Wednesday, August 5, 2009

E-business Model Ontology. Criterias and Characteristics of e-business model.

e-business model ontology can be defined as a rigorous definition of the e-business issues and their interdependencies in a company’s business model. The e-business model ontology focuses on four aspects of the organization: product innovation, infrastructure management, customer relationship, and financials.

Dimensions of product innovation are target customer segment, value proposition, and capabilities. Dimensions of customer relationship are information strategy, feel and serve, and trust and loyalty. Dimensions of infrastructure management are resources, activity configuration, and partner network, while dimensions of financials are revenue model, cost structure, and profit/loss.

e-business model can be assessed with the following characteristics: economic control, supply chain integration, functional integration, innovation, and input sourcing:

 Economic control refers to the degree to which a market is hierarchical or self-organizing. This characteristic can be measured in terms of the extent of regulatory bodies, government policy, customers, asset specificity, switching costs, proprietary products, capital requirements, and access to necessary inputs for new entrants in this industry.

 Supply chain integration is considered to be a measure of the degree to which the business functions and processes of an organization are integrated with those of their supply chain partners. This characteristic can be measured in terms of shipping scheduling, transportation management, tax reporting, negotiating customer credit terms, negotiating supplier credit terms, determining freight charges and terms, resource planning, and inventory control.

 Functional integration refers to the degree to which multiple functions are integrated in a business model. In order to measure the degree to which functions within an organization are integrated, a scale that considers a detailed list of processes can be applied. Examples of process integrations are purchase order processing with servicing functions, shipping scheduling with manufacturing, transportation management with financial functions, tax reporting with financial functions, negotiating customer credit terms with distribution, and negotiating supplier credit terms with distribution.

 Innovation is the degree of innovation of an e-business model, which can be defined as the extent to which processes can be performed via the Internet that were not previously possible. Innovation can be divided into internal and external components based on the firm’s ability (internal) to innovate or assimilate innovations within the innovative environment of the industrial sector (external).

 Sourcing refers to the way in which inputs are sourced by the organization, either systematically from a long-term supplier or through spot markets. The issue of sourcing raw materials is more straightforward as manufacturing and operating inputs are either sourced systematically or on spot markets.

In determining an appropriate e-business model, several criteria can be used, such as:
 Involved parties, such as business-to-business, business-to-consumer, and/or consumer-to-consumer.
 Revenue sources, such as transaction fee, product price, and/or exposure fee.
 Value configuration, such as value chain, value shop, and/or value network.
 Integration with customers and/or partners.
 Relationships, such as one-to-many, many-to-many, and/or many-to-one.
 Knowledge, such as know-how, know-what, and know-why.



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