From Value Chains to Business Models

Daniel Field
28-09-2011

Brussels, 28-09-2011

Your business technologists. Powering progress | 28-09-2011 | Daniel Field Atos Research and Innovation

Contents
From Value Chains to Business Models: An exploitation tool

Rationale: Where did this come from and why? Value Chains. Rent Chains. Supply Chains. My Chains. The observation Commercial example the operating system Commercial example Social networks The premise Project example Generic service platform Project example a testbed facility Project example a PaaS interoperability

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The trouble with exploiting these projects ...

Multidisciplinary Diverse partners Technology-led

Large lag between conceptualisation and completion (

5 years in some cases) Participants latch on to an exploitation model Difficulty contrasting exploitation visions
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But what if we could

Reduce each exploitation vision to the bare bones? Graphically compare different models?

Create a list of all possible business models?

Discover innovative models?

Categorise and compare competitors models?

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Value Chains. Rent Chains. Supply Chains. My Chains.

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The OBSERVATION:
The value proposition from a provider to a client can often be linked to one value activity of the value chain. From the clients perception, this is what they pay for. From the firms point of view, some activities generate revenue whilst others merely cost. But some value activities of our chain may be filled by third party organisations. So, there are three basic activities: Revenue Activities, Cost Activities, and 3 rd Party Activities

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28-09-2011

Your business technologists. Powering progress | 28-09-2011 | Daniel Field Atos Research and Innovation

Key point #1

Assigning each activity in a value chain the designation of Revenue Activity, Cost Activity or 3rd Party Activity is a suitable way to show the basic difference between different business models.

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Commercial example #1- Proprietary Operating System

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Commercial example #2- iPhone

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Commercial example #3 Open Source operating system

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Key point #2

This method can be used to retrospectively analyse incumbent market actors, clearly identify their multiple sources of revenue and contrast between similar actors.

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Commercial example #4 LinkedIN and the Freemium model

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Commercial example #4 Facebook

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Commercial example #4 InfoJobs

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Key point #3

Even where the focus of different companies differ, where a generic value chain exists, similarities in business models can be identified, and potential new sources of revenue identified.

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The PREMISE:

1. By definition a value chain is composed of value activities. 2. In any given model, value is only captured (monetised) in some activities. 3. As by definition every value activity creates value, theoretically any value activity could be the point of value capture the core of the business model. 4. Consequently, every permutation of the activity designations is a potential business model. And by experimenting with these designations we can create an exhaustive list of the possible business models for any given system.

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Examples from Projects #1 A generic service platform

Prosumers
3rd party platforms Commercial EI / EC SPs
Free EI / EC SPs
(SP = service provider)

Consultancy Training
Service discovery

Service creators

Service Invoking IT Providers Service consumers Users clients

Service provision COIN AP front end

Hardware Provider

Infrastructure Provider

COIN VA platform COIN SU platform COIN Management COIN Marketing & Sales ... Resellers

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Examples from Projects #1 A generic service platform Scenario 1 Revenues generated through the platform

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Examples from Projects #1 A generic service platform Scenario 2 Revenues generated through the services

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Examples from Projects #1 A generic service platform Scenario 3 An Open Source approach

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Examples from Projects #1 A generic service platform Scenario 4 A franchise approach

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Examples from Projects #1 A generic service platform Scenario 5 A marketplace approach

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Examples from Projects #1 A generic service platform Scenario 6 The Bank

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Examples from Projects #2 A testing facility (FIRE)

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Examples from Projects #2 A testing facility (FIRE) Scenario 1 Testbed-as-a-Service

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Examples from Projects #2 A testing facility (FIRE) Scenario 2 3rd party testbed-provision

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Examples from Projects #2 A testing facility (FIRE) Scenario 3 Experiments as a Service

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Examples from Projects #3 Interoperability platform for PaaS

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Examples from Projects #3 Interoperability platform for PaaS Scenario 1 Open Source Strategy

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Examples from Projects #3 Interoperability platform for PaaS Scenario 2 Commercial hub

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Examples from Projects #3 Interoperability platform for PaaS Scenario 3 Platform adapter scenario

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Key point #4

This method has successfully be applied to generate business models for emerging technologies in European projects. Not only does it generate the obvious models (SaaS, open source, marketplaces etc.) but also highly innovative models

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Conclusions This method is: A powerful and versatile tool Valuable in the exploitation of projects Useful for identifying and contrasting existing business models. Can help existing companies to explore potential innovations in their business model

It can be used to reinvent current business models which were once considered highly innovative, such as the open source model as exemplified by Canonical ltd. or freemium model as exemplified by LinkedIN. Consequently, we believe it will generate entirely innovative business models in the future.

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For more details

All this material is discussed in greater depth in the whitepaper: Identification of business models through value chain analysis : A method for exploiting large technology projects Available for free on scribd (http://www.scribd.com/doc/66408751) under a creative comments license Or contact me at daniel.field[at]atos.net

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License
This work is licensed under a Creative Commons Attribution-NonCommercial 3.0 Unported License.

For use under any other terms as those provided by this license, please contact the author.

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Thanks

For more information please contact: T+ 34 93 486 1818 Daniel.Field@atos.net

Atos Spain

atos.net
Atos, the Atos logo, Atos Consulting, Atos Worldline, Atos Sphere, Atos Cloud and Atos WorldGrid are registered trademarks of Atos SA. September 2011 2011 Atos. Confidential information owned by Atos, to be used by the recipient only. This document, or any part of it, may not be reproduced, copied, circulated and/or distributed nor quoted without prior written approval from Atos.

Your business technologists. Powering progress | 28-09-2011 | Daniel Field Atos Research and Innovation