Ms. Man-Sze Li from IC FOCUS presented the Task Force for Business Values, Business Scenarios & Business Models. She analysed the state of the art and pointed out the future directions. (FInES Cluster Meeting, December 2012)

1. FInES Cluster
Task Force: Business Values,
Business Scenarios &
Business Models (Re-visited)
Man-Sze Li
msli@icfocus.co.uk
1

2. Key Drivers for Enterprise
Transformation and Future
Enterprise Environments
• The Overall Context: Digitalisation, Individuals and Enterprises
– Europe is set to become ever more digital in the years to come.
• Policy & Governance: Knowledge, Ownership and Control
– Knowledge as a fifth freedom and the “European Knowledge Area”
• Technology: Infrastructure Models
– In the future, a potentially unlimited array of high value-added
capabilities, fine-tuned to the precise needs of the end-user, will be
enabled by software-based services, delivered on-line, on-demand
and in real-time… the need for a universal ICT infrastructure model
that all could exploit
• Business & Economics: Towards a New Value System
– Our present system of business values is no longer adequate in
supporting the full range of business goals that future enterprises
would consider as relevant and important … enterprises should be
given new rights to capabilities that would help them to innovate in
a changing world, of which ICT should be a key enabler
Source: FInES Research Roadmap
FInES Cluster meeting, Brussels, 25 January 2011 2

3. State of the Art and Analyses
within the FInES Cluster
(2005 to present)
EI Research Roadmap V4/5 Business-Economic as 1 of 3 dimensions of the
(2006/8) research framework, with a focus on b-e
environment, b-e scenarios & b-e impact
Value Proposition for EI Changing business context analysis, EIVP
Report (2008) Framework, Business model analyses &
categorisation, Direction towards a new value
analysis at Enterprise/Individual/Society levels
FInES Cluster Position Paper Business-Economic context analysis, discussion of a
(2009) new way of doing business, The future of European
enterprises: sustainable value creation, new
business models, flexible & agile business processes,
research recommendation on a new notion of
‘enterprise’ & ‘enterprise network’
Overview of the State-of- Snapshot of the status, available results & prelim
the-Art Research in Business conclusions of business model research work
Models (2009)
FInES Research Roadmap Towards a new business value system
(2010) Re-consideration of: how to create value, how to
capture value
FInES Cluster meeting, Brussels, 25 January 2011 3

4. FInES Position Paper on
Orientations for FP8 (2011)
From the Recommendations section
• The Socio-Economic circle. A new scientific approach
to finance and economic science is urgently required …
At the macro-economic level, there is a need to re-
define key notions of business and economic theories
such as value, growth and competitiveness, taking
account of profound changes at all levels of society in
recent decades, the emerging world order, new
visions and alternative future scenarios.
Ultimately, the impact of the immaterial economy on
businesses and society will have to be systematically
and comprehensively analysed, leading to better
insights and potentially better policy making and
governance.
FInES Cluster meeting, Brussels, 25 January 2011 4

5. TF activities – implementation of
FInES RR ambition on value system
• Update of Cluster publication on Overview of State of the
Art Research in Business Models
• Interfacing with projects (within & outside Cluster)
working on business model related research
– Address new ideas early
– Facilitate ideas sharing & collaboration
– Publish joint work
– Support and consolidate the development of new concepts,
metrics, and tools (1) within the Cluster; (2) in other
research domains; (3) in the market?
• Initial timeframe: one year
FInES Cluster meeting, Brussels, 25 January 2011 5

6. Task Force Members
• NEFFICS (Lead): Man-Sze Li (IC Focus), Andrew Hinchley (IC Focus), Peter
Lindgren (Aalborg University), Henk de Man (Cordys), Cyril Carrez (SINTEF)
• NisB: Victor Shafran (SAP Israel), Boris Otto (University of St Gallen), Verena
Ebner (University of St Gallen)
• COIN: Daniel Field (Atos)
• VENTURE GATE, ACCESS ICT & YMIR (ICT Financial Marketplace related
projects): Anton Theuma
• OPAALS & its follow-up Open Knowledge Space Initiative: Paolo Dini
• ADVENTURE: Americo Azevedo (INESC)
• ComVantage: Lior Fink (BGU), Sigal Berman (BGU), Reinhard Willfort (ISN),
Dimitris Karagiannis (UNIVIE)
• ExtremeFactories: Eero Korhonen (VAIBMU), Aitor Elorriaga Elorza
(INNOPOLE)
• Additional Interested Parties:
TAHI: Stephen Pattenden; ActionPlanT: Klaus-Dieter Platte;
UNIVERSELF: Makis Stamatelatos; Telenor Group: Hanne Stine Hallingby
FInES Cluster meeting, Brussels, 25 January 2011 6

7. The European Internet Economy:
State of Play
• The Internet economy contributes 4.1% of EU GDP; projected to grow 7 times
as fast
• Growth is currently driven more by demand than investment; size and
embeddedness are therefore uncertain; PPP will rebalance towards productivity
as main driver
• Revenues are dominated by telecoms; this may not continue
• Measured revenues far understate true contributions – infra marginal gains,
unmonetised benefits, indirect productivity improvements and broader societal
contributions
• Performance is less strong in services and other rapidly-innovating sectors;
• Largest sectors have lowest intensity; this is linked to the ‘productivity gap’ and
is expected to reverse
• Future challenges are to build and sustain domestic presence in innovative and/
or service layers; increase competitiveness; produce greater innovation-
friendliness; rebalance returns towards end-user-facing part of value chain;
increase societal benefits
• FI PPP could potentially raise Internet contribution to GDP by 5.7%
FInES Cluster meeting, Brussels, 25 January 2011 7
7

8. Evolution of Business Models
A wide spectrum of scenarios for the future of businesses
on the Internet, e.g.
• Utility business models and Web enterprises (Rappa, 2004)
• “IT doesn’t matter” and the “Big Switch” (Carr, 2003, 2004,
2008)
• “Open Business Models” (Chesbrough, 2007)
• The “generative” argument (Zittrain, 2008)
• The business models of “free” (Anderson, 2009)
• A new framework for the evolution of specific technologies
(Arthur, 2009)
• The rise and fall of “information empire” (Wu, 2010)
• The “Apple / i-xxx” ecosystem (2009 onwards)
FInES Cluster meeting, Brussels, 25 January 2011 8

9. From service platforms to service
ecosystems:
business model implications
• Value-added applications based on a generic technology
platform
>> generic technologies in creating markets
• Business partnerships based around a provider’s core offering,
typically for expanding and/or customising the functionality of
the offering for broadening market reach
>> collaboration with a wider range of partners including third
party developers, consultants and channels in expanding a
specific, chosen market (segment)
• A system of relationships and the supporting infrastructures
(technical and business) involving suppliers and customers,
potential or actual, that are tightly aligned with the activities,
characteristics, objectives and value proposition of a company
>> new types of market and even mode of exchange brought
about by Internet and especially Web native companies
FInES Cluster meeting, Brussels, 25 January 2011 9

10. ”The 7 building blocks of a business model”
Core question
Core building block
Value proposition/s (products, services and What do we provide?
processes) that the company offers (Physical, 1
Digital, Virtual)
Target customer/s, (customers, users, Who do we serve? Table 4: Core components of the business model
market segments that the company serves 2
– geographies, physical, digital, virtual).
Value chain [internal] How do we provide it?
configuration.(physical, digital, virtual) 3
Competences (technologies, human What are our competences?
resources, organizational systems, culture 4
-).(Physical, digital, Virtual) What are our core competences?
Network - Network and Networkpartners What is our network?
(e.g. strategic partnerships, supply chains 5
and others (Physical, digital, virtual)
Relations(s) Relationship(s) (e.g. physical, What are our relations?
digital and virtual relations, personal, 6
peers). (Physical, digital, virtual)
Profit formula – both Turnover structure, How do we make money and business value?
cost structure and revenue flow. (physical, 7
digital, virtual)
Table 4: Core components of the business model
Source: Lindgren and Taran 2011 / FP7 NEFFICS, 2011
www.ici.aau.dk 22-12-11
Lindgren and Taran 2011
FInES Cluster meeting, Brussels, 25 January 2011 10

11. Transaction Value Resource- Game theory Coordination Network New Innovation Neoclassical
cost theory Chain based view theory economics institutional economics economics
economics
Transaction as Competitive Competency Decision Coordination Positive “Institutions Assessment of Efficiency
an differentiator as key support to of structures, feed-back matter” – innovation driven
Focus
organisational (margin) & resource & the prevent lock- resources, and critical broadening the uncertainty competition &
concept and competitive application of in situations people for mass as scope of and success; competitive
cost as an strategy a bundle of for software advancing features of economics from argument for markets
economic heterogeneous services; economic network resource innovation as
friction and not argument for welfare economy; allocation to the a growth
perfectly commonly new notions broad context driver
mobile defined of network for institutional
resources for solutions externalities arrangements
creating and demand
sustainable side
competitive economies of
advantage scale
Utility service support
No compelling No compelling No compelling Provides Provides a Provides a Critique of Provides No compelling
support as support based support based major insight useful useful assumptions arguments for support based
focus is on on stable on competition into the conceptual conceptual surrounding utility services on Pareto
transactions markets and for scarce development basis for basis for production- infrastructure efficient
between static value resources, of utility assessing assessing based as a growth pricing
organisations chains which in turn services, e.g. utility services development economies & driver, and
and drives an the Web as a as an overall of utility firms as a potentially as
transactions as organisation’s major enabler fundamental services in “black box”; an enabler for
differentiator network for all infrastructure, volatile, contribute radical
for different dependency (serendipitous) but not dynamic ideas / innovation
market types . internet necessarily for markets; conceptual tools (and high
developments; coordination Penguin for ownership, growth)
Game theory of tasks or effect etc. governance and
supports resources as a delivers investment
coordinated determinant evidence considerations
actions of for individual for utility
players to utility services services in
achieve an information
optimum intensive but
solution also information
imperfect
modern
Source: Li and Eschenbächer / FP7 COIN, 2011 economies
FInES Cluster meeting, Brussels, 25 January 2011 11

12. Baseline of Value Analysis
Entities Worlds
People Things Real Virtual Merged
Value Creation
(inputs)
Value Distribution
(flows)
Value Consumption
(outputs)
Drivers / Factors
Culture & Structures Regulations Technology Volatility &
Social Norms (intra- & inter- ): Risk
Market /
Organisation/
Community
Knowledge
Time
FInES Cluster meeting, Brussels, 25 January 2011 Source: Man-Sze Li / FP7 NEFFICS, 2011 12

13. Back up slides
13

14. Task Force Focus
(initial ideas)
• From NisB:
– “Makes value network a tangible asset”, by developing
(1) business model “archetypes”; (2) “Wisdom of the
Network” valuation.
• From NEFFICS:
– Networked enterprises operating in cloud-based
environment and value creation through innovation: (1)
Define the established baseline in Value Networks; (2)
Propose a new Definition for Business Values; (3) Define
a Value Delivery Model; (4) Define a corresponding
Framework for Value Analysis
FInES Cluster meeting, Brussels, 25 January 2011 14

15. Conclusion from Cluster work
on Business Models so far
• A variety of business model activities within the FInES
Cluster
• The rising prominence of the utility paradigm as a driver for
new business models for the supply side of ICT, including in
the Future Internet contexts
• There is a critical, but also long and difficult path, to market
acceptance
• Balance between state-of-practice, state-of-play and
research ambition for “innovation” and “level playing field”
(especially relevant for SMEs)
• A challenge to the status quo: economic values and their
foundations
• What about the demand side?
FInES Cluster meeting, Brussels, 25 January 2011 15

16. Vision Statement
Future Internet Enterprise Systems
By 2020, the Internet will become a universal business
environment on which new values can be created by
competing as well as collaborating enterprises through
innovation in a level playing field. Within this
environment, FInES will become a transparent and
invisible part of the business operation, available and
affordable to all enterprises as required. It will make
optimal use of the capabilities provided by a universal
service infrastructure based on the concept of the
Interoperability Service Utility (ISU)[1]. It will support
and enable the full range of enterprise qualities as
described in Chapter 2 of this Research Roadmap.
Source: FInES Research Roadmap
[1] The first Grand Challenge of the Enterprise Interoperability
Research Roadmap [European Commission, 2006 and 2008].
FInES Cluster meeting, Brussels, 25 January 2011 16

17. What has changed?
• The exit from the crisis should be the point of entry into a new
sustainable social market economy (as already enshrined in
the Lisbon Treaty), which is moreover a smarter, green economy
• The new drivers for prosperity and growth will come from
innovation and from using resources better, where the key input
will be knowledge
• Future competitiveness will be driven by factors far beyond
conventional economic dynamics … increasingly the focus is
on conserving and making more effective use of energy, natural
resources and raw materials; it is also on social cohesion,
tackling unemployment and fostering social inclusion
• European enterprises have the opportunity to thrive in the
post-crisis landscape by means of environmentally and socially
responsible business innovation and creativity
• The time has come to re-consider value creation, business
values and practices
Source: FInES Research Roadmap
FInES Cluster meeting, Brussels, 25 January 2011 17