PhD Seminar INFORGE/HEC e-Business Models

PhD PhD SeminarSeminar INFORGE/HEC INFORGE/HECe-Business Modelse-Business Models

HEC 2002Lausanne, February 14 2002

Alexander OsterwalderHEC Lausanne

[email protected](+41 21) 692.3420

© 2002 Osterwalder, HEC Lausanne e-business 2

Université de Lausanne

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Agenda

1. Why business models?

1. Economic environment (the market, the enterprise) p3

2. What are they good for? p7

2. State of the art in business models

1. Ontologies, business models, tools p9

3. Structure of the research

1. Research levels, research projects p10

4. Structure of my thesis

1. Ontology, prototype, proof of concept p12

5. Sketch of the business model framework

1. 4 pillars: Product, customer, infrastructure, finance p14



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Why Business Models?

• A buzzword with no precise definition

– 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 [Linder, 2001]

• Dynamic business environment

– New Information and Communication Technologies (ICT)

– Increased & global competition

– Shorter product life cycles

• Fluid company borders & dynamic business networks

– Business Webs [Tapscott & al., 2000]

– Co-opetition [Brandenburger & al., 1996]

– Fluid organizations [Selz, 1999]



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e-Business Logic Today

Business Processes

StrategyPlanning level

Implementationlevel

Information & Communication

Technology (ICT) pressure

e-Businessprocesses

e-Business Technology layer

•Positioning•Objectives & goals•Communication of strategy

• Problem: Interpretation of strategy

• Result: Re-inventing strategy

?



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e-Business Logic Tomorrow

Business Processes

Business Model

StrategyPlanning level

Architectural level

Implementationlevel

Information & Communication

Technology (ICT) pressure

e-Business opportunities & change

e-Businessprocesses

e-Business Technology layer

Conceptual architectureof a business strategy



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What is an Business Model anyway?

• A business model is not a description of a complex social system itself with all its actors, relations and processes. Instead it describes the logic of a “business system” for creating value, that lies behind the actual processes.

• A business model is the conceptual and architectural implementation of a business strategy and represents the foundation for the implementation of business processes

Business Processes

Business Model

Strategy Business Im

pact



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A company that defines it’s business model can...

• Understand– The process of modeling social systems or ontologies–

such as an e-business model – helps identifying and understanding the relevant elements in a domain and the relationships between them (Ushold et al., 1995; Morecroft, 1994).

• Share knowledge– The use of formalized e-business models (i.e. an

ontology) helps managers communicate and share their understanding of a business among other stakeholders (Fensel, 2001).

• React to rapid change– Mapping and using e-business models facilitates

change. Business model designers can easily modify certain elements of an existing e-business model (Petrovic et al., 2001).

Objects

XML



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A company that defines it’s business model can… (continued)

• Measure– A formalized e-business model can help identifying

the relevant measures to follow in a business, similarly to the Balanced Scorecard Approach (Norton et al., 1992).

• Simulate & learn– e-business models can help managers simulate

businesses and learn about them. This is a way of doing risk free experiments, without endangering an organization (Sternman, 2000).

System

thinking

BSC



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State of the Art

• Ontologies– Enterprise ontologies: TOVE (Toronto Virtual Enterprise), The Enterprise

Ontology (html), Core Enterprise Ontology (CEO)

– e-Business Process ontologies (in XML): Transactions (xCBL, cXML), Ontology.org (html)

• Business Models– Classification: Timmers (pdf), Rappa (htm), Tapscott.

– Modeling (partial…): Hamel, Gordijn, Afuah, Linder (html).

• Tools– MIT eBusiness Process Handbook (html)

– System Dynamics...http://ecommerce.ncsu.edu/business_models.html



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3 Research Levels

Level 1

Level 3

Level 2

e-Business ModelEquations

e-Business ModelOntology

e-Business ModelMeasurements

Understanding model elements and relationships, communicate and share models, change models

Pilote, follow, alert

Simulate models, play and learn by changing models, understand consequences of change

e-Business Model Simulator, e-Business Model Games

e-Business Model Balanced Scorecard

e-Business Model Framework (eBMF), Language (eBML), Handbook (eBMH) and Design Tool

Research ProjectsManagement Use



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Research Objectives/Projects

E-Business Model Ontologyor Framework (eBMF)

- concepts/models (components)- links between concepts/models

E-Business Model Ontologyor Framework (eBMF)

- concepts/models (components)- links between concepts/models

E-Business Model Handbook- navigate in concepts (www)

- graphical representation- illustrative examples

E-Business Model Handbook- navigate in concepts (www)

- graphical representation- illustrative examples

E-Business Model Language (eBML)

- ontology representation (xml)- graphical representation

- knowledge sharing

E-Business Model Language (eBML)

- ontology representation (xml)- graphical representation

- knowledge sharing

E-Business Model Design Tool

- computer assisted design- evaluation

- change management

E-Business Model Design Tool

- computer assisted design- evaluation

- change management

E-Business Model Simulation

- scenarios (system dynamics)- learn about Business Models

- be prepared

E-Business Model Simulation

- scenarios (system dynamics)- learn about Business Models

- be prepared

E-Business Model Games

- play, learn & understand

E-Business Model Games

- play, learn & understand



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The Thesis

• Literature review and e-Business Model Ontology construction– e-business, ontology and business model review

– formalizing an e-business model ontology (e-BMO)

• e-Business Model Visualizer (prototype)– based on the ontology (e-BMO)

– e-business case

– graphical representation structure

• Proof of concept– interviews with consultants

& executive

– e-business case studies

RepositoryGraphics

CompanyBusiness

ModelEntry

ProgramTransformProgram

GUIread, process,

drawstore graphical representation

structureFull example



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Research Methods

• Conceptual Research– based on literature (articles, books)

– based on observations (case studies)

• Design Science [Au, 2001; Ball, 2001]– development of artifacts

• Validation (!?)– of model

– of completeness

– of utility



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Definition of a Business Model

A business model is nothing else than the value a company offers to one or several

segments of customers and the architecture of the firm and its network of partners for

creating, marketing and delivering this value and relationship capital, in order to generate profitable and sustainable revenue streams.



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Definition of an e-Business Model

PRODUCTINNOVATION

INFRASTRUCTUREMANAGEMENT

CUSTOMERRELATIONSHIP

FINANCIAL ASPECTS



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CapabilitiesValue

PropositionTarget

Customer

PRODUCTINNOVATION



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CapabilitiesValue

PropositionTarget

Customer

PRODUCTINNOVATION

Resources

ValueConfiguration

PartnerNetwork




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CapabilitiesValue

PropositionTarget

Customer

Resources

ValueConfiguration

PartnerNetwork

PRODUCTINNOVATION


InformationStrategy

Feel &Serve

Trust &Loyalty




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CapabilitiesValue

PropositionTarget

Customer

Resources

ValueConfiguration

PartnerNetwork

InformationStrategy

Feel &Serve

Trust &Loyalty

PRODUCTINNOVATION



Cost Structure Revenue ModelProfit/Loss

FINANCIAL ASPECTS



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Ontology: Relationships Between Concepts



PRODUCTINNOVATION

PRODUCTINNOVATION

FINANCIALASPECTS

FINANCIALASPECTS



resourcefor

resourcefor

sold through

revenue for

resource for

cost

feedback for

buildson

TARGET CUSTOMER

VALUE PROPOSITION

CAPABILITIES

RESOURCES & ASSETS

ACTIVITY CONFIGURATION

PARTNER NETWORK

INFORMATION

FEEL & SERVE

TRUST & LOYALTY

REVENUE MODEL

PROFIT / LOSS

COST MODEL

has needs value for

resource for builds on

to enable supposes

resource for builds on

to improve to collect

to establish to improve

to increase

diminishes

buildson



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Questions & More Information

[email protected]://inforge.unil.ch/aosterwa

PhD Seminar INFORGE/HEC e-Business Models

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