About Business models and Ecosystems

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1 About Business models and Ecosystems Jan Markendahl November 07, Cooperation: Market Actors and Relations Company under study Supplier Supplier Supplier 2 1

2 Cooperation: Market Actors and Relations Partner Company under study Competitor Supplier Supplier Supplier 3 Aspects to discuss Business models Ecosystems Industrial sectors Distribution of business roles How to organize the supply chain 4 2

3 About Business Models Some definitions found at the web The plan a company uses to generate revenue A business model describes the rationale of how an organization creates, delivers, and captures value The particular way in which a business organization ensures that it generates income, one that includes the choice of offerings, strategies, infrastructure, organizational structures, trading practices, and operational processes and policies 5 About Business Models There is a multitude of definitions of how to model business models and large number of papers. The Business Model Ontology (BMO) The Business Blueprint Method (BBM) The e3value ontology The approach by Chesbrough & Rosenboom

Business Model Ontology (BMO) by Osterwalder et al (2005) The business model is composed by four main elements or pillars : Product Interface, Infrastructure Management Financial Aspects.

4 Business Model Ontology (BMO) by Osterwalder et al (2005) The business model is composed by four main elements or pillars : Product Interface, Infrastructure Management Financial Aspects. 7 The Business Blueprint Method (BBM) Following the BBM approach of business modeling the value network can not be seen separated from the value proposition, the functional architecture nor the finances. 8 4

Gordijn & Akkerman, 2003 9 E3value ontology The e3value methodology (Gordijn, Akkermans, 2001) has been developed to model a value web consisting of actors who create, exchange, and consume things of

5 Gordijn & Akkerman, E3value ontology The e3value methodology (Gordijn, Akkermans, 2001) has been developed to model a value web consisting of actors who create, exchange, and consume things of economic value. The e3-value Ontology aims at identifying exchanges of value objects among actors in a business case and supports profitability analysis. The e3-value Ontology includes some base constructs (Actors, Value objects, Value interfaces, Value ports, Value Interfaces and Value exchanges) and defines linkages among them. The constructs and their linkages in the e3-value Ontology can be used to model a Value Network. 10 5

6 One business model definition 11 Elements in the BM definition by C & R Value proposition. Market segment. Firm organisation and value chain Cost structure and profit potential. Competitive Strategy Firm in the value network 12 6

7 Elements in the BM definition by C & R Value proposition. What can our product offer that is new and unique compared to what s available on the market today? Firm organisation and value chain What additional assets and functions will the firm need, in order to provide the service? Firm in the value network. How is the firm positioned in the network of other players in the industry? 13 Elements in the BM definition by C & R Market segment. For what market segment is the service useful or of interest? Cost structure and profit potential. Estimate the cost structure and profit potential of producing the service offering given the value constellations under study. Competitive Strategy How is the position in relation to other competing firms? 14 7

8 About ecosystems How many have heard it before? Related to what? 15 Business Ecosystem In the early 1990s James F. Moore originated the strategic planning concept of a business ecosystem, now widely adopted in the high tech community. The basic definition comes from Moore's book The Death of Competition: Leadership and Strategy in the Age of Business Ecosystems The concept first appeared in Harvard Business Review in May/June 1993, 16 8

Business Ecosystem Moore defined "business ecosystem" as: An economic community supported by a foundation of interacting organizations and individuals the organisms of the business world.

9 Business Ecosystem Moore defined "business ecosystem" as: An economic community supported by a foundation of interacting organizations and individuals the organisms of the business world. The economic community produces goods and services of value to customers, who are themselves members of the ecosystem. The member organisms also include suppliers, lead producers, competitors, and other stakeholders. Over time, they coevolve their capabilities and roles, and tend to align themselves with the directions set by one or more central companies. Those companies holding leadership roles may change over time, but the function of ecosystem leader is valued by the community because it enables members to move toward shared visions to align their investments, and to find mutually supportive roles. 17 Example: NFC mobile eco-system 18 9

10 Example: NFC mobile eco-system 19 Example: from Mobey Forum 20 10

to compete successfully in the new consumer ecosystem.

11 Example: from Mobey Forum 21 CASSIS has developed a comprehensive and value-added software suite which offers a superior value proposition to customers; enabling them to compete successfully in the new consumer ecosystem. The CASSIS NFC ecosystem allows customer to deploy rapidly services that cater to the mobile-centric consumer lifestyle

12 Example: NFC mobile eco-system Example: NFC mobile eco-system

13 Example: GSMA Pay-Buy-mobile ecosystem

14 Now something completely different 27 A small exercise. What do these representations of Eco-systems say? Is there something missing? What do you think are good things with a specific representation? 28 14

15 Compare with other representations 3GPP Credit card transactions 29 Example of an architecture standard: 3G mobile communication (UMTS) with network elements (functional blcoks) and interfaces 30 15

16 About 3GPP Technical standards for GSM, 3G, 4G Descriptions of single operator networks Also covers multi-operator aspects Network selection Roaming Shared networks 31 Credit card payments 32 16

17 How credit card payments are done - authorization part The involved actors are User (cardholder) Merchant Cardholders bank Merchants bank Credit card company 33 More examples Representations of Actors Roles Relations Activitites 34 17

18 GSMA Mobile NFC reference architecture 35 EPC GSMA specification, Oct 2010 Mobile Contactless Payments Service Management Roles Requirements and specifications 36 18

19 GSMA/EPC:Service Management Roles - Example of 4 party model 37 Example: EPC/SEPA European Ppayment Council (EPC) white paper June 2010 on mobile payments Example of one use case 38 19

20 39 How do actors organize the cooperation? Red Operator Blue Operator Green Operator Black Operator Payments and billing Payments and billing Payments and billing Payments and billing relations relations relations relations Networks Networks Networks Networks 40 20

21 National roaming Red Operator Payments and billing Blue Operator Payments and billing Mobile virtual network operator (MVNO) Green Operator Payments and billing Black Operator Agreements Agreements (MVNO) Payments and billing rel mgmt rel mgmt rel mgmt rel mgmt Networks Networks Networks 41 Network sharing Red Operator Payments and billing Agreements Blue Operator Payments and billing rel mgmt Common rel mgmt Network, 42 21

22 Different solutions for indoor coverage DAS: Distributed Antenna System Indoor base stations Repeater Base station Red MNO Base station Blue MNO 43 Shared indoor infrastructure Red Operator Payments and billing rel mgmt Blue Operator Payments and billing rel mgmt Facility owner Shared indoor infrastructure 44 22

23 Dynamic roaming - Ambient Networks (access for anyone to any network) Blue Operator Credit card company Payments and billing rel mgmt Networks Local Network Operator Networks Payments and billing 45 How do actors organize the cooperation? Operators share network resources but control own marketing, customers and billing What can be said about dynamic roaming? DR means less control of users, usage and revenues May lead to lower incentives for network investments Will change the market landscape Dynamic roaming is beneficial for Market entrants (access to networks) Local operators (access to customers) 46 23

24 Cooperation or not Traditionally mobile operators have been responsible for all or most of the resources (a vertically integrated value chain) No need to cooperate Many technical solutions imply cooperation with other actors Roaming Network sharing Indoor wireless solutions SMS ticket services More examples Mobile payments A Mobile Operator Payments and billing rel mgmt Networks 47 Mobile payment and contactless services Near Field Communication 48 24

25 Vending machine and SMS payments 49 Ticket machine for parking services 50 25

26 Ticket machine for parking services 2 companies offer mobile parking subscriptions 51 One of the companies offers SMS payments for parking tickets Ticket machine for parking services 2 companies offer mobile parking subscriptions 52 26

27 Actor map for the case of SMS tickets for parking services End users EasyPark MBLOX Mobile operators Parking Operator 53 Actor map for the case of SMS tickets for local transporation (SL) End users Unwire Mobile operators Local transportation company (e.g. SL) 54 27

28 Example of business roles and actors - SMS parking tickets Mobile parking payment provider (EasyPark) Issue ticket Distribute payments Manage ticket database Aggregator ( MBLOX ) Aggregation of SMS traffic Send charging request Transfer payments Mobile operators Charge user account Validate ticket Service provider (EuroPark, Stockholm stad, etc) 55 Example of business roles and actors - SMS tickets for bus and subway Unwire Mobile parking payment Aggregator ( MBLOX ) provider (EasyPark) Aggregation Issue ticket of SMS traffic Distribute Send charging payments request Manage ticket Transfer database payments Mobile operators Charge user account Validate ticket Service provider (EuroPark, Stockholm stad, etc) Local transportation 56 28

29 Actor map for SMS ticket services Consumers Consumers Mobile service provider Mobile operators Mobile service provider Mobile operators Subway or bus company Parking operator 57 Actor maps for Parking subscriptions and separate charging services Consumers Banks and credit card companies Mobile parking payment provider Mobile operators Parking operator Consumers Banks and credit card companies Provider of separate charging service Mobile operators Merchant or service provider 58 29

actors in many cases do a lot They establish and maintain business relations with merchants/

30 Actor map for Payex Mobil Consumers Banks and credit card companies Payment provider Merchants and Service providers 59 Some findings about mobile payment services and business models Intermediary actors in many cases do a lot They establish and maintain business relations with merchants/ service providers They provide the services to end-users Thay develop services and maintain platforms 60 30

31 Some findings about mobile payment services and business models Financial institutions are involved as usual People make use of credit card and bank accounts Mobile operators in many cases do less Play a minor role in the service provisioning May even not be aware of the mobile payment or ticketing service 61 Compare the situation for mobile phone subscriptions Operators may share network resources BUT Operators own customers and billing Operators invest in marketing and own brand 62 31

Transportation Payments Briefing

Burt A. Wilhelm, Vice President Global Transportation Team Business Development Burt_Wilhelm@MasterCard.com March 16, 2009 Transportation Payments Briefing APTA 2009 Fare Collection Workshop Agenda Business