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Institute for Software Technology and Interactive SystemsVienna University of Technology
Favoritenstraße 9-11/188-3 . 1040 Vienna . AustriaTel.: +43 (1) 58801 - 18861, Fax: +43 (1) 58801 - 18896
http://www.ec.tuwien.ac.at
Business Models with special focus on
e3-Value
© www.e3value.com
Agenda
Business Model vs. StrategyThe 3 views of a Business ModelBusiness Modeling vs. Business Process Modelinge3-Value
Artifacts & Syntax of e3-Valuee3-Value exampleTool support
Other ontologies References
2
Business Model Definition (1)
“In the most basic sense, a business model is the method of doing business by which a company can sustain itself -- that is, generate revenue. The business model spells-out how a company makes money by specifying where it is positioned in the value chain.”
(Rappa 2001)
“This [the Internet business model] is a set of Internet-related activities - planned or evolving - that allows a firm to make money using the Internet and to keep the money coming”.
(Afuah/Tucci 2001)
3
Business Model Definition (2)
marketing model
Architecture for product, service and information flows, including a description of the various business actors and their roles (‘organisation of the business’);
Description of the potential benefits for the various business actors;
Description of the sources of revenues.
Business model Marketing (business) strategy
(Timmers 2001)
4
Business Model vs. Strategy
Business models specify the relationships between different participants in a commercial venture, the benefits and costs to each and the flows of revenue.
Business strategies specify how a business model can be applied to the market to differentiate the firm from its competitors (Elliot, 2002)
(Osterwald & Pigneur): a business model can be seen as the missing link between strategy and business processes or in other words the linkage between the planning and the implementation level of a business environment
Business Model ≠ Business Plan
5
The 3 Views of a Business Model Classification (Timmers, Rappa) – which types of business
model 29 different types of business model, in 9 categories Brokerage, Advertising, Infomediary, Merchant (Wholesaler, Retailer), Manufacturer
(Direct), Affiliate, Community, Subscription, Utility (on demand model)
Concrete model (for enterprises)
Meta model – provide means to „model“ a business model Ontologies like …E3-Value, REA, BMO
Ÿ
Collecting and editing ofexternal contents
Production of ow n onlinecontent
Communicationadmin
Management ofadvertising
collaborationIntegration/ Positioning
Customer interaction
Offering content
Production model Service model
ContentŸPersonalized contentsŸPublic interest contentŸSpecial interest contentŸAd hoc new sŸData bases
ConnectionŸDiscussion listsŸRecommendation service
Advertising§ Banner ads
Inte
gr ate
d p
r od
uc t a n
d s
erv ice b
un
dle
Procurement modelRevenue and
distribution model
e.g.
dpa
Reuters
Internet-community/companies
DeutscheBank
Consumer
DeutscheBank
Financial Times Deutschland
content message
integration of content
payment
coordination ofexternal communication
co-advertising offer
advertising content
Presentation
Distribution
Advertisingrevenues
6
What is Business Modeling?
E-Commerce Information System
CEO
Programmer
Modeler
What?How?
Just do it ;-)
7
Business Modeling is not Business Process Modeling
Business Process Modeling
time-order creation of a common approach
for work to be carried out; incremental improvement of
processes (e.g. efficiency); support of processes by
workflow management systems; analysis of properties of a
process (e.g. deadlock free);
Business Modeling
no time-order rationale for e-commerce
systems from a business point of view
concept of value stakeholders creating and
exchanging objects of value with each other
benefits & revenues profitability sheet
8
Business Process Modeling
who are the actors involved in the operations
which operational activities can be distinguished
which activities are executed by which actors
what are the inputs and outputs of activities
what is the sequence of activities to be carried out for a specific case
which activities can be carried out in parallel for a specific case
9
Business Modeling
who are the value adding business actors involved
what are the offerings of which actors to which other actors
what are the elements of offerings
what value-creating or adding activities are producing and consuming these offerings
which value-creating or adding activities are performed by which actors
10
We concentrate on…
Slides from a Tutorial at CAISE 2006
by Jaap Gordijn, Hans Akkermans and Michael Petit
extended by material on www.e3value.com
© www.e3value.com
© www.e3value.com
11
3-Layer approach
Management
Administration
IT
Business Models(value perspective)
Business Process Models(process flow perspective)
Deployment Artifacts(execution perspective)
plattformunabhängig
plattformspezifisch
E3-Value
UMMBPMN
BPEL
12
xxx
13
Notation of Business Models
Business models are presented as informal text Ad-hoc graphical presentations Spread sheets
Limitations No clear and unambiguous specification of the business
issue Manifests the gap between business and IT folks
E-3 Value Defines how economic value is created Defines which economic value is exchanged in a network
of actors
14
Network Constellations
“A construct where actors come together to co-produce value with each other” (Normann & Ramirez)
Similar to: value & business webs (also called b-webs): “contributors that come together to create value for
customers and wealth for their stakeholders” (Don Tapscott, “Digital Capital”, 2001 !!!!)
Emerged due to widespread use of the Internet Examples:
Cisco Systems, Dell, but also industries such as Electricity supply Most Internet services such as news, market places,
entertainment
15
Network Constellations
While designing constellations …
Concerns are: Multiple enterprises: in case of conflicts no central
decision taking authority Multiple stakeholders: often confusion about which
product/service we offer with whom, long before talking about IT
Short timeframe: ~weeks available for designing a constellation offering a particular service (time to market)
Economic & technical feasibility
17
Reasons to model constellations
Eliciting a constellation (under design) Who are the actors (enterprises and final customers)
involved? What do they transfer of economic value to each other,
and what do they request in return for that? Why do they transfer these values? What activities do they perform to produce/consume?
Representing a value model using an ontology and conceptual modeling techniques
Analyzing properties of a constellation Economic sustainability for all actors Technical feasibility
18
Reasons to model constellations (2)
A precise and shared understanding of the constellation Checking common business rules:
For business requirements and profitability e.g. “one good turn deserves another”
Analysis of (economic) feasibility: scenarios Starting point for Information Systems development:
networked value constellations e.g. for assessing technical feasibility
19
Hello world in e3value
© www.e3value.com
LegendValue
ExchangeValueport
Valueinterface
Startstimulus
Connect.element
ActorEnd
stimulus
20
E3-value concepts
Actor Value Object Value Interface Value Offering Value Transfer Market Segment Value Activity Composed actor
ValueInterface
ValueOffering
ValueTransfer
ValuePort
MarketSegment
ValueObject
hashas
consists-of
has-in offers-
requests
0..1 1..* 1..* 0..1
1
1..*
1..*
0..* 1
10..*0..* 1has-out
Actor
in
assigned-to-ac
assigned-to-ms
in
offered-re-quested-by
in-connects
out-connects
consists-of in
0..* 0..*
consists-of1
1..2
ValueTransaction
1..n
1..n in
consists-of
21
Is the meta model correct?
Actor
Models an economically independent entity
Example: enterprises and end consumers profit and loss responsible business units
Graphically: Rectangle + enterprise or role name
Def: An actor is an independent economic (and oftenlegal) entity. By carrying out value activities, an actor makes aprofit or increases its utility. In a sound, viable, e-businessmodel, each actor should be capable of making a profit.
22
Value object
Models things of economic value that can be observed. Note: valuation itself is subjective!
Example: Money, Music, Car, Electricity, …
Graphically: […]
Def: Is a service, a good, money, or even an experience, which is of economic value for at least one of the actors involved in a value model.
23
Value port
Models provisioning or requesting value objects to or from actor’s environment
Change of ownership, or a change in rights Used to abstract away from internal business
processes Example:
Requesting (in-port) money (a value object) Offering (out-port) a good
Graphically: Triangle Peak signals provide / request
Def: An actor uses a value port to show that it wants to provide or request value objects. The concept of port enables us to abstract away from the internal business processes and focus only on how external actors and other components of the e-business model can be plugged in.
24
Value interface
Groups in-going and out-going value offerings Models economic reciprocity Example:
Value interface: music + payment + online access + payment Graphically:
Rectangle (with round edges) covering value ports
© www.e3value.com
Def: Actors have one or more value interfaces, grouping individual value ports. A value interface shows the value object an actor is willing to exchange in return for another value object through its ports. The exchange of value objects is atomic at the level of the value interface.
25
Value offering
Value offering: groups equally directed ports models bundling: mixed bundling, only of value in
combination, … Example:
Value offering: music + online access Graphically:
No graphical representation i.e. all value ports of an value interface that
either provide or consume value objects
Def: A value offering is a set of value exchanges that shows which value objects are exchanged via value exchanges in return for other value objects. A value offering should obey the semantics of the connected value interfaces: Values are exchanged through a value interface on all its ports or on no ports at all.
26
Value transfer
It shows which actors are willing to transfer value objects with each other.
Graphically: A connection (line) between two value ports. The
transferred value object is specified on this connection.
Example:
Def: A value transfer connects two value ports with each other. Itmodels one or more potential trades of value objects.
27
Value transaction
A value transaction groups all value transfers that all should happen, or none at all, as a result of how the value interfaces are chosen
Example:
[MONEY]
[train trip]
[MONEY]
[food]
Value transaction
28
Market segment
Graphically: Stack of actors
Example: ADSL light/heavy/business users
Surfers assign value differently
Surfers assign value equally
Def: A market segment is a concept that breaks a market (consisting of actors) into segments that share common properties. It shows a set of actors that for one or more of their value interfaces, value objects equally.
29
Value activity
Shows activities that are expected to be profitable for at least one actor
Models decoupling of a legal entity from what it is doing Needed to discuss “who is doing what” in a structured way Example:
Def: An actor performs a value activity for profit or to increase its utility. The value activity is included in the ontology to discuss and design the assignment of value activities to actors. As such, we are interested in collecting activities that can be assigned as a whole to actors. Consequently, such an activity should be profitable or increase utility.
30
Actor composition
Models that actors offer something of economic value jointly as a partnership
Not: ownership
Def: For providing a particular service, several actors might decide to work together and to offer objects of value jointly by using one value interface to their environment. We call such a partnership an actor composition.
31
Use Case Maps (Scenario Path) for e-Business
Value interfaces between different actors/activities are related via value transfers
Value interfaces of same actor/activity are related by dependency paths
Purpose: to make value models “computable”
© www.e3value.com
End stimulus
Start stimulusOR AND
32
Dependency path
Consists of one or more segments related by connection elements and start-and-stop stimuli.
Indicates which exchanges through values interfaces result in further exchanges
End stimulus
Start stimulusOR AND
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Stimulus
A scenario path starts with a start stimulus
Start stimulus is an initiating event caused, for example, by an actor.
A scenario path ends with one or more stop stimulus.
A stop stimulus indicates that the scenario path terminates.
End stimulus
Start stimulus
34
Segment
A scenario path has one or more segments.
Segments relate value interfaces to each other by connections
Show that an exchange on one value interface causes an exchange on another value interface.
35
Connections Connections relate individual segments.
An AND fork splits a scenario path into two or more subpaths.
An AND join collapses subpaths into a single path.
An OR fork models a continuation of the scenario path into one direction that is to be chosen from several alternatives. (XOR Semantics!)
An OR join merges two or more paths into one path.
A direct connection interconnects two individual segments
A scenario path must obey the semantics of the value interface connected by value exchanges: Either objects are exchanged on all its ports or on none at all.
36
OR AND
36
Value transfer/exchange/object: Possession vs. Ownership
37
What is a value exchange: transfer of possession or of rights?
You can possess an object, but not have rights of ownership for it
Possession is not ownership Suggestion: an exchange that only involves a transfer of
possession, but not rights is not a value exchange
E3-Value Concepts Summary
ValueInterface
ValueOffering
ValueTransfer
ValuePort
MarketSegment
ValueObject
hashas
consists-of
has-in offers-
requests
0..1 1..* 1..* 0..1
1
1..*
1..*
0..* 1
10..*0..* 1has-out
Actor
in
assigned-to-ac
assigned-to-ms
in
offered-re-quested-by
in-connects
out-connects
consists-of in
0..* 0..*
consists-of1
1..2
ValueTransaction
1..n
1..n in
consists-of
38
Is the meta model correct?
Waste Management Example
39
© www.e3value.com
“The Amsterdam Times”
Idea: “We want to offer our readers new articles via the Internet online also, to: protect our channel to customers (readers); to exploit our news archive better; to offer readers more value for money; to learn how to operate in a wired world; …”
40
View for free
41
News – BAP Consortium
42
© www.e3value.com
Pay per view
43
Assessing Economic Sustainability
The question is:
Which scenario is the most profitable one?
44
Assessing Economic Sustainability
Economic sustainability is assessed on a per actor basis by:Counting the number of value transfersAssigning economic value to value objects obtained and providedCalculating a net value flow by multiplying the number of value transfers times the value objects they transferSumming up these value flows in a net value flow sheet(Discounting net value flows sheets, to account properly for the value of time)
45
Example
“A traveler wants to travel from Amsterdam to Paris.He decides to do so by a high speed train. During traveling, it is possible to buy some food on board of the train. Two alternative are possible. First, the food can be included as part of the train trip. Second, the food can be optional.”
46
A value web:Both a train trip and food
[MONEY]
[train trip]
[MONEY]
[food]
ActorValue
interface
Value port
Value object
Value transfer
47
Net value flows
A net value flow for an actor equals: The economic value for all ingoing value objects minus the
economic value for all outgoing value objects Assumption: for a sustainable constellation, all actors in the
constellation should have a positive net value on the long term
A discounted net value flow takes a long period into consideration, and accounts for the value of time
48
A first exampleA Traveler and a Railway company
[MONEY]
[train trip]
[MONEY]
[food]
Value Interface Value Port Value Transfer Occurrences Valuation Economic Value Total{train trip,food,MONEY,MONEY} 5 -1050 in: train trip (all transfers) 5 0 0 in: food (all transfers) 5 0 0 out: MONEY MONEY 5 10 -50 out: MONEY MONEY 5 200 -1000 INVESTMENT 0 EXPENSES 0 total for actor -1050
Value Interface Value Port Value Transfer Occurrences Valuation Economic Value Total{MONEY,food} 5 50 in: MONEY MONEY 5 10 50 out: food (all transfers) 5 0 0 {MONEY,train trip} 5 1000 in: MONEY MONEY 5 200 1000 out: train trip (all transfers) 5 0 0 INVESTMENT 0 EXPENSES 0 total for actor 1050
Traveler
Railwaycompany
Steps to calculate a net value sheet
1. Count the number of times value transfers that take place, by considering the dependencies (e.g. the consumer need) and value transfers;
2. Assign economic value to value objects obtained and delivered by each actor;
3. Calculate the net value flow sheet by subtracting the value of all outgoing value objects from the value of all incoming value objects, per actor.
50
Counting value transfersAnother example
Find traces using needs
Follow trace … until a
boundary element
Propagate need occurrences
[train trip]
[MONEY]
[MONEY]
[food]
• All needs should consider the same timeframe; know this timeframe (day, month, year)
51
Counting value transfers cont’dOR fork
An OR fork splits occurrences depending on the stated fractions
[train trip]
[MONEY]
[MONEY]
[food]
Occurrencesportout i= Fraction(porti)
nj=1 Fraction(port j)
×Occurrencesport in
52
Counting value transfers cont’dAND fork
An AND fork duplicates occurrences of the in-port of the fork
[train trip]
[MONEY]
[MONEY]
[food]
53
Counting value transfers cont’dOR join
An OR join sums up the occurrences of the in-ports of the fork
[train trip]
[MONEY]
[MONEY]
[food]
Occurrencesportout=n
i=1 Occurrencesport ini
54
Counting value transfers cont’dExplosion/Implosion element
An explosion / implosion element multiplies / divides the occurrences of the in-port of the element
[train trip]
[MONEY]
[MONEY]
[food]
Occurrencesportout= Fraction(portout)
Fraction(portin)×Occurrencesport in
55
Counting value transfers cont’dValue interface
A value interface inherits the occurrences of incoming dependency element
[train trip]
[MONEY]
[MONEY]
[food]
56
Download e3 value toolset
See www.e3value.com
© www.e3value.com 57
© www.e3value.com
End of Story
58
Other Ontologies REA – Ressource Event Agents
From the Accounting Theory Ressources exchanged between Actors, triggered by a certain
Event REA is a business enterprise ontology expressing exchanges,
policies and plans For interoperability, REA is used in ISO Open-edi (ISO 15944-4)
and UN/CEFACT‘s Modeling Methodology UMM Work by William E. McCarthy
BMO – Business Modeling Ontology From Osterwalder & Pigneur Expresses the business logic of a specific firm Focusing on intra-organizational business dependencies 4 basic areas: value proposition, customer interface,
infrastructure management, financial aspects
59
The take-home message …
Before embarking on an IS development track for multi-enterprise information systems supporting IT-enabled value propositions:
You’d better first explore the constellation of enterprises from an economic perspective
And understand why the multi-enterprise IS is needed from the business point of view in the first place.
E3-Value models multi-enterprises network constellations from a “value-point-of-view”
E3-Value, REA, BMO are the most promising approaches in Business Modeling (so far)
60
Referenzen (1) Jaap Gordijn, Hans Akkermans and Hans Van Vliet.
Business Modelling is not Process Modelling. In Conceptual Modeling for E-Business and the Web, ECOMO 2000, Vol. 1921(40-51) of LNCS, Springer, 2000.
J. Gordijn and J.M. Akkermans, "e3value: Design and Evaluation of e-Business Models", IEEE Intelligent Systems, special issue on e-business, Vol. 16, No. 4, pp. 11-17, 2001
Jaap Gordijn, Eric Yu, Bas van der Raadt, “e-Service Design Using i* and e3value Modeling”, IEEE Software, May/June 2006, pp. 26-33.
J. Gordijn and J.M. Akkermans, "Value based requirements engineering: Exploring innovative e-commerce idea", Requirements Engineering Journal, Vol 8, Nr 2, pp. 114-134, 2003
Timmers, P. (1998). "Business Models for Electronic Markets." Journal on Electronic Markets 8(2): 3-8.
61
Referenzen (2) Yves Pigneur, Jaap Gordijn and Alexander Osterwalder.
Comparing two Business Model Ontologies for Designing e-Business Models and Value Constellations. Proceedings of the 18th BLED conference (e-Integration in Action), Pages cdrom,, University of Maribor, Maribor, SL, 2005.
Osterwalder, A. and Y. Pigneur (2002). An e-Business Model Ontology for Modeling e-Business.15th Bled Electronic Commerce Conference, Bled, Slovenia.
Rappa, M. (2001). Managing the digital enterprise - Business models on the Web, North Carolina State University. 2002.
Geerts, G. and W. E. McCarthy (1999). An accounting object infrastructure for knowledge-based enterprise models. IEEE Intelligent Systems and Their Applications: 89-94.
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