Exploring Business Models to Sustain EGI
IT is an ever-evolving landscape; today we have seen countless innovative business models emerging as well as other entirely new industries forming such as around cloud computing, social media and smart devices. As a number of upstarts are starting to challenge the old guard, some of who are struggling feverishly to reinvest themselves, this growing trend is now spilling over into the public sector as well. As wallets begin to tighten, funding agencies are looking to focus investments in more targeted areas that will stimulate innovation and economic growth.
Following suit, the long-term sustainability strategy of e-Infrastructures has now come to the forefront of all stakeholders within the EGI community who have to re-evaluate the way things are done, not only from a technological perspective, but organisationally as well.
The idea of defining business models may help provide the necessary structure for those involved in e-Infrastructures to re-develop a series of organisational and strategic components for delivering its value to its consumers. However, a common misconception is that a business model is how to generate revenue or conduct commercial activities. While any organisation that creates and delivers value must be able to generate enough revenue to cover its expenses, a business model is much more than that. It can be basic or complex, but is simply “the rationale or description of how an organisation creates, delivers, and captures value sustainably”. In fact, revenue generation is just one aspect of a 9-point model that was recently presented in a dedicated workshop at the EGI Technical Forum in Lyon on 20 September.
Part of the workshop was to clearly define what business models are, how they fit within the context of EGI and offer a model by which to follow in order to encourage each organisation to start developing individual business models around providing grid services.
Overall, a business model must be intuitively understandable, but not oversimplifying the complexities of how an organisation functions. Therefore, the following concepts serve as a pragmatic way to start defining a business model strategy using a common framework from which to build.
- Customer Segments – Who do you serve? Who are the customers or consumers of your services?
- Value Propositions – What do you solve or satisfy? What value does your service bring?
- Channels – How is it delivered and communicated?
- Customer Relationships – How will you interact with your customers? What level of interaction will there be?
- Key Resources – What is needed to provide your service? What assets do you have or need?
- Key Activities – What activities need to be performed? What must you do?
- Key Partnerships – What don’t you have but need? Where will you obtain the materials or expertise? Who will be your suppliers or consultants?
- Cost Structure – What will the total costs incurred equal and where or what is the source of this cost?
- Revenue Streams – How will you collect the necessary revenue to cover these costs? Collection mechanisms? Pricing models?
Answering these questions in a defined business model will serve as a strategic step moving forward to ensure e-Infrastructures are well positioned for the coming years.
Do you have a defined business model or plan to produce one? Leave us your thoughts.
Re: Exploring Business Models to Sustain EGI
Interesting post. True a BM shouldn't focus merely on commercial activities, not-for-profits have business models too! Have to disagree that the BM is about creating, delivering and capturing value, though. Discussions of business models are often only useful when the definition is kept to the latter. If the term is extended to widely it becomes difficult to compare like for like models between sectors and value propositions. Value creation is your value proposition, value delivery is your value chain. Value capture is the business model. A case in point, using the Osterwalder business canvas IMHO adds too much fluff, albeit important fluff, to those initial decisions on how to explore sustainability or commercial exploitation. The Canvas has its merits, and all these 9 points should appear in the BUSINESS PLAN, where they are no longer 'fluff', but when it comes to business models, advertising is advertising and retail is retail, regaradless of the sector, customers, channels, costs. If you let the fluff get in the way of seeing that your business is delivering people to advertisers, your heading down the wrong track.