4 Towards a Structured Market Engineering
4.3 A Design Process Model for Market Engineering
4.3.3 Stage 2 – Design and Implementation
The second stage – headlined as design and implementation – comprises the actual design process. It commences when the design problem has been sufficiently specified. The design problem thereby corresponds to the market-engineering problem stated in chapter 4.1.3.1.
Accordingly, the specification of the problem consists of the properties of the electronic mar-ket service, the desired properties and the socio-economic environment reflecting the alloca-tion problem.
The aim of stage two is twofold. Firstly, the conceptual design of an appropriate electronic market on the paper, and, secondly, its transformation into a running software system. As such, stage two is the core stage of market engineering.
4.3.3.1 Preliminary Considerations
As the name “design and implementation” already reveals, is this stage definitely a com-pound task. Before the phases of this comcom-pound task are depicted, a brief recapitulation of service development will be given. This recapitulation is deemed helpful, as service develop-ment already incorporates the intuition of engineering design but in more concrete terms.
Chapter 3.2.2.2 states that offering services means to offer the possibility of conducting a ser-vice. As such, it is necessary to establish the right service prerequisites. The right prerequi-sites comprise three components (1) the service concept, (2) the service procedure, and (3) the service system.
The service concept denotes in abstract terms the mission of the service. To be attractive for potential customers, the service concept accommodates to the customers needs and demands.
As the service concept is of abstract nature, it must be translated into a (less abstract) process view. The service procedure thereby provides this process view conceptually. The last com-ponent of the service prerequisites is given by the service system, which is the infrastructure that conducts the service according to the service procedure. The service system accordingly represents those entities that conduct the service.
Figure 21 summarizes the prerequisites as a triangle, where the degree of abstraction increases from the basis to the tip. Accordingly, the service concept is at the tip of the triangle, whereas the service system is at the bottom. Principally, any service development process starts with the generation of the idea (step 2 of the service development process depicted in Figure 18).
The idea addresses customer needs. As with any idea, they are of abstract nature. Subse-quently, the idea is specified as abstract concept, which is later on refined into a more con-crete model (step 4). Eventually the concon-crete model is finally even implemented (step 8 & 9).
Prerequisites for a service
Service Concept
Service Procedure
Service System
CONCEPTUAL DESIGN
EMBODIMENT DESIGN
DETAIL DESIGN &
IMPLEMENTATION Design Steps
Degree of Abstraction
Figure 21: Design and Implementation Stage (cf. Figure 19)
The market engineering process (and engineering design process, respectively) exactly fol-lows this intuition, as Figure 21 demonstrates. In the conceptual design phase the concept of the service is elaborated. Embodiment design refines the concept to the service procedure, which is substantiated in the detail design. Based upon the specification of the detail design the implementation as a last phase of this stage can be performed. As in the engineering de-sign process, iterations are principally possible. Furthermore, it should be noted that the use of prototypes is possible at any time of the design process – as such they are left out in Figure 21.
The phases conceptual and embodiment design are only briefly covered, as a more thorough description is given in chapter 5.
4.3.3.2 Conceptual Design
The conceptual design step hallmarks the peculiarity that distinguishes the market engineering from the service development process. Essentially the design problem is abstracted in a way that the design object is abstracted to its functions. As the design object is the electronic mar-ket service it has the function to allocate resources, provide the customers with information, enforce the allocation, sue infringements and so on. The recourse to abstraction simply means
“ignoring what is particular or incidental and emphasizing what is general and essential”
(Pahl and Beitz 1984, 58).
Those functions are further divided into sub-functions reducing the overall complexity of the design problem. Then, the sub-functions are distinguished into important (i.e. main) or less important (i.e. auxiliary) functions. Important functions are tackled within the conceptual de-sign phase, whereas the dede-sign of auxiliary functions is postponed to the embodiment phase.
The conceptual design itself follows the intuition of the methodology suggested by Pahl and Beitz (cf. chapter 5). Accordingly, effects in combination with the form design that cause
them fulfill functions. By combining effects and their form designs the desired overall func-tionality is achieved.
Transferred to market engineering, the functions are also solved by means of social effects (Oren 2001). Different than in engineering design, the entities that cause these effects are not form design, but institutional rules and/or complementary (information) services. For exam-ple, the market firm may have identified the function “allocate resources efficiently”, then it is searched for possible social effects that attain this function. The corresponding trading rules that incite these effects can ideally work as solutions. By doing so, the market firm can gener-ate alternative abstract descriptions of the institutional rules. The abstract descriptions will be combined into concepts that contain an overall abstract description of the institutional rules.
The abstract descriptions are furthermore supplemented by a calculation of profitability pre-dicting the chances of the envisioned service in the competition. Finally, it is decided upon which concept – including abstract descriptions of the service enriched by profitability esti-mates – is further adopted.
4.3.3.3 Embodiment Design
The concepts produced along the conceptual design phase are of abstract nature. For example, concepts define the trading rules in terms of the offer types available to the agents or the com-putation of offers into allocations and prices, but they do not exactly specify the flow of offers in detail. As such, different trading protocols can be used to implement the same conceptual representation of the trading rules. Embodiment design is thus primarily concerned with de-veloping a layout that refines the concept into (semi-) formal descriptions of the institutional rules. The layout is thereby intended to allow an implementation, but is itself free of imple-mentation details. Beside the layout development, embodiment design is also concerned with the search for conceptual solutions for the auxiliary functions.
4.3.3.4 Detail Design and Implementation
The detail design phase starts out with the layout, which describes the central aspects of the system, but is still at a level that is not implementable. Detail design further refines the layout into a fully-fledged system model that is subsequently implemented. Apparently, this phase accounts for the software engineering effort in market engineering.
From the software development point of view, the precedent design phases of the market en-gineering process can be subsumed under the term requirement analysis. Different than the traditional sequence of interviews, or the use of Joint Application Development (JAD) meet-ings conducted by professional modelers, the market engineering process provides the design-ers with a systematic approach to collect design information from the experts. In other words, the precedent design phases of the market design process converts the activities of gathering, figuring out, and communicating what to build (Holtzblatt and Beyer 1995) into a closed dis-cursive approach.165 By doing so, the market engineering process supports the arguably most important step in the requirement analysis (Dennis, Hayes et al. 1999).
Once the market firm has a clear idea how the electronic market service will look like (by means of the layout), an ordinary software development process can be started. State-of-the art approaches like the V-model (Tansley and Hayball 1993; Sommerville 2001) supple-mented by methods such as the FUSION (Coleman, Arnold et al. 1994) or Coad/Yourdon (Coad and Yourdon 1991a; Coad and Yourdon 1991b) and tools such as UML (Odell and
165 The market engineering process thereby follows the four phases of the requirement analysis, conceptual design, logical design, validation and formal specification proposed by Zmud (Zmud 1983; Byrd, Cos-sick et al. 1992).
Fowler 1999; Rumbaugh, Jacobson et al. 1999) are available such that the software engineer-ing process will not further be elaborated.
Detail design is, however, more than software engineering – detail design phase is also cerned with the concretization of the business rules. Up to this point, only the key data con-cerning the business rules such as target costs and price ranges for the electronic market ser-vice exist. Once the properties of the electronic market serser-vices are clarified, reliable pricing schemes can be developed.
The end of the detail design and implementation is reached, when the electronic market ser-vice is fully implemented.