1Daniel Field V1.0, September 2011
Identification of business models through value chainanalysis
A method for the exploiting large technology projects
Daniel Field, Atos
Synopsis
Large and consortium based technology based research projects, as exemplified by the
European Commission’s
framework programme projects share certain properties whichcomplicate efforts to commercialise the results. They are multidisciplinary, multi-partner andtechnology-led. Significant lag is present between the inception of the project and its finalresults, five years in some cases, and the initial business case, if ever described, may be basedon assumptions or predictions later found to be false. The final results may differ widely fromthe original plans, as approaches are changed, technology evolves and emerges, andexperiments fail.Faced with these difficulties, consultants working for the international information technologyservices company Atos have developed a method for identifying potential business models forthe commercialisation of project results through value chain analysis. By incorporating aspectsof technology analysis into value chain analysis, different value propositions can be exploredand consequently innovative routes to market discovered.This whitepaper describes the process of developing appropriate value chains and analysingthem to identify possible business models. In the course of developing this method it was alsoseen that it could be applied to existing companies. Through this, the business model of acompany can be contrasted with those of other companies sharing similar generic valuechains, implying that this method could be used to categorise generic business models.Furthermore, as the analysis effectively predicts possible business models, it could become aneffective tool for generating novel business models.Several examples of the application of this method in European projects are given towards theend of this whitepaper, along with the results that were achieved. It is demonstrated that thismethod assists not only the development of innovative business models but also in structuringand formalising preliminary models.
2Daniel Field V1.0, September 2011
Table of Contents
Introduction .................................................................................................................................. 3Overview of the exploitation method ........................................................................................... 5Description of the exploitation method and tools ........................................................................ 6Identification of assets .............................................................................................................. 6Identification of the value chain ............................................................................................... 6Development of business scenarios ........................................................................................ 13From business scenarios to business models.......................................................................... 17Example scenarios from commerce ............................................................................................ 19The proprietary model ........................................................................................................ 19The Open Source model ...................................................................................................... 21Cloud Computing ................................................................................................................. 22The Freemium model .......................................................................................................... 24Examples of the method in technology projects ........................................................................ 27The COIN project ..................................................................................................................... 27A FIRE project .......................................................................................................................... 33A PaaS interoperability project ............................................................................................... 37Conclusion ................................................................................................................................... 42About ........................................................................................................................................... 43Acknowledgements ................................................................................................................. 43About the Author .................................................................................................................... 43About Atos Research and Innovation ...................................................................................... 43About Atos ............................................................................................................................... 43License terms .............................................................................................................................. 44
3Daniel Field V1.0, September 2011
Introduction
This paper introduces a method and tools for the development of exploitation strategies forlarge and complex technology research projects. This process has been developed in theexploitation of several large Framework Programme and other subsidized research projects.These projects are by nature multidisciplinary, multipartner and technology-led. In theseresearch programmes there is a large delay between the development of the project idea andplan, and its finalization. From the publication of the call for proposals, to the proposalsubmission, favourable evaluation and contract negotiation, many months will have passed.Then the project lifetime may range from 12 to 48 months. In total it is not uncommon thatthe overall lag between idea conception and fruition is five years or more. This means that theinitial assumptions and premises on which the project were founded may no longer hold true.Even if a business case was elaborated prior to the project start, the technical results may nolonger match the initially foreseen set of results. The projects are invariably developed on atechnology-push model rather than a market pull one. Nonetheless, towards the end of theproject it is necessary for participants to determine suitable exploitation strategies in order tocapitalize on their investment and the innovation of the project. The challenge lies inunderstanding how the technology can deliver value and how the participants can positionthemselves to profit from this value delivery.Often towards the end of the project there are numerous competing ideas on what thetechnology does and how it can be exploited. The views expressed by one participant canrarely take into account all the business factors required to exploit the technology and it isfrequent to find that the lack of formalization of these ideas prevents the participants beingable to contrast and develop the ideas in a structured and constructive manner.Above all, what is required at this phase of any technology-led R&D project is to establish aclear basis for building the exploitation ideas upon. This allows multiple perspectives of thesame vision to be recognized as versions of one and the same vision, as well alternative visionsto be formalised through a common framework thus enabling constructive debate on how todevelop from a technology prototype to a business venture.Over the course of numerous R&D projects the Atos has developed and fine tuned the methodpresented here. The intention of this whitepaper is not to teach value chain analysis but toshow how it can be used in the area of business model identification. It is assumed that thereader is familiar with the concept of value chain analysis and the initial chapters dealing withidentifying a value chains focus on the particularities of large collaborative projects.Whilst developing the method presented here, it was seen that it could equally be applied toexistent companies. Exploring possible alternative business models according to our methodinvariably uncovers business models already used by competitors or other actors with similarvalue chains. Examples of this are given here and the implications of this, as discussed in a
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Identification of Business Models Through Value Chain Analysis - A Method for Exploiting Large Technology Projects - A Whitepaper
A whitepaper introducing a novel method for the identification and generation of business models through value chain analysis, suitable for entrepreneurs as well as technologists. Specifically considered for large technology projects, in particular research projects as exemplified by the European Commission’s framework programme (FP7).
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