modelling e-business models caise’2001 interlaken yves pigneur hec lausanne [email protected]...
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Modelling e-Business ModelsModelling e-Business Models
CAISE’2001Interlaken
Yves PigneurHEC Lausanne
[email protected](+41 21) 692.3416
© 2001 Pigneur, HEC Lausanne e-business 2
Université de Lausanne
SYLLABUS | AGENDA | FIN
Agenda
• Strategy pages
– Value creation– differenciation
• Business model components > Model 8
– Product innovation10
• Value proposition, target and aptitudes
– Customer relationship 22• Feel, serve and protect customer
– Infrastructure & logistics 48• Logistics, process and alliances
– Finance & revenue67
• Measure > Measure 77
• Simulation– scenarios for uncertainty > Scenario 91
© 2001 Pigneur, HEC Lausanne e-business 3
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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]
© 2001 Pigneur, HEC Lausanne e-business 4
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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
© 2001 Pigneur, HEC Lausanne e-business 5
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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
Transaction phases
The information systems have to support:
catalog payment logistics After-saleorder
© 2001 Pigneur, HEC Lausanne e-business 6
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«How the Internet influences industry structure»[Porter, 2001]
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Strategic positioning
1. Correct goal2. Attractive value proposition 3. Differentiated value chain4. Priorities5. Integration (coordination)6. Continuity (of direction)
STRATEGY « ABSENCE OF STRATEGY »
Profit Revenue, market sharecustomer acquisition
Value & direct revenue (higher price) Indirect revenue (advertising)
Priority and focus All opportunities
Differentiated value chain Imitation and reproduction (cloning)
Control of internal resources Partnerships
Differentiation Price wars
[Porter, 2001]
diffe
rent
iatio
n
© 2001 Pigneur, HEC Lausanne e-business 8
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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
© 2001 Pigneur, HEC Lausanne e-business 9
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Elements of a business model
CUSTOMER
personalization
distribution
community
PRODUCT
Target
Value proposition
Capabilties
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
Decision processes
Markets
get a feel
serve
protect
CRM
channels
dis-intermediation
Price
© 2001 Pigneur, HEC Lausanne e-business 10
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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
© 2001 Pigneur, HEC Lausanne e-business 12
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Classification of business models (I)
• Brokerage Brokerage– Buy/sell fulfillment, market exchange, business trading community, buyer aggregator,
distributor, virtual mall, metamediary, auction broker, reverse auction, classified, search agent
• Advertising Advertising– Generalized portal, personnalized portal, specialized portal, attention/incentive marketing,
free model, bargain discounter
• Infomediary Infomediary– Recommender system, registration model
• Merchant Merchant– Virtual merchant, catalog merchant, surf-and-turf, bit vendor
• Manufacturer Manufacturer
• Affiliate Affiliate
• Community Community– voluntary contributor model, knowledge networks
• Subscription Subscription
• Utility Utility http://ecommerce.ncsu.edu/business_models.html
© 2001 Pigneur, HEC Lausanne e-business 13
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Classification of business models (II)F
un
ctio
nal
in
teg
rati
on
Degree of innovationlower higher
Sin
gle
fun
ctio
ns
Inte
gra
ted
fun
ctio
n
e-shope-shop
e-procuremente-procurement
e-malle-mall
e-auctione-auction
Info brokerageInfo brokerage
Trust serviceTrust service
value chain service providervalue chain service provider
Virtual communityVirtual community
Collaboration platformCollaboration platform
Third party marketplaceThird party marketplace
Value chain integratorValue chain integrator
Le Shop
Saci
Buy.com
Ricardo
Swisskey
Reuters
FedExp Intership
iVillage
AssureNet
Gofish
eMerge
Business-to-business
[Timmers, 1998]
© 2001 Pigneur, HEC Lausanne e-business 14
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Classification of business models (III)
Integration
AGORAeBay, PriceLine …
AGORAeBay, PriceLine …
ALLIANCEAOL, iVillage …
ALLIANCEAOL, iVillage …
AGGREGATIONAmazon, Chemdex …
AGGREGATIONAmazon, Chemdex …
VALUE CHAINDell, Cisco …
VALUE CHAINDell, Cisco …
low high
Con
trol
hier
arch
y
auto
-org
aniz
atio
n Dynamic pricing creativity
Process integrationSelection and convenience
[apscott, 2000]
Distributive networkFedExp, UPS …
Distributive networkFedExp, UPS …
© 2001 Pigneur, HEC Lausanne e-business 15
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Classification of business models (IIIb)[apscott, 2000]
www2.actnet.com/pdf/2410671.pdf
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Classification of business models (end)
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
© 2001 Pigneur, HEC Lausanne e-business 17
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Multi-role models - 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
Illustrations
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Multi-function model & ASP
• Complete coverage of process or a value system• Deep knowledge of the profession• High added value• High differentiation
• ASP (application service provider)
Illustrations
Target
Value proposition
Aptitudes
professional
multiple
difficult
© 2001 Pigneur, HEC Lausanne e-business 19
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• Voice• Voice • Internet• Internet • WAP• WAP
Auctions Portals
Multi-technology model – wireless Illustrations
© 2001 Pigneur, HEC Lausanne e-business 20
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Capabilities
VALUE PROPOSITION
Capabilities
TARGET
Customers
Competencies
[Bagchi, 2000]
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Capabilities Network[IBM, 1999]
Forumwith authors
attractpeople
• A capability depends on another• When its performance depends on the another’s
© 2001 Pigneur, HEC Lausanne e-business 22
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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
Build
to o
rder
[Kalakota, 2001]
Customerrelationship
Customerrelationship
© 2001 Pigneur, HEC Lausanne e-business 23
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CRM – Customer Relationship Management
MARKETING
SALES
SERVICE
Customer care
– Call center, messaging, web …
– Self-service
– Pro-active, quality of service, …
– Sales force (SFA - Sales Force Automation)
• Prevision, contacts, estimate, proposition, follow up …
– Convert a visitor to a customer and keep the customer
– initiative, campaign
– from telemarketing to messaging
– one-to-one marketing
personalization
Customer Base
© 2001 Pigneur, HEC Lausanne e-business 24
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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
© 2001 Pigneur, HEC Lausanne e-business 25
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Functions of intermediaries
Facilitate • Matching between an offer and a demand• the research of products (& their sellers)• the aggregation of products (& of sellers)• the aggregation of customers (& and their needs)
– buying clubs, customer associations, group buying
• the protection of the private sphere and the management customer profiles• putting sellers under pressure• evaluation of needs and the suggestion of the adequate product• the management of risk (insurance)• the distribution of the articles• the diffusion of information on products• influence on the buying act (Marketing)• the transmission of information about the customer
Intermediaries improve the efficiency of the exchange between producers and consumers, by aggregating transactions and creating economies of scale or scope
© 2001 Pigneur, HEC Lausanne e-business 26
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Distribution channels
Airline Travel AgencyReservation S.
80% by Internet!
Otopenia …
Illustrations
[Klein, 2001]
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Scenarios for intermediation[Sakar, 1995]
I. Direct market reinforced by Internet
ultra-intermediation
II. Threatened intermediary
dis-intermediation
III. Cyber-mediairy
extra-intermediation
IV. Intermediary reinforce by the Internet
re-intermediation
tcPC < tcPI + tcIC tcPC > tcPI + tcIC
tc’PC < tc’PI + tc’IC
tc’PC > tc’PI + tc’IC
Supplier Consumer
Intermediary
tcPI tcIC
tcPC
Pre-internet
Post-internet
The intermediaries augmentthe efficiency of the exchanges between suppliers and consumers,When they aggregate transactions for creating scale or scope economies
© 2001 Pigneur, HEC Lausanne e-business 28
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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
© 2001 Pigneur, HEC Lausanne e-business 29
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Moves of threatened intermediaries
I. Direct market reinforced by the Internet > SCOTT
II. Threatened intermediary
> SCOTT
III. Cyber-mediary
> SCOTT
IV. Intermediary reinforce by the Internet > SCOTT
tcPC < tcPI + tcIC
tc’PC < tc’PI + tc’IC
tc’PC > tc’PI + tc’IC
Pre-internet
Pos
t-in
tern
et
[Scott, 2000]
tcPC > tcPI + tcIC
Integration capabilities(direct access)
Perpetual innovation capabilities(new entrants, spin-off)
Collaborative SCM capabilities(virtual enterprise)
© 2001 Pigneur, HEC Lausanne e-business 30
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Distribution channel conflict
For established companies (incumbents, bricks-and-mortars)
• Risk of cannibalization• Difficulty to reconcile to ways of selling
– on the sales force level
– Compaq and its resellers and the advent of direct sales
• Former competencies, advantage or disadvantage?– unusable or contra-productive, in case of radical innovation
– Capitalization possible, if innovation incremental
• QUESTION: start doing e-commerce:– Integrated entity?
– Separated company?
[Afuah, 2001]
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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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Mass customization
stable dynamic
stable
dynamic
Change of processes
Cha
nge
of p
rodu
ct
Mass productionContinuousamelioration
Mass customization
Mass customization
Invention
[Piller, 2000]
Production of a product or service for a large market which satisfies the needs of every single customer on one or the other characteristic of the product at a cost close to mass production
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One-to-one marketing
• perceive every customer as an individual• win his confidence and loyalty (and keep it for a long time)
• by satisfying his needs in a personalized way• on the basis of information you have on the customer
– without abusingin the line of direct marketing and database marketing Attract
retain
Attractretain
startdialogue
startdialogue
Motivateaction
Motivateaction
Conducttransaction
Conducttransaction
[Peppers, 1993]
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Personalization strategies in e-business
low high
low
hig
h
Degree of digitalization of customized components
Deg
ree
of c
usto
mer
inte
grat
ion
requ
ired
[Piller, 2000]
Housingwww.streif.de
Computerwww.dell.com
Fitnesswww.efit.com
Cosmeticswww.reflect.com
Jewelry www.expressions.com
Flowers1.800-flowers.com
Skiwww.myski.com
Configuration Innovation
Add-on Attention
Watcheswww.idtown.com
Printwww.iprint.com
Videowww.kideo.com
Presswww.individual.com
© 2001 Pigneur, HEC Lausanne e-business 35
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Recommending techniques
• Non-Personnalized Recommendations– Same for all the customers– Based on customer’s notices
• Attribute-Based Recommendations action-to-item affinities
– Based on syntactical elements (search)
• Item-to-Item Recommendations item-to-item affinities
– Based on the products the customer was interested in or bought
• People-to-People Recommendations people-to-people affinities
– Based on other customers advice who had a previous similar commercial behavior– Collaborative Filtering (correlation)
Entrées: buy data | Ranking [likert] | Text | Choice
[Schafer, 1999]
© 2001 Pigneur, HEC Lausanne e-business 36
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Taxonomy for recommending techniques
manual automatized
Automatization (intervention of customer)
Ephemeral(one session)
persistent(many sessions)
pers
iste
ncy
[Schafer, 1999]
Non-Personalized
Customer comments
Amazon Delivers
Attri
bute
-Bas
ed
Customer who Bought
Item-to-Item
Book Matcher
People-to-People
1. Non-Personalized2. Attribute-Based3. Item-to-Item4. People-to-People
© 2001 Pigneur, HEC Lausanne e-business 37
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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
© 2001 Pigneur, HEC Lausanne e-business 39
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Comparaison[Fink, 2000]
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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
© 2001 Pigneur, HEC Lausanne e-business 41
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Trust factors[McKnight, 2000]
TRUST
propensity
To trust
mechanisms
3d party seal
Reputation
Perceived quality
Of the meerchant
Of web site
de confiance
For trust (encryption …)
intention
belief
of e-business
Exploratory phase
Commitment phase
To buy
To trust
Web experience
© 2001 Pigneur, HEC Lausanne e-business 42
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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)
© 2001 Pigneur, HEC Lausanne e-business 43
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Types of communities
Communityvirtual
[Schubert, 1999]
Communityinterest
Communitybusiness
Communityleasure
Communityinternet
Communitynetwork
Communityresearch
Communityrelationhip
Communityfantasy
Communitymerchant
Communitytransaction
Communitycommerce
SkiRando
Ultima Online
EMB
Ricardo
TPN Register
ISworld
Social interest
Commercial interest
goal
media
© 2001 Pigneur, HEC Lausanne e-business 44
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one-to-tribe marketing• target a group statistically homogenous• so that the member of the community feels the company • and can discuss with his congeners• to avoid the isolation feeling due to personalization
• from profiles (mimetic)– in considering the eventual
demultiplication of personalities
• model of the television (themes) ?– we watch programs– we assist events– we comment them in groups– in real time …
• major stake for media groupsOne-to-TribeOne-to-TribeOne-to-OneOne-to-One
Community and marketing
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• Datawarehouse and data mining– to study client behavior and anticipate his needs
• The client grumbles when the vendor exaggerates (or doesn't explain)• But the client gives information if he is « rewarded » (miles, …)
– loyalty program (M-CUMULUS, Qualifyer, …)
• This information belongs to the client– Cookies & web, Intuit, SmartCard (CASH)…
• allows tracking the client's behavior on DIFFERENT sites• unlike loyalty cards (specific to a shop)
– he can reinforce it
– sell it or authorize - or not - access to vendors
– leave it to an intermediary for a good use ...
Battle for information & privacy
PASSEPORT (OPS)
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Open Profile Standard (OPS)
• protocole• passport containing the client's profile
– with his personal information • name, address, credit card,…
– and his preferences• explicitly specified• assigned after his visits on WEB OPS sites
– in possession of the client
– who can authorize the access to vendors• the whole of it or parts only• during his visits on their site
> definition
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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
traficemotion
[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
© 2001 Pigneur, HEC Lausanne e-business 49
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Reference model
IT infrastructureIT infrastructure
Informationservices
searchdirectories
online catalogsproduct evaluation
request for proposalconditions
Informationservices
searchdirectories
online catalogsproduct evaluation
request for proposalconditions
Business modelsBusiness models
Agreementservices
contractingbrokerageexchangee-market
setting pricesnegotiation
Agreementservices
contractingbrokerageexchangee-market
setting pricesnegotiation
Settlementservices
authenticationcertification
escrowlogisticspayment
dispute resolution
Settlementservices
authenticationcertification
escrowlogisticspayment
dispute resolution
[Schmid, 1997]
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Standards - BizTalk
• Microsoft
> definition > framework
• XML framework– Simple Object Access Protocol (SOAP)
> soap
• XML tags for inter-application exchanges– Enterprise Application Integration (EAI)
– Business to Business (B2B)
• Software & Repository
www.bizTalk.orgwww.microsoft.com/biztalk/
[Haifei Li, 2000]
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Standards - Common Business Library (CBL)
• CommerceOne
• Public collection of XML DTDs– Can be assembled and
– Or integrated in XML-basedapplications
• EDI legacy– ISO codes
• Countries, currencies, …
– X12 components• Catalog, order, invoice …
• Trans-industries …www.xcbl.org
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Standards - Common Business Language (CBL)
Glushko, R., Tenenbaum, J., Meltzer, B. (1999)An xml framework for Agent-based E-commerce
Comm. ACM, 42 (3), Marc: 106-114
Inter-opératbilité …
Scénario ABC
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Standards - Commerce XML (cXML)
• Ariba
• Collection of business components– Product, supplier, order, …
• And standard processes– For order fulfillment, invoicing,
delieving …
– Possible integration with the BizTalk framework
http://www.cxml.org/
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Standards - Other emerging standards
• Internet Open Trading Protocol (IOTP)– by Internet Engineering Task Force (IETF)
• Open Application Group Integration Specification (OAGIS)– by Open Applications Group (OAG)
– Collections of 90 Business Object Documents (BODs)
• Open Catalog Format (OCF)– Language for the Open Catalog Protocol (OCP)
© 2001 Pigneur, HEC Lausanne e-business 55
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Standards - ebXML
www.ebxml.org/documents/documents.htm
Initiative OASIS & UN-CEFAC (Edifact)
UML
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Logistics (warehousing)
• Shop– department and/or stock (eventually separated)
• Franchise or partnership– fragmented sector: multitude of small shops
• Multi-channel distribution center existing– mail order business with a certain volume
• Ad hoc distribution centers– mail order business with a high volume
and also• Virtual warehouse (partnership with third party)
– outsourcing– use of distribution centers FedEx, for ex.
• Direct sending by manufacturer – outsourcing– integration of information systems
transportation
warehousing
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Order fulfillment (warehousing)
centralized distributed
self-operated
outsourced
Structure
Ope
ratio
n DedicatedFulfillment
Center
DedicatedFulfillment
Center
DistributedDeliveryCenters
DistributedDeliveryCenters
Third-PartyFulfillment
Center
Third-PartyFulfillment
Center
PartnerFulfillmentOpération
PartnerFulfillmentOpération
Build-to-order
ManufacturerDirectShipment
In-store
[Kalakota, 1999]
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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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Value chain & activities
infrastructure
Human resources
Technology development
Procurement
inboundlogistics
production outbound logistics
marketing &sale
After-sale
Main activities
Support activities
Value
e-SCMe-procurement
e-alliance
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Configuration of activities
Laminer (1)
Presser (13)
Découper (14)
Souder (9)
Concevoir (16)
Rechercher composants
(17)
Assembler (8)
Stocker (15)
Livrer (10)
Gérer les stocks (11)
Livrer (12)
Presser (2)
Découper (3)
Alusun
Aerotech
Stocker (4)
Livrer (7)
Metalu
Tôles laminées
Tôles pressées
Toits
Capots moteurs
Landcar
ToitsCapots moteurs
Toits
Capots moteurs
SkyStar
Composants
Composants
Panneaux alu
Alliages reçus
Tableaux de bord
Rechercher alliages (5)
Suivre les contrats (6)
Propositions émises Contrats
Commandes
Informations alliages
Montants encaissés
Emettre des propositions
Conclure des contrats
E1
E2
Tôles pressées
Tôles découpées
Eléments soudés
Tôles laminées
Tableaux de bord
Plans
Panneaux alu
Eléments soudés
Eléments soudés
Tôles pressées
Informations
Informations
Tableaux de bord
Nouvel alliage
Commandes
Cartel
[Revaz, 1995]
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FAP f1
Possible contact
s1
s1
Contact searcher c1
Ad Association
Read ad
$
$
Ad
$Ad
$
Checkedad
Ad
$
Ad $
Submittedad
Read an ad
Submit an ad
Publish an ad
Place an ad
Distributean ad
Check an ad
[Gordijn, 2000]
Value-oriented model
Legend:
ActorValue activity
Valueinterface
Valueport Value
exchange
Flows:
AND Scenariodelimiter
ScenarioPath (x)
OR (x)
• Place an ad
• Read an ad
• Redistribute an ad
Solution:
• The FAPs offer the service.
• The Ad Association redistributes the ads.
• FAPs add most value
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[Gordijn, 2000]
Value-oriented model – second configuration
Flows:
• Redistribute an ad
Possible contact
s1
s1
Contact searcher c1
Ad Association
Read ad
$
$Ad
$
Checkedad
Brand
$
Submittedad
Read an ad
Submit an ad
Publish an ad
Place an ad
Maintainbrandnam
e
Check an ad
FAP f1
Check an ad
• Read an ad
• Place an ad
Legend:
ActorValue activity
Valueinterface
Valueport Value
exchange AND
Scenariodelimiter
ScenarioPath (x)
OR (x)
Solution:
• The Ad Association performs most activities.
• The Ad Association adds most value
• Shift in power
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[Gordijn, 2000]
Value-oriented ontology
assigned-to
has-in
between
contains
requestsoffers
Valueinterface
Valueport
Value exchange
Value offering
Valueobject
has-out
1..n 0..1
0..n 0..n
1 1
0..n0..n2..n0..n
1..n
1
Valueactivity
1..n
0..1has
assigned-to
1
1..n
Composite Actor
Elementary Actor
decomposed-into
is-a
is-a
2..n 0..n
Actor
withsimilar
Market
segment 1..n0..n
Composite Object
Elementary Object
decomposed-into
is-a
is-a
2..n 0..n
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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]
Coordination (& integration)
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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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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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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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Income models - examples
Business models Revenue model
Virtual community (iVillage) Subscription, ad, sponsoring
Online sale (Dell) Transaction (sale)
Auctions (eBay) Commission, Subscription, ad
Buying clubs (cendant) Subscription, ad, commission
Infomediation (netZero) Transaction (content)
Affiliation (millicent) Commission
buy:
advertisementsubscriptioncommission
buy:
advertisementsubscriptioncommission
market:
commissionsubscription
ad
market:
commissionsubscription
ad
barter:
-advertisement
subscription
barter:
-advertisement
subscription
sale:
transactioncommission (intermediary)
sale:
transactioncommission (intermediary)
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Pricing
• Based on a catalog• Resulting of the negotiation between the seller and the buyer
– With its back-and-forth and its protocol
• Result of an auction– With its models and reputation mechanisms
• Result of a request for proposal (RFP)
• Barter
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Pricing - Dutch Flower Auction
[Kambil, 1999]
Illustration
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Auction software - objects[Kumar, 1999]
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Auction software - process[Kumar, 1999]
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Transforming the pricing
• « good bye to fixed pricing »?– Suppliers enjoy price differenciation in order to avoid comparison
– Customers enjoy low price and gaming using comparison
• Trends towards dynamic and online pricing– Adopted in the air transportation industry
– Renewed on Internet
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]
Yield Management
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Yield Management
– Air Transportation (American Airline since 1978 + 1.4 billion in 1989-1991)– Hotel industry (Marriott + 30 million en 1991)– Car renting (Hertz 1989)– Leisure parc (Futuroscope)– Rail road (TGV Suisse-Paris)– Cyber-cafe (EasyEverything)
[Phillips, 2000]
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Yield Management - conditions
• Perishable product– No value after a given date (seat onboard, room, …)
• Variable demand and rigid production capacity– Demand changes (high, low, …)
– Offer is fixed
• Reservation– Before the use of the service
• Price differenciation– Elasticity (demand/price) is variable according to the segment
– Attract customer with high sensity to price with low prices (apex)
– Keep demanding people with price barriers (1st class)
• High fixed cost & low variable cost• Price leverage
– Small increase of revenu causes significative increase of profit
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Intangible assets measuring models[Sveiby, 2001]
http://www.sveiby.com.au/intangibleMethods.htm
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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Intangible assets in Celemi
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Intellectual capital in Skandia[Edvinsson, 1997]
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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
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BALANCED SCORECARD software
From cause to effect
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BALANCED SCORECARD for IS
Learning and InnovationLearning and Innovation
Internal ProcessesInternal Processes
Customer PerspectiveCustomer Perspective
Value ContributionValue Contribution
Increase ofend-user productivity
Increase ofend-user productivity
IT Staff Mr. xyz
IT Staff Mr. xyz
ObjectivesKey Performance Indicators (KPI’s)
Targets (Baseline/Year n) Initiatives
Account-ability
% hidden / unproductivity
costs
% hidden / unproductivity
costs
• Implement and conduct Acadys-Survey
• Set up education program
• Set standards
• Implement and conduct Acadys-Survey
• Set up education program
• Set standards
A statement of what is critical to the success of
the vision
How success in achieving the objectives will be measured and tracked
Do Wellsrequired to achieve
objectives
What group or person is
responsible for the measure
56 % byAcadys
56 % byAcadys
Reduc-tion by5 %p.a.
Reduc-tion by5 %p.a.
The level of performance or
rate of improvement
needed
Train end-users efficiently and
quickly
Train end-users efficiently and
quickly
Capability or activity needed
to develop, improve or
secure in order to reach strategic
objectives
Value Drivers
[Bader, 2000]
Illustration
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BALANCED SCORECARD for IS
Objectives
Increase End-user
Productivity V3.3 Speed up upgrade of infrastructure products and services and equipment/ connection of new users or partners
Key Performance Indicators (KPIs)
SLA fulfillment rate % problems/requests solved within 1 h, 1h to 6h, 1 day, more /
total help-desk problems/requests
Value Drivers
Provide Cost-Efficient
Services at Quality
V3.1 Ensure reliable environment (availability, performance, security)at SLAs
V3.2 Provide quick and effective problems/requests solving
V3.6 Develop prospective capacity planning
V3.7 Assess new technologies to increaseend-user productivity
V4.10 Align ’IT factory’ costs on best in class providers
Average lead and execution time for global desktop upgrade # Non-standard desktops / # standard desktops
SLA fulfillment rate (e.g. # interventions / # users (for the period))
Budget forecasts based on capacity planning (HW forecast, engineering and migration resources...)
# New technologies (e.g PC, OS...) assessed within the period
Fixed and variable costs / # desktops TCO for user survey vs benchmark (ACADYS): actuals vs
benchmarks (visible and user hidden costs) Costs for migration (e.g. Common Office Envirt Engineering...) # business applications / functionality (e.g. Visio, flowchart...)
V3V3
V4V4
[Bader, 2000]
EXEMPLE
Illustration
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BALANCED SCORECARD for IS
V3 - Increase End-User ProductivityMONTH
JUNE
TABLE
3
Identify and fix issues on segment 5:response time
AC
TIO
NS
Contributor: POYC
Comments:
Bi-Yearly End-Users Survey: Application and Service Quality
Quality of training
Application User-Friendly
System Response Time
System Availability
User Satisfaction (Support)
Problem Solving
Help-Desk Accessibility
Help-Desk Contact Quality
Average
# of users
% of pulled users
4.2 4.0
3.0 3.0
2.1 3.0
4.0 4.0
3.5 4.2
4.5 4.9
4.8 4.5
4.9 3.9
C P
Seg.1
800
C P
Seg.2
1.100
C P
Seg.3
650
C P
Seg.4
750
C P
Seg.5
700
END-USER ASSESSMENT (0 to 5)C: Current survey
P: Previous survey
TARGET IS 3.5 OR OVER
4.5 4.1
4.0 4.0
2.8 2.9
4.0 4.0
3.5 4.2
3.5 3.9
4.8 4.5
4.9 3.9
3.9 4.0
3.5 3.8
3.1 3.7
4.0 4.0
3.5 4.2
4.0 3.9
4.8 4.5
4.9 3.9
4.2 4.0
3.0 3.0
3.1 3.5
4.0 4.0
3.5 4.2
2.5 2.9
4.8 4.5
4.9 3.9
3.5 4.0
3.0 3.0
1.5 2.0
3.0 3.0
3.5 4.2
3.5 3.9
4.8 4.5
2.9 3.0
3.9 3.9 4.0 3.9 4.0 4.0 3.8 3.8 3.2 3.4
10 10 8 8 15 15 15 15 90 90
[Bader, 2000]
EXEMPLE
Illustration
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Vision and strategy
BALANCED SCORECARD for CIOs
Corporate ContributionCorporate Contribution
• Control IT Expenses–percentage above or within budget–allocation of the different budget items–IT budget as a percentage of turnover–IT expenses per staff member
• Sell to third parties–financial benefits steeming form selling products and
services
• Business value of new IT projects–Financial evaluation based on ROI, NPV, IRR, PB–Business evaluation based on Information Economics
• Business value of the IT function–percentage of the development capacity engaged in
strategic projects–relationship between new developments /
infrastructures investments / replacement investments
• Control IT Expenses–percentage above or within budget–allocation of the different budget items–IT budget as a percentage of turnover–IT expenses per staff member
• Sell to third parties–financial benefits steeming form selling products and
services
• Business value of new IT projects–Financial evaluation based on ROI, NPV, IRR, PB–Business evaluation based on Information Economics
• Business value of the IT function–percentage of the development capacity engaged in
strategic projects–relationship between new developments /
infrastructures investments / replacement investments
Internal ProcessesInternal Processes
• Efficiency Software Development–% of changes and adjustments made throughout
different development stages–number of defects per function point in the first year of
production–number of function points per person per month–average number of delays late in delivering software–average unexpected budget increase–% of projects performed within SLA–% of code that is reused–% of maintenance activities–visible and invisible backlog
• Efficiency operations–% unavailability of the mainframe–% unavailability of the network–response times per category of users–% of jobs done within set times–% of reruns–average time between system failures–ratio operational costs/installed MIPS
• Acquisition PCs and PC software–average lead time for deliveries
• Problem management–average answer time of help desk–% of question answered within set time–% of solutions within SLA
• User Education–% of users that already perceived education (per
technology / applications)–quality index of education
• Managing IT staff–number of people hours that can be charged internally
or externally–% of people hours that are charged on projects–satisfaction index of IT staff
• Use of communication software–% of IT staff that can access groupware facilities (inter-
and intranet)–% of IT staff that effectively use groupware-facilities
• Efficiency Software Development–% of changes and adjustments made throughout
different development stages–number of defects per function point in the first year of
production–number of function points per person per month–average number of delays late in delivering software–average unexpected budget increase–% of projects performed within SLA–% of code that is reused–% of maintenance activities–visible and invisible backlog
• Efficiency operations–% unavailability of the mainframe–% unavailability of the network–response times per category of users–% of jobs done within set times–% of reruns–average time between system failures–ratio operational costs/installed MIPS
• Acquisition PCs and PC software–average lead time for deliveries
• Problem management–average answer time of help desk–% of question answered within set time–% of solutions within SLA
• User Education–% of users that already perceived education (per
technology / applications)–quality index of education
• Managing IT staff–number of people hours that can be charged internally
or externally–% of people hours that are charged on projects–satisfaction index of IT staff
• Use of communication software–% of IT staff that can access groupware facilities (inter-
and intranet)–% of IT staff that effectively use groupware-facilities
Learning and GrowthLearning and Growth
• Permanent Education of staff–number of educational days per person–education budget as % of total IT budget
• Expertise of the IT staff–Number of years of IT experience per staff member–age pyramid of the IT staff
• Age of the type Applications portfolio–Number of applications per age category–Number of implications younger than 5 years
• Research and emerging technologies–% of budget spent on IT research
• Permanent Education of staff–number of educational days per person–education budget as % of total IT budget
• Expertise of the IT staff–Number of years of IT experience per staff member–age pyramid of the IT staff
• Age of the type Applications portfolio–Number of applications per age category–Number of implications younger than 5 years
• Research and emerging technologies–% of budget spent on IT research
Customer = UserCustomer = User
• Research IT supplier–% of applications managed by IT–% of applications delivered by IT–% of in-house applications
• Partnership with users–index of user involvement in generating new strategic
applications–index of user involvement in developing new
application–frequency of IT Steering Committee meetings
• User satisfaction–index of user friendliness of applications–index of user satisfaction–index of availability of applications and systems–index of functionality of applications–% of application development and operations within
the Service Level Agreement (SLA)
• Research IT supplier–% of applications managed by IT–% of applications delivered by IT–% of in-house applications
• Partnership with users–index of user involvement in generating new strategic
applications–index of user involvement in developing new
application–frequency of IT Steering Committee meetings
• User satisfaction–index of user friendliness of applications–index of user satisfaction–index of availability of applications and systems–index of functionality of applications–% of application development and operations within
the Service Level Agreement (SLA)
[van Granbergen, 1997]
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Metrics for e-business[Corporate Executive Board, 1999]
FINANCE
PROCESSUS
CLIENT
CLIENT
CLIENT
PROCESSUS
PRODUIT
PRODUIT
PROCESSUS
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Metrics for e-business[Corporate Executive Board, 1999]
(SALES EFFICIENCY AND TRANSACTIONAL EXCELLENCE)
Illustration
© 2001 Pigneur, HEC Lausanne e-business 91
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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• …
© 2001 Pigneur, HEC Lausanne e-business 92
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Management Cokpit
http://www.management-cockpit.com/
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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 planningSIMULAT
E
© 2001 Pigneur, HEC Lausanne e-business 94
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Model• Based on (differential) equations
– Stocks and flows
– converters and connectors
• manages feed-back loops explicitely – positive (reinforcement)
– or negative (correction)
• allows simulating the behavior– In a virtual world
• in a learning perspective
DecisionSupportsystem
DecisionSupportsystem
learninglearning
Computer-aideddesign
Computer-aideddesign
inventory
+
orderrate
deliveryrate
Servicetime
Productivity
System dynamics
© 2001 Pigneur, HEC Lausanne e-business 95
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Customer-relationship
Customer-relationship
Product innovation
Product innovation
Infrastructureslogistics
Infrastructureslogistics
Financerevenue
Financerevenue
System dynamics
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Simulation
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Strategic postures
?
Shape the future
Play a leadership role
Setting standardsCreating demand
Adapt the future
With through speed,Agility and flexibility
Recognizing and capturingOpportunities in existing markets
Defend & react
Set barriers
Defensive competition
Reserve the right to play
Invest sufficiently to stayIn the game
Avoid prematurecommitments
[Courtney, 1997]
© 2001 Pigneur, HEC Lausanne e-business 98
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Conclusion
Customer-relationship
Customer-relationship
Productinnovation
Productinnovation Infrastructure
logistics
Infrastructurelogistics
Financerevenue
Financerevenue
Business model What?Who?How?How much?
Measure
Simulationscenarios
=
BUSINESS PLAN
+
+
INNOVATIONGoals Measures
& initiatives
stra
tegy
© 2001 Pigneur, HEC Lausanne e-business 99
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Rethinking the traditional organization[Hagel, 1999]
Product innovation Customer relationship mngt Infrastructure management
Economy
Culture
Competition
Speed is the keyto be the firston the market
Employee centered
Battle for talents,low barriers to entry, many small players thrive
Economies of scope are keyto acquire a large numberof customers
Highly service orientedcustomer comes first
Battle for scope,rapid consolidation,big players dominate
Economies of scale are keyfor reducing cost inmanaging large volumes
Cost focusedstress on standardizationefficiency
Battle for scalerapid consolidation,a few big players dominate
© 2001 Pigneur, HEC Lausanne e-business 100
Université de Lausanne
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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
Next …
XML
© 2001 Pigneur, HEC Lausanne e-business 101
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XML ontology