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Collaborative working environments for
enterprise incubation – The Sekhukhune
Rural Living Lab
Christian MERZ1, Rudi DE LOUW2, Nina ULLRICH1
1SAP Research, CEC Karlsruhe, Vincenz-Priessnitz-Strasse 1, Karlsruhe, 76131, Germany
Tel: +49 721 69020, Fax: +49 721 696816, Email:
2SAP Research, CEC Pretoria, Persequor TechnoPark, Pro Park Building 3, 29 de
Havilland Crescent, Scientia, Pretoria 0001, South Africa
Tel: +27 12 349-3100, Fax: +27 12 349-3131, Email: email@example.com
In rural South Africa, due to their remoteness small and micro enterprises
face difficult business conditions and are hampered by developmental impediments.
Following the European Network of Living Labs (ENoLL) initiative a Rural Living
Lab (RLL) is set up in the economically active region of Sekhukhune, Mpumalanga.
The RLL introduces so called Infopreneurs that offer extended collaborative service
bundles to the rural enterprises that helps them to reduce high transaction and
logistics cost, to upscale supply chain volumes, to release product related market
constraints and to share knowledge and know-how.
In line with the principles of Living Labs a user centred co-design process isfollowed that provides a Collaborative Working Environment based on a ServiceOriented Architecture (SOA) approach. The technical advantages of a decoupled,multi tiered SOA approach are used to realize measurable impact on local businessesin terms of the improvement of efficiency, competitiveness, outreach to firsteconomies, employment and human capacity.
(Rural) Living Lab, SMME (Small Medium and Micro Enterprises)
incubation, Collaboration, Collaborative Working Environment, SOA (Service
Oriented Architecture), Rural Development, C@R (Collaboration @ Rural)
1. Introduction and Objectives
In South Africa, Small Medium and Micro Enterprises (SMMEs) are flourishing as a resultof modern financial systems and governmental policies supporting entrepreneurship. Theyform a key element in the government's strategy for employment creation and incomegeneration. Almost 90% of active entities registered at CIPRO (Companies and IntellectualProperty Registration Office) are either micro or very small businesses. SMMEs areregarded as important growth engines for economies, especially in emerging economies likeSouth Africa, where they provide about 54% of total jobs (see figure 1). Despite thissignificant proportion, SMMEs account only for 24% of the South African gross domesticproduct (GDP) . Especially in rural areas, SMMEs face difficult business conditions andare hampered by developmental impediments that are mainly related to the absence ofadequate infrastructures, the disconnection to economically strong regions and markets,difficulties to find good professionals, the non awareness of business opportunities and themissing managerial know-how about financing a business, asset management, accountingor market research .
Figure 1: Contribution to Gross Domestic Production and employment with regards to the size of enterprises
In order to overcome these impediments and to promote economic development in rural
areas, the project Collaboration@Rural (C@R) - an Integrated Project funded by the ISTprogramme of the European Commission's 6th Framework Program  - fosters theincubation of SMMEs and their collaboration in rural areas. The project follows the LivingLab approach, a European initiative [4, 5], and applies Collaborative WorkingEnvironments (CWEs) as a technological response to the barriers preventing ruraldevelopment. The South African Living Lab boosting SMME incubation is located in theeconomically active but rural region of Sekhukhune. It introduces Infopreneurs , a kindof e-entrepreneur that act as service agents for SMMEs and apply the collaborativeincubation mechanisms to the SMMEs. The objectives of the South African Living Lab are:
Reaching a state of sustainable trusted innovation in a user centred co-design processthat is mainly driven by the Infopreneurs as the major end-users.
Applying the main principles of the concept of Living Labs [4, 5] taking into accountthe local, African context to support seamless collaboration amongst variousstakeholders to enable incubation of SMMEs.
Boosting the collaboration amongst SMMEs via incubation mechanism.
Introducing an extended collaborative service bundle that will offer amongst othersmentoring support, business management tools and business development services. Themain impact of this service bundle is to reduce high transaction and logistics cost, toupscale supply chain volumes, to release product related market constraints and to shareknowledge and know-how.
Enhancing socio-economic development for the rural communityLinking 1st and 2nd economies, e.g. mining industry and SMMEs via innovativebusiness models to ensure long-term economic viability of incubation mechanism.
In the Sekhukhune area, the C@R project identified several service-oriented,collaborative scenarios for SMME incubation. Four of them are considered as mostimportant, namely [7, 8]:
Collaborative Procurement & Logistics (including healthcare procurement)Collaborative Management & e-Commerce (including marketing sub-scenarios)Collaborative Knowledge Sharing, Mentoring & Support (including linking 1st and 2ndeconomies e.g. via Tender and Contract Services sub-scenarios)Collaborative Spatial Analysis Support Services
2. Collaboration@Rural - Research Approach
In order to realize sustainable trusted innovation in a user centred co-design process, themethodology of so called Living Labs is applied. The Living Lab concept was developed
by Professor William Mitchell (MIT Media Lab and School of Architecture). According toProfessor Mitchell, user-centric research methods can be used in real life environment toidentify and build prototypes, and to evaluate multiple solutions which are needed more andmore in constantly changing living environments.
In Living Lab contexts, users and developers are co-creating innovations, and users are
working and living with these services and applications in their daily life settings. Insteadof bringing people to the laboratory, the Living Labs concept aims to ’bring the laboratoryto the people’. Three principles of Living Labs are implemented in the following way at theLiving Lab site in South Africa:
2.1 Living Labs as context for human-centric innovation
Living Labs are implemented as context for human-centric innovation for knowledgesociety services, businesses and technologies in rural settings. That means involving theuser actively in the prototyping, development, testing and validation of the requiredproducts and services. In our interpretation not only the directly concerned end-users areinvolved from the early stage, but also the other stakeholders in the regional value networkaffected by the Living Labs. For example employees of the local mining sector have beeninvolved in the use case design spanning from higher management to operativeadministrative staff.
On a next level of end user involvement ‘Participatory design’ and ‘Design in use’
sessions are scheduled making use of a support environment called ‘Studio’ . Thesesessions have been executed on expert level to develop the use cases. In a next step alsoactual end-users (mainly Infopreneurs) that are currently trained will be involved. Most ofthe SMMEs in the Sekhukhune area do not have strong technical skills to properlydocument their needs and wishes, and to ensure their requirements are properly understood.
‘Participatory design’ and ‘Design in use’ methodologies help here. The users are notmerely consulted, but collaborating in the development of the system. An iterative process,with rapid design cycles, is used. As such it is similar in some aspects to the ‘agile’development methodologies [10, 11].
‘Design in use’ addresses the gap between the expected and actual requirements for
technological support. In the ’Design in use’ methodology, user’s behaviour working in realsettings is used to re-configure and develop the system. This demands a change of culture indesigners and developers to accept users as co-designers, and changes in application as apart of the development process. We have successfully applied the ‘Design in use’ approachwith novice computer users on the development of in service teachers in rural areas inSouth Africa .
Living Labs is a research methodology for innovation that challenges the whole researchand innovation process in real-life conditions by human, social, cultural, organizational andinstitutional aspects, and has an impact on sustainable service, business and technologydevelopment. Thus, we are not talking about just user-centric research or usability research,but about a real human-centric approach. One of the crucial cornerstones is to identify apartnership that is able to cover the necessary skills to do research in a holistic approachand to run the Living Lab. Our partnership for the Sekhukhune Living Lab comprises thefollowing relevant public, private and citizen stakeholders.
Public: Council for Scientific & Industrial Research, Meraka InstitutePrivate: SAP Research, the Infopreneurs, local SMMEs, 1st economy players (e.g.
mining and retail sector)
Citizen: MPCCs (Multi Purpose Community Centres), rural community members.
2.3 Boosting service, technology and business development
Rural living is characterized by widely-distributed activities of work and life. Successfullyintegrating these activities and multiple roles requires that solutions design is driven byhuman-centric innovation principles, adapted to the rural requirements. When this happens,RLLs should boost in an all-inclusive way the new service, business and technologydevelopment in rural and remote areas, in co-creative cooperation of local people, publicagencies and SMMEs. RLLs should also foster the creation of new economic activities,including the creation of new enterprises and new jobs. Our approach very much focuses onbusiness related requirements identification with no predefinition of technology setup, i.e. atop-down propagation of business requirements. As these requirements are constantlychanging, change management support is required on a continuous base.
This implicates the technology setup in a way that it has to support the collaborative
nature of the whole stakeholder value chain. Information and Communication Technologieshave to provide Collaborative Working Environments that enables seamless crossorganizational business processes. One of the key aspects is to combine both informal (e.g.
Blogs, WIKIs, forums, MxIT, Messenger, SMSs) and formal collaboration (e.g. workflowdriven, cross organizational ERP (Enterprise Resource Planning) like collaborativeapplications).
3. Technology Description
The C@R project creates Collaborative Working Environments suitable for ruralenvironment activities that are based on an open Service Oriented Architecture (SOA)design approach. This approach has several advantages for the purposes of the SekhukhuneLiving Lab that will be discussed in detail in the following sections.
Service Orientation is a new computing paradigm that will enable seamless interoperabilityamongst heterogeneous platforms once it adopts the principles of open standards (e.g. WebServices).
A literature study on SOA showed that SOA means different things to differentcompanies and industry sectors. The hardware vendors closely associate their version ofSOA with the Operating System and the physical hardware. The application vendors ratherassociate it with their application offerings and regard the SOA version of the hardwarevendors as too low-level. System architecture departments have yet another view, and thebusiness think of SOA-based services as business processes. As there is no agreement onthe context, the definitions of SOA differ widely. We look at the definition of SOA from the business processes and associated applications point of view.
There are quite a few benefits of this SOA-based approach. Applications tend to be
written around a gathering of similar data. For example, we gather all customer datatogether in a database, write an application to manipulate that customer data, and call itCustomer Relationship Management (CRM). The problem is that this data is now containedin an application ’silo’, and other systems now have to integrate to or interface with such asystem to access this customer data. The costs of these integration and interfacing issuescan contribute significantly to project costs. Changing business needs or environmentschanges the business rules, and adapting is difficult. These systems tend to be like wetcement when implemented originally, but they become like reinforced concrete when in usefor a while. This approach might be fine for big enterprises that have a fixed line of
business e.g. producing automobiles, but is hardly applicable to smaller organizations thatdepend on their agility for survival.
Using a SOA-based approach, this quickly defines the technology and the architecture
that should be used. Standard web services using the basic WS-*, WSDL, UDDI, SOAPand XML, together with BPEL and BPM, can be expanded to become so called EnterpriseServices. The term E-SOA (for Enterprise SOA) is then used. Orchestration of ERPfunctionality into new collaborative cross-organizational business processes now becomeseasy and provides business agility. A SOA-based development approach ensures:
Re-usability of code via open standardsParts of an Enterprise Service can be outsourced, ensuring that businesses can keepfocusing on their core processes.
Services can be interchanged and new services can be added or developed to addressnew business requirements in a fast an efficient manner. Because of the flexibility,services can be used in new and unexpected ways.
3.2 SOA enabling multiple, decoupled tiers
Because of the SOA-based approach, a multi-tiered architecture is used. The design of
the Open Service Oriented Architecture (OSOA) used in the Collaboration @Rural (C@R)project  has three layers (see figure 2).
Figure 2: Collaborative Core Services (CCS), Software Collaborative Tools (SCT) and Rural Living Lab
Collaborative Core Services (CCS) are lower-level services that encapsulate various
service components e.g. sending an SMS via the cellular network. These are then used bythe higher level, interoperable, reusable and independent Software Collaborative Tools(SCT) where required, e.g. an order was entered into the system, an order number is sentper SMS back to the customer. We use various services in our Collaborative Procurementscenario, for example a service to handle order taking from the SMMEs, another service tocombine orders from these SMMEs and combine the order items for various vendors (theactual Collaborative Procurement), and yet another service to place these 'collaborative'orders at the vendors. These services based SCTs are then orchestrated into meaningfulapplications serving the needs of RLLs, e.g. providing the various scenarios as discussed inthe following section.
3.3 The SOA–based approach assist with de-coupled intelligent UIs and Simplification
SOA, from its very definition as back-end service calls that do not require any UI (becauseservices can also be called from other services or systems), requires a complete separationof the Business Logic and the UI (User Interface). Traditional software architecture has atight integration between the user screens and the various back-end calls with strictdependencies.
The SOA-based approach has a decoupled UI with loosely-coupled dependencies which
can lead to simplified and intelligent UIs, e.g. instead of the user having to fill in 100 fieldson a screen. By using business rules and company facts that are constants (thus alsocreating a more ’intelligent’ UI), we can have a simplified user entry screen that onlyrequires a screen with 20 fields (see figure 3). With the ubiquitous cellular networks andband-width problems in emerging economies this is a blessing, as the UI can be designedwith mobile technologies and low bandwidth options in mind.
Figure 3: Comparison of the traditional way of UI coding, the newer SOA-based decoupled UI, and the SOA-
based approach with additional simplification services
By addressing the simplification of the user screen, we also managed to address some of
the infrastructure concerns in the African context e.g. the cost of bandwidth, using mobiletechnologies in areas that lack other more traditional infrastructure, as well as useracceptance and training.
Another principle learned from the above is that in order to simplify the front-end for
the users, the back-end functionality gets significantly more complex, and new paradigmsare needed to handle such complexity.
Re-use of business functionality assets in heterogeneous system environments e.g. using
SAP and Meraka’s InTouchTM  can also be addressed by new user interface layers.
3.4 The SOA-based approach combined with a multi-tiered architecture assists the
As illustrated in Figure 2, the C@R project  uses a three-tiered architecture. This is veryeffective in managing such a large project, as well as ensuring a clear division of work forthe various parties involved. Business requirements are gathered by the RLL participants,the technical infrastructure services are developed by the CCSs, etc.
3.5 The SOA-based approach assists in abstraction
In order to simplify the front-end for users, the back-end functionality gets significantlymore complex, and new paradigms are needed to handle this complexity. The SOA-basedapproach, together with agile development methodologies, are used in building multipleabstraction layers, all of which assist in dealing with the added back-end complexity.
4. Current Status and Lessons Learned
The project started September 2006 and has concluded a systematic analysis of the policyand business context of the Living Labs including the Sekhukhune area. This analysisrevealed the key characteristics of the collaborative innovation issues and the keyconditions that should be met to result into successful rural innovation systems. Thefollowing step was to enter the process of concrete innovations based on the approach ofearly stakeholder involvement. Concentrating on the collaborative procurement scenario forthe RLL in Sekhukhune two rapid prototyping cycles have been concluded consideringfeedback from different stakeholders. The existing prototype is currently presented to theInfopreneurs to deal with Participatory Design. Similar approaches will be undertaken forthe other scenarios in an incremental fashion.
In a next step a cross-case analysis is carried out to identify synergies andcommonalities amongst all Living Lab instantiations of the C@R project in Europe andSouth Africa. This analysis also serves to derive a library of services commonly used by theLiving Lab applications.
In parallel the deployment of the necessary infrastructure in the Living Lab premises (or
elsewhere) takes place to instantiate the CCSs and SCTs that will be used for the furtherdevelopment of applications of the Living Labs and to test these components separately.
Despite of the early stage of the project there are important lessons learned including
Develop a clear communication strategy to avoid different interpretations of objectivesof the projectGet the support and buy in of project stakeholders on higher management levelPut much effort on change managementEnable dedication of human resources and communicate clear responsibilitiesAvoid copying best practices from industrialized environments, e.g. taking into accounttraditional versus institutional leadershipEnhance skill levels of stakeholders right from the beginning
Cope with basic infrastructure impediments (traffic, electricity, connectivity etc.), e.g.
by providing backup solutionsCommunication backbones are not providing required levels of Quality of Service (i.e.
connectivity and bandwidth). The SOA-based approach makes good use of the inferiorinfrastructure.
Reduce WAN traffic to the fullest extend possible (rich media content, caching,acceleration etc.)Make use of existing infrastructure, e.g. on community level (e.g. MPCC)
Simplify and contextualize Human Computer Interaction (supported by SOA approachas UIs are decoupled)Simplify whole software lifecycle management including maintenance andadministrationProvide professional hosting services and supportThe SOA-based approach combined with a multi-tiered architecture assists thedevelopment of large applications
A first fully operational Living Lab based on an integrated platform providing a wide
range of defined requirements is expected to be available by early 2008. Because of theiterative approach we are however already starting to reap some of the results in the earlierphases of the project.
There are indications that synergies can be drawn from the three other instantiations ofRural Enterprise incubator Living Labs in Frascati (Italy), Turku (Finland) and Soria(Spain) as part of the C@R project  that enables networked collaboration amongstEuropean and African Living Labs.
5. Business Benefits
The set up of a Living Lab introducing Infopreneurs comprising the implementation oftailored collaborative working environments addresses the problems of rural SMMEs at thecore. Whilst often ICT for development projects focus on the introduction of newtechnologies serving the basic infrastructure needs (e.g. connectivity) our approach is muchmore business application driven. Applying the principles of Living Labs the solution is aresult of human centric development bridging the gap between real world needs andtechnical inventions creating sustainable innovation. The technical innovation of SOAbased, flexible, open and dynamic architectures is a result of clearly identified businessneeds.
It is envisioned that the business model of Infopreneurs increases effective collaboration
and productivity amongst 1st and 2nd economy players. It is designed to be fully sustainableand replicable without external funding or sponsoring. Furthermore, it is driven by theprivate sector without requiring major political or public interventions.
Our current research promises that the growth in e.g. the mining sector can be much
more propagated to local SMMEs using the incubation models of the Infopreneur LivingLab than predicted. Clusters of SMMEs and networks between 1st and 2nd economy playersform an innovative ecosystem that increases the efficiency and productivity of allparticipants. The strengthening of local SMMEs have a much broader impact going beyondthe borders of communities. The model indicates amongst mining industry global playersthat there are measurable benefits (i.e. competitiveness increase) on a global scale.
In the province of choice (Mpumalanga) the proportion of informal businesses to the
provincial population is comparably high . The Infopreneur model has the potential toscale informal businesses up to the level of formality which enhances even more the alreadyrelatively high importance of the SMME sector for local employment.
Finally there is an added value in the exchange of knowledge amongst SMMEs in
virtual communities provided by the C@R collaborative platform. This will measurablyenhance the knowledge, skills and capabilities of SMMEs e.g. related to computer literacy.
Experience in comparable projects  with non computer literate end users has shown thatnovice users are rapidly adopting nowadays human computer interaction paradigms of e.g.
the World Wide Web.
In summary the following business benefits are part of the Living Lab introducing
Real world need solution for Infopreneurs acting as start up knowledge service basedmicro enterprisesEfficient collaboration amongst SMME networks and clusters with 1st economy playersboosting efficiency and competitiveness of small, micro and large economic playersUpscale of informal businessesEmployment creationHuman capacity development
The key message of this paper is that a Rural Living Lab model is not just a product andservice concept, but includes the various dimensions of partnership establishment andoperation across the different Living Labs development stages. The South African LivingLab with its SMME incubation has the character of partnership design. The paper identifiesthe different, mainly technological factors determining the specific characteristics of suchpartnership designs.
To overcome rural barriers to entrepreneurship, a collaborative-based SMMEs incubator
in rural areas is created as a facility designed to encourage and, mainly, to facilitateentrepreneurship in rural and remote regions, and to minimize obstacles to SMME businessformation and growth, by means of sharing the collaborative services and tools integrated inthe C@R platform with the interested entrepreneurs.
Even though the project is at an early stage, various lessons have already been learned
regarding infrastructure, system solution design and stakeholders. It is highly recommendedto make sure that these lessons learned are taken into account when developing futureapplications and to adapt to the rural requirements.
However, it is too early to analyse whether the SMME incubator’s objectives have been
met. By involving stakeholders and end-users in developing prototypes for their daily use,we got indications that the proposed concept is the answer for some of Africa’s socio-economic challenges. The next step is to develop and apply a framework for impactassessment so that results of the SMME incubation will be measurable and benchmarkingwith other Living Labs focusing on SMME incubation in rural areas will be feasible.
Furthermore, the mutual benefits of this cross EU-African collaborative research on theusage of networked Living Labs will be explored, e.g. to exchange best practices, includingregulation and socio-economic issues as technological drivers or to do large scale validationof technologies or networked applications in a global context. On the basis of a comparativeLiving Labs’ analysis, it is planned to identify the situational parameters which requiresituation-dependent strategies resulting in open and collaborative business innovationmodels.
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Collaborative working environments for enterprise incubation – The Sekhukhune Rural Living Lab Christian MERZ1, Rudi DE LOUW2, Nina ULLRICH11 SAP Research, CEC Karlsruhe, Vincenz-Priessnitz-Strasse 1, Karlsruhe, 76131, Germany Tel: +49 721 69020, Fax: +49 721 696816, Email: firstname.lastname@example.orgemail@example.com 2 SAP Research, CEC Pretoria, Persequor TechnoPark, Pro Park Bui
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