1

Developing e-Negotiation support with a meta-modeling

approachin a Web services environment

Shing-Chi CHEUNGPatrick C.K. Hung

Dept. of Computer Science Hong Kong University of

Science & Technologyscc@cs.ust.hk

Sherina Y. Y. ChiuK. K. Chung

Dept. of Computer Science & Engineering,

Chinese University of Hong Kong

Dickson ChiuSenior Member, IEEEdicksonchiu@ieee.org

DSS 40(2005) 2

To be learned from this case

Capture and abstract various business process requirements

Generalize them into an organized framework and model Application of IT and CS to solve a business problem Novelty - process support for NSS is much less studied

(as compared with decision models for negotiation) Extend a traditionally human centric application

into a Web service based platform to support growing need for programmatic interface for B2B support negotiating agents – autonomous intelligent

programs act on behalf of a user Architecture and Web service design

DSS 40(2005) 3

Introduction e-Contract

computerized facilitation or automation of a contract cross-organizational business process

Negotiation a decision process in which two or more parties make

individual decisions and interact with each other for mutual gain

negozio = shop in Italian … e-Negotiation

perform negotiation activities over the Internet Web Services and Grid technologies and infrastructures

=> Context: extended e-Marketplace

DSS 40(2005) 4

Classification of Negotiation

Our Meta-model covers the following types of negotiation

Bidding Multilateral distributive negotiation Formal, competitive procurement procedure

Bargaining Usually involves two parties Each party has a single but opposing objective Each fights for the best value that opponent would still

accept Request for Proposals (RFP)

Extended form of bargaining Has a prelude phase of requirement & candidate

identification

DSS 40(2005) 5

Project Background D.K.W. Chiu, S.C. Cheung, P.C.K. Hung, S.Y.Y. Chiu* and K.K.

Chung*. Developing e-Negotiation Process Support with a Meta-modeling Approach in a Web Services Environment, Decision Support Systems, 40:51-69, 2005. (*FYP students)

Peliminary Version at ICWS'03, June 2003 6th Pacific Asia Conference on Information Systems, Sept 2002

D.K.W. Chiu, S.C. Cheung, P.C.K. Hung, and H.F. Leung. Constraint-based Negotiation in a Multi-Agent Information System with Multiple Platform Support, HICSS37, Jan 2004.

S.C. Cheung, P.C.K. Hung and D.K.W. Chiu. On e-Negotiation of Unmatched Logrolling Views, HICSS36, Jan 2003 (best paper nominee). (journal version under revision for JMIS)

S.C. Cheung, P.C.K. Hung and D.K.W. Chiu. A Meta-model for e-Contract Template Variable Dependencies Facilitating e-Negotiation, ER2002, Oct 2002

DSS 40(2005) 6

Contract Templates Reference document based on which a new contract is created Contains a set of template variables whose values are to be

negotiated Particularly applicable to standard business interactions that

could be taken place over the Internet Such as real-estate transactions, purchase and sale of goods,

etc. New e-Contracts for these business interactions can be defined

based on standard contract templates Specific business interactions not covered by the clauses in

standard contract templates can be provided as contract variations or contract escalations

The PURCHASER shall send a Letter of Credit for the GOODS to the SUPPLIER in the currency of [ ] within [ ] days of the invoice date. The SUPPLIER shall on receipt of the Letter of Credit ships the GOODS to the PURCHASER within [ ] days and provides the PURCHASER with shipment details.

DSS 40(2005) 7

Motivation and Objectives

e-Contract template and template variables facilitate negotiation by avoiding uncontrolled openness of issues

Address specific semantic requirement of contracts for supporting B2B applications

Reduce cost and improve effectiveness of negotiation(avoid combinatorial explosion of issues)

Development of an effective and efficient negotiation plan in a natural way

Rapid development and deployment of a flexible negotiation support system (NSS) through reuse in a e-Marketplace

A reference model for future research

DSS 40(2005) 8

Overall Meta-modeling Approach1. Based on business experience and requirements, contract

templates (with variables) are abstracted from previous contracts

2. Administrator models a contract template as an e-Contract template

3. Suitable e-Negotiation processes are designed based on our meta-model for e-Negotiation processes Such as bargaining, auctions and RFP Determine template variable relations (dependencies) These designed processes are most likely repeatable and

reusable for a business. NSS derive e-Negotiation plan

4. Designed e-Negotiation processes are executed with the support of a NSS (e.g., exchange bids via Web Services)

5. Each successful e-Negotiation will lead to an e-Contract

DSS 40(2005) 9

Meta-Model of an e-Contract Template

e-ContractTemplate

*1

1..* TemplateVariable

2..*

involves

*

refines

Obligation Permission Prohibition

*

*

depends

e-Contract Party

Contract Clause

references

DSS 40(2005) 10

A Sales e-Contract Template as an Instance of the Meta-model

insurance premium:Template Variable

freight:Template Variable

quantity:Template Variable

delivery date:Template Variable

return policy:Template Variable

unit price:Template Variable

deposit:Template Variable

dependsPurchaser:Party

Supplier:Party

involves involves

Sales:e-Contract Template

Shipping & Insurance:Contract Clause

Pricing:Contract Clause

Delivery:Contract Clause

Deposit Payment:Contract Clause

consists of

DSS 40(2005) 11

Conceptual Model of e-Negotiation and e-Contract

TemplateVariable

Party Negotiation

Accepted Alternative Value

Alternative Value

makes

1

1..*

1..*has

1..*

1..*

*

logrolls

1..*

2..*

involves

Issue1

1

*

*

Contract Clause

AuxiliaryVariable

precedes

Variable

Accepted Offer

maps to

PlanOffer

*

e-Contract Conceptual

Model

e-Negotiation Conceptual

Model

1

1..*

1 **

**

resolves1..*Task 1

consists of

specializes

DSS 40(2005) 12

A Meta-Model of e-Negotiation Process in UML Activity Diagram

select e-Contracttemplate

derive variablerelations

define issues and criteria

for eachcollectionof co-relatedissue

make offers &counter offers

validateconsistency

formulateplan

organize tasks

all issueshave beenmapped

[consistent][inconsistent]

creation ofe-Contract

[reach consensuson all variables]

[quit]

How we carry out e-Negotiation in general …

Pre-negotiationphase

Negotiationphase

DSS 40(2005) 13

System Architecture

Web / WAP Access

Web Service Server

XSLT Processor

Web Front-end

Web Services Programmatic

Access

Public UDDIRegistry

Enterprises

Internet

Criteria& Issues

EditorSearchEngine

e-ContractTemplate Editor

criteria,issues

e-Contracttemplatee-Negotiation

Data & Repository existing

e-Contracttemplate

e-Contract Template Management

VariableDependency

EditorTasks

Organizer

e-NegotiationProcess

Generator

e-Contract template, template variables variable

dependency

taskdependency

e-NegotiationMatchingSubsystem

e-ContractGenerator

e-NegotiationSession Manager

e-NegotiationExecuting Subsystem

e-Negotiation process

e-Contract

revised e-Contract template,

template variables

bids & offers

e-Negotiation process

End users on Multi-platformDevices

XSLT Stylesheets

e-Marketplace

DSS 40(2005) 14

Bargaining e-Negotiation Process (1)

Decide your offers Select E-contract Template / Define Issues and

Criteria business experience formally from its old sale contracts informally from quotations, purchase orders, invoices other correspondences with its customers typical contract template variables - product for sale,

price, quantity, delivery date, freight, payment terms, deposit, etc.

select e-Contracttemplate

derive variablerelations

define issues and criteria

for eachcollectionof co-relatedissue

make offers &counter offers

validateconsistency

formulateplan

organize tasks

all issueshave beenmapped

[consistent][inconsistent]

creation ofe-Contract

[reach consensuson all variables]

[quit]

DSS 40(2005) 15

Web Services for Bargaining - Offer

Service Name: placeNewBargainOffer Input: Item Description, Contract Template ID, Proposed

Template Variable Values, Additional Requirement List Response: Offer ID

Service Name: withdrawOffer Input: Offer ID Response: Confirmation

Service Name: searchOffer Input: Search Criteria Response: List of Offer ID and Descriptions

DSS 40(2005) 16

Web Services for Bargaining – Contract Template

Service Name: searchContractTemplate Input: Search Criteria Response: XML Contract Template Summaries

Service Name: downloadContractTemplate Input: Contract Template ID Response: XML Contract Template

Service Name: uploadContractTemplate Input: XML Contract Template Response: Contract Template ID

DSS 40(2005) 17

Bargaining e-Negotiation Process (2)

Formulate Plan and Make Offer and Counter Offer Based on offers and contract template Evaluation of several variables and of several values per

variable Need to take in account of the dependencies among the issues

Deciding the order of negotiation Trade-off evaluation of inter-dependent issues

Negotiate: Who pay freight

/ insurance

Negotiate: Unit price, Quantity,

Delivery date

Compute Freight

Check Insurance Premium

Negotiate: Return policy

Negotiate: Payment terms,

Deposit

DSS 40(2005) 18

Derivation of Negotiation Plan

leaseperiod

facilitiesprovision

basic rent

start date

additional fee1

mgt feeinclusion

additionalfee2

Landlord

Tenant

rent

deposit

numOfMonths

{facilities provision, lease period, basic rent}

{start date, additional fee1}{management fee inclusion, additional fee2}

{rent}{numOfMonths}

{deposit}

Partial ordering of variables (sets)

DSS 40(2005) 19

Web Services for Bargaining – Contract Template & Negotiation Plan

Service Name: downloadNegotiationPlan Input: Contract Template ID Response: XML Negotiation Plans in the Repository for

the specified contract template Service Name: uploadNegotiationPlan

Input: Contract Template ID, XML Negotiation Plan Response: Negotiation Plan ID

DSS 40(2005) 20

Make Offer and Counter Offer

Identify the issue(s) to be next negotiated in the

plan

Preparereservation

prices

Make offer /counter-offer

Evaluate offer /counter-offer[offer received]

[counter-offer received]

Notify counterparty

of failure

Quit?

Revise reservation

prices

[false]

[true]

[unacceptable prices]

Have all issues been negotiated?

[false] Successfulnegotiation

[true]

[acceptable prices]Notify counterpartyof acceptance

[acceptance received][failure received]

start a new negotiation cycle

[ready to make an offer]

DSS 40(2005) 21

Web Services for Bargaining – Make Offer and Counter Offer

Service Name: initNegotiationSession Input: Offer ID Responded to, Negotiation Plan ID,

Counteroffer Template Variable Values, Comments Response: Session ID

Service Name: updateNegotiationSession Input: User ID, Session ID, Counteroffer Template

Variable Values, Comments Response: Outstanding Variables Not Agreed or

Successful Negotiation Service Name: abortNegotiationSession

Input: Session ID Response: Confirmation

DSS 40(2005) 22

Auction Process (1)

Decide your offers Select E-contract Template / Define Issues and

Criteria price is usually the main and only issue for negotiation quantity - when a lot of same items are sold occasionally may involve multiple issues, using a

scoring rule (formula) auction service or marketplace provider

select e-Contracttemplate

derive variablerelations

define issues and criteria

for eachcollectionof co-relatedissue

make offers &counter offers

validateconsistency

formulateplan

organize tasks

all issueshave beenmapped

[consistent][inconsistent]

creation ofe-Contract

[reach consensuson all variables]

[quit]

DSS 40(2005) 23

Auction Process (2)

Formulate Plan (specify the rules and parameter for the bidding process)

Format – Dutch or English auction, maximum rounds of bidding (if any), deadline for last bid (if any), maximum time between each bid (if any), whether bids are sealed or open, etc.

Rules of bidding – starting price, (minimum) price increment for each bid (if any), reserve price (sealed or open), etc.

Administration – start time and location (physical location, or URL in the case of electronic auction) of the bidding, entry fee (if any), deposit (if any), penalty for bidder default (if any), who may bid, etc.

DSS 40(2005) 24

Auction Process (3)

Organize Task Important factor for the success of an action Potential bidders have to be identified Announcements and publicity to attract potential

bidders Carry out the planned admission procedures, such as

admitting and registering valid bidders, charging entry fee and deposit (if any)

DSS 40(2005) 25

Auction Process (4)

Make Offer and Counter Offer (i.e. the bidding race)

Compare with Reservation Price

Fail

Received Valid Bid

Time Out

Received Valid Bid

Time Out or Exceeding Max. round (if any)

Success

[Price too low] [Valid Final Price]

Wait for Next Bid

DSS 40(2005) 26

Web Services for Auctions that are different

Service Name: placeNewAuctionOffer Input: Item Description, Contract Template ID,

Proposed Template Variable Values, Additional Requirement List, Auction Parameters

Response: Offer ID Service Name: placeAuctionBid

Input: User ID, Session ID, Counteroffer Template Variable Values, Comments

Response: Valid | Invalid

Consider the following services could be the same as bargaining – withdrawOffer, seachOffer, those regarding templates, etc.

DSS 40(2005) 27

Request for Proposals (RFP) (1)

Select E-contract template / Define Issues and Criteria

customer has some requirements, but with a lot of open issues

rest of the contract template is to be constructed based on the information from potential suppliers

select e-Contracttemplate

derive variablerelations

define issues and criteria

for eachcollectionof co-relatedissue

make offers &counter offers

validateconsistency

formulateplan

organize tasks

all issueshave beenmapped

[consistent][inconsistent]

creation ofe-Contract

[reach consensuson all variables]

[quit]

DSS 40(2005) 28

Request for Proposals (RFP) (2)

Decide your offer Formulate Plan

Identifies which issues and criteria to be disclosed to RFP candidates

Identify specific candidates from directories, or identify some criteria for open advertisement

Determine various administration procedures, such as deadline, submission procedures, etc.

DSS 40(2005) 29

Request for Proposals (RFP) (2)

Organize Tasks Similar to auction…

Make Offers and Counter Offers Candidate proposals before the deadline Evaluates them according to the criteria previously defined May need further interaction with the candidates for

clarifications Shortlist / rank candidates, or directly select a successful

one By this time, the customer will have much more

understanding on the details of product/service requirements, their issues, and thus also in the potential contract

Can negotiate further issues and criteria by following the detail procedures of scenario 1 – bargaining

DSS 40(2005) 30

Web Services for RFP

Service Name: placeNewRFP Input: Item Description, Contract Template ID,

Proposed Template Variable Values, Additional Requirement List

Response: Offer ID Service Name: replyRFP

Input: OfferID, Contract Template ID, Proposed Template Variable Values, Additional Requirement List

Response: Accept | Reject | RevisedOfferID

DSS 40(2005) 31

Monitoring - Session Manager

DSS 40(2005) 32

NSS – Create Contract Template

System administrator create new contract template by entering different contract template variables

DSS 40(2005) 33

NSS - Grouping & Auxiliary Variables

System administrator then input grouping and auxiliary variables

DSS 40(2005) 34

NSS - Input Dependencies System administrator then input dependencies among groups / issues

DSS 40(2005) 35

Negotiation Based on Different Contract Templates GUI (1)

DSS 40(2005) 36

Negotiation Based on Different Contract Templates GUI (2)

DSS 40(2005) 37

UDDI Registry for the Prototype

Access URI

DSS 40(2005) 38

Sample Web Service

DSS 40(2005) 39

Conclusions An novel application of computer science techniques for a

management problem A novel approach of e-Negotiation of contracts based on e-

contract template A meta-model for e-Contract templates with the notion of

template variables and their dependencies A flexible meta-model for e-Negotiation processes Feasibility of designing various practical e-Negotiation

processes (viz., bargaining, auctions and request for proposals)

Derivation of effective and efficient negotiation plan Application of contemporary Web Services technologies

Facilitate rapid implementation for e-Marketplaces supporting the cross-organizational process

NSS supporting both human and computer access

DSS 40(2005) 40

Continuing and Future Work

Contract template dependencies (Cheung et al 2002) One-to-many contract negotiation Ranking of different types of issues and criteria for tradeoff issues Decision making to reach an optimal and stable state for

negotiators (Nash equilibrium) Ontology support for negotiation

D.K.W. Chiu, S.C. Cheung, P.C.K. Hung and H.F. Leung. Facilitating e-Negotiation Process with Semantic Web Technologies, HICSS38, Jan 2005.

E-marketplace D.K.W. Chiu, J.K.M. Poon, W.C. Lam, C.Y. Tse, W.H.T. Siu, W.S. Poon.

How Ontologies Can Help in an E-marketplace, ECIS 2005, to appear. Anonymity and Security

Real-life negotiation practice Integration of NSS / e-Marketplace with EIS Request for proposals (particularly with semantic support)