PhD Seminar INFORGE/HEC
e-Business Models
HEC 2002
Lausanne, February 14 2002
Alexander Osterwalder
HEC Lausanne
alexander.osterwalder@hec.unil.ch
(+41 21) 692.3420
Université de Lausanne
WEB | AGENDA | FIN
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
© 2002 Osterwalder, HEC Lausanne
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
• Problem: Interpretation of
strategy
• Result: Re-inventing strategy
•Positioning
•Objectives & goals
•Communication of strategy
Planning level
Strategy
?
Implementation
level
Business
Processes
Information &
Communication
Technology (ICT)
pressure
e-Business
processes
e-Business Technology layer
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e-Business Logic Tomorrow
Conceptual architecture
of a business strategy
Planning level
Architectural
level
Implementation
level
Strategy
Business
Model
Business
Processes
Information &
Communication
Technology (ICT)
pressure
e-Business
opportunities & change
e-Business
processes
e-Business Technology layer
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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.
Strategy
Business
Model
Business Impact
• 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
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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).
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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).
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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
Management Use
Research Projects
Level 3
e-Business Model
Equations
Simulate models, play and
learn by changing
models, understand
consequences of change
Level 2
e-Business Model
Measurements
Pilote, follow, alert
e-Business Model Balanced
Scorecard
e-Business Model
Ontology
Understanding model elements
and relationships, communicate
and share models, change
models
e-Business Model Framework
(eBMF), Language (eBML),
Handbook (eBMH) and Design
Tool
Level 1
© 2002 Osterwalder, HEC Lausanne
e-Business Model Simulator,
e-Business Model Games
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Research Objectives/Projects
E-Business Model
Language (eBML)
E-Business Model Handbook
- navigate in concepts (www)
- graphical representation
- illustrative examples
- ontology representation (xml)
- graphical representation
- knowledge sharing
E-Business Model Ontology
or Framework (eBMF)
- concepts/models (components)
- links between concepts/models
E-Business Model
Simulation
E-Business Model
Design Tool
- scenarios (system dynamics)
- learn about Business Models
- be prepared
- computer assisted design
- evaluation
- change management
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
© 2002 Osterwalder, HEC Lausanne
Company
Business
Model
Full example
Entry
Program
GUI
Repository
store
Transform
Program
read, process,
draw
Graphics
graphical representation
structure
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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
INFRASTRUCTURE
MANAGEMENT
CUSTOMER
RELATIONSHIP
PRODUCT
INNOVATION
FINANCIAL ASPECTS
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Definition of an e-Business Model
PRODUCT
INNOVATION
Capabilities
© 2002 Osterwalder, HEC Lausanne
Value
Proposition
Target
Customer
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Definition of an e-Business Model
INFRASTRUCTURE
MANAGEMENT
PRODUCT
INNOVATION
Capabilities
Resources
Value
Configuration
Value
Proposition
Target
Customer
Partner
Network
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Definition of an e-Business Model
INFRASTRUCTURE
MANAGEMENT
PRODUCT
INNOVATION
Capabilities
Information
Strategy
Resources
Value
Configuration
Partner
Network
© 2002 Osterwalder, HEC Lausanne
CUSTOMER
RELATIONSHIP
Value
Proposition
Feel &
Serve
Target
Customer
Trust &
Loyalty
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Definition of an e-Business Model
INFRASTRUCTURE
MANAGEMENT
PRODUCT
INNOVATION
Capabilities
CUSTOMER
RELATIONSHIP
Information
Strategy
Resources
Value
Configuration
Value
Proposition
Partner
Network
Cost Structure
Feel &
Serve
Target
Customer
Trust &
Loyalty
Profit/Loss
Revenue Model
FINANCIAL ASPECTS
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Ontology: Relationships Between Concepts
PRODUCT
INNOVATION
CUSTOMER
RELATIONSHIP
TARGET CUSTOMER
INFORMATION
has needs
value for
sold through
VALUE PROPOSITION
to enable
supposes
resource
for
to collect
FEEL & SERVE
feedback for
CAPABILITIES
builds
on
to improve
to establish
to improve
TRUST & LOYALTY
resource
for
revenue for
builds
on
INFRASTRUCTURE
MANAGEMENT
FINANCIAL
ASPECTS
RESOURCES & ASSETS
REVENUE MODEL
resource for
builds on
cost
ACTIVITY
CONFIGURATION
resource for
builds on
PARTNER NETWORK
© 2002 Osterwalder, HEC Lausanne
to increase
PROFIT / LOSS
resource for
diminishes
COST MODEL
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Questions & More Information
http://inforge.unil.ch/aosterwa
alexander.osterwalder@hec.unil.ch
© 2002 Osterwalder, HEC Lausanne
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