some students developed Web pages for their company to advertise products, provide details of stock levels and to offer discounts and other services. The Business Simulation Management System (BSMS) The Need for a BSMS The importance of developing a Business Simulation Management System (BSMS) to automate the service facilities (such as the bank and warehouse) comprising the e-commerce business simulation was highlighted during the three most recent action research projects (Parker 1997). We found that the TRECS facilitators spent the majority of their time during each laboratory session responding to the documents sent to the service facilities, or that the facilitators were required to perform these tasks outside class time. Operating the service facilities was therefore a time-consuming duty which hindered the facilitators ability to fulfil other important roles such as answering participants e-commerce related questions and promoting student discussion. We believed, however, that the focus by the facilitator should be reversed so that the emphasis was placed on teaching participants about e-commerce rather than on operating service facilities. We also found that the year-to-year management of the business simulation environment was also time-consuming, because the TRECS facilitator was responsible for such tasks as: altering the design of the supply chain, which included adding new kitchen appliance manufacturers (for example, in 1993 there were only toaster manufacturers, while in 1997 there were toaster, frypan and kettle manufacturers due to the increased number of participants); setting up a copy of some EDI software for each student company which allows the participants to create, send and receive their business documents; monitoring the business simulation (for example, detecting problems with students business documents and helping them solve these problems) and providing participants with information about their organisations (including their current bank balances and inventory levels); and writing instructional material for each company type which provides students with the necessary details on how to operate their company only if the industry design changes. The Design of the BSMS A Windows-based BSMS was therefore designed to support and, where possible, completely automate these tasks, so that the TRECS facilitator only needs to spend a minimal amount of time setting up and running the e-commerce business simulation. More specifically, the BSMS (Liman 1997; Scholtus 1996): has a module for each service facility (that is, the bank, warehouse, freight forwarder, retailer and raw materials supplier) which is responsible for receiving business documents associated with its role, performing the relevant functions and generating the necessary replies. The service facilities also respond to documents with error messages if the documents are invalid for any reason for example, the company has insufficient input materials to manufacture the specified quantity of end-products;

enables participants to request from the bank and warehouse their current bank balance and inventory levels (respectively) so that these requests are no longer directed at the coordinator; allows the TRECS facilitator to modify and redesign (if necessary) the manufacturing industry being used, which involves such activities as: defining the organisation types and the products each company type will build specifying the trade relationships between these company types to form a supply chain, from a raw materials supplier through to consumers/retailers and identifying the goods (raw materials, components, etc.) which will be traded between these companies; provides the TRECS facilitator with the means by which to define instances of each company type and to generate automatically a configuration file which is used by each participant s Student Business Application (see the next Section for more information about this system) to identify their company, its customers/suppliers and the products which can be traded with each; and generates an on-screen log which allows the TRECS facilitator to monitor which business documents are being processed and which documents, if any, are erroneous thus allowing the coordinator to approach the students who are experiencing difficulties and to help them. Evaluation of the BSMS Questionnaire responses from the students who took part in the informal evaluation of TRECS using the BSMS showed that there were improvements in the effectiveness of the business simulation. More specifically, when the four Honours students who had participated in the pre- and post-bsms versions of TRECS were asked to compare their experiences (using a five point lichert scale) during the two business simulations (Liman 1997): all strongly agreed that they found it easier during the BSMS version of TRECS to determine their current bank balance indeed, the processing log generated by the BSMS showed that each student typically checked their bank balance at least four times an hour, which had not been possible without the BSMS; and three strongly agreed and one agreed that the immediate responses by the automated service facilities to their business documents was an essential component of TRECS; all strongly agreed that the error messages concerning documents which were in error were an essential component of the TRECS Laboratory. The TRECS facilitators also experienced dramatic decreases in the time they needed to spend processing the business documents on behalf of the service facilities when compared to the pre-bsms version of TRECS. For example: all invoices (e.g., for production) created by the various service facilities have been completely automated by the BSMS or only require a few mouse button clicks, while previously these invoices took facilitators between one and five minutes each to prepare; all validation checks on despatch advices and production orders (e.g., for adequate quantities of inventory) have been completely automated by the BSMS, while previously these validations took up to five minutes per document or were avoided all together; and all orders created by the TRECS facilitators are created easily, because the BSMS is able to provide all the information (e.g., product prices, company inventory and previous order fulfilment history) needed to determine appropriate order quantities for each company. Previously facilitators had to gather this information manually from other documents.

The BSMS also has the advantage of allowing facilitators to design new industries for use during TRECS, which was not practicable prior to the introduction of the BSMS. This means that they are not restricted to using the kitchen appliance manufacturing industry currently being used. For example, designing a new spaghetti cannery industry would involve: defining the company types comprising the industry (e.g., flour suppliers, paper suppliers, aluminium sheeting suppliers, can manufacturers, spaghetti canneries, retailers, etc.); defining the products which are traded between and built by each company type; defining the company types which trade with each other; and defining the quantities of input materials used to build other end-products. These general design principles can be used to design a range of other industries. The company types comprising the industry, however, must also use (at the very least) purchase orders, despatch advices (or ASNs) and remittance advices to carry out their procurement activities. Using these design principles a TRECS supply chain design can be operational within a matter of hours, depending on its complexity. These findings therefore provide indicative support for our belief that the BSMS significantly reduces the time the TRECS facilitators need to spend designing and coordinating the e- Commerce business simulation environment on a semester-by-semester, and day-to-day basis. We believe that this approach to simulation management will provide facilitators with more time to concentrate on teaching participants about the strategic use of e-commerce. The Development of a Student Business Application The Need for a Student Business Application TRECS participants during the 1993-97 action research projects used a DOS-based EDI translation package called STX (developed by Supply Tech, Michigan, USA) to generate their business transactions. STX permits the building of data entry screens based on EDI standard subsets for each transaction type (for example, purchase orders and invoices), so that there was no separate business system which was being integrated with the EDI system. We decided, however, that it was necessary to develop a Windows-based Student Business Application (SBA) which was integrated with a commercial EDI system, because we believe it will give students the opportunity to explore in a more concrete manner the process of integrating EDI with internal systems. Our intention when designing the SBA was to reduce the amount of data entry performed by students, when compared to the EDI-based system, when creating their business documents. This was achieved by ensuring that when a business document (e.g., an order) is input by the SBA, only relevant additional data (e.g., delivery quantities) need to be provided by the students to produce the response (e.g., a despatch advice). Evaluation of the Student Business Application This approach to the design of the SBA was found to be effective during the informal evaluation of TRECS in second semester 1997. Our observations showed that the students were able to use the SBA with minimal or no assistance from the TRECS facilitator, because a step-by-step user manual was provided and because students were very familiar with a Windows-based environment. This ease of use was in contrast to the participants use of STX, where we found that the more atypical DOS environment (even with a comprehensive

step-by-step user manual) resulted in many questions from students on the use of the system to create, send and receive their business documents (Parker 1997). Similar results were found when a simplified version of the SBA was used by small and medium business participants during a three hour e-commerce course which incorporated TRECS (Parker 1997). More specifically, these business participants were given a ten minute demonstration of the SBA, after which they used the system competently with little or no assistance from the TRECS facilitator some participants had not had much exposure to a Windows-based environment prior to the course. Simplifying the Configuration of the Student Business Application A further time-consuming task for facilitators with the original version of TRECS was configuring copies of the EDI software for each student company. Configuring a single trading partner profile using the software involved specifying: the type of EDI standard being used by the trading partner in this instance UN/EDIFACT; the EDI subsets being used by each trading partner for each of the business documents being exchanged; the name and address of the owner of the EDI software for each trading partner profile it was not possible to provide the company s name and address once for all trading partners; and the products which the trading partner can buy from or sell to the company concerned. This problem was addressed by designing the BSMS so that it can automatically generate a configuration file for the SBA which contains the company s name, address, product and trading partner information. This was achievable because the BSMS has all the information about each company instance (e.g., its name) and about the industry design (e.g., trading partners and products) which is required to produce this company specific configuration file. The TRECS facilitators found that configuring a copy of the SBA for a particular company therefore took a matter of seconds, as opposed to 10-20 minutes per company when using the EDI software. We therefore believe that this approach significantly reduces the amount of time the TRECS facilitators need to spend setting up the e-commerce business simulation from semester-to-semester, because they only need to add company instances to the BSMS to generate the complete SBA configuration file. A Web-based Version of the TRECS Laboratory Technical Difficulties with the BSMS and SBA Despite the success of the BSMS and SBA systems, technical difficulties were encountered which we believe limits the application of these tools in other university environments: installing the SBA and BSMS on a university s computer network, so that these software tools are available to the students and TRECS facilitators; installing copies of a commercial EDI software package for each student company; and integrating the SBA and BSMS software tools with the EDI software, since this requires that a copy of the EDI software be installed on each student s laboratory computer.

The three main factors which further complicate these once only, time-consuming installation problems are that: universities often have different computer network environments, so that providing a single, simple method of installing all the TRECS software to work under various conditions is not possible; universities typically have a central body or computing centre which provides networking services within the institution, so that obtaining permission and support from such a centre to install many software packages can occasionally prove problematic; and the computer disk space required for both the SBA and the copies of the EDI software is large, particularly as the number of students (and hence software copies) increase. The computing centres at most universities would generally not be supportive of tools requiring such resources. A further technical problem associated with TRECS is the fact that the BSMS and SBA are designed specifically for Microsoft Windows 95 and/or NT environments. This means that universities which might use other platforms in their student computer laboratories, such as Macintosh and Unix, cannot be supported. Web Versions of the BSMS and SBA The feasibility of developing a Web-based version of TRECS was therefore investigated to determine if these technical problems could be addressed, while at the same time still achieving the benefits resulting from the use of the SBA and BSMS. We found that a Microsoft product called Internet Information Server (IIS) 3.0, which turns a Microsoft NT Server into a Web server, enabled us to develop a Web-based version of TRECS. The designs of the SBA and BSMS were subsequently revised so that they could be implemented instead on a Web server using the IIS. These new designs enabled us to replace the SBA and BSMS with a version of TRECS which operates entirely on a Web server. The Web-based version of TRECS also includes all on-line instructions for participants, e- Commerce educators and technical support staff on the use and installing of TRECS. While the new Web-version of TRECS makes the Windows-based versions of the SBA and SMS obsolete, the development of these software tools turned out to be beneficial, because they served as prototypes which enabled a more rapid and successful development of the on-line simulation game. Our preliminary experiences with a Web-based e-commerce business simulation (which have not yet involved students) suggests that there are a number of advantages over the former Windows-based versions of the SBA and BSMS: the Web versions of the SBA and BSMS are now installed on a single computer (or Web server), so that the installation of multiple software packages on multiple computers is no longer required; the duties (or functionality) of the SBA and BSMS can be carried out in a similar manner to the Windows-based versions of these software tools, so that the full advantages achieved by these tools will not be lost by moving to a Web-based implementation; the instructions provided to TRECS participants on how to perform simulation tasks, such as calculating prices for their end-products, are quite configurable. For instance, when the facilitator alters the design of the simulation industry, the Web-based instructions alter automatically to reflect this new industry design. This automated, on-line approach to

TRECS instruction provision has the potential to eliminate the need for facilitators to prepare new support material for an e-commerce course when a new industry design is introduced; the students and TRECS facilitators only require a Web browser to participate in the simulation game, so long as their computers and the Web server have Web-based connections to each other. This includes the ability for people to participate from home via an Internet connection if they so desire; the participants will be able to use the most recent versions of the TRECS software, so that there will be no problems with some people using out-dated or incompatible copies; the Web servers are designed to operate 24 hours a day and 7 days a week, so that the simulation game can operate on a continuous basis without involvement from the TRECS facilitator; the solution can be installed on any university s Microsoft Windows NT Web site (or server), so long as this server is running Microsoft s Internet Information Server (IIS) software; the IIS is currently available for free from Microsoft, providing a copy of Microsoft s NT Server operating system has been purchased by the University; the entire installation process for the Web-based version of TRECS takes between 15-30 minutes, so that the simulation game can be operational within a very short period of time. In addition, only one installation disk is currently required to install the full Webbased version of TRECS, compared to approximately 10 for the Windows version; the students and TRECS facilitator can use computer platform (for instance, Macintosh, Unix), so long as the chosen platform supports the Internet Explorer 4.01 and Netscape Communicator 4+ Javascript features; and the students will experience first-hand some of the advances being made in e-commerce and see how the Internet is being used to enhance the way in which real companies do business. We also believe that this Web-based approach to the development of an e-commerce business simulation will also be especially significant in the context of the education of SME owner/managers concerning the business potential of e-commerce. Previous research has shown that SME owner/managers do not tend to take part in e-commerce business simulations at their company premises because of the time and difficulty of installing the required Windows-based and commercial EDI software (see Parker 1997). We anticipate that a Web-based approach will lessen these problems because SME owner/managers will only be required to obtain an Internet connection in order to participate in and learn from this type of e-commerce simulation. The Web-based version of TRECS which we have implemented so far has a number of features which will enable us to teach students about various e-commerce concepts and techniques: a centralised Microsoft Access database is used to store all the business simulation data, including: the design of the simulation industry, the product information, manufacturing specifications and the profiles of the companies in the supply chain; the business transactions which are created by and exchanged between all participating student organisations; a simulated EDI software package which enables students to send and receive their business documents in EDI format (still under development);

a collection of Active Server Pages 4 which enable participants to: specify prices for their products; generate orders for and receive deliveries of input materials; manufacture products using these input materials; pay and receive payments from their trading partners; obtain financial statements and other simplified business reports; view their own business transactions in flat file and EDI formats; a collection of Active Server Pages which enable TRECS facilitators to design and administer the simulation industry using similar tools to those available in the BSMS; a login process to prevent students (both internal and external to the business simulation) from logging in as other companies; the automation of the service facilities comprising the business simulation, so that the TRECS facilitators are not required to run these entities manually. The advantage of this approach is that while students are operating their simulated organisations they will be able to see first hand: the benefits of EDI and how this technology works; the way in which databases can be integrated with Web servers; the potential of the Web for transaction processing, in addition to marketing/advertising applications; and the way in which the Web, EDI and other e-commerce applications can be used as facilitators of business process reengineering. Conclusions and Future Research This paper has discussed the results of our research into the importance of a Business Simulation Management System (BSMS) and a Student Business Application (SBA) for improving the effectiveness of e-commerce business simulations. Our investigation has provided indicative support for our view that BSMSs must: be adequately configurable so that the business simulation can support more than just a single industry and its associated organisations, especially if the environment is to be used by many universities and educators; be able to automate many of the operational tasks which must be performed by the facilitators of business simulation environments; and be capable of assisting the facilitators in monitoring the business simulations so that useful feedback can be given to the participants. The paper has also described how the Windows-based BSMS and SBA tools can be implemented on the Web to produce a Web-based business simulation, which offers such additional advantages as the ease of remote administration and participation. Our findings concerning the success of developing a Web-based version of TRECS also seem to suggest that it will be feasible to develop a tool for allowing SME owner/managers to learn about the business potential of e-commerce from their company premises. 4 Active Server Pages (ASPs) are server-side Web pages which can include, among other languages, Visual Basic programming code which can interrogate and update an Access database. ASPs then produce normal HTML/Javascript Web documents which are sent to the client s Web browser.

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