Business Models in PSI Reuse

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The presentation contains a brief summary of an international exploratory study on the business models adopted by for profit organizations in the reuse of public sector information

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Business Models in PSI Reuse

  1. 1. BUSINESS MODELS FOR PSI RE-USE Hype, Hope or the Next Big Thing? www.ismb.itEnrico Ferro - Michele OsellaBusiness Model & Policy Innovation Unit
  2. 2. Study financed by Join the debate via Social Media! #psi4profit2 Technology Intelligence for Government, Business and Society
  3. 3. Foreword “Venture capitalists and entrepreneurs should not underestimate the value of government data. […] As governments democratize data, there is a potential for hundreds of startups and the birth of billion dollar businesses based on this data.” Vivek Kundra Former U.S. Chief Information Officer3 Technology Intelligence for Government, Business and Society
  4. 4. The ScenarioPublic bodies are by far the largest producersof information in Europe and not only. “Commercial exploitation of Europes public sector information” – Pira International for the European Commission (2000)However:• The role of public agencies in creating, elaborating, consuming and releasing information is often not completely understood.• PSI is recognized as a major, but so far under-exploited asset, which could and should be a fundamental building block of the “new economy” in the Information Society.4 Technology Intelligence for Government, Business and Society
  5. 5. Prominent Gaps in the Literature Paucity of studies on «downstream information» Focus on «how much» in lieu of «how»5 Technology Intelligence for Government, Business and Society
  6. 6. Different Perspectives on the PSI Realm 6 Technology Intelligence for Government, Business and Society
  7. 7. Boundaries of Public Sector Information Open Public Sector Government Open Data Information DataOur perspective: all the broad spectrum of PSIPublic Sector Information Open Government Data Open Data Information generated, Data produced or “Works” which are “open” increated, collected, processed, commissioned by government terms of: access, preserved, maintained, or government controlled redistribution, reuse, absencedisseminated, or funded by or entities which can be freely of technological restriction,for the Government or public used, reused and redistributed attribution, integrity, no institution. by anyone. discrimination, license. Source: OECD Source: Open Knowledge Foundation Source: Open Knowledge Foundation [Recommendation C(2008)36] [opendefinition.org] [opendefinition.org] 7 Technology Intelligence for Government, Business and Society
  8. 8. Research Questions 1. Are there profit-oriented organizations capable of generating revenues from information produced by the public sector? 2. What are the value creation mechanisms present in this sector? How is value created and appropriated? 3. In light of non-rivalry and non- excludability characterizing PSI - when released as Open Data - which are the key factors playing a pivotal role in the pursuit of sustainable competitive advantages?8 Technology Intelligence for Government, Business and Society
  9. 9. Methodological Overview Adopted research approach: qualitative research Predominant research method: case study Type of case study: exploratory Unit of analysis: single company Case design: multiple case design Distribution of units of analysis: holistic9 Technology Intelligence for Government, Business and Society
  10. 10. Sampling Overview Long list of enterprises re-using PSI or enabling the re-use(mainly in the EU landscape) obtained through an extensive market research ~ 139 items Mixed sampling approach Criteria for the theoretical sampling • Empirical sampling (spontaneous collection of • Geographical location exceptional cases “in the (Italy, Europe, Rest of the World) limelight”) • Position in the value chain • Theoretical sampling (Re-Users, Enablers) (“structured” collection of cases in light of the prearranged research purposes) 13 enterprises under the lens 10 Technology Intelligence for Government, Business and Society
  11. 11. Units of AnalysisLong list distribution Sample distribution 11 Technology Intelligence for Government, Business and Society
  12. 12. The FrameworkResource-driven design PSI-based Value Proposition Enterprise- PSI Processed specific Data resources Public resources PSI Raw Data PSI-based Revenues12 Technology Intelligence for Government, Business and Society
  13. 13. The Framework (cont’d) Make money from data Price Mechanisms Create value from data Role of PSI in the Value Proposition Make sense of data Types of Data Elaboration13 Technology Intelligence for Government, Business and Society
  14. 14. The Framework (cont’d) Types of Data Elaboration Role of PSI in the Value Proposition Data aggregation Final good itself Data structuring and classification Key ingredient of a product Data geo-referencing Key ingredient of a service Data validation Marginal ingredient of a product Data mash-up Marginal ingredient of a service Visual analytics Price Mechanisms Premium Freemium Free À la carte Feature limited Advertising powered Subscription fee Time limited Cross subsidization Royalties Size limited Zero marginal cost14 Technology Intelligence for Government, Business and Society
  15. 15. Main Findings • Changes in governmental boundaries • The multi-actor PSI-centric value ecosystem • Archetypal actors • Archetypal business models • Entry barriers and sources of competitive advantage • Upside-down price logic • Dissimilar market structures for different re-users15 Technology Intelligence for Government, Business and Society
  16. 16. From “Monolithic” Government … Back-end Front-end Policy sphere Operative sphere System Data Decision Data Service integration integration making provision provision Private sector enterprises Data sphere GOV 1.016 Technology Intelligence for Government, Business and Society
  17. 17. … To “Extended” Government Back-end Front-end Policy sphere Operative sphere Spontaneous civil initiatives Spontaneous civil initiatives System Data Decision Data Service integration integration making provision provision Private sector enterprises Private sector enterprises Private sector enterprises Data sphere GOV 2.017 Technology Intelligence for Government, Business and Society
  18. 18. The Multi-Actor Value Ecosystem “Fit-for-purpose” Raw data Refined data products and services PSI PSI retrieval, generation storage, PSI PSI and categorization re-use consumption dissemination and exposure Governmental Business Non-profit enablers Core re-users bodies end-users Private sector Service Governmental enablers advertisers end-users Legend Advertising Profit-oriented Consumers factories actors Spontaneous civil Non-profit initiatives actors18 Technology Intelligence for Government, Business and Society
  19. 19. From Archetypal Actors … On the front line Position in the value creation process Behind the scene PSI as PSI as «bread and butter» «attraction tool» Strategic vision of the PSI realm19 Technology Intelligence for Government, Business and Society
  20. 20. … To Archetypal Business Models#1 Premium product / service#2 Freemium product / service #7 Free as branded advertising#3 Open Source like#4 Infrastructural razors & blades #8 White-label development#5 Demand-oriented platform#6 Supply-oriented platform 20 Technology Intelligence for Government, Business and Society
  21. 21. #1 Premium Product / Service21 Technology Intelligence for Government, Business and Society
  22. 22. #1 Premium Product / Service Data retrieval Long or and structuring, medium term, Mostly Provision of development of standardized business high-value the application or customized clients (B2B) features based logic on PSI Creativity, Web, technical traditional expertise, financial channels resources (rarely) Software Lump sums or development and subscription maintenance, fees CRM22 Technology Intelligence for Government, Business and Society
  23. 23. #2 Freemium Product / Service23 Technology Intelligence for Government, Business and Society
  24. 24. #2 Freemium Product / Service Data retrieval Medium or Provision of PSI- Mostly and structuring, short term, based features consumers development of standardized according to the (B2C) the application “value for logic money” principle Creativity, Web, mobile technical apps expertise, financial resources Software Charges for development and additional data maintenance, or advanced CRM features24 Technology Intelligence for Government, Business and Society
  25. 25. #3 Open Source Like25 ISMB – Copyright 2012
  26. 26. #3 Open Source Like Data retrieval Long, medium and structuring, Provision of Heterogeneous or short term, development of PSI-based customers (B2B, standardized the application features in an B2G, B2C) or customized logic “open“ manner Creativity, Web technical expertise, financial resources Software Payments for added- development and value services and maintenance, for license variations CRM26 Technology Intelligence for Government, Business and Society
  27. 27. #4 Infrastructural Razors & Blades 27 Technology Intelligence for Government, Business and Society
  28. 28. #4 Infrastructural Razors & Blades Data exposure Short term, via APIs, standardized Developers, Facilitation in provision of scientists access to PSI computing resources capacity Storage Cloud resources, computing computing platforms resources Management On-demand and evolution payments for of the IT estate computing power 28 Technology Intelligence for Government, Business and Society
  29. 29. #5 Demand-Oriented Platform29 Technology Intelligence for Government, Business and Society
  30. 30. #5 Demand-Oriented Platform Data structuring Long orProviders of and medium term, Developers Facilitation incloud classification, standardized access to PSIcomputing data exposure resourcesservices via APIs Storage “One stop resources, shopping” data computing platforms resources Management of Payments for the IT estate, advanced data features or maintenance refined data 30 Technology Intelligence for Government, Business and Society
  31. 31. #6 Supply-Oriented Platform31 Technology Intelligence for Government, Business and Society
  32. 32. #6 Supply-Oriented Platform Data structuring Long term, Facilitation in and classification, customized PSI holders management data exposure via Long, medium (charged side and exposure APIs, data or short term, of the market) of PSI exposure via GUI standardized resources Facilitation in Developers Storage access to PSI (non-charged Two-sided data side of the resources, resources management market) computing platforms resources Management and "Parametric" payments evolution of the IT based on data storage, estate, data bandwidth maintenance requirements, API calls32 Technology Intelligence for Government, Business and Society
  33. 33. #7 Free as Branded Advertising33 Technology Intelligence for Government, Business and Society
  34. 34. #7 Free as Branded Advertising Data retrieval, Short term,Software Provision of Wide audience development of standardizeddevelopment PSI-based of customers the applicationcompanies, services of logic, brandcommunication general promotionagencies usefulness Creativity, Web, mobile technical apps expertise Software Revenue streams development, coming from non- marketing, PSI-based service evolution business lines 34 Technology Intelligence for Government, Business and Society
  35. 35. #8 White-Label Development35 Technology Intelligence for Government, Business and Society
  36. 36. #8 White-Label Development Customer negotiation, data Long or Development Companies retrieval, medium term, and delivery of willing to use development of customized white-label PSI as the application solutions "attraction tool" logic based on PSI Creativity, technical expertise Software Lump sum or development, recurring CRM payments for crafted solutions36 Technology Intelligence for Government, Business and Society
  37. 37. Sources of Competitive Advantage Vision at a glance Dynamic perspective Learning curve Cumulated experience (acquired also outside the PSI world) coupled by absorption capacity that enhances an effective use of knowledge acquired from Static perspective external sources. Efficiency Presence of already established internal resources which are usable without incurring incremental costs.37 Technology Intelligence for Government, Business and Society
  38. 38. Entry Barriers…Extent of barriers to PSI re-use Effort for differentiating the value proposition Effort for accessing PSI Closed PSI Grey area OGD Degree of PSI openness 38 Technology Intelligence for Government, Business and Society
  39. 39. … and Sources of Competitive Advantage High Extent of price barriers Low Low High Extent of technological barriers 39 Technology Intelligence for Government, Business and Society
  40. 40. Pricing Paradigm: the “Old-Style” Locus: the “Closed by Default” realm40 Technology Intelligence for Government, Business and Society
  41. 41. Pricing Paradigm: the “New-Style” Locus: the “Open by Default” realm41 Technology Intelligence for Government, Business and Society
  42. 42. Dissimilar Market Structures … Impregnable strongholds Fluid markets Prominent business driving force Data volumes Application logic Key success factor Aggregation Creativity Amount of PSI encompassed in Slew of datasets Few chunks of data re-use operations Degree of data diversity Homogenous data Heterogeneous data Main barriers to the re-use Price barriers Technological barriers (not always present) Market concentration High Low Target customers Mainly B2B and B2G entities Chiefly B2C audience Re-users’ profile Well-structured companies Mainly start-ups Re-users’ business approach “Evergreen” businesses “Groundbreaking” businesses Pricing mechanism Premium pricing model Free / freemium pricing model42 Technology Intelligence for Government, Business and Society
  43. 43. … For Different Re-Users High Low Stars Question marks “Ground- breaking” High businesses operating in fluid Market growth markets Low“Evergreen”businessesoperating in Cash cows Dogsoligopolistic regimes Market share Growth-Share Matrix (a.k.a. BCG Matrix) 43 Technology Intelligence for Government, Business and Society
  44. 44. Conclusions PSI re-use for profit purposes is not a marginal phenomenon at a European level. Two "ideal types" of market have been found out: fluid markets vs. oligopolistic markets. Four main positions have emerged along the PSI value chain. Eight archetypal business models have been depicted. A paradigm shift in terms of pricing is appearing at the horizon.44 Technology Intelligence for Government, Business and Society
  45. 45. Policy Guidelines Why opening data? Extended Gov. PSI is a pivotal pillar in the Business opportunities reshaping of governmental Competition boundaries, creating more The opening up of public room for spontaneous civil data (in legal, technical and initiatives and private pricing terms), despite The increasing degree of business endeavors. reinforcing the nature of openness and accessibility public good, is compatible shifts the sources of with its use in profit- competitive advantage to oriented activities. functional aspects as well as to knowledge of vertical domains, strengthening the competition in PSI-related market arenas and weeding out rent seeking.45 Technology Intelligence for Government, Business and Society
  46. 46. Policy Guidelines (cont’d) How opening data? Scale The presence of a Most wanted minimum efficient scale Information sources Italian scenario (national or international) calls for taking the lion’s share regard geography and In the Italian coordination activities ecosystem, noteworthy aimed at promoting cartography, companies and finance, law and opportunities may stem local initiatives. from the immense legislation. cultural heritage, which nowadays seems to represent a largely untapped potential.46 Technology Intelligence for Government, Business and Society
  47. 47. Policy Recommendations Tackling major Clear and long-term roadblocks on legal framework the way to PSI re-use … Distinction between Continuity in the Enabling ownership and update of data factors stewardship of data Guarantees about data quality47 Technology Intelligence for Government, Business and Society
  48. 48. Let us Have Your Opinion! ferro@ismb.it osella@ismb.it @egferro @MicheleOsella “We believe that changing the world is the only way to make it a better place” “We believe in building the future we want to live” “We create value-driven and socially relevant technological innovations in close collaboration with industry and government” “Do you want to be part of our next research venture?”48 Technology Intelligence for Government, Business and Society

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