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Business model aspects


Here the term “business models” is used in a wide sense, complementing the technological and organisation aspects of digital platforms.

One proven tool for analysing and shaping business model is the “Business Model Canvas”. When trying to apply this tool to platforms, it appears that some elements apply to platform-based business models (e.g. the “value proposition”) and that tools as the ”canvas” can provide a first inspiration.

However, for digital platforms the traditional business models view in the narrow sense falls short of describing the business and relationship aspects of platforms. In particular, the strict “partner” and “customer”- view has to be replaced by an ecosystem-perspective.  In addition, this ecosystem can be highly dynamic, which means that platforms can move into new user groups, change their features and might have the typical effects. Another difference is the central role of data for platforms, meaning that data governance is one of the essential elements of the value proposition of platforms.

 

  • Business ecosystem

    By definition, by bringing together actors from different sides, platforms are defined by their stakeholders. There are core stakeholders (target customers, core suppliers, value chain partners), but it should not be forgotten that there are also actors with an indirect or external interest in the activities in the platform (competitors, existing customers not addressed through the platform). A platform also defines the relationship with and the channels with the different user groups.

  • Service model

    In order to be sustainable, the value proposition must be mirrored by a revenue stream, which is orchestrated by the platform. This value streams can be direct (pay-per-use, subscription, sales etc.), but could also be indirect (increasing price of products, increasing market share).

  • Payment modalities
  • Data ownership - data governance

    At the core of  all potential industrial use case scenarios of platforms are data. When formerly isolated data are shared, suddenly a new set of factors arises, both in terms of new external factors, but also in terms of business/microeconomic implications. Therefore, at the core of every digital platform must be a legally, organizationally and commercially viable concept for data sharing/trading/exchange.
    When shaping this model, the following questions must be answered:

    • What is the legal arrangement for data “ownership”?  Can users classify their data, is staggered approach possible (closed, traded or open data)? What are legal means that the platform uses to ensure the confidentiality of data ? (Trade Secrets, data base directive)
    • Transparency: Can users monitor/control the sharing of data with third parties? Are there “expiration dates” for data use?
    • Is the legal setting a fixed standards (“general conditions”) or is it a flexible, individual  approach? Are model contracts available?
    • Are there sectorial regulatory requirements concerning data?
    • How far is portability and change of platform possible?
    • Who is responsible in the case of  breaches of confidentiality?
    • How is fairness/ a level playing field between the platform and smaller players ensured ?
  • Added Value from user perspective

    Digital platforms will be successful if they provide a clear value proposition to the user groups  involved. In general, digital platforms offer added-value basd upon three main mechanisms:

    • Reduction of transaction costs
    • Network effects
    • Use of data integration for new services (mainly optimisation) and business models

    Based upon these mechanisms, added-value can be created in a variety of perspectives, such as the process perspective (what process or activity is optimised?) or the KPI perspective (what KPI is the focus of the optimisation).  This added value enables the financing of the digital processes through e.g.increased price margins, market shares or reduced costs.

  • Data Liability
  • Software ownership
  • Infrastructure ownership

    In the same way that software can be developed and commercialized using different business models according to the software ownership, digital platforms could be developed and commercialized using different business models according to the infrastructure ownership. Different infrastructure ownerships can be identified in this chapter and also their business models (like renting, pay per use…)