»Creative Thinking about Internet of Service Business Models«, Nico Weiner, SRII Global Conference 2011, San Jose, California, U.S.

1. Creative Thinking about »Internet of Service
Business Models«
Presentation of the contribution »A Framework for the Design and
Evaluation of Business Models in the Internet of Services«
at the SRII Global Conference 2011
Nico Weiner
Competence Center Electronic Business
Fraunhofer IAO, Stuttgart Germany
March 31st, 2011
San José, CA, USA
© Fraunhofer IAO, IAT Universität Stuttgart 1

2. The »Internet of Services« - Vision
Hypothesis:
The Web of the future offers the infrastructural and organizational
facilities to trade business-services over the internet as simple as we can
trade products today.
Today, Cloud Computing- and Software-Services are the most
significant aspects of this vision to become reality!
© Fraunhofer IAO, IAT Universität Stuttgart 2

3. Agenda
 The Internet of Services from a Business Model
Perspective – A First Glance
 The[moby]-Business Model Approach
 Web-based Business Model Design Demo
 Outlook on Business Model Management
© Fraunhofer IAO, IAT Universität Stuttgart 3

4. Cloud Services –
Excerpt of the Dimensions of a Business Model
Financials:
 costs for running a datacenter and server-infrastructure (inhouse or via partner); typically
high-quality support with appropriate costs; a completely different pricing model in many
cases –various criteria do exist: OS, location of datacenter, instances, compute units,
memory size, transfer, transactions, subscriptions …
Partnership:
 Integration of a datacenter-partner; platform providers;
ISV – independent software vendors which offer via a platform;
integrators; resellers & value adding resellers and many other 3rd parties …
Value Creation & Distribution:
 New questions of outsourcing of resources, capabilities to partners;
development of software-offering itself + migration/ integration/
customization-services; support; infrastructure & service monitoring,
hosting, SW/HW-appliances …
Value Proposition => How do you describe the value for your customers?
© Fraunhofer IAO, IAT Universität Stuttgart 4

5. »The Greater Picture«
Thinking of creative business model variants by keeping track of all aspects
without information overload
Image by Ben Heine © Ben Heine 2011 - www.benheine.com BLOG: http://benjaminheine.blogspot.com
© Fraunhofer IAO, IAT Universität Stuttgart 5

6. Solution –
Think about business models, not business plans
Business Model: A simple model of the business logic (main
aspects of value exchange) of a company. Business Models are
(far) more than financials!
Elements of a business model description depend on author’s
focus – most of them see building blocks and relations between
them
 => An Ontology is particularly
suitable to describe a business model
Why no business plan? A business model
 is an early-stage tool to be fast
 is a visual way to speak about ideas
 targets a wider audience (internal and external
decision makers, business developers but maybe
also partners and other external parties)
Images: small versions of the canvas by Osterwalder, Gordijn’s e3-value and Wirtz’s model; Business Model Research Map by Fraunhofer IAO
© Fraunhofer IAO, IAT Universität Stuttgart 6

7. Business Model Design is a Creative & Visual Task
»Much of the thinking done in formal education Critical vs. Creative
emphasizes the skills of analysis – teaching students Thinking Thinking
how to understand claims, follow or create a logical
analytic vs. generative
argument, figure out the answer, eliminate the
incorrect paths and focus on the correct one. probability vs. possibility
However, there is another kind of thinking, answer vs. an answer
one that focuses on exploring ideas,
generating possibilities, left brain vs. right brain
looking for many right answers verbal vs. visual
rather than just one.«
(Robert Harris) linear vs. associative
reasoning vs. richness,
novelty
Excerpt from Robert Harris,
Introduction into Creative Thinking 1998
http://www.virtualsalt.com (1998) Image: photostock / FreeDigitalPhotos.net
© Fraunhofer IAO, IAT Universität Stuttgart 7

8. Agenda
 The Internet of Services from a Business Model Perspective – A
First Glance
 The [moby]-Business Model Approach
 Web-based Business Model Design Demo
 Outlook on Business Model Management
© Fraunhofer IAO, IAT Universität Stuttgart 8

9. Business Model Concept
moby – methodology for business dynamics
© Fraunhofer IAO, IAT Universität Stuttgart 9

10. Four Stages of Business Model Design
0.) Business Model Ideas
Brainstorming about innovative ideas
1.) Configuration of the model
Introduction into the available building blocks
Selection of the required building blocks together with the partner
2.) Prioritization and design of the business model alternatives
Criteria-based identification of the promising alternatives
Design of the alternatives together with the partner (Software-supported)
3.) Business Model Evaluation
Comparison and validation of the modeled alternatives
4.) Business Model Dynamics & Management
Exploitation and revision of the business model information
© Fraunhofer IAO, IAT Universität Stuttgart 10

11. Basic reference model (full)
Value Approach Market Interface Financial Aspects Products & Services Value Creation &
Capabilities
offersRelated
Customer
Experience causesExperience Product &
leadsTo Service Offering
isOfferedWith
Competitor
influences
Pricing creates
intends
experiences
approaches
refines targets
requires
leadsTo
reflects Target Revenue
refines
Customer generatesSharedRevenue isOfferedWith requires
isRiskFor (Group) targets
providesInputFor
isMaintainedWith
targets influences
usesSimilar Business
Revenue isOperationalBaseFor
Customer/ Process
creates
leadsTo Sharing Complementary
Business
Mechanism Offering
Relationship
delivers requires requires
Value deliversTo
Intention refines
requires integrates
refines Profit
refines targets
isAspectOf
isOperationalBaseFor
isMaintainedWith Distribution
Channel Capability requires Resource
isAspectOf
contributes
targets
influences
Potential
Expense isAspectOf
conceals
Agreement
reflects earns negotiates
operates
isInvolvedIn
isSetUpWith refines
causes
Partner
(Group) causes
causes
Expense
experiences
refines
Partner causesExperience provides
holds
Experience requires
requires
invests
Investment
© Fraunhofer IAO, IAT Universität Stuttgart 11

12. Configured Reference Model (example)
Value Approach Market Interface Financial Aspects Products & Services Value Creation &
Capabilities
offersRelated
Customer
Experience causesExperience Product &
leadsTo Service Offering
isOfferedWith
Competitor
influences
Pricing creates
intends
experiences
approaches
refines targets
requires
leadsTo
reflects Target Revenue
Customer refines
generatesSharedRevenue
isOfferedWith requires
isRiskFor (Group) targets
providesInputFor
isMaintainedWith
targets influences
usesSimilar isOperationalBaseFor Business Process
Revenue
Customer/ creates
leadsTo Sharing Complementary
Business
Mechanism Offering
Relationship
delivers requiresrequires
Value deliversTo
Intention refines
requires integrates
refines Profit
refines
targets
isAspectOf
isOperationalBaseFor
isMaintainedWith Distribution
Channel Capability requires Resource
isAspectOf
contributes
targets
Potential
influences
Expense isAspectOf
conceals
Agreement
reflects earns negotiates
operates
isInvolvedIn
isSetUpWith refines
causes
Partner
(Group) causes
causes
Expense
experiences
refines
Partner causesExperience provides
holds
Experience requires
requires
invests Investment
© Fraunhofer IAO, IAT Universität Stuttgart 12

13. Agenda
 The Internet of Services from a Business Model Perspective – A
First Glance
 The[moby]-Business Model Approach
 Web-based Business Model Design Demo
 Outlook on Business Model Management
© Fraunhofer IAO, IAT Universität Stuttgart 13

14. [moby:designer]bm
Software-supported Business Model Design & Management
Moby-bm.wmv
© Fraunhofer IAO, IAT Universität Stuttgart 14

15. OnLive – A Cloud-Service for High-End Gaming
Please note: this an external view on a business model excerpt based on
publicly available information
© Fraunhofer IAO, IAT Universität Stuttgart 15

16. Agenda
 The Internet of Services from a Business Model Perspective – A
First Glance
 The[moby]-Business Model Approach
 Web-based Business Model Design Demo
 Outlook on Business Model Management
© Fraunhofer IAO, IAT Universität Stuttgart 16

17. Possible Extensions of the [moby]-Framework
moby – methodology for business dynamics
Model [moby:business ontology]bm
Dynamic Business Model Method [moby]bm
Editor [moby:designer]bm
Broker
Model [moby:event processing]dbpm
Dynamic Business Process Method [moby]dbpm
Editor [moby:designer]dbpm
© Fraunhofer IAO, IAT Universität Stuttgart 17

18. Thanks for your time &
see you at the forum!
Download of publications and presentations:
www.itbusinessmodels.org
More information on the THESEUS Research Program:
www.theseus-programm.de/en-US/home/
Contact Details:
 Nico Weiner, Fraunhofer IAO
nico.weiner@iao.fraunhofer.de
Tel.: +49 711 970 5120
Fraunhofer-Alliance Cloud Computing
is led by Fraunhofer IAO
 7 Fraunhofer-institutes steering the
Cloud-activities of Fraunhofer
 http://www.cloud.fraunhofer.de (German)
The project underlying this report was funded by the German Federal Ministry of Economics and Technology under project funding reference number 01MQ07017. The
responsibility for the content of this publication lies with the author.
© Fraunhofer IAO, IAT Universität Stuttgart 18