Bangkok  >  PACIS ‘05  > July 2005 E-Business Models and Disruptive Behaviors > Business Design disruptive services on the...
About Me University of Lausanne Switzerland www.hec.unil.ch BusinessModelDesign.com Switzerland/Thailand www.businessmodel...
Agenda <ul><li>WHY CONCENTRATE ON BUSINESS MODELS </li></ul><ul><ul><li>Motivations </li></ul></ul><ul><ul><li>What is a b...
<ul><li>A disruptive technology is a technology or innovation  def </li></ul><ul><li>&quot;that results in worse product p...
Technology roadmap (and landscape) [Zurcher and Kostoff, 1997] [Rinne, 2004[ Market Product Technology time 2 What is the ...
Thinking about Disruptive Business Models <ul><li>We are used to thinking about disruptive technologies </li></ul><ul><ul>...
Business Models not only Technology and Products lead to Disruption <ul><li>Working hypothesis: it is the business model o...
Goals of this Tutorial <ul><li>Theoretical/conceptual goal: mapping, understanding and comparing business models  </li></u...
<ul><li>Niklass Zennstrom, founder of  Skype  VOIP application, quotes some Skype statistics.  </li></ul><ul><ul><li>The a...
The Business Model Triangle of Skype Strategy Structure Technology Business Model Internet Voice over IP (VoIP) Peer-to-Pe...
Comparing Business Models (similarities & differences) Skype’s business Model (insurgent) Telco business Model (Incumbent) 1
Disruption phases: Delphi Study [Christensen, 1997] [Rafii, 2002] 2 Foothold  market entry Main market entry Customer attr...
Business Model Comparison: How? vs. vs.
Business Model Comparison: How? vs. vs.
How do we create a common understanding? Courtesy slide: Hans Akkermans Create common understanding with all stakeholders ...
Find a common language vs. vs.
Mapping, understanding and comparing business models? <ul><li>Build a model to... </li></ul><ul><ul><li>Define </li></ul><...
Business model > evolution  Occurrences of the term « business model » in business and academic journals (in Business Sour...
Business model: buzzword or meaningful artifact? <ul><li>A buzzword with no precise definition? </li></ul><ul><ul><li>[…] ...
Business Models in Literature: A Place of Confusion non-conceptual use term simply refers to the way a  company does busin...
What is a (Conceptual) Business Model? <ul><li>It’s a model of the business of a company </li></ul><ul><ul><li>…  so it’s ...
Evolution of research in business model define & classify business models list business model components describe business...
The Business Model Ontology Value Proposition Partner Network Core Capacities Value Configuration Customer Relationship Di...
The Nine Elements Compared to the Business Model Literature Revenue Model Cost Structure Partnership Capability Value Conf...
Modeling Rigor Mentioning Elements Describing Elements Modeling Elements
Value proposition <ul><li>To characterize product innovation, the value proposition   defines </li></ul><ul><ul><li>the ac...
Comparing Value Propositions Free VoIP   Broadband Internet Users targets SkypeOut SkypeIn & voicemail   Value Proposition...
Comparing Value Propositions Voice Calls (in/out) Private Customer Connecting Users Data Services Value Added Services Int...
Comparing Value Propositions (continued) (Accessories through partnerships) Devices and Accessories x Network traffic whol...
Customer group <ul><li>Categorizations of the population into social class or psychologically defined groups </li></ul><ul...
Comparing Customer Groups Free VoIP  Broadband Internet Users targets SkypeOut SkypeIn & voicemail  Voice Calls (in/out) P...
Comparing Customer Groups (continued) x Telco carriers x National business customers Broadband internet users globally Nat...
Distribution channel <ul><li>A channel can be defined as a set of links or a network via which a firm “goes to market” and...
Comparing Distribution & Communication Channels Skype Website Broadband Internet Users Free VoIP delivers serves Viral Mar...
Comparing Distribution & Communication Channels (continued) Phone Private Customer Voice Calls (in/out) delivers serves Re...
Comparing Distribution & Communication Channels (continued) Accessory Vendors x Viral marketing Traditional marketing Skyp...
Relationship mechanism How do we get and keep our customers? Relationship mechanism   <ul><li>Reasoning (acquisition, rete...
Comparing Relationship Mechanisms (continued) Community x Website (self-service) Website (self-service) Live instant messa...
Core capabilities and resources <ul><li>Resource (ASSETS) </li></ul><ul><ul><li>available & useful in detecting and respon...
Comparing  Core capabilities and Resources Free VoIP  Large user base requires SkypeOut SkypeIn & voicemail  Interconnecti...
x Manage Network Capacity Handle rapid growth x Listen to customers and rapidly adapt x Supply chain management (accessory...
Value configuration How do we operate and deliver? 6 Value activity Value configuration   Actor  by <ul><li>Category  {Val...
Partnership Agreement How do we collaborate? Partnership agreement   Actor  with <ul><li>Category   {chain, market, networ...
Comparaison of business models > value configuration > e3-value Telcos [Gordijn, 2002]
Comparing  Value Configurations Service provisioning Service provisioning Growth of user base Customer care Software/versi...
Comparing Partnership Agreements Technology (developers, P2P, VoIP) Acquirers (payment processing) x Device Manufacturers/...
Comparing Actors <ul><li>ACTORS </li></ul><ul><li>Skype </li></ul><ul><li>Users </li></ul><ul><li>Broadband provider </li>...
Revenue stream What are our revenues? Our pricing? Revenue stream <ul><li>Category {subscription, sale, advertisement …}  ...
Comparing Revenue Streams SkypeOut Prepaid Other VAS Prepaid Voice income SkypeOut concerns Wholesale Network Traffic Busi...
Comparing Revenue Streams (continued) (Value-added services) Value-added services x Business solutions x Wholesale network...
Profit and cost account What are our costs? Cost account   <ul><li>Category   </li></ul>concerns Core capability Partnersh...
Comparing Profit and Cost Accounts (continued) Business Administration/ Development Business /Administration Development x...
Disruption phases: Delphi Study [Christensen, 1997] [Rafii, 2002] Foothold  market entry Main market entry Customer attrac...
Skype’s disruptiveness profile … Experiment [-3] [+3]
Delphi Study > Skype’s Disruptiveness Profile
Delphi Study > Incumbent Retaliation
Summary of Skype’s Disruptive Business Model Elements Software development Network maintenance Cost structure Low average ...
Visual Summary of Skype’s Disruptive Business Model Elements Telco
Based on other Business Model Building Blocks Because there is no network management Because it is based on existing “free...
Summary of Skype’s challenges / incumbents retaliation Staying lean while growing Known components Cost structure Creating...
Visual Summary of Skype’s challenges / incumbents retaliation Skype Telco
The Environmental Model: Other factors Value Propositions Actors Markets Issues influence influence influence adopt offer ...
Next step > profitability evaluation >  e 3 value
Next Step > Computer Aided Business Design/Engineering (CABD/CABE)  <ul><li>Business Model Design & Communication (i.e. th...
Further Research
Other Disruptive Business Models [Osterwalder 2004, Understanding ICT-based Business Models in Developing Countries, IJITM...
Interviews: Evaluating Business Model Usage ability to create a transparent big picture creation of a commonly understood ...
Business Model Case Studies fidelity with real world phenomena? is the business model concept applicable? appropriateness ...
Research Agenda: Business IT/IS Alignment -  Understanding & Integration BUSINESS strategy IT strategy IT/IS STRATEGY BUSI...
Research Agenda: Business IT/IS Alignment -  Infrastructure & Application Portfolio Function integration Strategic fit BUS...
Research Agenda: Business IT/IS Alignment -  Requirements Engineering Function integration Strategic fit BUSINESS IT strat...
Outlook: Business Models and Interoperability PROSPECTS Vertical Interoperability Horizontal Interoperability Company A Co...
Download material & tools www.BusinessModelDesign.com Business-Model-Design.blogspot.com
Questions? [email_address] http://www.BusinessModelDesign.com What do I want to know from Alex? Can he help me?
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Business Model Ontology

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  • Very interesting presentation. Could you send me it for my email: mai_vipe@hotmail.com.Thank you.
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  • Hi, I am a business student major in entrepreneurship and technology. I would be grateful if you can kindly share your slides with me on namjun98@hanmail.com. Most appreciated and thank you.
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  • Very interesting presentation. The concept of 'disruption' is very interesting
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  • Title Scenario planning, real option and environment scanning Date July 9, 2004 Author(s) Dr Yves Pigneur University of Lausanne (HEC) [email_address] Abstract File 12a_scenario .ppt URL: http://inforge.unil.ch/yp/GTI/slides/12a_scneario.ppt Version 2.0 Versions Dates Remarks 1.0 January 2005 old GTI 2.0 January 2005 GTI course
  • Transcript of "Business Model Ontology"

    1. 1. Bangkok > PACIS ‘05 > July 2005 E-Business Models and Disruptive Behaviors > Business Design disruptive services on the Internet: Skype vs. Telco Zurich/Bangkok - alex@businessmodeldesign.com - http://www.businessmodeldesign.com Business Design BusinessModelDesign.Com <ul><li>Introduction </li></ul><ul><li>WHY CONCENTRATE ON BUSINESS MODELS </li></ul><ul><li>motivations </li></ul><ul><li>research in b-models </li></ul><ul><li>models selected </li></ul><ul><li>STUDYING SKYPE’S DISRUPTIVE POTENTIAL </li></ul><ul><li>skype </li></ul><ul><li>comparison </li></ul><ul><li>DELPHI STUDY </li></ul><ul><li>Rafii </li></ul><ul><li>experiment </li></ul><ul><li>outcome </li></ul><ul><li>Conclusion </li></ul>Table of content University of Lausanne Ecole des Hautes Etudes Commerciales (HEC) BusinessModelDesign.Com Alexander Osterwalder, University of Lausanne Yves Pigneur, University of Lausanne
    2. 2. About Me University of Lausanne Switzerland www.hec.unil.ch BusinessModelDesign.com Switzerland/Thailand www.businessmodeldesign.com The Constellation for AIDS Competence Belgium/Thailand www.aidscompetence.com
    3. 3. Agenda <ul><li>WHY CONCENTRATE ON BUSINESS MODELS </li></ul><ul><ul><li>Motivations </li></ul></ul><ul><ul><li>What is a business model </li></ul></ul><ul><ul><li>Research evolution in business models </li></ul></ul><ul><ul><li>Selected Models > Business Model Ontology & e3-value </li></ul></ul><ul><li>STUDYING SKYPE’S DISRUPTIVE POTENTIAL > COMPARING BUSINESS MODELS (INSURGENT VS. INCUMBENT) </li></ul><ul><ul><li>Intro Skype </li></ul></ul><ul><ul><li>Business Model Ontology (9 business model building blocks) & e3-value </li></ul></ul><ul><ul><li>Conclusions </li></ul></ul><ul><li>DELPHI STUDY > DISRUPTION PHASES </li></ul><ul><ul><li>An experiment to evaluate Skype’s disruptive potential </li></ul></ul>
    4. 4. <ul><li>A disruptive technology is a technology or innovation def </li></ul><ul><li>&quot;that results in worse product performance, at least in the near-term... </li></ul><ul><li>[It] brings to the market a very different value proposition than had been available previously... </li></ul><ul><li>Products that are based on disruptive technologies are typically cheaper, simpler, smaller, and, frequently, more convenient to use. </li></ul><ul><li>[But, they generally] underperform established products in mainstream markets.&quot; </li></ul>Disruptive technology time performance market rupture New replaces old technology Market for old technology Market for new technology [Christensen, 1997] a b c d VoIP (Skype)?
    5. 5. Technology roadmap (and landscape) [Zurcher and Kostoff, 1997] [Rinne, 2004[ Market Product Technology time 2 What is the Business Model? How have technology & products been incorporated into different companies’ disruptive business models in order to reach markets and make a profit?
    6. 6. Thinking about Disruptive Business Models <ul><li>We are used to thinking about disruptive technologies </li></ul><ul><ul><li>Internet, SMS, RFID, P2P, VoIP, WiFi, etc. </li></ul></ul><ul><li>We are used to thinking about disruptive processes </li></ul><ul><ul><li>Just-in-time, business process outsourcing (BPR), etc. </li></ul></ul><ul><li>But how do we reason about disruptive business models? </li></ul><ul><ul><li>E.g. no-frills-airlines </li></ul></ul><ul><ul><li>E.g. online brokerage </li></ul></ul>?
    7. 7. Business Models not only Technology and Products lead to Disruption <ul><li>Working hypothesis: it is the business model of an insurgent that replaces an incumbent. </li></ul><ul><li>We studied and compared the business model of an insurgent and an incumbent in the telecommunication industry </li></ul>Are the business model methods that we have been working on useful for comparing business models? And, particularly, are they useful in the field of disruptive business models? time performance market rupture New replaces old technology Market for new technology
    8. 8. Goals of this Tutorial <ul><li>Theoretical/conceptual goal: mapping, understanding and comparing business models </li></ul><ul><ul><li>and particularly their disruptive potential </li></ul></ul><ul><ul><li>bring conceptual business model research to another level </li></ul></ul><ul><li>Practical goal as an executive/consultant: be able to map, understand and compare your business model to the one of your competitor </li></ul><ul><ul><li>by using the concepts outlined in this tutorial </li></ul></ul><ul><li>Practical goals: be able to design a new, or extend and re-design your existing business model to achieve a competitive edge (in e-business). </li></ul><ul><ul><li>Map > understand > analyze & compare > reconfirm or reposition </li></ul></ul>
    9. 9. <ul><li>Niklass Zennstrom, founder of Skype VOIP application, quotes some Skype statistics. </li></ul><ul><ul><li>The application currently has 30 million users worldwide in more than 200 countries. </li></ul></ul><ul><ul><li>Far over 100’000 new users are signing up for Skype daily. </li></ul></ul><ul><ul><li>Recently Skype surpassed 3 million users being online simultaneously. </li></ul></ul><ul><ul><li>Average VOIP call lasts about 6 minutes. </li></ul></ul><ul><ul><li>The early adopters were 18-38 years old males. </li></ul></ul>Skype vs. Telco - P2P VoIP vs. phone http://www.engadget.com Interview March 2005
    10. 10. The Business Model Triangle of Skype Strategy Structure Technology Business Model Internet Voice over IP (VoIP) Peer-to-Peer Disrupt the voice communication market Software development in Tallinn, Estonia Business division in London Disruptive Process (Business Process Reengineering BPR) Disruptive Technology (supporting or transforming business) Understanding Environment
    11. 11. Comparing Business Models (similarities & differences) Skype’s business Model (insurgent) Telco business Model (Incumbent) 1
    12. 12. Disruption phases: Delphi Study [Christensen, 1997] [Rafii, 2002] 2 Foothold market entry Main market entry Customer attraction Customer switching Incumbent retaliation Incumbent displacement yes yes yes yes unsuccessful significant start Disruption succeeds Disruption fails minimal
    13. 13. Business Model Comparison: How? vs. vs.
    14. 14. Business Model Comparison: How? vs. vs.
    15. 15. How do we create a common understanding? Courtesy slide: Hans Akkermans Create common understanding with all stakeholders Source: Financial Times, e-procurement, Oct. 2000 create a business model ontology
    16. 16. Find a common language vs. vs.
    17. 17. Mapping, understanding and comparing business models? <ul><li>Build a model to... </li></ul><ul><ul><li>Define </li></ul></ul><ul><ul><li>Seize </li></ul></ul><ul><ul><li>Describe </li></ul></ul><ul><ul><li>Store </li></ul></ul><ul><li>...the logic of what a firm does and how it does it </li></ul>unstructured information Semi –structured information formalization formal model, understanding & description Intuitive understanding comparison
    18. 18. Business model > evolution Occurrences of the term « business model » in business and academic journals (in Business Source Premier) compared to the NASDAQ BUZZWORD or MEANINGFUL ARTIFACT?
    19. 19. Business model: buzzword or meaningful artifact? <ul><li>A buzzword with no precise definition? </li></ul><ul><ul><li>[…] Executives, reporters and analysts who use the term don't have a clear idea of what it means. They use it to describe everything from how a company earns revenue to how it structures its organization </li></ul></ul><ul><li>or … </li></ul><ul><li>An artifact aggregating … </li></ul><ul><ul><li>the value a company offers to one or several segments of customers, and </li></ul></ul><ul><ul><li>the architecture of the firm and its network of partners </li></ul></ul><ul><ul><li>for creating, marketing and delivering this value and relationship capital, </li></ul></ul><ul><ul><li>in order to generate profitable and sustainable revenue streams. </li></ul></ul>[Linder, 2000]
    20. 20. Business Models in Literature: A Place of Confusion non-conceptual use term simply refers to the way a company does business conceptual use conceptualization of business models finite number of business models a limited number of business model types exist in reality: Infinite number of business models every company has a unique business model that can be described through modelling Business models preoccupation: classification, types preoccupation: meta-models, reference models, ontologies hybrids
    21. 21. What is a (Conceptual) Business Model? <ul><li>It’s a model of the business of a company </li></ul><ul><ul><li>… so it’s not a process model… </li></ul></ul><ul><li>It’s a common understanding of the business idea </li></ul><ul><ul><li>… this means a collection of concepts that allow to describe and express the idea </li></ul></ul>Business Model Concept Business Model A Business Model B eBay Amazon Concepts that are to be found in every business model in order to capture its business logic/idea Instances of the concepts Value Proposition Distribution Channels … Auctions Web Retailing
    22. 22. Evolution of research in business model define & classify business models list business model components describe business model elements model business model elements apply business model concept Rappa 2001 Timmers 1998 Tapscott, 2000 Linder & Cantrell 2000 Magretta 2002 Afuah & Tucci 2001 Hamel 2000 Weill & Vitale 2001 Gordijn 2002 Osterwalder & Pigneur 2002 Geerts and McCarthy, 2002 definitions & taxonomies &quot;shopping list&quot; of components components as building blocks reference models & ONTOLOGY applications & conceptual tools activity outcomes authors Modelling Rigour (towards a business model ontology)
    23. 23. The Business Model Ontology Value Proposition Partner Network Core Capacities Value Configuration Customer Relationship Distribution Channel Customer Segment Cost Structure Revenue Streams Success / Failure
    24. 24. The Nine Elements Compared to the Business Model Literature Revenue Model Cost Structure Partnership Capability Value Configuration Customer Relationship Distribution Channel Target Customer Value Proposition Business model ontology Stähler √ √ √ √ √ √ Weill and Vitale √ √ √ √ √ √ Petrovic, Kittl et al. √ √ √ √ √ √ Gordijn √ √ √ √ √ √ Afuah and Tucci √ √ Tapscott, Ticoll et al. √ √ √ √ √ Linder and Cantrell √ √ √ √ √ √ √ √ √ Hamel
    25. 25. Modeling Rigor Mentioning Elements Describing Elements Modeling Elements
    26. 26. Value proposition <ul><li>To characterize product innovation, the value proposition defines </li></ul><ul><ul><li>the actual product or service, and </li></ul></ul><ul><ul><li>the value or benefits perceived by customers of the products and services offered by the firm </li></ul></ul>What do we offer to our customers? <ul><li>Reasoning (use, risk, effort) </li></ul><ul><li>Life cycle (creation, appropriation, use, renewal, transfer) </li></ul><ul><li>Value level (me-too, innovation/imitation, innovation) </li></ul><ul><li>Price level (free, economy, market, high-end) </li></ul>Value proposition Customer group Core capabilities requires targets 1 refined by
    27. 27. Comparing Value Propositions Free VoIP Broadband Internet Users targets SkypeOut SkypeIn & voicemail Value Proposition Target Customer Core Capacity Large user base requires Interconnectivity Create VAS Handle Prepayment (CC) Listen & adapt Handle Rapid Growth
    28. 28. Comparing Value Propositions Voice Calls (in/out) Private Customer Connecting Users Data Services Value Added Services Interconnectivity Create VAS Business Customer Telco Carriers Network Traffic Wholesale Business Services Free Network Capacity SCM requires targets Value Proposition Target Customer Core Capacity Telco
    29. 29. Comparing Value Propositions (continued) (Accessories through partnerships) Devices and Accessories x Network traffic wholesales x Business solutions Skype value-added-services Value-added services SkypeOut Skype-to-Skype VoIP calls (free) Voice calls Value Proposition Skype Telco Business Model Element
    30. 30. Customer group <ul><li>Categorizations of the population into social class or psychologically defined groups </li></ul><ul><li>Area where a firm can specialize and gain competitive advantage </li></ul><ul><ul><li>By having lower costs or customer-satisfying differentiation </li></ul></ul>Who are our customers? Customer group Value proposition <ul><li>Reasoning (segment, community, …) </li></ul><ul><li>CRITERION </li></ul><ul><li>Category </li></ul>targeted by 2 refined by
    31. 31. Comparing Customer Groups Free VoIP Broadband Internet Users targets SkypeOut SkypeIn & voicemail Voice Calls (in/out) Private Customer targets Data Services Value Added Services Business Customer Telco Carriers Network Traffic Wholesale Business Services Value Proposition Target Customer SKYPE TELCO
    32. 32. Comparing Customer Groups (continued) x Telco carriers x National business customers Broadband internet users globally National private customers Customer Segment
    33. 33. Distribution channel <ul><li>A channel can be defined as a set of links or a network via which a firm “goes to market” and delivers its value proposition. </li></ul>How do we reach our customers? Distribution link Distribution channel Customer group Value proposition by delivers serves Actor refined by is a <ul><li>Customer buying cycle (awareness, evaluation, purchase, after sale) </li></ul><ul><li>Category (network, internet, call center, …) </li></ul>3 precedes
    34. 34. Comparing Distribution & Communication Channels Skype Website Broadband Internet Users Free VoIP delivers serves Viral Marketing Accessory Vendors SkypeOut SkypeIn & Voicemail Distribution Channel Target Customer Value Proposition Software
    35. 35. Comparing Distribution & Communication Channels (continued) Phone Private Customer Voice Calls (in/out) delivers serves Retail Shops Sales Force Data Services Value Added Services Business Customer Telco Carriers Traditional Marketing Website Network Traffic Wholesale Business Services Distribution Channel Target Customer Value Proposition Telco
    36. 36. Comparing Distribution & Communication Channels (continued) Accessory Vendors x Viral marketing Traditional marketing Skype website Telco website x Sales force x Retail shops Distribution Channel
    37. 37. Relationship mechanism How do we get and keep our customers? Relationship mechanism <ul><li>Reasoning (acquisition, retention, add-on selling, …) </li></ul><ul><li>Category (trust, personalization, brand…) </li></ul>Customer group Value proposition concerns Distribution link 4 refined by
    38. 38. Comparing Relationship Mechanisms (continued) Community x Website (self-service) Website (self-service) Live instant messaging (chat) Call centre Customer Relationship
    39. 39. Core capabilities and resources <ul><li>Resource (ASSETS) </li></ul><ul><ul><li>available & useful in detecting and responding to market opportunities or threats </li></ul></ul><ul><li>Capability (KNOW-HOW) </li></ul><ul><ul><li>Aptitude to exploit and coordinate resources to create, produce, and/or offer products and services to a market </li></ul></ul>What are our key competencies? 5 Resource Value proposition Actor by <ul><li>Category (generative, transformative, …) </li></ul>required by Core capability is a refined by
    40. 40. Comparing Core capabilities and Resources Free VoIP Large user base requires SkypeOut SkypeIn & voicemail Interconnectivity Create VAS Voice Calls (in/out) Connecting Users requires Data Services Value Added Services Interconnectivity Create VAS Network Traffic Wholesale Business Services Free Network Capacity SCM Value Proposition Core Capacity Value Proposition Core Capacity Handle Prepayment (CC) Listen & adapt Handle Rapid Growth Telco
    41. 41. x Manage Network Capacity Handle rapid growth x Listen to customers and rapidly adapt x Supply chain management (accessory) Handle credit card transactions Manage billing Interconnect with phone network Interconnect with other networks Create VAS (innovation) Create VAS Large user base x Core Capabilities and Resources
    42. 42. Value configuration How do we operate and deliver? 6 Value activity Value configuration Actor by <ul><li>Category {Value chain, Value shop, Value network …} </li></ul><ul><li>activity level </li></ul><ul><li>activity nature </li></ul>needs (in) implements Resource Value proposition refined by is a Category {principal, support …} creates (out)
    43. 43. Partnership Agreement How do we collaborate? Partnership agreement Actor with <ul><li>Category {chain, market, network …} </li></ul><ul><li>strategic importance </li></ul><ul><li>degree of integration </li></ul><ul><li>degree of competition </li></ul><ul><li>substitutability </li></ul>concerns Core capability Distribution channel Value configuration 7 refined by
    44. 44. Comparaison of business models > value configuration > e3-value Telcos [Gordijn, 2002]
    45. 45. Comparing Value Configurations Service provisioning Service provisioning Growth of user base Customer care Software/version management Network management Value Configuration (activities)
    46. 46. Comparing Partnership Agreements Technology (developers, P2P, VoIP) Acquirers (payment processing) x Device Manufacturers/Distributors Device Manufacturers and Vendors Telco carriers Telco carriers Partnership Agreement
    47. 47. Comparing Actors <ul><li>ACTORS </li></ul><ul><li>Skype </li></ul><ul><li>Users </li></ul><ul><li>Broadband provider </li></ul><ul><li>Device Manufacturer & Vendor </li></ul><ul><li>Telco carrier </li></ul><ul><li>Acquirer </li></ul><ul><li>Technology Partners </li></ul><ul><li>Translator </li></ul><ul><li>DIFFERENCES IN THE VALUE EXCHANGES COMPARED TO TELCOS </li></ul><ul><li>Free Skype-to-Skype </li></ul><ul><li>Customer need for broadband connection </li></ul><ul><li>Skype does not sell devices </li></ul><ul><li>Outsourced payment processing (credit card) </li></ul><ul><li>ACTORS </li></ul><ul><li>Telco </li></ul><ul><li>Private customers </li></ul><ul><li>Business customers </li></ul><ul><li>Device Manufacturer & Vendor </li></ul><ul><li>Telco carrier </li></ul><ul><li>Translator </li></ul><ul><li>DIFFERENCES IN THE VALUE EXCHANGES COMPARED TO SKYPE </li></ul><ul><li>Telco sells its network capacity </li></ul><ul><li>Telco sells devices and accessories </li></ul><ul><li>Telco purchases devices and accessories from suppliers </li></ul>Telco
    48. 48. Revenue stream What are our revenues? Our pricing? Revenue stream <ul><li>Category {subscription, sale, advertisement …} </li></ul>concerns Customer group Value proposition Distribution link 8 refined by
    49. 49. Comparing Revenue Streams SkypeOut Prepaid Other VAS Prepaid Voice income SkypeOut concerns Wholesale Network Traffic Business Solutions income VAS Website VAS income Broadband Internet Users Revenue Stream Value Proposition Revenue Stream Telco Distribution Channel Customer Group Mail/Billing Value Proposition Distribution Channel Customer Group Voice Calls (in/out) Data Services Value Added Services Network Traffic Wholesale Business Services Data Income Private Customer Business Customer Telco Carriers Internet
    50. 50. Comparing Revenue Streams (continued) (Value-added services) Value-added services x Business solutions x Wholesale network traffic Skype out Voice Revenue Stream
    51. 51. Profit and cost account What are our costs? Cost account <ul><li>Category </li></ul>concerns Core capability Partnership Value configuration 9 refined by
    52. 52. Comparing Profit and Cost Accounts (continued) Business Administration/ Development Business /Administration Development x Contract Management Software development Network maintenance Cost Structure
    53. 53. Disruption phases: Delphi Study [Christensen, 1997] [Rafii, 2002] Foothold market entry Main market entry Customer attraction Customer switching Incumbent retaliation Incumbent displacement yes yes yes yes unsuccessful significant start Disruption succeeds Disruption fails minimal
    54. 54. Skype’s disruptiveness profile … Experiment [-3] [+3]
    55. 55. Delphi Study > Skype’s Disruptiveness Profile
    56. 56. Delphi Study > Incumbent Retaliation
    57. 57. Summary of Skype’s Disruptive Business Model Elements Software development Network maintenance Cost structure Low average revenue per user (ARPU) sufficient High average revenue per user (ARPU) necessary Revenue streams Software/version management (low marginal cost/user) Network management (high marginal costs/user) Value configuration Community (listening) x Customer relationship Viral marketing (lifestyle) Traditional marketing Virtual (internet) Mainly physical Distribution & Communication Channels Global reach Limited reach Customer Segments Free VoIP Complex charging Value Proposition Free calls Telco Business Model Element
    58. 58. Visual Summary of Skype’s Disruptive Business Model Elements Telco
    59. 59. Based on other Business Model Building Blocks Because there is no network management Because it is based on existing “free” infrastructure Because it extensively uses the Internet Software development Low average revenue per user (ARPU) sufficient Software/version management (low marginal cost/user) Community (listening) Viral marketing (lifestyle) Virtual (internet) Global reach Free VoIP Free calls
    60. 60. Summary of Skype’s challenges / incumbents retaliation Staying lean while growing Known components Cost structure Creating new value added services necessary Refocusing on other established areas possible Revenue streams Quality dependency (depending on Internet connection - ISP) Owner of quality control Value configuration Serving customers/managing “light speed” customer growth Established relationships Customer relationship Scaling-up marketing Marketing machinery Distribution & Communication Channels One customer “type” Diversified customer base Customer Segments Limited offer Diversified offer Value Proposition Free calls Telco Business Model Element
    61. 61. Visual Summary of Skype’s challenges / incumbents retaliation Skype Telco
    62. 62. The Environmental Model: Other factors Value Propositions Actors Markets Issues influence influence influence adopt offer IM 3G VoIP MS & Yahoo! (IM) telco’s regulator VoIP national needs & customs global price sensibility WiFi broadband penetration regulation unknown technologies
    63. 63. Next step > profitability evaluation > e 3 value
    64. 64. Next Step > Computer Aided Business Design/Engineering (CABD/CABE) <ul><li>Business Model Design & Communication (i.e. the drawing board) </li></ul><ul><li>Requirements Engineering </li></ul><ul><li>Balanced Scorecard </li></ul><ul><li>Knowledge Management & Visualization </li></ul><ul><li>Automatic Comparison (e.g Through Ontologies) </li></ul>DESIGN SCIENCE modelling & formalization layer which model? computer- assisted tool application layer which artefact? visualization Indicators/measures requirements communication xy usage layer Has management improved?
    65. 65. Further Research
    66. 66. Other Disruptive Business Models [Osterwalder 2004, Understanding ICT-based Business Models in Developing Countries, IJITM 3(2-4)] QUALITATIVE RESEARCH Grameen Village Phones Bangladesh Chiang Mai Group Thailande/World How can ICTs improve my revenue model? Do ICTs generate any new possible revenue streams? Revenue Model How can I improve my cost structure through ICTs? Cost Structure Financial Aspects What partnerships does my business model require and how do ICTs influence these partnerships, respectively make them possible or more efficient? Partnership What kind of capabilities do I need to deliver my (ICT-based) value proposition? Capability How can ICTs make my arrangement of activities and resources for value creation more efficient? Can I link into international supply chains through ICTs? Value Configuration Infrastructure Management What kind of ICT-based mechanisms help me establish a relationship with my customers? How can ICTs improve trust and brand? Relationship Can ICTs help me increase my reach (e.g. electronic markets, cybermediaries, direct marketing, web sales etc.)? How do ICTs make my distribution channels more efficient? Distribution Channel What additional target customers can I address through the help of ICTs? Target Customer Customer Relationship In what kind of ICT-based value propositions do/could I have a competitive advantage? How can ICT improve my current value proposition? Value Proposition Product Innovation Description Building Block of Business Model Pillar
    67. 67. Interviews: Evaluating Business Model Usage ability to create a transparent big picture creation of a commonly understood language helps addressing fundamental questions [Osterwalder and Pigneur, 2004, Investigating the Use of the Business Model Concept through Interviews, ICEB, Beijing] QUALITATIVE RESEARCH green = positive answers, red = negative answers, grey = neutral answers, white = not answered q = quotes q44 - no yes Consultant 3 q43 q42 q41 q40 q39 - no yes Consultant 2 q38 q37 q36 q35 q33, q34 q32 - no yes Consultant 1 q31 q30 q29 q28 yes no no 3'315 Transport q27 yes no no 10-1200 Entertainment q26 q25 q24 q23 q22 no no yes 400 Industry q21 q20 q19 q18 yes no yes 80 Internet Industry Platform q17 q16 no no no 31 Service in Finance q15 q14 q13 q12 q11 yes no no 15 Service over Internet q10 q9 q8 q7 q6 yes no little 5 Software in the mobile industry q5 q4 q3 q2 q1 yes no little 3 Retail over Internet improving communication improving process design increasing innovation helping in the design of ISs improving strategic planning improving decision making defining indicators trial & error use of tools use of concepts employees
    68. 68. Business Model Case Studies fidelity with real world phenomena? is the business model concept applicable? appropriateness of the building block concepts? Masters Students’ Class Work & thesis QUALITATIVE RESEARCH Swiss company ZenithVie – life insurance Belgian venture established in 1999 Phone-Plus – telecommunication services reseller Swiss consultancy Adrenalink – sports marketing and management consultancy Swiss Telecom service provider founded in 1998 MNC – mobile phone services (SMS) Subsidiary of Aleance (USA) founded in 2001 NetMovies – DVD rental over the Internet Swiss bookstore founded in 1984 Ellipse – bricks & clicks book retailing Subsidiary of book retailer Librairies La Fontaine SA LeLivre –book retailing over the Internet Swiss startup founded in 2003 Factory121 – personalized Swiss watch retailing over the Internet Swiss startup founded in 2002 Logifleet – Fleet management systems provider Company information Company & industry sector 4.33 In your opinion is the business model concept useful? 4.11 Was the concept &quot;partenariat&quot; relevant to describe the business model you analyzed? 3.89 Was the concept &quot;activités et compétence&quot; relevant to describe the business model you analyzed? 3.78 Was the concept &quot;relation-client et confiance&quot; relevant to describe the business model you analyzed? 3.78 Was the concept &quot;clients et canaux de distributions&quot; relevant to describe the business model you analyzed? 4.44 Was the concept &quot;proposition de valeur&quot; relevant to describe the business model you analyzed? 4 How closely do the elements of the sample document cover the aspects of the business model analyzed? 3.89 Did the concepts exposed in the course &quot;Stratégies et technologies de l'information&quot; allow you to accurately describe the business model of the company you analyzed? average Closed interview questions rated between 1 and 5 (1 = very definitely not, 3 = to some extent, 5 = very definitely)
    69. 69. Research Agenda: Business IT/IS Alignment - Understanding & Integration BUSINESS strategy IT strategy IT/IS STRATEGY BUSINESS MODEL Function integration Strategic fit BUSINESS IT strategy infrastructure [Henderson and Venkatraman, 1993] ORGANIZATION infrastructure IS infrastructure VALUE proposition Value configuration Customer (relationship) <ul><li>Mutual understanding </li></ul><ul><li>Business and IS integration </li></ul><ul><li>Balanced Scorecard </li></ul>Technology scope System competencies IT governance [Osterwalder and Pigneur, 2004, Clarifying Business Models: Origins, Present and Future of the Concept, Communications of the AIS] PROSPECTS communication xy Business Strategy IS Strategy
    70. 70. Research Agenda: Business IT/IS Alignment - Infrastructure & Application Portfolio Function integration Strategic fit BUSINESS IT strategy infrastructure Technology scope System competencies IT governance Administrative structure Business processes Skills [Weill and Vitale, 2002] VALUE proposition Value configuration Customer (relationship) Information OBJECT Application User (interface) ORGANIZATION infrastructure IS infrastructure BUSINESS strategy IT strategy IS MODEL IT/IS STRATEGY BUSINESS MODEL <ul><li>IT/IS infrastructure services </li></ul><ul><li>IT/IS application portfolio </li></ul>[Ward, 2000] [Osterwalder and Pigneur, 2004, Clarifying Business Models: Origins, Present and Future of the Concept, Communications of the AIS] PROSPECTS Application infrastructure Communication Data management IT management Security Architecture & standards IT research & development IT education
    71. 71. Research Agenda: Business IT/IS Alignment - Requirements Engineering Function integration Strategic fit BUSINESS IT strategy infrastructure [Gordijn and Akkermans, 2003] VALUE proposition Value configuration Customer (relationship) Information OBJECT Application User (interface) ORGANIZATION infrastructure IS infrastructure BUSINESS strategy IT/IS strategy IS MODEL BUSINESS MODEL <ul><li>Business Model Viewpoint </li></ul><ul><li>Process Viewpoint </li></ul><ul><li>Information Systems Viewpoint </li></ul>ENTERPRISE MODEL Organization GOAL Process Team (coordination) [Osterwalder and Pigneur, 2004, Clarifying Business Models: Origins, Present and Future of the Concept, Communications of the AIS] PROSPECTS
    72. 72. Outlook: Business Models and Interoperability PROSPECTS Vertical Interoperability Horizontal Interoperability Company A Company B Strategy Business Model Enterprise Model Systems Model Strategy Business Model Enterprise Model Systems Model goals compatible? Business logic aligned? Processes coordinated? Systems integrated?
    73. 73. Download material & tools www.BusinessModelDesign.com Business-Model-Design.blogspot.com
    74. 74. Questions? [email_address] http://www.BusinessModelDesign.com What do I want to know from Alex? Can he help me?

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