**11. The knowledge-based enterprise framework**

In the knowledge modelling field the process-oriented view is recognized as a success factor [18]. In the organizational management practice widely recognized the Porter's (VCM) represents a process-oriented view to business. The Porter's Value Chain Model (VCM) here is used as a basis for the enterprise knowledge modelling (Gudas, Brundzaite, 2006b).

The control view-based approach (Gudas et al., 2005) is focused on the informational interactions between two kinds of VCM activities -primary and support activities. The different nature of these two kinds of activities is revealed: support activities are information processing activities and are referred to as *Business Process Management Functions*; primary activities typically are material processing (technological) and are named *Processes*.

The interrelated elements *Function* and *Process* form the construct *Business Process* (B). The interaction of the elements *Process* and *Function* is formally assumed as a *Control Process* with the *Feedback Loop*, i.e. *Elementary Management Cycle* (*EMCp*). As the *Function* and *Process*  interaction is already discussed in detail in (Gudas et al., 2005), let us concentrate on enterprise model constructs, which are related to the knowledge management.

The similar insights are represented in the organizational control systems modelling (OCSM) framework developed in (Kampfner, 1999).

According to the knowledge-based enterprise definition and structure (see Fig. 11, 12) there is a type of business activity – *knowledge management activity,* which is hidden within M.Porter's Value Chain Model. On the basis of these findings and other methods discussed above, the Value Chain Model is modified and Knowledge-Based Enterprise model is developed (see Fig. 21). Whereas the modified Value Chain Model is focused on the enterprise knowledge management activities and components, it is named *Knowledge-Based Enterprise Model.*

For the completeness of the model two important components of enterprise systems are included: *resources* (*R*) component and *information technology* (*IT*) component (Gudas, 2009).

The Knowledge-Based Enterprise model (KBEM) is a process-oriented model and it refines three different layers of enterprise management hierarchy (Fig. 21):


The Knowledge-Based Enterprise (KBE) model is constructed from the following main components: *Business process* (*B*), *Knowledge management function* (*K*) component, *Information technology* (*T*) component and the *Resources* component (*R*).

The interaction of the components from different layers of the KBEM (management transaction) is considered as control loop (informational feedback) formally described in

As it could be concluded from the overview of Enterprise modeling approaches (see the column "Abstraction levels or views" in Table 2), the enterprise management hierarchy levels and knowledge abstraction hierarchy are co-related. For instance, abstraction levels of knowledge could be *Generic knowledge*; *Specific knowledge, Partial knowledge, Domain-*

Therefore the knowledge management modeling requires some complex hierarchical structures to be identified for adequate representation of the knowledge management

In the knowledge modelling field the process-oriented view is recognized as a success factor [18]. In the organizational management practice widely recognized the Porter's (VCM) represents a process-oriented view to business. The Porter's Value Chain Model (VCM) here is used as a basis for the enterprise knowledge modelling (Gudas, Brundzaite, 2006b). The control view-based approach (Gudas et al., 2005) is focused on the informational interactions between two kinds of VCM activities -primary and support activities. The different nature of these two kinds of activities is revealed: support activities are information processing activities and are referred to as *Business Process Management Functions*; primary activities typically are material processing (technological) and are named

The interrelated elements *Function* and *Process* form the construct *Business Process* (B). The interaction of the elements *Process* and *Function* is formally assumed as a *Control Process* with the *Feedback Loop*, i.e. *Elementary Management Cycle* (*EMCp*). As the *Function* and *Process*  interaction is already discussed in detail in (Gudas et al., 2005), let us concentrate on

The similar insights are represented in the organizational control systems modelling

According to the knowledge-based enterprise definition and structure (see Fig. 11, 12) there is a type of business activity – *knowledge management activity,* which is hidden within M.Porter's Value Chain Model. On the basis of these findings and other methods discussed above, the Value Chain Model is modified and Knowledge-Based Enterprise model is developed (see Fig. 21). Whereas the modified Value Chain Model is focused on the enterprise knowledge management activities and components, it is named *Knowledge-Based* 

For the completeness of the model two important components of enterprise systems are included: *resources* (*R*) component and *information technology* (*IT*) component (Gudas, 2009). The Knowledge-Based Enterprise model (KBEM) is a process-oriented model and it refines

The Knowledge-Based Enterprise (KBE) model is constructed from the following main components: *Business process* (*B*), *Knowledge management function* (*K*) component, *Information* 

The interaction of the components from different layers of the KBEM (management transaction) is considered as control loop (informational feedback) formally described in

enterprise model constructs, which are related to the knowledge management.

three different layers of enterprise management hierarchy (Fig. 21):

*technology* (*T*) component and the *Resources* component (*R*).

*specific, Application specific, Meta-, Meta-Meta- ,* and etc. (see Table 2).

**11. The knowledge-based enterprise framework** 

(OCSM) framework developed in (Kampfner, 1999).

activities and organizational units.

*Processes*.

*Enterprise Model.*


(Gudas, Brundzaite, 2007) as *EMC* (*Elementary Management Cycle*). There are two different management transactions (*Elementary Management Cycles)* identified in the KBEM (Fig. 21): *Knowledge management cycle ( EMCz*) and *Process management cycle( EMCp*) (Gudas, 2009). The peculiarity of the developed model comparing with the M.Porter's Value Chain Model is that the developed model distinguishes between qualitatively different business management activities (*F, P* and *K* constructs in the Fig. 21) and allows formally represent interactions between these activities by using two types of the control activities (*EMCz* and *EMCp* with different semantics) (Gudas, 2009).

#### Fig. 21. Knowledge-Based Enterprise model

The semantics of identified management transactions *EMCp* and *EMCz* are different, and are defined as follows:


By definition (Gudas, Brundzaite, 2006b), an Elementary Management Cycle (*EMC)* consists of the predefined sequence of mandatory steps of information transformation (*Interpretation, Information Processing, Realization*); these steps compose a management cycle (a feedback loop). The content of information and semantics of transformation of these mandatory steps of *EMC* depends on the subject area (domain of the enterprise). For instance, the subject area of the *Knowledge management cycle EMCz* is a definite set of *Processes management function*s. It is evident that this subject area of *EMCz* (i.e. information and semantics of transformation of *EMCz*) is totally different from that of *Process management cycle EMCp*. The *EMCz* deals with the information about the characteristics of management functions (quality, effectiveness, etc.), meanwhile the Process management cycle *EMCp* controls characteristics of products, services and state of a *Process* (i.e. technological process).

Therefore, the content (semantics) of information (data, knowledge, goals) processed in these two management cycles (*EMCz* and *EMCp*) is unlike different. The mandatory steps (*Interpretation, Information Processing, Realization*) of the *Elementary Knowledge Management* 

Knowledge-Based Enterprise Framework: A Management Control View 205

Every higher management level is related with the lower level by the Elementary Management Cycles (*EMCz1, EMCz2, EMCz3, and EMCZ4*) [8]. Each *EMCz* has different

Thus*,* from the management control point of view, *Knowledge Management Layer* of the Knowledge-Based Enterprise [Gudas, 2009), (Gudas, 2009a) is decomposed into four

 The component *K4* - *Business Process Knowledge Management Functions* (KM level 4 – *Enterprise Management Level*). K4 forms management control attributes for Business Process (*B*) level. *K4* uses interface *S4* with the *Enterprise Knowledge Base* (*KB*) for the

 Third component *K3* - *Enterprise Knowledge Management (*KM level 3 *- Enterprise Knowledge Management Level*) is aimed to complement knowledge of structural element *K4* by using knowledge, stored in Enterprise Knowledge base (KB) through interface *S3*.

 The component *K2 – Knowledge Base Management* (KM level 2 - Enterprise-Meta Knowledge *Management Level*) is aimed to improve the structure and content of the *Enterprise Knowledge Base* (*KB)*, i. e. to adjust KB content with the business goals through the interface *S2*; Level *K2* in turn is related with third KM *K3* level by feedback loop

 Knowledge management is driven by organizational goals and objectives. In the highest KM level – (KM level 1 - *Enterprise Strategic Management Level)* the component *Business/IT Strategic Alignment* (*K1*) defines strategic requirements for the Enterprise Knowledge Base meta-modeling. Components *K1* and *K2* are interrelated by the

Fig. 22. Knowledge-Based Enterprise management framework

exchange knowledge about business processes management.

*K3* is related with KM level K4 by feedback loop *EMCz3*.

semantics.

*EMCz2*.

feedback loop *EMCz1*.

structural elements as follows:

*Cycle* (*EMCz*) are defined as an information transferring processes focused on the control of the content of management functions *F*.

As it was concluded from the overview of Enterprise modeling approaches (see the column "Abstraction levels or views" in Table 2), representation of the enterprise knowledge management activities requires some hierarchical structure to be defined.

Therefore, the *Knowledge management component (K)* in the Fig. 25 is decomposed as hierarchical system and the Knowledge-Based Enterprise (KBE) framework (Fig. 26) developed (Gudas, Brundzaite, 2006, 2006a, 2006b).

*The Knowledge management component (K)* consist of the internal components as follows (Fig. 29): Business Process (BP), Resources (R), BP knowledge management (K4), Enterprise knowledge management (K3), Knowledge Base management (K2) and Business/IT strategic alignment (K1). These components shape a hierarchy of KBE management levels as follows: Level 1 .Enterprise strategic management (Business and IT strategic alignment activities);

Level 2. Enterprise meta-knowledge management (Enterprise meta-modeling activities);

Level 3. Enterprise knowledge management (Enterprise knowledge for BP management);

Level 4. Enterprise management (BP knowledge management: knowledge acquisition for BP management, required by Enterprise strategy, defined at level 1);

Level 5. Business process management (managerial activities: Implementation of management functions, directing and controlling (manufacturing) Process);

Level 6. Process management and control (manufacturing control activities).

These enterprise management levels differ in the content of knowledge, required for KBE components for implementation of management activities.

The *KBE framework* is a process-oriented model and it refines two different layers (Fig. 26) of enterprise management hierarchy. The *Knowledge management domain* (*K*) is aimed to control activities of the component *Business domain* (B). The *Business domain* (B) includes management and control of manufacturing activities (the component *Processes* (*P*).

The Knowledge-Based Enterprise framework is based on the management (control) view (Gudas, et al., 2005), formally defined using the concept of Elementary Management Cycle (EMC). In brief, the concept EMC is a formalized description of the Enterprise management control as interaction of *Process* and *Function* – as two core components of enterprise from the control point of view (Gudas, 1991), (Gudas et al., 2005). The interaction of core elements *Management Function* and *Process* is formally assumed as a *Control Process* with the *Feedback Loop* between *Process P*(*j*) and *Management Function F*(*i*).

The interactions of the different management levels (including levels 1 – 6) of the *KBE framework* are management transactions, which are considered as control loops (informational feedback) between corresponding KBE components, that is formally described as *EMC* (the *Elementary Management Cycle*). The semantics of identified management transactions *EMCp* and *EMCz* are different, and are defined as follows:


*Cycle* (*EMCz*) are defined as an information transferring processes focused on the control of

As it was concluded from the overview of Enterprise modeling approaches (see the column "Abstraction levels or views" in Table 2), representation of the enterprise knowledge

Therefore, the *Knowledge management component (K)* in the Fig. 25 is decomposed as hierarchical system and the Knowledge-Based Enterprise (KBE) framework (Fig. 26)

*The Knowledge management component (K)* consist of the internal components as follows (Fig. 29): Business Process (BP), Resources (R), BP knowledge management (K4), Enterprise knowledge management (K3), Knowledge Base management (K2) and Business/IT strategic alignment (K1). These components shape a hierarchy of KBE management levels as follows: Level 1 .Enterprise strategic management (Business and IT strategic alignment activities); Level 2. Enterprise meta-knowledge management (Enterprise meta-modeling activities); Level 3. Enterprise knowledge management (Enterprise knowledge for BP management); Level 4. Enterprise management (BP knowledge management: knowledge acquisition for BP

Level 5. Business process management (managerial activities: Implementation of

These enterprise management levels differ in the content of knowledge, required for KBE

The *KBE framework* is a process-oriented model and it refines two different layers (Fig. 26) of enterprise management hierarchy. The *Knowledge management domain* (*K*) is aimed to control activities of the component *Business domain* (B). The *Business domain* (B) includes

The Knowledge-Based Enterprise framework is based on the management (control) view (Gudas, et al., 2005), formally defined using the concept of Elementary Management Cycle (EMC). In brief, the concept EMC is a formalized description of the Enterprise management control as interaction of *Process* and *Function* – as two core components of enterprise from the control point of view (Gudas, 1991), (Gudas et al., 2005). The interaction of core elements *Management Function* and *Process* is formally assumed as a *Control Process* with the

The interactions of the different management levels (including levels 1 – 6) of the *KBE framework* are management transactions, which are considered as control loops (informational feedback) between corresponding KBE components, that is formally described as *EMC* (the *Elementary Management Cycle*). The semantics of identified



management transactions *EMCp* and *EMCz* are different, and are defined as follows:

management and control of manufacturing activities (the component *Processes* (*P*).

management activities requires some hierarchical structure to be defined.

management, required by Enterprise strategy, defined at level 1);

components for implementation of management activities.

*Feedback Loop* between *Process P*(*j*) and *Management Function F*(*i*).

*Business process (B)* with the Enterprise strategic goals.

schedule, etc));

management functions, directing and controlling (manufacturing) Process); Level 6. Process management and control (manufacturing control activities).

the content of management functions *F*.

developed (Gudas, Brundzaite, 2006, 2006a, 2006b).

Fig. 22. Knowledge-Based Enterprise management framework

Every higher management level is related with the lower level by the Elementary Management Cycles (*EMCz1, EMCz2, EMCz3, and EMCZ4*) [8]. Each *EMCz* has different semantics.

Thus*,* from the management control point of view, *Knowledge Management Layer* of the Knowledge-Based Enterprise [Gudas, 2009), (Gudas, 2009a) is decomposed into four structural elements as follows:


Knowledge-Based Enterprise Framework: A Management Control View 207

output of the step RE3 of the higher level management EMCz3) and actual knowledge

The step RE4 is the co-ordination activity, the feedback from higher level knowledge management component K4 to business process management level 5. The RE4 is aimed to transfer manipulated variables (decision) and to influence the component Business process

Business Process Knowledge Management Cycle (*EMCz3)*. The Business Process Knowledge Management Cycle (the management control EMCz3 in Fig. 22) is *knowledge adaptation cycle* (Fig. 28) aimed to integrate the component "BP knowledge management" (K4) with the

The Enterprise knowledge management cycle EMCz3 is aimed to development (generation) of particular new knowledge for business process management functions, which are

The semantics of steps of the Business process knowledge management cycle (EMCz3) are as follows (Fig. 24): IN3 – interpretation of facts (characteristics) related with the controlled object – an activity of the component K4, IP3 – processing of interpreted information (data, knowledge) and decision making (aimed to control the component K4), RE3 – realization of decision (making management control, including transferring of manipulated variables (a particular decision) and influencing a controlled object – the component K4. The constraints on the Business process knowledge management cycle (EMCz3) are output of the component K2 (Knowledge base management) and input of the interface S3 from

The activity IN3 performs an interpretation of the actual knowledge about the features (state) of BP knowledge management functions (F4). The step IN3 comprises of a set of interpretation rules and procedures for transformation of the actual data and knowledge about a state BP knowledge management functions (F4) for the integration with the step IP3. These transformations are aimed to fit the requirements of the IP3 – the next step of the

The step IP3 – knowledge processing activity, aimed to form a set of manipulated variables – decision to implement new features of the BP knowledge management functions. The IP3 is a system of data and knowledge manipulation procedures focused for modification of the content of component K4 with the requirements of the higher level component K2 (these

accessed by interface S4 from the Enterprise knowledge base.

Fig. 23. Business process management cycle (EMCz4)

(BP), namely to modify Management functions (F).

enterprise knowledge management cycle EMCz3.

Knowledge base (KB).

actual content of the component "Enterprise Knowledge Base" (KB).

depicted as the component K4 ("Business process management") in Fig. 26.

Summing up, four management transactions (formally described as *EMC*), which have different semantics, are identified (Fig. 26):


The semantics of structural components of these Enterprise Management Cycles further are described in detail.
