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

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

3. 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

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

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, (*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 (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

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.

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

8. 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

9. 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

10. 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

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

12. 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]

13. System Architecture

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-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]

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

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

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

18. 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

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

20. 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]

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

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-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]

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.

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)

25. 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

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.

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-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]

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.

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

30. 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

31. Monitoring - Session Manager

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

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

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

35. Negotiation Based on Different Contract Templates GUI (1)

36. Negotiation Based on Different Contract Templates GUI (2)

37. UDDI Registry for the Prototype
Access URI

38. Sample Web Service

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

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)