Ontology for E-business Models

Ontology for E-business Models
Yves Pigneur
HEC Lausanne
yves.pigneur@unil.ch

Business models can become a major stake in ebusiness. Understanding them and helping to design them are important issues. A business model is nothing else than the architecture of a firm and its network of partners for creating, marketing and delivering value and relationship capital to one or several segments of customers in order to generate profitable and sustainable revenue streams.

We propose a framework or ontology for defining business models. This framework could be used for describing, cataloguing and analysing case studies illustrating typical business models. Another use of this framework should be to develop a computer-aided design tool for supporting the design, the assessment, the benchmarking, the critics, and the simulation of new business models.

Our e-business model framework is divided into four principal components. (1) The products and services a firm offers, representing a substantial value to the customer, and for which he is willing to pay. (2) The relationship capital the firm creates and maintains with the customer, in order to satisfy himand to generate sustainable revenues. (3) The infrastructure and the network of partners that are necessary in order to create value and to maintain a good customer relationship. And last, but not least, (4) the financial aspects that can be found throughout the three former components, such as cost and revenue structures.

The product component of the e-business model framework describes the value proposition a firm wants to offer to a specific target customer segment. To deliver this value, the firm has to possess a certain set of in-house and/or outsourced capabilities.

The importance of the customer relationship is often forgotten in other business model approaches that are mainly focused on products or financial aspects. However ICT offer a range of opportunities to create new and exploit existing customer relationships by getting a feel for the customer’s desires, serving him and developing an enduring relationship with him. In order to improve the customers experience in doing business, the firm has to gather and exploit customer information. This is important because the notion of branding has also evolved from traditional product and company marketing to include relationship capital which emphasizes the interaction
between the firm and the customer. More then ever before, the focus has to be on a positive customer relationship which will result in customer trust and loyalty.

In the product component of the e-business model framework we have described the capabilities which are needed in order to create and deliver the value proposition. The infrastructure component describes the value system configuration that is necessary to deliver the value proposition; in other words, the relationship between in-house resources and assets, the activity and process configuration of the business the firm is operating in and the firms partner network.
Of course, the financial perspective also belongs to our e-business model framework. But rather than qualifying financial aspects such as the revenue or pricing model of a firm as the unique and most important element of a business model, we consider them as the fourth component and as the consequence of the formerly described. Financial aspects can be understood as costs required to get the infrastructure to create value and as revenues of sold value. The difference between revenues and costs determines the profitability of a company.

References
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