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Capability‐as‐a‐Service: Investigating the Innovation Potential 
from a Business Model Perspective
Chair of Business Infor...
Overview
• Motivation: Why take a business model perspective?
• Background
– Capability definitions
– CaaS approach to Cap...
Motivation
Capability management is expected to contribute to a new level of productivity in 
developing and deploying IT‐...
Background: Capability Definitions
• Many definitions exist in the literature; no generally accepted definition available
...
Capability‐as‐a‐Service in Digital Enterprises  (CaaS): Basic Idea
6
Business
Service
Potential delivery context of a
busi...
Capability Modeling Methodology
7
Market
role
Patterns
Market
role
Enterprise Model
Business Service Model
Context Model
Capability Modeling
8
Business Service (Example: Process + Variants)
Market role = energy supplier
= water supplier
= ….
C...
Capability Design and Delivery Environment
10
Busines Model Conceptualization: 
Partial models of the integrated business model  [Wirtz 2011]
11
Industrial Case from Energy Sector
• SIV.AG from Rostock Germany
– independent software vendor for utilities industry:
ERP...
Industrial Case: Energy Market Roles & SIV business services
13
Industrial Case: Business Service Example
14
Industrial Case: Business Service Example
15
Analysis of Industrial Case
Partial models of business
model
Business model of MSCONS
Market
model
Demand
model
Main targe...
Analysis of Industrial Case
Partial models of business
model
Business model of MSCONS
Manufacturing model The processing o...
How to identify innovation potential?
Take a value chain perspective
• analyze extensions to neighboring parts of the valu...
Context Elements for MSCONS
Variation
Aspect
Context Element Measurable
Property
Context
Element Range
Operation
Operating...
Analysis Results in the Case
Three main business drivers are identified, which cause variations and provide 
stimulus for ...
Observations from Analysis
• extension from a business service to a capability will not make the established 
business mod...
Summary
• Based on example of a business service from BPO in energy industries, we showed 
how to decompose the underlying...
Thank you for your attention!
Time for questions!
24
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Capability-as-a-Service: Investigating the Innovation Potential from a Business Model Perspective @DIFENSE workshop @ CAISE in Stockholm

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Capability-as-a-Service: Investigating the Innovation Potential from a Business Model Perspective.
By Kurt Sandkuhl (Rostock University), Janis Stirna (Stockholm University)
DIFENSE workshop @ CAISE'2015 in Stockholm

Published in: Technology
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Capability-as-a-Service: Investigating the Innovation Potential from a Business Model Perspective @DIFENSE workshop @ CAISE in Stockholm

  1. 1. Capability‐as‐a‐Service: Investigating the Innovation Potential  from a Business Model Perspective Chair of Business Information Systems Kurt Sandkuhl Janis Stirna Rostock University Stockholm University kurt.sandkuhl@uni‐rostock.de, js@dsv.su.se Presented by Kurt Sandkuhl Presentation at DiFENSE (CAiSE 2016), June 2015, Stockholm
  2. 2. Overview • Motivation: Why take a business model perspective? • Background – Capability definitions – CaaS approach to Capability Design and Delivery • Business Model conceptualization • Case Study from Energy Sector – Analysis of Business Model for Case Study – Innovation Potential • Summary and Future Work 2
  3. 3. Motivation Capability management is expected to contribute to a new level of productivity in  developing and deploying IT‐based business  • One of the key features in is to explicitly capture the delivery context of business  services and to provide mechanisms for configuring IS or generating its delivery  according to a capability design  3 Guiding question for our work • What is the potential of capability management in general and the CDD approach in  particular when it comes to business model innovation? Aim of the paper • apply an established business model conceptualization as a framework for analyzing  case study from business process outsourcing  • compare the possibility to identify business innovations with and without defined  capability characteristics • identify the most promising part for assessing the business innovation potential
  4. 4. Background: Capability Definitions • Many definitions exist in the literature; no generally accepted definition available – “combination of resources” [Antunes, Barateiro, Becker 2011] – “capacity to execute an activity”[Jiang, Zhao 2010]  – “perform better than competitors” [Boonpattarakan 2010] – “possessed ability” [TOGAF 2014] 4 • Several papers suggest that capabilities are provided as Business Services, i.e. they  are designed and delivered in a process‐oriented fashion • EU‐FP7 project Capabilities‐as‐a‐Service in Digital Enterprises (CaaS): – “Capability is the ability and capacity that enable an enterprise to achieve a  business goal in a certain context.”
  5. 5. Capability‐as‐a‐Service in Digital Enterprises  (CaaS): Basic Idea 6 Business Service Potential delivery context of a business service Components and patterns for potential variants of the business service Configuration or adaptation of the business service to meet the delivery context Based on EU-FP7 funded project no: 611351 CaaS – Capability as a Service in Digital Enterprises
  6. 6. Capability Modeling Methodology 7 Market role Patterns Market role Enterprise Model Business Service Model Context Model
  7. 7. Capability Modeling 8 Business Service (Example: Process + Variants) Market role = energy supplier = water supplier = …. Context Model Legislation = Germany / EU = …. Patterns Market role Grid operator Gas supplier Enterprise Model (Concepts/Goals) Variation Point depending on Joint meta-model same modeling tool
  8. 8. Capability Design and Delivery Environment 10
  9. 9. Busines Model Conceptualization:  Partial models of the integrated business model  [Wirtz 2011] 11
  10. 10. Industrial Case from Energy Sector • SIV.AG from Rostock Germany – independent software vendor for utilities industry: ERP product kVASy® – offers Business Process Outsorcing (BPO) services to utility providers and other  market roles of energy sector • Typical business services: – Meter readings and Meter data evaluation – Billing and Accounting for Utility Industries – Customer Relationship Management • Continuously changing business environment: – Regulations & bylaws – Customer requirements and processes – Technological requirements and deployment environments 12
  11. 11. Industrial Case: Energy Market Roles & SIV business services 13
  12. 12. Industrial Case: Business Service Example 14
  13. 13. Industrial Case: Business Service Example 15
  14. 14. Analysis of Industrial Case Partial models of business model Business model of MSCONS Market model Demand model Main target group are medium-sized enterprises from utility industries. Within this group, different segments are distinguished, e.g. energy provides, water providers, gas providers or grid operators. Competition model For the MSCONS service, several other software vendors provide platforms which can be used as software-as-a-service, but only two of them offer business process outsourcing. These two BPO providers can be considered as competitors. Procurement model A few elements of the service are contracted to other service providers:  Transaction printing services, if requested by the client, are outsourced to a printing center  if the client requires post-processing of the transactions and export to specific information system, data conversion services are used from external providers 17
  15. 15. Analysis of Industrial Case Partial models of business model Business model of MSCONS Manufacturing model The processing of meter data, business process monitoring and handling of exceptions by knowledge workers all are provided from the own back-office of SIV. SIV offers using IT hardware and software systems, but the client may select to host the actual application in its own data center. Service offer model The MSCONS BPO service is offered as stand- alone service or as “accounting bundle” with other services within accounting and billing. Distribution model Distribution is based on VPN connections and dedicated communication lines. Service delivery also depends on the customer’s ability to provide an appropriate operating environment for the back office applications needed. Capital model Financing model Operating costs are financed by internal funds of the enterprise. Revenue model The pricing for the service includes a basic fee for each client depending on the size of the customer base. An additional fee is charged for exception cases to be handled manually by knowledge workers. If the service is bundled within the accounting bundle, the basic fee is the same as for a single service, but the customer-based fee is higher.18
  16. 16. How to identify innovation potential? Take a value chain perspective • analyze extensions to neighboring parts of the value chain • Example: change procurement model to no longer outsource account printing but  to do it in‐house would 19 Analyze  business drivers in each partial model • what potential alterations in the current status are possible? • what are the effects on the other partial models? • Example: if for the demand model a new target group is identified, this might have  immediate effects on procurement and manufacturing model.  Does it make sense to start from the capability design, in particular the context model?
  17. 17. Context Elements for MSCONS Variation Aspect Context Element Measurable Property Context Element Range Operation Operating platform kVASy deployment {data center, cloud, customer} BSP human resources Schedule {low, average, high} Payload Market role Role segment {grid access provider, balance supplier, MDC, MOp, consumer} Message exchange format Format segment {MSCONS, UTILMD} Process subtype Subtype segment {VL, LG} Message version Version segment {2.2a, 2.2b, 5.0, 5.1} Contract Backlog threshold Backlog size [0-5] Exception type BAM notification {list of exception types} Business Service Process type {list of business services} 20
  18. 18. Analysis Results in the Case Three main business drivers are identified, which cause variations and provide  stimulus for changes • contractual aspect – specifies parameters such as backlog threshold as well as the process variant  to be implemented regarding the backlog size, such as “if the backlog size  exceeds the agreed threshold, then the case is routed to customer” • payload aspect – includes information of the service call such as the market role, the faulty  message and the exception type etc. • operational aspect,  – related to both SIV Services personnel deployment plan and the kVASy‐ operating environment 21
  19. 19. Observations from Analysis • extension from a business service to a capability will not make the established  business model invalid or obsolete • context elements identify potential variations in the business service caused by a  change in delivery context • variation points form starting points for identifying changes in partial business  models which eventually will lead to changes in MSCONS / overall business model 22 • Example: variation aspect “operation” with its context element “operating  platform”  – context element values are “data center”, “cloud” and “customer” – each of the values can be considered as variant of the existing business model:  • MSCONS operated in own data center, the cloud, the customer’s data  center, or as a mixture between these. • If it would make sense to actually distinguish the business model for these  variations depends on the effects on the other partial models – the investigation of potential innovations can start from the context elements.
  20. 20. Summary • Based on example of a business service from BPO in energy industries, we showed  how to decompose the underlying business model into different partial models  • Context model proved to be useful for identifying potential variants of the existing  business model (starting point for changes in the partial business models) 23 Main limitation  • we analyzed only the business model for one business service ‐ more services will  have to follow to develop our observations into clear implications • analysis was done by a researcher from the field, not by a practitioner from the  company ‐ validation of the results by a practitioner has to follow Business model analysis resulted in new option for capability modelling • the different partial business models could actually help identifying context  elements in capability modelling and more complete capability definitions Example: • use of a different supplier for accounting printing as part of the procurement model • indicates one more variation aspect which should be part of capability definition.
  21. 21. Thank you for your attention! Time for questions! 24

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