Ontology for e-Business ModelsOntology for e-Business Models
OES-SEO’2001Rome
Yves PigneurHEC Lausanne
[email protected](+41 21) 692.3416
© 2001 Pigneur, HEC Lausanne e-business 2
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Agenda
• Strategypages
– Value creation & differenciation
• Business model components > Model 5
– Product innovation7
• Value proposition, target and aptitudes
– Customer relationship 11• Feel, serve and protect customer
– Infrastructure & logistics 21• Logistics, process and alliances
– Finance & revenue28
• Measure > Measure 31
• Simulation– scenarios for uncertainty > Scenario 34
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General context
technologytechnology
Electronic commerceElectronic commerce
StrategyStrategy
Business modelsBusiness models
IndustryIndustry
IT strategyIT strategy
allows
Levier to change
Allows
impact
impact
IntermediaryIntermediary
CommunityCommunity
standard
infrastructure
integration
Brand
Promotion
Customer service
Brand
Promotion
Customer service
Costs
Diffusion time
Learning
Costs
Diffusion time
Learning
New products
New channels
New businesses
New products
New channels
New businesses
... improve
reduce
create
CustomerRelationship
CustomerRelationship
ProductInnovation
ProductInnovation
logisticsinfrastructures
logisticsinfrastructures
FinanceRevenue
FinanceRevenue
[Bloch, 1999]
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Models and ontologies
• The Enterprise Ontology > html– Collection of business terms and definitions
(activities, organization, strategy, marketing, time …)
• Toronto Virtual Enterprise Ontology (TOVE)
• Ontology Interchange Language (OIL)– Primitives for modelling (frame & logic) and automatic reasoning (consistency)
Still to conceive for (e-) business models
XML
is co
min
g
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Innovationproduit
Gestion desrelations-clients
Gestion desinfrastructures
Aspectsfinanciers
Business model
Financialaspects
Financialaspects
HOW MUCH?What is the revenue model? the profit model? designed to last?
WHO?How to manage relationships with customers, satisfy them and generate revenues to be on the winning side?
CustomerRelationship
CustomerRelationship
WHAT?What is the scope of products and services, its value (its benefits) for the customer, the capabilties to deliver them in an innovating way?
Productinnovation
Productinnovation
HOW?How to organize the infrastructure, its resources, the knowledge and the structure of resulting costs, manage the value chain and processes, build alliances to achieve performance?
Infrastructurelogistics
Infrastructurelogistics
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Elements of a business model
CUSTOMER
Personalization
Distribution
Trust
PRODUCT
Target
Value proposition
Capabilities
INFRASTRUCTURE
Resources
Activities/processes
Alliances/networks
value for resources for
Revenue Value added + Costs Revenue Value added + Costs
Profit
On-line sales
Electronic markets
Info-mediation
Value chain
Value shop
Value network
Feel
Serve
Protect
CRM
channels
dis-intermediation
Price
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Value proposition
To characterize product innovation, the value proposition
• defines,
• the actual product or service, and
• the value or benefits perceived by customers of the products and services offered by the firm.
• In the case of e-business this offer naturally includes a strong information system component, principally the Internet.
VALUE PROPOSITION CAPABILITESTARGET
Targeted customers Competencies, aptitudes
ProductInnovation
ProductInnovation
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Value proposition - examples
• Facilitate research– and reduce transaction costs
• Speed up distribution– particularly digital goods (written, music, image, software)
• Improve the quality of service– by personalization, for example
• Improve facility and experience of buying– capitalizing on game aspects
• Improve the transparency of information– by opening up the information system
• Develop a sense of community– and improve the diffusion of knowledge,
contacts and trust
• Bind complementary products
ticketless
Yield Management
Barcelone Loterie Romande
reservation
easyCar
Illustrations
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Value proposition – simple models
Influence of sellerlow high
Influ
ence
of
buye
r
low
high
Electronicbarter
Electronicbarter
SwapBarterAlaxis
Onlinesale
Onlinesale
Products:Amazon LeShop Brun Passot
Services:AutoWebE*tradeeasyJet
aggregation:
EMB
Onlinebuy
Onlinebuy
Portals:AOL, Yahoo Zdnet
Group buying:Cendant MercataAccompany
Pressure of seller
Pressure of buyer
competition
cooperation
Electronicmarket
Electronicmarket
search:Acses
auction:eBay PriceLine Ricardo
plate-form:TPN Register, linkom goFish
POWER
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Value proposition – syndication
ROLE SOURCES SYNDICATORS DISTRIBUTORS CUSTOMER
Missions Create the content
Assemble the content
Manage the relationship between the sources and the distributors
Deliver the content to the consumers
Explore the content
Create revenues by subscription, payments or advertising
Internet Inktomi
Quote.com
iSyndicate
Linkshare (e-comm)
Screaming Media
Women.com
Yahoo!
E*Trade
[Werbach, 2000]product infrastructure customer
iSYNDICATE1’200 editors
270’000 sites web
• Delivery of an information that will be reused and integrated in an other one,
• for a payment generally in the form of asubscription
• with a complicated content management
> ICE
illustration
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• Interactive order by the customer– selection of the model, personalization, receiving of price, receiving of a
confirmation
• delivery of the model– without having it in stock, by assembling the order, on time with a minimum cost
In-house corecompetencies
Rigidprocesses
Products/services
channels Customers
Manufacture and sale products
Customers’needs
Integratedchannels
Products/services
Flexibleprocesses
Outsourcing/In-house
competencies
Feel and serve customers
Feel and serve customer[Kalakota, 2001]
Customerrelationship
Customerrelationship
MARKETING
SALES
SERVICE
Customer Base
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Cost(shirt)
% profit
Added value
CustomerRetailerDistributorProducer
$20.91$11.36$20.45
Price $52.72$31.81$20.45 $52.72
Producer RetailerDistributor Customer $52.72 0%
Producer CustomerRetailerDistributor $41.34 28%
Producer CustomerRetailerDistributor $20.45 62%
[Benjamin, 1995]
Dis-intermediation
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Distribution channels
Airline Travel AgencyReservation S.
80% by Internet!
Otopenia …
Illustrations
[Klein, 2001]
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Intermediaries
I. Direct market reinforced by the Internet
II. Threatened intermediary
III. Cyber-mediary IV. Intermediary reinforce by the Internet
More expensive with intermediary Cheaper with intermediary
Pre-internet
Pos
t-in
tern
et
Expedia …
Illustrations
More expensive with intermediary
Cheaper withintermediary
[Sakar, 1995]
ultra-intermediation
extra-intermediation
dis-intermediation
re-intermediation
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Personalization
2
3
4a
5
4b
Establish the configuration Establish the configuration
Planing of production
Listen to the customerListen to the customer
Distribution
CRM
Production (internal)
ERP Outsourcing (external) SCM
One-to-one
Mass-customization
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• Suggest a personalized content• maintain a privileged relation with the customer• preserve a track of each visit and a customer profile• manage an individualized interaction
– promotion, action, catalogue, historic, ...
– from business rules (if … then)
– and from the client's profile– without interfering (too much) with his private life
Recommending system – rule basedConversion
prospect client
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Recommending system - Collaborative filtering
• anticipate customers needs– recommend products
• from his preferences– as if we knew him for a long time
• and from preferences of other clients with similar tastes– word of mouth & correlation (if you liked this, then you should also like this …)
– learn by experience
– agents (intelligent)• big mass of information rating
book 1 book 2 book 3 book 4Isabelle 1 1 5 ?Thomas 5 2 1Mathieu 5 2Catherine 2 2 4 5Benoît 3 3 3Fabian 1 1 3 4
Catherine and Fabian seem to have a similar judgement to Isabelle's for the books 1, 2 (& 3);their rating (explicit) is used for Isabelle's (implicit) for the book 4: between 4 and 5
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Trust
TRUST
SECURITY
PRIVACY
Contribute to the establishment of
BRAND
Notoriety …
Fear: financial losses
Fear: loss of intimacy
INFO- MEDIARY COMMUNITY
Certification
Verification et authorization
Escrow
Notary, payments
Expertise
Guarantee of quality
Rating
Reputation of actors
Insurance
Risk management
Contribute
QUALITY
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Community
Group of people or entities– that share values or interests
– and use the le Net regularly &at the same place
transaction Business, trading, occasions, barter …
interest Idea sharing,communication …
fantasy Role games, fantasy world…
relation Assistance (disease), sharing of experiences …
[Hagel, 1997]
Put pressure on sellers
Meeting ofsellers/buyers
Target customers
BuyUnion(mass)
BuyUnion(mass)
Marketmix
(informed)
Marketmix
(informed)
BarterNew age
(unselfish, elitist)
BarterNew age
(unselfish, elitist)
Sale target
(spendthrift)
Sale target
(spendthrift)
One-to-TribeOne-to-TribeOne-to-OneOne-to-One
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• Receives, merges and manages the buyers information• protects the buyer • supplies information to vendors• puts the vendors under pressure• obtains advantages for the buyer on the behalf of the vendors
– for the information given to the vendors
• prefigured by Portals, buying clubs, associations of consumers …• requires skills and rare technologies
• Who can become info-mediary?– Fiduciaries– Merchants– buying clubs & consumer associations– databases– media, portals, …
Infomediary
brand
trafficemotion
[Hagel, 2000]
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Infrastructure and logisticsInfrastructuremanagement
Infrastructuremanagement
Computerized system
Buyer
seller
info
rmat
ion
Identifyproduct
Promoteproduct
influ
ence
Negotiate
Negotiate
paym
ent
BUY
SELL
good
s
Consume
Serve
info
rmat
ion
Query
Answer
Findsource
Findcustomer
info
rmat
ion
catalog payment logistics After-saleorder
logistics
standards
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Changing the warehousing approach
centralized distributed
in h
ouse
outs
ourc
ed
Structure
Ope
ratio
n DedicatedFulfillment
Center
DedicatedFulfillment
Center
DistributedDeliveryCenters
DistributedDeliveryCenters
Third-PartyFulfillment
Center
Third-PartyFulfillment
Center
PartnerFulfillmentOpération
PartnerFulfillmentOpération
Exemples
VolumesInvestmentFlexibility
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Orderprocessing
Orderconfirmation
Planing ofrealization
destockingloading
Planingdelivery
Customerservice
Prevision
Planing ofstock
Planing ofcapacity
MRPchoice supplier
Availability stockScheduling
Stock allocationorder of priorities
Schedulingmanufacturing
Schedulingdistribution
Process
Order planning
Process
Replenishment
Process
Production & assemblage
Process
Distribution
• profitable?• available in the inventory?• can be manufactured?
• integration with shipping companies• tracking by the customers• return of goods
• flexibilityy•integration
• BPR (business process reengineering)•INTEGRATION WITH ERP & SCM
[Kalakota, 2001]
Value chain, coordination & integration
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ECRECRECRECREDIEDIEDIEDI
Efficient customer Response
from to
Electronic Data Interchange
OrderOrder
BUYBUY
ReceptionReception
PaymentPayment
Company A
SupplySupply
SALESALE
DeliveryDelivery
InvoicingInvoicing
Company B
Bank ABank A Bank ABank AClearingClearing
selection, comparaison, ...
order or statistics
Delivery
invoice
paiement confirmation
Before sale
sale
production & distribution
After-sale
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Alliances et partnerships
Authormarketing
Authormarketing
Distributorinventory
Distributorinventory
Amazon.comsales
Information systemscoordination
contents
Amazon.comsales
Information systemscoordination
contents
Shippingtransporttracking
Shippingtransporttracking
Affiliatesales
Affiliatesales
Customerbuy
content
Customerbuy
content
Bankpayment
Bankpayment
deliver deliver
order
sale order
sales
critics
Credit cardclearance
returns
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e-SCM, e-procurement and e-market
Electronicmarket
suppliersbuyers
supply chain
Power of buyers
Reduced transaction costs Improved information access group buying …
Reduced selling costs bigger market access Dis-intermediation …
Power of suppliers
Market Vs. relation
Customers’needs
Integratedchannels
Products/services
Flexibleprocesses
Outsources/In-house
competencies
procurement
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HIERARCHY
MAKEMAKE
Supply chain
MARKET
BUYBUY
Production cost
Coordination costlow
high
low
NETWORKNETWORK
high
[Malone, 1993]
Co-production
partnership
Externalization
Virtualization
Holding
Strategic network
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Value creation
«The creation of an economic value stays the measure of success»
• PROFIT
= (P – VC).Q – FC
P the unit price of a product
VC the variable cost of a unit
Q the number of products sold
FC fixed costs
Aspectsfinanciers
Aspectsfinanciers
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Income models
REVENUE
one time
recurrent
sale
registry
subscription
advertisement
use
Income of the subscription fees to become a memberPaid by the buyer and/or the vendor
transaction
commission Income, percentage of a transaction made by the settlement(affiliate program)
Income of online sales paid by the buyer
Income of the ad banners posted on the shopfrontPaid by the vendor
Phone• registry• subscription• Usage
• Time• Services
combination
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Trends towards dynamic and online pricing
• Based on – catalog– negotiation between the seller and the buyer– auction– request for proposal (RFP)
• « good bye to fixed pricing »?– Suppliers enjoy price differenciation in order to avoid comparison– Customers enjoy low price and gaming using comparison
Yield Management • Allows to calculate in real time (online if on the Internet)
• the best prices• for maximazing the profit generated by the sales• based on a forecasting model of sale behavior
(for micro-segments)
[Klein, 2000]
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Customermanagement
Customermanagement
Productinnovation
Productinnovation
Logisticsmanagement
Logisticsmanagement
FinancialAspects
FinancialAspects
Balanced scorecard
CUSTOMER RELATION
Goals Measures
How do the customers perceive us?
INFRASTRUCTURE
Goals Measures
In which process do we have to prove excellence?
PRODUCT INNOVATION
Goals Measures
How to improve our services and our quality?
FINANCE
Goals Measures
How do shareholder perceive us?
& initiatives
& initiatives
& initiatives
& initiatives
Scope
Scale
talent
Value
MEASURE
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Intangible Assets Monitor, Balanced Scorecard and Intellectual Capital
Value
Tangibles assets Intangible assets
Growth/Renewing
Efficiency
Stability
Clients Processes Training/Learning
Supplierpartner
SystemsPatentsknowledge
AptitudesExperienceformation
Growth/Renewing
Efficiency
Stability
Growth/Renewing
Efficiency
Stability
Individualprofit generator
Knowledge perspective
Customer capital Organizational capital Human capital
Structural capital
Logisticsmanagement
Logisticsmanagement
Customermanagement
Customermanagement
Productinnovation
Productinnovation
External structure Internal structure Individual competencies
IAM[Sveiby, 2001]
BSC[Nolan, 1995]
IC[Edvinsson, 1997]
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E-Performance[Agrawal, 2000]
ATTRACTION
• Visitor base• Visitor acquisition cost• Visitor advertising revenue
CONVERSION
• customer base• customer acquisition cost• customer conversion rate• nb transactions / customer• revenue / transaction• revenue / customer• customer gross income• customer maintenance cost• customer operating cost• customer churn rate• …
RETENTION
• repeat-customer base• r-customer acquisition cost• r-customer conversion rate• nb transactions / r-customer• revenue / transaction• revenue / r-customer• r-customer gross income• r-customer maintenance cost• r-customer operating cost• r-customer churn rate• …
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1
2
3
A B
C D?
Clear-enough future
forecast
Traditional toolkit
Alternate futures
Discrete options
Game theoryDecision analysis
True ambiguity
No basis for forecast
analogiesPattern recognition
Range of futures
No natural option
Scenarioplanningsimulation
Levels of uncertainty:
[Courtney, 1997]
Scenario planning
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Customer-relationship
Customer-relationship
Product innovation
Product innovation
Infrastructureslogistics
Infrastructureslogistics
Financerevenue
Financerevenue
System dynamicsSIMULAT
E
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Case-basedreasoning
• Business model• (Un-) bundled corporation• Breakthrough strategy
CUSTOMER
PRODUCT
LOGISTICS
FINANCE
Critiquingsystem
• Critical success factor• Balanced scorecard• Resource-based view
Simulationenvironment
• System dynamics• Dynamic resource system• Scenario Planning
DEFINECLASSDESIGN
ASSESSMEASURECRITIQUE
MODELFORECASTSIMULATE
BUSINESSONTOLOGY
OBSERVEDCASES
ENGINEERINGTOOL
Framework for Tool forE-BUSINESS MODELHANDBOOK
Projet
[Pigneur, 2001]
e-business model handbook
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