Developing e-Negotiation support with a meta-modeling approach in a Web services environment Dickson Chiu Senior Member, IEEE dicksonchiu@ieee.org Shing-Chi CHEUNG Patrick C.K. Hung Dept. of Computer Science Hong Kong University of Science & Technology scc@cs.ust.hk Sherina Y. Y. Chiu K. K. Chung Dept. of Computer Science & Engineering, Chinese University of Hong Kong

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

Introduction e-Contract Negotiation e-Negotiation 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

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

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

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.

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

Overall Meta-modeling Approach Based on business experience and requirements, contract templates (with variables) are abstracted from previous contracts Administrator models a contract template as an e-Contract template 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 Designed e-Negotiation processes are executed with the support of a NSS (e.g., exchange bids via Web Services) Each successful e-Negotiation will lead to an e-Contract

Meta-Model of an e-Contract Template involves e-Contract Party 2..* depends refines 1 * * e-Contract Template Contract Clause Template Variable 1..* * * references Obligation Permission Prohibition

A Sales e-Contract Template as an Instance of the Meta-model involves involves depends Purchaser :Party Supplier :Party consists of Sales :e-Contract Template Shipping & Insurance :Contract Clause Deposit Payment :Contract Clause Pricing :Contract Clause Delivery :Contract Clause freight :Template Variable deposit :Template Variable quantity :Template Variable delivery date :Template Variable insurance premium :Template Variable unit price :Template Variable return policy :Template Variable

Conceptual Model of e-Negotiation and e-Contract specializes consists of

A Meta-Model of e-Negotiation Process in UML Activity Diagram Pre-negotiation phase formulate plan define issues and criteria for each collection of co-related issue all issues have been mapped derive variable relations organize tasks select e-Contract template validate consistency [consistent] [inconsistent] make offers & counter offers [reach consensus on all variables] Negotiation phase creation of e-Contract How we carry out e-Negotiation in general … [quit]

System Architecture

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-Contract template derive variable relations define issues and criteria for each collection of co-related issue make offers & counter offers validate consistency formulate plan organize tasks all issues have been mapped [consistent] [inconsistent] creation of e-Contract [reach consensus on all variables] [quit]

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

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

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 Compute Freight Negotiate: Payment terms, Deposit Negotiate: Unit price, Quantity, Delivery date Negotiate: Who pay freight / insurance Negotiate: Return policy Check Insurance Premium

Derivation of Negotiation Plan {facilities provision, lease period, basic rent} {start date, additional fee1} {management fee inclusion, additional fee2} {numOfMonths} Landlord {rent} start date additional fee1 lease period facilities provision {deposit} basic rent Partial ordering of variables (sets) mgt fee inclusion rent deposit additional fee2 numOfMonths Tenant

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

Make Offer and Counter Offer [acceptance received] [failure received] Make offer / counter-offer Revise reservation prices [ready to make an offer] Identify the issue(s) to be next negotiated in the plan Prepare reservation prices [counter-offer received] [false] Quit? Evaluate offer / counter-offer [unacceptable prices] [offer received] Notify counterparty of acceptance [acceptable prices] start a new negotiation cycle [true] Notify counterparty of failure Have all issues been negotiated? Successful negotiation [false] [true]

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

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-Contract template derive variable relations define issues and criteria for each collection of co-related issue make offers & counter offers validate consistency formulate plan organize tasks all issues have been mapped [consistent] [inconsistent] creation of e-Contract [reach consensus on all variables] [quit]

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.

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)

Compare with Reservation Price Auction Process (4) Make Offer and Counter Offer (i.e. the bidding race) Received Valid Bid Wait for Next Bid Compare with Reservation Price Time Out or Exceeding Max. round (if any) Received Valid Bid [Valid Final Price] [Price too low] Time Out Success Fail

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.

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-Contract template derive variable relations define issues and criteria for each collection of co-related issue make offers & counter offers validate consistency formulate plan organize tasks all issues have been mapped [consistent] [inconsistent] creation of e-Contract [reach consensus on all variables] [quit]

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.

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

Web Services for RFP Service Name: placeNewRFP Service Name: replyRFP 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

Monitoring - Session Manager

NSS – Create Contract Template System administrator create new contract template by entering different contract template variables

NSS - Grouping & Auxiliary Variables System administrator then input grouping and auxiliary variables

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

Negotiation Based on Different Contract Templates GUI (1)

Negotiation Based on Different Contract Templates GUI (2)

UDDI Registry for the Prototype Access URI

Sample Web Service

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

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)