Risk Analysis in B2B E-Business Relationships: A Model for Continuous Monitoring and Assurance in Partnering Relationships

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Risk Analysis in B2B E-Business Relationships A
Model for Continuous Monitoring and Assurance in
Partnering Relationships

• Vicky Arnold (UConn)
• Clark Hampton (UConn)
• Deepak Khazanchi (Nebraska-Omaha)
• Steve G. Sutton (UConn)

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B2B E-Commerce Market

• Projected between 4.3 to 7 Trillion by 2005
• Dynamics Changing in Business Relationships
• Business Partnering
• Market Exchanges
• Private
• Public
• Traditional EDI (Estimated 3.8 Billion)

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E-Business Facilitated Change in Organizational
Focus

• Emphasizing Core Competencies
• Advanced Production Planning and Scheduling
  Systems
• Co-Dependence on Upstream / Downstream Supply
  Chain Partners
• Just-in-Time Inventories with Minimal Safety
  Stocks
• Required Use of Electronic Linkages

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Business Partner Relationships

• Cooperative and Extensive Electronic Linkages
• Forced Implementation of Electronic Linkages
• Influenced by Power Balance
• Varying Levels of Technology Integration into
  Internal Business Processes

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Associated Business Risk Issues

• Process Alignment w/ Technology (IFAC)
• Poor Integration of B2B Capabilities With
  Internal Processes Limited Operations Efficiency
  Improvements (Khazanchi and Sutton 2001)
• Match Between IS Strategy and Business Strategy
  (Sabharawal Chan 2001)
• Coercive Power Forcing B2B Integration Leads to
  Vulnerability and Becomes a Constraint on
  Relationship (Hart Saunders 1997)
• Power Negatively Related to Quantity and
  Diversity of B2B Transaction Usage (Hart
  Saunders 1998)

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Assessing Business Risk in Advanced IT
Environments
B2B ASSURANCE SERVICES
D. Khazanchi S.G. Sutton (2001) Assurance
Services for Business-to-Business Electronic
Commerce A Frameworkand Implications Journal
of the Association for Information Systems
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Application-User Level

• Understanding potential benefits of E-business
• Current business environment and internal
  processes
• Organizational readiness for adoption
• End-users reliance on paper-based transactions
• Overcoming the impersonal nature of e-business
• Pilot tests of transactions for reliability
• Adequacy of educational and training programs in
  preparing organizations staff to handle above

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Business Level

• Appropriate changes made to traditional business
  processes and controls to incorporate new methods
  of conducting business
• Appropriateness of e-business for company
• Are direct/indirect e-business benefits being
  realized?
• Legal issues (electronic orders, signatures,
  legal trading partner agreements)
• Managing data and transmission security and
  auditability
• Reassessing workflow procedures for efficiency
  improvements
• Adjustments in Internal Control systems to assure
  privacy of data, reliability of systems and
  secure electronic transmission

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Technical Level

• Assuring necessary technical elements are in
  place
• Integration of internal and external applications
  is feasible given financial and technological
  resources
• Implementation of multiple trading partners
• Mapping customer/supplier data for direct use in
  internal applications
• Business transaction processing works
• Appropriate means of communications and vendors
  for transaction integrity and completeness
  (includes ISP/ASP assessment)
• Data integrity and control
• Integration Issues

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Assessing Business Risk in Advanced IT
Environments (cont)
B2B ASSURANCE SERVICESApplication-User
LevelBusiness LevelTechnical Level
EDI Adoption
EDI Outcomes(Benefits)
EDI Integration
D. Khazanchi S.G. Sutton (2001) Assurance
Services for Business-to-Business Electronic
Commerce A Frameworkand Implications Journal
of the Association for Information Systems
11
Research Method

• Structured Group Process for Identifying Key
  Business Risks in Each Level (Sutton 1991 Sutton
  Lampe 1994 Havelka et al. 1998)
• Discuss and Define B2B Organizational Context
• Structured Brainstorming of Risks by Level
• Round Robin Listing of Risk Factors
• Reflection Upon and Addition of New Risk Factors
• Consensus on Risk Definitions
• Individual Identification of Key Risk Factors
  Ranking

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Study Participants

• IT Audit Specialists, Security Specialists and
  E-Commerce Development Leaders
• ConAgra
• Mutual of Omaha
• Union Pacific
• External IT Audit (Partner/Mgr), CIO Staff
• PricewaterhouseCoopers
• E-B Consultants (Team Leaders in Business
  Applications, Infrastructure, Strategy)
• Rising Tide Consulting

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Results

• KPIs for Technical Level Risks
• KPIs for Application/User Level Risks
• KPIs for Business Level Risks

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Continuous Monitoring Assurance of E-Business
Relationships
B2B ASSURANCE SERVICES
Periodic
Continuous
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