Service-oriented Business Models The value of use

Fachbereich Informatik Service-oriented Business Models The value of use Tilo Böhmann Full professor Head of Research Group IT Management & Consulting (ITMC) Department of Informatics Universität Hamburg

Agenda 1 Business models 2 The value of use Service-oriented business models 3 IT as driver of service-oriented business models 2012 Prof. Dr. Tilo Böhmann CTF Service Academy 2

Business Models? 2012 Prof. Dr. Tilo Böhmann CTF Service Academy 4

What is a business model? an architecture for the product, service and information flows, including, a description of the various business actors and their role; a description of the potential benefit for the various business actors, and a description of the sources of revenue A business model describes the rationale of how an organization creates, delivers, and captures value. (Osterwalder/Pigneur 2010) (Timmers 1998) 2012 Prof. Dr. Tilo Böhmann CTF Service Academy 5

Key elements of business models Element Slywotzky (1995) Timmers (1998) Ethiraj et al. (2000) Gordijn & Akkermanns (2001) Weill und Vitale (2001) Wirtz (2001) Alt & Zimmermann (2001) Afuah & Tucci (2001) Hedman & Kalling (2003) Osterwalder (2004) Harreld et al. (2007) Al-Debei (2010) Count Value Proposition 11 Customers 9 Partners / competitors 8 Revenue model 8 Strategy 7 Activities 6 Cost Elements 4 Value Flows 3 Resources 3 (Distribution) channels 2 Organisation 1 Source: Zolnowski & Böhmann 2013, forthcoming 2012 Prof. Dr. Tilo Böhmann CTF Service Academy 6

A simple representation: the Business Model Canvas Key partner Key activties Value proposition Customer relationship Customer (segments) Key resources Channels Cost structure Sources of revenue Source: Osterwalder et al. 2010 2012 Prof. Dr. Tilo Böhmann CTF Service Academy 7

From traditional innovation to... Key partner Key activties Value proposition Customer relationship Customer (segments) Key resources New product or service Channels Cost structure Sources of revenue Source: Osterwalder et al. 2010 2012 Prof. Dr. Tilo Böhmann CTF Service Academy 8

From traditional innovation to... Key partner Key activties Value proposition Customer relationship Customer (segments) Key resources Channels Business Model Innovation Cost structure Sources of revenue Source: Osterwalder et al. 2010 2012 Prof. Dr. Tilo Böhmann CTF Service Academy 9

Many examples in many industries 2012 Prof. Dr. Tilo Böhmann CTF Service Academy 10

Plain coffee 0,10 2012 Prof. Dr. Tilo Böhmann CTF Service Academy 12

Servitized coffee 0,50 2012 Prof. Dr. Tilo Böhmann CTF Service Academy 13

Even more servitized coffee... 3,50 2012 Prof. Dr. Tilo Böhmann CTF Service Academy 14

2012 Prof. Dr. Tilo Böhmann CTF Service Academy 15

Purchase Use Multiple Value 2012 Prof. Dr. Tilo Böhmann CTF Service Academy 16

Traditional coffee business model Key partner Key activties Value proposition Customer relationship Coffee growers Buy Roast Key resources Dose of caffeine Average taste anonymous Channels Customer (segments) Coffee drinkers Factory Retail Coffee Cost structure Facility Retail Distribution / kg Sources of revenue Source: Osterwalder et al. 2010 2012 Prof. Dr. Tilo Böhmann CTF Service Academy 17

Servitized coffee business model: The case of Key partner Key activties Value proposition Customer relationship Coffee growers Buy Roast Key resources Dose of caffeine Average taste anonymous Channels Customer (segments) Coffee drinkers Factory Retail Coffee Cost structure Facility Distribution / kg Sources of revenue Source: Osterwalder et al. 2010 2012 Prof. Dr. Tilo Böhmann CTF Service Academy 18

Service-oriented business models Business models based on relational and interactive value creation Focus on value-adding activities of the customer Solution-focused partnership Resource integration Source: Zolnowski & Böhmann 2013, forthcoming 2012 Prof. Dr. Tilo Böhmann CTF Service Academy 19

Service-oriented business models in many industries Rotor Guaranteed yield Airplane Available flight hour Car insurance Repaired car Data center Web Service 2012 Prof. Dr. Tilo Böhmann CTF Service Academy 20

Information Purchase Use Multiple value 2012 Prof. Dr. Tilo Böhmann CTF Service Academy 22

From big data to big (service) business? Data Algorithms Activties Value propositons Capture Filtering Consult Products Storage Quality Correlations Pattern recognition Optimize Decide Services Product- Service- Systems Learning Big data innovation: Statistical data analysis, parallel processing, storage, visualization 2012 Prof. Dr. Tilo Böhmann CTF Service Academy 23

Business model impact of data-driven services Source: Zolnowski/Schmitt/Böhmann 2011 2012 Prof. Dr. Tilo Böhmann CTF Service Academy 24

Modular service ecosystems as a business model Web-based business services Large collection of services Facilitating service composition and commerce Support end-to-end business processes (Barros/Dumas/Bruza, 2005; Barros/Dumas, 2006; Riedl et al., 2008; Riedl et al., 2009; Sawatani, 2007; Wu/Chang, 2005) 2012 Prof. Dr. Tilo Böhmann CTF Service Academy 25

Take aways 1. Focus on what customers do and how to help them to get more value out of what they do (co-creation) 2. Leverage this extended value proposition into more and/or novel sources of revenue 3. Learn how to deliver this extended value proposition by creating and managing and integrating a network (ecosystem) 4. Use customer use information to deliver effectively and efficiently 5. More research required on business model transformation and tools for generating service-oriented business models 2012 Prof. Dr. Tilo Böhmann CTF Service Academy 26

ITMC The service ecosystem Platinum partners Gold partners Silver partners Institutional partners 2012 Prof. Dr. Tilo Böhmann CTF Service Academy Seite 27