1. Strategy and e-Business Models IFIP I3E’2001 Zurich, October 2001 Yves Pigneur HEC Lausanne yves.pigneur@unil.ch (+41 21) 692.3416

2. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 2 Agenda Strategy pages –Value creation & differenciation Business model components > Model 8Model –Product innovation11 Value proposition, target and aptitudes –Customer relationship24 Feel, serve and protect customer –Infrastructure & logistics49 Logistics, process and alliances –Finance & revenue66 Measure > Measure75Measure Simulation –Scenarios for uncertainty > Scenario89Scenario –Case study: mobile commerce > mobile90mobile http://inforge.unil.ch/yp/Talk/ifip.htm

3. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 3 General context technology Electronic commerce Strategy Business models Industry IT strategy allows Levier to change Allows impact Intermediary Community 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 Customer Relationship Customer Relationship Product Innovation Product Innovation logistics infrastructures logistics infrastructures Finance Revenue Finance Revenue [Bloch, 1999]

4. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 4 Models and ontologies The Enterprise Ontology> htmlhtml –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 coming

5. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 5 Buyer seller information Identify product Promote product influence Negotiate payment BUY SELL goods Consume Serve information Query Answer Find source Find customer information Transaction phases The information systems have to support: catalogpaymentlogisticsAfter-saleorder

6. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 6 «How the Internet influences industry structure» [Porter, 2001]

7. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 7 Strategic positioning 1.Correct goal 2.Attractive value proposition 3.Differentiated value chain 4.Priorities 5.Integration (coordination) 6.Continuity (of direction) STRATEGY« ABSENCE OF STRATEGY » ProfitRevenue, market share customer acquisition Value & direct revenue (higher price)Indirect revenue (advertising) Priority and focusAll opportunities Differentiated value chainImitation and reproduction (cloning) Control of internal resourcesPartnerships DifferentiationPrice wars [Porter, 2001] differentiation

8. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 8 Innovation produit Gestion des relations-clients Gestion des infrastructures Aspects financiers Business model Financial aspects Financial aspects 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? Customer Relationship Customer Relationship 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? Product innovation Product innovation 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? Infrastructure logistics Infrastructure logistics

9. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 9 Rethinking the traditional organization [Hagel, 1999] Product innovationCustomer relationship mngtInfrastructure management Economy Culture Competition Speed is the key to be the first on the market Employee centered Battle for talents, low barriers to entry, many small players thrive Economies of scope are key to acquire a large number of customers Highly service oriented customer comes first Battle for scope, rapid consolidation, big players dominate Economies of scale are key for reducing cost in managing large volumes Cost focused stress on standardization efficiency Battle for scale rapid consolidation, a few big players dominate

10. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 10 Elements of a business model CUSTOMER personalization distribution community PRODUCT Target Value proposition Capabilties INFRASTRUCTURE Resources Activities/processes Alliances/networks value forresources for 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

11. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 11 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 PROPOSITIONCAPABILITESTARGET Targeted customersCompetencies, aptitudes Product Innovation Product Innovation

12. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 12 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 BarceloneLoterie Romande reservation easyCar Illustrations

13. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 13 Classification of business models (I) Brokerage –Buy/sell fulfillment, market exchange, business trading community, buyer aggregator, distributor, virtual mall, metamediary, auction broker, reverse auction, classified, search agent Advertising –Generalized portal, personnalized portal, specialized portal, attention/incentive marketing, free model, bargain discounter Infomediary –Recommender system, registration model Merchant –Virtual merchant, catalog merchant, surf-and-turf, bit vendor Manufacturer Affiliate Community –voluntary contributor model, knowledge networks Subscription Utility http://ecommerce.ncsu.edu/business_models.html

14. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 14 Classification of business models (II) Functional integration Degree of innovation lowerhigher Single functions Integrated function e-shop e-procurement e-mall e-auction Info brokerage Trust service value chain service provider Virtual community Collaboration platform Third party marketplace Value chain integrator Le Shop Saci Buy.com Ricardo Swisskey Reuters FedExp Intership iVillage AssureNet Gofish eMerge Business-to-business [Timmers, 1998]

15. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 15 Classification of business models (III) Integration AGORA eBay, PriceLine … AGORA eBay, PriceLine … ALLIANCE AOL, iVillage … ALLIANCE AOL, iVillage … AGGREGATION Amazon, Chemdex … AGGREGATION Amazon, Chemdex … VALUE CHAIN Dell, Cisco … VALUE CHAIN Dell, Cisco … lowhigh Control hierarchy auto-organization Dynamic pricingcreativity Process integrationSelection and convenience [apscott, 2000] Distributive network FedExp, UPS … Distributive network FedExp, UPS …

16. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 16 Classification of business models (IIIb) [apscott, 2000] www2.actnet.com/pdf/2410671.pdf

17. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 17 Classification of business models (end) Influence of seller lowhigh Influence of buyer lowhigh Electronic barter Electronic barter Swap Barter Alaxis Online sale Online sale Products: Amazon LeShop Brun Passot Services: AutoWeb E*trade easyJet aggregation: EMB Online buy Online buy Portals: AOL, Yahoo Zdnet Group buying: Cendant Mercata Accompany Pressure of seller Pressure of buyer competition cooperation Electronic market Electronic market search: Acses auction: eBay PriceLine Ricardo plate-form: TPN Register, linkom goFish POWER

18. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 18 Multi-role models - syndication ROLE SOURCESSYNDICATORSDISTRIBUTORSCUSTOMER 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] productinfrastructurecustomer iSYNDICATE 1’200 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 a subscription with a complicated content management > ICEICE Illustrations

19. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 19 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

20. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 20 Voice Internet WAP AuctionsPortals Multi-technology model – wireless Illustrations

21. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 21 Multi-member model – P2P Illustrations [Gartner, 2001] Atomistic User-centered Data centered Compute-centered Web mk2

22. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 22 Capabilities VALUE PROPOSITION Capabilities TARGET Customers Competencies [Bagchi, 2000]

23. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 23 Capabilities Network [IBM, 1999] Forum with authors attract people A capability depends on another When its performance depends on the another’s

24. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 24 Part II - Customer Relationship CUSTOMER personalization distribution community PRODUCT Target Value proposition Capabilties INFRASTRUCTURE Resources Activities/processes Alliances/networks value forresources for 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

25. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 25 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 core competencies Rigid processes Products/ services channelsCustomers Manufacture and sale products Customers’ needs Integrated channels Products/ services Flexible processes Outsourcing/ In-house competencies Feel and serve customers Feel and serve customer Build to order [Kalakota, 2001] Customer relationship Customer relationship

26. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 26 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

27. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 27 Cost (shirt) % profit Added value CustomerRetailerDistributorProducer $20.91$11.36$20.45 Price $52.72$31.81$20.45$52.72 ProducerRetailerDistributorCustomer $52.720% ProducerCustomerRetailerDistributor $41.3428% ProducerCustomerRetailerDistributor $20.4562% [Benjamin, 1995] Dis-intermediation

28. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 28 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

29. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 29 Distribution channels AirlineTravel AgencyReservation S. 80% by Internet! Otopenia … Illustrations [Klein, 2001]

30. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 30 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 tc PC < tc PI + tc IC tc PC > tc PI + tc IC tc’ PC < tc’ PI + tc’ IC tc’ PC > tc’ PI + tc’ IC Supplier Consumer Intermediary tc PI tc IC tc PC 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

31. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 31 Intermediaries I. Direct market reinforced by the Internet II. Threatened intermediary III. Cyber-mediaryIV. Intermediary reinforce by the Internet More expensive with intermediaryCheaper with intermediary Pre-internet Post-internet Expedia … Illustrations More expensive with intermediary Cheaper with intermediary [Sakar, 1995] standard ultra-intermediation extra-intermediation dis-intermediation re-intermediation

32. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 32 Moves of threatened intermediaries I. Direct market reinforced by the Internet > SCOTTSCOTT II. Threatened intermediary > SCOTTSCOTT III. Cyber-mediary > SCOTTSCOTT IV. Intermediary reinforce by the Internet > SCOTTSCOTT tc PC < tc PI + tc IC tc’ PC < tc’ PI + tc’ IC tc’ PC > tc’ PI + tc’ IC Pre-internet Post-internet [Scott, 2000] tc PC > tc PI + tc IC Integration capabilities (direct access) Perpetual innovation capabilities (new entrants, spin-off) Collaborative SCM capabilities (virtual enterprise)

33. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 33 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]

34. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 34 Personalization 2 3 4a 5 4b Establish the configuration Planing of production Listen to the customer Distribution CRM Production (internal) ERP Outsourcing (external) SCM One-to-one Mass-customization

35. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 35 Mass customization stabledynamic stable dynamic Change of processes Change of product Mass production Continuous amelioration 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

36. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 36 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 abusing in the line of direct marketing and database marketing Attract retain Attract retain start dialogue start dialogue Motivate action Motivate action Conduct transaction Conduct transaction [Peppers, 1993]

37. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 37 Personalization strategies in e-business lowhigh low high Degree of digitalization of customized components Degree of customer integration required [Piller, 2000] Housing www.streif.de Computer www.dell.com Fitness www.efit.com Cosmetics www.reflect.com Jewelry www.expressions.com Flowers 1.800-flowers.com Ski www.myski.com ConfigurationInnovation Add-onAttention Watches www.idtown.com Print www.iprint.com Video www.kideo.com Press www.individual.com

38. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 38 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]

39. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 39 Taxonomy for recommending techniques manualautomatized Automatization (intervention of customer) Ephemeral (one session) persistent (many sessions) persistency [Schafer, 1999] Non-Personalized Customer comments Amazon Delivers Attribute-Based Customer who Bought Item-to-Item Book Matcher People-to-People 1.Non-Personalized 2.Attribute-Based 3.Item-to-Item 4.People-to-People

40. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 40 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 based Conversion prospect  client

41. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 41 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 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

42. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 42 Comparaison [Fink, 2000]

43. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 43 Trust TRUST SECURITY PRIVACY Contribute to the establishment of BRAND Notoriety … Fear: financial losses Fear: loss of intimacy INFO- MEDIARYCOMMUNITY Certification Verification et authorization Escrow Notary, payments Expertise Guarantee of quality Rating Reputation of actors Insurance Risk management Contribute QUALITY Conflict Conflict resolution

44. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 44 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

45. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 45 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 of sellers/buyers Target customers Buy Union (mass) Buy Union (mass) Market mix (informed) Market mix (informed) Barter New age (unselfish, elitist) Barter New age (unselfish, elitist) Sale target (spendthrift) Sale target (spendthrift)

46. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 46 Types of communities Community virtual [Schubert, 1999] Community interest Community business Community leasure Community internet Community network Community research Community relationhip Community fantasy Community merchant Community transaction Community commerce SkiRando Ultima Online EMB Ricardo TPN Register ISworld Social interest Commercial interest goal media

47. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 47 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 groups One-to-TribeOne-to-One Community and marketing

48. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 48 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)OPS

49. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 49 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 trafic emotion [Hagel, 2000]

50. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 50 Part III - Infrastructure management CUSTOMER personalization distribution community PRODUCT Target Value proposition Capabilties INFRASTRUCTURE Resources Activities/processes Alliances/networks value forresources for 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

51. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 51 Infrastructure and logistics Infrastructure management Infrastructure management Computerized system Buyer seller information Identify product Promote product influence Negotiate payment BUY SELL goods Consume Serve information Query Answer Find source Find customer information catalogpaymentlogisticsAfter-saleorder logistics standards

52. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 52 Reference model IT infrastructure Information services search directories online catalogs product evaluation request for proposal conditions Information services search directories online catalogs product evaluation request for proposal conditions Business models Agreement services contracting brokerage exchange e-market setting prices negotiation Agreement services contracting brokerage exchange e-market setting prices negotiation Settlement services authentication certification escrow logistics payment dispute resolution Settlement services authentication certification escrow logistics payment dispute resolution [Schmid, 1997]

53. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 53 Scénario ABC Standards - XML Collection of business components (product, supplier, order, …) and standard processes (fulfillment, invoicing, delieving …) XML tags for inter-application exchanges –EAI, B2B, … –EDI legacy (ISO codes, X12 components) bizTalk –By Microsoft –Simple Object Access Protocol (SOAP)SOAP Common Business Library (CBL) –By CommerceOne Commerce XML (cXML) –By Ariba and also Bolero, IOTP, OAGIS, OCF … [Haifei Li, 2000]

54. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 54 Standards - ebXML Initiative OASIS & UN-CEFAC (Edifact) UML TPA Trading Partner Arrangement

55. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 55 CONTRAT Trading Partner Agreement (TPA) [Dan, 2001]

56. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 56 Logistics: the hidden face of e-commerce 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 transportatio n warehousing [Kalakota, 1999]

57. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 57 Order fulfillment (warehousing) centralizeddistributed self-operated outsourced Structure Operation Dedicated Fulfillment Center Dedicated Fulfillment Center Distributed Delivery Centers Distributed Delivery Centers Third-Party Fulfillment Center Third-Party Fulfillment Center Partner Fulfillment Opération Partner Fulfillment Opération Build-to-order Manufacturer Direct Shipment In-store [Kalakota, 1999]

58. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 58 Changing the warehousing approach centralizeddistributed in house outsourced Structure Operation Dedicated Fulfillment Center Dedicated Fulfillment Center Distributed Delivery Centers Distributed Delivery Centers Third-Party Fulfillment Center Third-Party Fulfillment Center Partner Fulfillment Opération Partner Fulfillment Opération Exemples Volumes Investment Flexibility

59. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 59 Value chain & activities infrastructure Human resources Technology development Procurement inbound logistics productionoutbound logistics marketing & sale After-sale Main activities Support activities Value e-SCM e-procurement e-alliance

60. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 60 Configuration of activities [Revaz, 1995]

61. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 61 FAP f 1 Possible contact s1 Contact searcher c 1 Ad Association Read ad $ $ Ad $ $ Checke dad Ad $ $ Submitted ad Read an ad Submit an ad Publish an ad Place an ad Distribute an ad Check an ad [Gordijn, 2000] Value-oriented model Legend: Actor Value activity Value interface Value port Value exchange Flows: AND Scenario delimiter Scenario Path (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

62. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 62 [Gordijn, 2000] Value-oriented model – second configuration Flows: Redistribute an ad Possible contact s1 Contact searcher c 1 Ad Association Read ad $ $ Ad $ Checke dad Brand $ Submitted ad Read an ad Submit an ad Publish an ad Place an ad Maintain brandna me Check an ad FAP f 1 Check an ad Read an ad Place an ad Legend: Actor Value activity Value interface Value port Value exchange AND Scenario delimiter Scenario Path (x) OR (x) Solution: The Ad Association performs most activities. The Ad Association adds most value Shift in power

63. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 63 [Gordijn, 2000] Value-oriented ontology assigned- to has-in between contains requests offers Value interface Value port Value exchange Value offering Value object has-out 1..n0..1 0..n 11 2..n 0..n 1..n 1 Value activity 1..n 0..1 has assigned-to 1 1..n Composite Actor Elementary Actor decomposed-into is-a 2..n 0..n Actor with similar Market segment 1..n0..n Composite Object Elementary Object decomposed-into is-a 2..n 0..n

64. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 64 Order processing Order confirmation Planing of realization destocking loading Planing delivery Customer service Prevision Planing of stock Planing of capacity MRP choice supplier Availability stock Scheduling Stock allocation order of priorities Scheduling manufacturing Scheduling distribution 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)

65. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 65 Alliances et partnerships Author marketing Author marketing Distributor inventory Distributor inventory Amazon.com sales Information systems coordination contents Amazon.com sales Information systems coordination contents Shipping transport tracking Shipping transport tracking Affiliate sales Affiliate sales Customer buy content Customer buy content Bank payment Bank payment deliver order sale order sales critics Credit cardclearance returns

66. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 66 ECRECREDIEDI Efficient customer Response from to Electronic Data Interchange (EDI) Order BUY Reception Payment Company A Supply SALE Delivery Invoicing Company B Bank A Clearing selection, comparaison,... order or statistics Delivery invoice paiementconfirmation Before sale sale production & distribution After-sale

67. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 67 Vendor-managed inventory (VMI) ManufacturerVMI - DC Fabr. - DC [Waller, 1999] Retailer 3d party - DC Retailer DC = distribution center Collaborative Planning, Forecasting, and Replenishment (CPFR)

68. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 68 E-market AGGREGATION MATCHING –Identify sellers and buyers –Matching their needs FACILITATION –facilitate the transactions bargaining –manage the commitment trust –garantee trust [Dai, 2000]

69. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 69 e-SCM, e-procurement and e-market Electronic market 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 Integrated channels Products/ services Flexible processes Outsources/ In-house competencies procurement

70. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 70 HIERARCHY MAKE Supply chain MARKET BUY Production cost Coordination cost low high low NETWORK high [Malone, 1993] Co-production partnership Externalization Virtualization Holding Strategic network

71. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 71 Part IV - Finance CUSTOMER personalization distribution community PRODUCT Target Value proposition Capabilties INFRASTRUCTURE Resources Activities/processes Alliances/networks value forresources for 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

72. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 72 Value creation «The creation of an economic value stays the measure of success» PROFIT  = (P – V C ).Q – F C Pthe unit price of a product V C the variable cost of a unit Qthe number of products sold F C fixed costs Aspects financiers Aspects financiers

73. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 73 Income models REVENUE one time recurrent sale registry subscription advertisement use Income of the subscription fees to become a member Paid 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 shopfront Paid by the vendor Phone registry subscription Usage Time Services combination

74. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 74 Income models - examples Business modelsRevenue model Virtual community ( iVillage ) iVillage Subscription, ad, sponsoring Online sale ( Dell ) Dell Transaction (sale) Auctions ( eBay ) eBay Commission, Subscription, ad Buying clubs ( cendant ) cendant Subscription, ad, commission Infomediation ( netZero ) netZero Transaction (content) Affiliation ( millicent ) millicent Commission buy: advertisement subscription commission buy: advertisement subscription commission market: commission subscription ad market: commission subscription ad barter: - advertisement subscription barter: - advertisement subscription sale: transaction commission (intermediary) sale: transaction commission (intermediary)

75. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 75 Pricing - Dutch Flower Auction [Kambil, 1999] Illustration

76. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 76 Auction software - objects [Kumar, 1999]

77. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 77 Auction software - process [Kumar, 1999]

78. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 78 Based on –catalog –negotiation between the seller and the buyer –auction –request for proposal (RFP) « good bye to fixed pricing » ? –Suppliers enjoy price differenciation in order to avoid comparison –Customers enjoy low price and gaming using comparison 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) Transforming the pricing [Klein, 2000] Yield Management

79. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 79 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]

80. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 80 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

81. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 81 Intangible assets measuring models [Sveiby, 2001] http://www.sveiby.com.au/intangibleMethods.htm MEASURE

82. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 82 Intangible Assets Monitor, Balanced Scorecard and Intellectual Capital Value Tangibles assetsIntangible assets Growth/Renewing Efficiency Stability ClientsProcessesTraining/Learning Supplier partner Systems Patents knowledge Aptitudes Experience formation Growth/Renewing Efficiency Stability Growth/Renewing Efficiency Stability Individual profit generator Knowledge perspective Customer capitalOrganizational capital Human capital Structural capital Logistics management Logistics management Customer management Customer management Product innovation Product innovation External structureInternal structureIndividual competencies IAM [Sveiby, 2001] BSC [Nolan, 1995] IC [Edvinsson, 1997]

83. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 83 Intangible assets in Celemi

84. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 84 Intellectual capital in Skandia [Edvinsson, 1997]

85. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 85 Customer management Customer management Product innovation Product innovation Logistics management Logistics management Financial Aspects Financial Aspects Balanced scorecard CUSTOMER RELATION GoalsMeasures 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 Scope Scale talent Value

86. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 86 BALANCED SCORECARD software From cause to effect

87. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 87 BALANCED SCORECARD for IS Learning and Innovation Internal Processes Customer Perspective Value Contribution Increase of end-user productivity IT Staff Mr. xyz Objectives Key Performance Indicators (KPI’s) Targets (Baseline/Year n)Initiatives Account- ability % 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 Wells required to achieve objectives What group or person is responsible for the measure 56 % by Acadys 56 % by Acadys Reduc- tion by 5 %p.a. The level of performance or rate of improvement needed 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

88. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 88 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 increase end-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...) V3 V4 [Bader, 2000] EXEMPLE Illustration

89. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 89 BALANCED SCORECARD for IS V3 - Increase End-User Productivity MONTH JUNE TABLE 3 Identify and fix issues on segment 5: response time ACTIONS 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 4.24.0 3.0 2.13.0 4.0 3.54.2 4.54.9 4.84.5 4.93.9 CP Seg.1 800 CP Seg.2 1.100 CP Seg.3 650 CP Seg.4 750 CP Seg.5 700 END-USER ASSESSMENT (0 to 5) C: Current survey P: Previous survey TARGET IS 3.5 OR OVER 4.54.1 4.0 2.82.9 4.0 3.54.2 3.53.9 4.84.5 4.93.9 4.0 3.53.8 3.13.7 4.0 3.54.2 4.03.9 4.84.5 4.93.9 4.24.0 3.0 3.13.5 4.0 3.54.2 2.52.9 4.84.5 4.93.9 3.54.0 3.0 1.52.0 3.0 3.54.2 3.53.9 4.84.5 2.93.0 3.9 4.03.94.0 3.8 3.23.4 10 88 15 90 [Bader, 2000] EXEMPLE Illustration

90. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 90 Vision and strategy BALANCED SCORECARD for CIOs Corporate 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 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 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 = 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]

91. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 91 Metrics for e-business [Corporate Executive Board, 1999] FINANCE PROCESSUS CLIENT PROCESSUS PRODUIT PROCESSUS

92. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 92 Metrics for e-business [Corporate Executive Board, 1999] (SALES EFFICIENCY AND TRANSACTIONAL EXCELLENCE) Illustration

93. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 93 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 …

94. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 94 Management Cokpit http://www.management-cockpit.comhttp://www.management-cockpit.com/

95. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 95 1 2 3 AB CD ? Clear-enough future forecast Traditional toolkit Alternate futures Discrete options Game theory Decision analysis True ambiguity No basis for forecast analogies Pattern recognition Range of futures No natural option Scenario planning Levels of uncertainty: [Courtney, 1997] SCENARIO PLANNING Emerging scenarios Emerging scenarios

96. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 96 Mobile - Framework Product Customer Infrastructure Payment Communication Access Platform Network Device Marketing Relation mgmt Personalization PRODUCT INNOVATION Conceive of attractive new services and contents, and figure out how best to bring them to market INFRASTRUCTURE MANAGEMENT Build and manage facilities for high volume, repetitive, operational tasks CUSTOMER RELATIONSHIP MANAGEMENT Identify, attract, and build relationships with customers Telecom operator Device manufacturer Internet player content provider Case study

97. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 97 Mobile - Product (payment) «a killer attitude, no killer application» Product Customer Infrastructure Communication Platform Network Device Marketing Relation mgmt Personalization Payment Access Existing credit card Nokia/VISA agreement France Telecom’s ItiAchat using Motorola’s StarTAC-D phone Phone operator provides credit Sonera Mobile Pay in Finland „Dial-a-Coke“ New virtual credit/debit card Paybox.net in Germany

98. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 98 Mobile - Low cash transaction value [McKinsey, 2000] EUR 300 milliards (Europe) Vending machines, Parking, Movie tickets Public transportation, Tolls, Laundry, Fast food Smart airport, Gambling Smart card barriers: Need of recharge (ATM dependent) Lack of information feedback (e.g., remaining balance) Dedicated & complex hardware (wire-lined POS & confirmation machine) Need of recharge (ATM dependent) Lack of information feedback (e.g., remaining balance) Dedicated & complex hardware (wire-lined POS & confirmation machine) Credit card barriers: Smart phone advantages: ATM independent Visual real time feedback Standard & common device (no wire line connection required, no confirmation machines required) High penetration of mobile phones Tailor-made solution for micro-payments Multifunctional Automatic identification control Relatively low penetration among users and merchants/ vendor machines Inefficient in transactions lower than $10 Mono-functional (payments only) Difficulty for customers & merchants to verify each other Relatively low penetration among users and merchants/ vendor machines Inefficient in transactions lower than $10 Mono-functional (payments only) Difficulty for customers & merchants to verify each other Estimate

99. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 99 Mobile - Product (communication) Product Customer Infrastructure Payment Platform Network Device Marketing Relation mgmt Personalization Communication Access SMS E-mail Instant messaging Unified messaging nomad

100. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 100 Mobile - Product (access) Product Customer Infrastructure Payment Communication Access Platform Network Device Marketing Relation mgmt Personalization InformationMultimediaTransaction News Alerts Sports Financial Entertainment Program Travel Guide Find me services Yellow pages Dictionary Traffic FINANCIAL Banking Broking SHOPPING Retailing Ticketing Auctions Reservations Travel Betting MEMBERSHIP Loyalty programs Medical records ENTERTAINMENT Gaming Music TV Characters IN-CAR ELECTRONICS Music Traffic GPS Anytime Anywhere Time/location-sensitive services WAP

101. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 101 Mobile - Infrastructure Product Customer Infrastructure Payment Communication Access Platform Network Device Marketing Relation mgmt Personalization WAPmiddlewareaggregator UMTSPKIGPS Operating systemSpeech recognitionBluetooth battle for standards

102. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 102 Mobile - Customer Product Customer Infrastructure Payment Communication Access Platform Network Device Marketing Personalization – to identify and attract customers – to generate economies of scope – to build customer loyalty and trust – to understand their attitudes and needs – to customize usage of services and content – to provide the customer with the right content PUSH information has to be relevant and timely to avoid being rejected PULL information has to be easily accessed and relevant to generate usage Relation mgmt battle for customer ownership

103. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 103 Mobile - Three scenarios Market chaos Operator integration competition cooperation Portal syndication product Infrastructure customer [c-qential, 2000]

104. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 104 Mobile – Operator integration BUNDLED SCENARIO 1 The operator leverages its control of the network and its ownership of the customers to extend its role Product Customer Infrastructure Payment Communication Access Platform Network Device Marketing Relation mgmt Personalization – subscription, airtime charges and pay-per-use from customers – commission fee (for processing, billing …) from content providers – derived from sale of devices through operators – margins from selling content traffic could be a device-centric in place of an oprator-centric scenario …

105. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 105 Mobile - Market chaos UN-BUNDLED SCENARIO 2 A marketplace where customers have distinct relationship with device makers, operators and content providers Product Customer Infrastructure Payment Communication Access Platform Network Device Marketing Relation mgmt Personalization – subscription and airtime charges from customers – sales of content and services: pay-per-use & subscription – sales of devices – sales of profiling information content

106. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 106 Mobile - Portal syndication RE-BUNDLED SCENARIO 3 Aggregators (infomediaries) syndicate content providers to create portals that deliver customized offerings Product Customer Infrastructure Payment Communication Access Platform Network Device Marketing Relation mgmt Personalization – subscription and airtime charges from customers – margins from selling content and services through wortals – subscription and pay-per-use – advertising fee – charges for personalized bundled services and content customers

107. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 107 Evaluation of scenarios ScenariosProsCons Operator Operators control customer experience Intense price competition among operators will keep service affordable Ability to provide unified billing for services and content Breadth and quality of content and commerce are limited Users will ultimately choose services based on content brand names Market Capitalizes on strengths of individual players Customer has direct contact with content provider No big brother: protection of private life Risk of anarchy Difficulty to reach the customer and maintain the distribution channels Portal Allows users a virtually seamless transition from the desktop to mobile world Core competency is a provision of highly customized content and services Portal may just serve as a launch pad to the Internet for users Rules for sharing third-party content with mobile users are complex and uncertain Product Customer Infrastructure

108. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 108 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 Decision Support system Decision Support system learning Computer-aided design Computer-aided design inventory + order rate delivery rate Service time Productivity System dynamics SIMULATE

109. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 109 Customer- relationship Customer- relationship Product innovation Product innovation Infrastructures logistics Infrastructures logistics Finance revenue Finance revenue System dynamics

110. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 110 Simulation

111. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 111 Strategic postures ? Shape the future Play a leadership role Setting standards Creating demand Adapt the future With through speed, Agility and flexibility Recognizing and capturing Opportunities in existing markets Defend & react Set barriers Defensive competition Reserve the right to play Invest sufficiently to stay In the game Avoid premature commitments [Courtney, 1997]

112. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 112 Conclusion Customer- relationship Customer- relationship Product innovation Product innovation Infrastructure logistics Infrastructure logistics Finance revenue Finance revenue Business model What? Who? How? How much? Measure Simulation scenarios = BUSINESS PLAN + + INNOVATION GoalsMeasures & initiatives strategy

113. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 113 Research … XML Frame e-business model ontology Project

114. Université de Lausanne WEBWEB | AGENDA | FINAGENDA FIN © 2001 Pigneur, HEC Lausanne e-business 114 Case-based reasoning Business model (Un-) bundled corporation Breakthrough strategy CUSTOMER PRODUCT LOGISTICS FINANCE Critiquing system Critical success factor Balanced scorecard Resource-based view Simulation environment System dynamics Dynamic resource system Scenario Planning DEFINE CLASS DESIGN ASSESS MEASURE CRITIQUE MODEL FORECAST SIMULATE BUSINESS ONTOLOGY OBSERVED CASES ENGINEERING TOOL Framework forTool for E-BUSINESS MODEL HANDBOOK Project [Pigneur, 2001] e-business model handbook Research … XML