STECON: 360 BUSINESS MODEL EVALUATION TOOL

The STEcon 360 Business Model Evaluation (BME)

tool
Important for helping market actors
assess the viability of new business
models and partnerships under several
Evaluates market scenarios
Business
Models

Important for policy makers (e.g., for Important for assisting individual actors
defining subsidies) and market understand how the different market
STEcon 360 conditions and costs in candidate
actors (e.g., for providing counter Business
arguments) regions affect the proposed business
Model
models
Evaluation Tool

Performs
Assesses
Holistic Cost-
replication &
Benefit
upscaling
Analysis of
potential
BMs
Key functional requirements of STEcon BME tool

Compare standard against innovative business models Up to 12 candidate BMs, using several financial KPIs

From single-actor business models to complex value

Consider multiple actor roles networks, with up to 14 roles

Generates charts for identifying market bottlenecks and

Support decision making for “all win” ecosystems assessing the effectiveness of additional compensations

Support multiple locations Up to 6 locations (pilot sites, cities, countries, ….) for the
Scaling-up and replication of the business models
Support for multiple scenarios and Monte Carlo simulations
Perform sensitivity analysis with user-defined random variables and number of iterations

By defining BM canvas for each actor, we can track the

Automate error-prone tasks money flows amongst all actors

Be fully-customizable User-defined Cost items, Revenue streams, Drivers, …

Scaling factors are used for associating costs/revenues

Be scalable amongst different locations
A high-level overview of inputs and
outputs of STEcon BME tool

Techno-Economic parameter values

and assumptions (from experts) Techno-
Economic
models

Key
Simulators technoeconomic
KPIs
STEcon 360 Knowledge via
Business BM financial
Model
Evaluation KPIs
Economic Parameter values Tool
and scaling factors Knowledge via
(from experts) Social Welfare
KPIs
Business Model Evaluation:
Assessing the profitability of a service offering for a
single actor (*) A service offering usually involves several actors
and is modelled as a value network

Cost I Revenue I

Cost II
Revenue II

Cost III Revenue III

Cost IV Revenue IV

Actor 1
Business Model Evaluation:
Assessing the end-to-end profitability of a service offering
(*) The presence and/or magnitude of each item
differs across separate actors
(**) Revenues for some actors do not necessarily
Cost I Revenue I outweigh the associated costs -> Updated
business models or compensation schemes
should be evaluated for bottleneck actors
Cost II
Revenue II
Cost III
Cost III Revenue III

Actor 1 … Actor N
Holistic Cost-Benefit Analysis

“Costs” of new “Costs” of (*) While the focus is on “costs”, benefits are
infrastructure Business-as-Usual present when their difference is negative
(e.g., 5G) solution (e.g., 4G)

ΣCost_Category A ΣCost_Category A (**) Each Cost Category (e.g., signaling)

is associated with several cost items
ΣCost_Category B and involves costs for all actors in the society
ΣCost_Category B (***) Internal economic transactions (those
ΣCost_Category C amongst actors in the society) are cancelled
ΣCost_Category C out -> focus on external ones

Total Opportunity Cost

of BaU Total Opportunity Cost (****) Opportunity costs refer to the
of new infrastructure foregone end-user utility and revenues (from
external actors) of the alternative option

Society
Actor 1 … Actor N
A walkthrough the tool’s version
The STEcon 360 BME tool for the energy
domain

■ A preliminary version of the STEcon 360 BME, especially configured

for the energy domain, has been released in 2017
■ An enhanced version of the tool has been subsequently developed
by the STEcon research group and successfully employed in the
context of Horizon 2020 projects funded by the EU.
 The STEcon 360 BME tool for the telecoms
domain

■ It will be used by the STEcon group in the EU funded project 5G-

VINNI for building momentum for investment in 5G networks by
quantifying the full potential of 5G technologies supporting
network slicing.
– The main purpose is to propose viable business models for
testbed 5G facility sites

More 5G More value to

infrastructure vertical industries

More value to More commercial

ICT industry services over 5G
Dashboard Screenshot 1: Describing the
business models

e.g., Data Center e.g., Communication

e.g., Slice Sub- Service Provider Service Customer
Network Operator

Repository of Cost Items, Revenue Streams, Drivers,

(and their associations) and CBA cost categories
 The Generic Value Network for Smart Grids

The actor roles and the business interactions are inputs to the STEcon 360 BME tool
Dashboard Screenshot 2:
Providing input values for each actor/role
& location
 Cashflow Analysis Template – High-level
overview of Baseline Business Model
Baseline Business Model (existing)
Year
0 1 2 3 4 5
Cost Driver
Cost Driver Input CAPEX (Capital Expenditures) Unit
>

Cost Driver
Cost Driver Input OPEX (Operational Expenditures) Unit

Revenue
Revenue Driver
Driver Input REVENUES Unit

Parameter
Parameter Input FINANCIAL RESULTS
EBITDA K Eur/year

Amortization
Years 5 D&A K Eur/year

EBIT K Eur/year

Tax Income Tax K Eur/year

Free Cash Flows K Eur/year

Internal Rate of Return (IRR) %
 Cashflow Analysis Template – CAPEX breakdown
(partial) of Baseline Business Model
Baseline Business Model (existing)
Year
0 1 2 3 4 5

Cost
Cost Driver
Driver Input CAPEX (Capital Expenditures) Unit
License Fees K Eur/year
to Regulator K Eur/year
SW (one time licenses, proprietary SW,
etc.) K Eur/year
cost per 1K e.g., VNF for S-GW
customers DRFM K Eur/year
Buildings owned K Eur/year
e.g., Cell towers
Buildings K Eur/year
Operations Equipment K Eur/year
e.g., Routers, gNodeBs
unit cost Smart meters K Eur/year
Information & Communications
Technology infrastructure K Eur/year
e.g., VMs
Servers K Eur/year
Services K Eur/year
smart meter Installation K Eur/year
 Cashflow Analysis Template – OPEX breakdown
(partial) of Baseline Business Model
Baseline Business Model (existing)
Year
0 1 2 3 4 5
Cost
Driver
Cost Driver Input OPEX (Operational Expenditures) Unit
Wholesale Power K Eur/year
from TSOs K Eur/year
from producers K Eur/year
Business Operations, Proj. Mgnt &
Administration K Eur/year
Managers K Eur/year
FTEs FTE/month
FTE cost K Eur/year
Senior Employees K Eur/year
Junior Employees K Eur/year
Maintenance K Eur/year

SW support and central system operations K Eur/year

% on ICT
Infrastructure
CAPEX 10% ICT infrastructure maintenance K Eur/year
 Cashflow Analysis Template – Revenues
breakdown (partial) & Financial Results of
Baseline Business Model
Baseline Business Model (existing)
Year
0 1 2 3 4 5
Revenue Revenue
Driver Driver Input REVENUES e.g., eMBB slice Unit
Product1 K Eur/year

Market Size K subscribers

% of Market
Market Share of Actor Size
Average Revenue Per User (ARPU) Eur/year
Product2 K Eur/year
Product3 K Eur/year

Parameter
Parameter Input FINANCIAL RESULTS
EBITDA K Eur/year

Amortization
Years 5 D&A K Eur/year

EBIT K Eur/year

Tax Income Tax K Eur/year

Free Cash Flows K Eur/year

Internal Rate of Return (IRR) %
 Cashflow Analysis Template – High-level
overview of New Business Models
Costs/Revenues per year when participating into a
value network (as part of a new business model)
Value Network
1 2 3 4 … 12
Cost Driver
Cost Driver Input CAPEX (Capital Expenditures) Unit

Cost Driver
Cost Driver Input OPEX (Operational Expenditures) Unit

Revenue Revenue
Driver Driver Input REVENUES Unit
Product1 K Eur/year

Market Size K subscribers

Market Share of Actor % of Market Size

Average Revenue Per User (ARPU) Eur/year

Parameter
Parameter Input FINANCIAL RESULTS
EBITDA K Eur/year
Amortization
Years D&A K Eur/year

EBIT K Eur/year

Tax Income Tax K Eur/year

Free Cash Flows K Eur/year

Internal Rate of Return (IRR) %
Dashboard Screenshot 3: Performing the
Evaluation & Checking outputs
Dashboard screenshot 4: Performing
Sensitivity Analysis
Indicative results for the energy domain
 Comparing the economic attractiveness (IRR) of 11+1 value
networks for 5 roles in 2 geographic areas in the energy
domain DSO Aggregator Retailer ProsumerA Prosumer
BaU 0.84% -100.00% 15.69% -100.00% -20.70% Non-viable
GreenEnergyMax 0.16% -100.00% 15.47% -100.00% -20.89% No side payments
value networks
ProsumerMax 0.16% -100.00% 15.46% -100.00% -19.59% could result in an
(Aggregator role
ElectricHeatAutomation 0.16% -100.00% 15.47% -100.00% -20.89% “all-win” situation
Terni (IT)

GridAssetsMaintenance 2.77% #N/A 15.47% -100.00% -17.94% is key)

GridQuality&Control 2.82% #N/A 15.47% -100.00% -17.94%
IncidentManagement 2.82% #N/A 15.47% -100.00% -17.94%
IncreasedPowerQuality 2.57% #N/A 15.47% -100.00% -17.94%
CoopPowerPlant 2.57% -100.00% 14.95% -100.00% -17.72%
ReduceRPFtoTSO 2.71% -100.00% 15.45% -100.00% -17.94%
CongestionAvoidance 4.01% -100.00% 15.45% -100.00% -17.69%
PowerFactorManagement 3.09% #N/A 15.45% -100.00% -18.01%

DSO Aggregator Retailer ProsumerA Prosumer

BaU 0.37% -4.26% 5.06% -100.00% -100.00% Viable
GreenEnergyMax 1.49% 62.13% 5.86% -100.00% -100.00%
value networks No side payments
Manchester (UK)

ProsumerMax 1.49% 83.72% 5.85% -100.00% -100.00% could attract

ElectricHeatAutomation 1.49% 51.00% 5.86% -100.00% -100.00% (even with no
GridAssetsMaintenance 3.27% #N/A 5.86% -100.00% -100.00% new prosumers) new prosumers
GridQuality&Control 3.30% #N/A 5.86% -100.00% -100.00%
IncidentManagement 3.30% #N/A 5.86% -100.00% -100.00%
IncreasedPowerQuality 2.84% #N/A 5.86% -100.00% -100.00%
CoopPowerPlant 2.84% 7.39% 6.23% -100.00% -100.00%
ReduceRPFtoTSO 2.92% -3.24% 5.82% -100.00% -100.00%
CongestionAvoidance 3.71% 16.33% 5.82% -100.00% -100.00%
PowerFactorManagement 3.13% #N/A 5.82% -100.00% -100.00%

Scaling factors were used for minimising the inputs required when doing replication analysis
 Sensitivity analysis of economic attractiveness due to
different assumptions in the energy domain
DSO Aggregator Retailer ProsumerA Prosumer
BaU 0.84% -100.00% 15.69% -100.00% -20.70%
GreenEnergyMax 0.16% -100.00% 15.47% -100.00% -20.89%
ProsumerMax 0.16% -100.00% 15.46% -100.00% -19.59%
ElectricHeatAutomation 0.16% -100.00% 15.47% -100.00% -20.89%
Terni (IT)

GridAssetsMaintenance 2.77% #N/A 15.47% -100.00% -17.94%

GridQuality&Control 2.82% #N/A 15.47% -100.00% -17.94% Moderate Electric Vehicle (EV)
IncidentManagement 2.82% #N/A 15.47% -100.00% -17.94% penetration rate
IncreasedPowerQuality 2.57% #N/A 15.47% -100.00% -17.94% and
CoopPowerPlant 2.57% -100.00% 14.95% -100.00% -17.72% Moderate Photovoltaic Panel
(PV) penetration rate
ReduceRPFtoTSO 2.71% -100.00% 15.45% -100.00% -17.94%
CongestionAvoidance 4.01% -100.00% 15.45% -100.00% -17.69%
PowerFactorManagement 3.09% #N/A 15.45% -100.00% -18.01%

DSO Aggregator Retailer ProsumerA Prosumer

BaU 11.44% -1.54% 17.25% -100.00% -20.70%
GreenEnergyMax 11.54% 107.61% 17.13% -100.00% -20.89%
ProsumerMax 11.54% 267.78% 17.12% -100.00% -19.59%
ElectricHeatAutomation 11.54% 6.00% 17.13% -100.00% -20.89%
GridAssetsMaintenance 12.97% #N/A 17.13% -100.00% -17.94%
Terni (IT)

GridQuality&Control 12.99% #N/A 17.13% -100.00% -17.94%

IncidentManagement 12.99% #N/A 17.13% -100.00% -17.94% High EV penetration rate
IncreasedPowerQuality 12.80% #N/A 17.13% -100.00% -17.94% and
CoopPowerPlant 12.80% 113.02% 17.01% -100.00% -17.72% Low PV penetration rate
ReduceRPFtoTSO 12.88% 7.63% 17.10% -100.00% -17.94%
CongestionAvoidance 13.06% 99.56% 17.10% 11.64% -17.69%
PowerFactorManagement 13.14% #N/A 17.10% -100.00% -18.01%
 Cumulative cash flow analysis of business
models in the energy domain
The operating profits (or losses) before deduction of any interest and taxes, at the 20th
year for different DSO business models in Terni (IT)

The cumulative cash flow at the 20th year for different Aggregator business models in Terni (IT)
 Payback period analysis of business models
in the energy domain
The payback period for each of the 11+1 DSO business models in Terni (IT) and Valencia (ES)
Conclusions

■ STEcon-AUEB group has developed a powerful business model

evaluation tool that:
– Has already been used successfully in the energy domain for
evaluating the market potential of the Smart Grid technologies
and the profitability of several value networks
– Can be customised for other domains such as the
telecommunications
– Can be extended to include new features
 Thank you!
Prof. George D. Stamoulis (gstamoul@aueb.gr)
Dr. Costas Kalogiros (ckalog@aueb.gr)
Dr. George Thanos (gthanos@aueb.gr)

http://stecon.cs.aueb.gr/