Valuebased Service Modeling and Design

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Value-based Service Modeling and Design

• Hans Weigand
• H.Weigand_at_uvt.nl,

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Problem description

• Service design (e.g. SOAD, Papazoglou vd
  Heuvel, 2006), is currently viewed mainly as a
  software engineering problem
• If web services are to be stable over time and
  self-contained, they must be economically
  sustainable and aligned to the business
• If service design involves business
  reengineering, this is to be done at the business
  level, not software level
• Confusion about terms and definitions software
  (web) service versus business service
• Is there a direct mapping between the two?

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Papazoglou 2006
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• Key design principles
• (Papazoglou, Vd Heuvel)
• service coupling
• service cohesion
• service granularity

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• the current trend toward a service-oriented
  enterprise necessitates a formal characterization
  of business architecture that reflects
  service-oriented business thinking
• N Nayak,  M Linehan et al. Core business
  architecture for a service-oriented
  enterprise. IBM Systems Journal, 46(4), pp.723-742
  (2007)

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Business concerns
Operational concerns
IS concerns
Path ()
Focus
Path (ISOA, SOMA, ..)
Business service
Operational service
IS service
Raf Haesen, KU Leuven, 2009 Existing approaches
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Business concerns
Operational concerns
IS concerns
Focus
Path
Focus
Focus
Business service
Operational service
IS service
Path
Path
Raf Haesen, KU Leuven, 2009 Proposed Method
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Service-oriented enterprise

• Service-dominant logic
• Resourcing (operant vs operand resources)
• Co-creation of value

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Designing Interactive Strategy from value chain
to value constellation Richard Normann, Rafael
Ramirez (1994)
The logic of co-production - enabling vs relieving
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• We develop our own products You help yourselves
• (to keep expenses low) (touch and try the
  products
• yourselves)
• We are the kings of flat packages You take away
  your
• (less transport and warehousing purchases
  yourselves
• costs and easier to handle for you)
• We buy in large quantities You assemble the
  products
• (lower prices) yourselves (tools and
  instructions
• are included in the package)

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• If our customers are not strong enough to survive
  in the face of new competition, it must be
  because they and us together do not have the
  appropriate co-productive relationship
• Your success is our success

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The new age of innovation driving co-created
value through global networks C.K. Prahalad, M.S.
Krishnan (2008)
N1 personalization, co-creation of value
convergence of B2B and B2C gt high flexibility,
value for money, collaborative networks,
complexity RG resource base is global access
to resources rather than ownership gt speed,
scalability (up/down), innovation arbitrage
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Challenges

• Unified view of service
• Modeling support for business-level services
• e3value
• Clarify bridge between business-level services
  and IS services
• A value-based service design method

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Service Ontology

• The relationship with REA is that services are
  conceived as resources that can be exchanged
• Service productions use certain resources and
  transform other resources
• A service-oriented enterprise is an enterprise in
  which value exchanges are conceived as services
• Web services are conceived as enhancing services
  that provide access to another (typically
  business) service

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Resource type
concerns
event type
ISA
contains
Service type
HasGoal
Process type
realizes
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Resource type
concerns
event type
ISA
contains
Service type
HasGoal
Process type
realizes
implements
Work process type
service composition
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exchange process (duality)
resource
service (resource)
resource
stockflow process
money (resource)
consume/produce events
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E3-value modelingJaap GordijnVrije
Universiteit Amsterdamhttp//www.e3value.com
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Developing e-commerce applications

• Whats so special about e-commerce applications,
  compared to normal applications?
• Requirements stem from a wide range of (sometimes
  unknown) stakeholders.
• E-commerce applications are the business rather
  than only supporting it.
• Successful ways of doing business are often
  unknown.
• Increasing use of technological possibilities
  enables new ways of doing business.

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Consequences

• A wide range of stakeholders create multiple
  stakeholder views on requirements
• E-commerce applications are business rather than
  only supporting it integrate stakeholder views
  using scenarios
• Successful ways of doing business are often
  unknown create requirements rather than elicit
  requirements
• Continuous alignment of business models and
  technological possibilities

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e3-value e-Business model core concepts

• Actor, Value Activity, Value Object (Type), Value
  Port, Value Interface
• Actor
• independent entity such as a company or person

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• Value Activity
• A process, performed by an actor which adds or
  creates value
• A value activity is performed economically and
  technologically independent from other value
  activities
• A value activity cannot be decomposed in smaller
  activities which each can be assigned to
  different actors
• Assigning value activities to actors is an
  important e-commerce design problem!

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• Value object
• Value objects are produced or consumed by value
  activities
• Value objects interact with actors
• The value of an object is comparative, personal
  and situational
• A value object usually has to do with providing a
  value resource that enables a transformation of
  something belonging to the customer (value
  activity)
• E.g. airline service resource is the chair in
  the plane, transformation is the physical
  transport of yourself from A to B

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• Value port
• Actors and value activities are connected to each
  other via value ports
• On ports, value objects are visible to the
  outside world.
• Value ports have a direction in or out
• Value ports have properties such as the unit
  price (range) of value object

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• Value Interface
• A value interface models a service offered or
  requested by a value activity
• It consists of its value ports. Examples
• 1 value port a free ride
• 2 value port a product which is paid for
• 3 value port bundling
• Multiple value interfaces per value activity
• A value activity typically uses and produces
  service
• Typically, multiple versions of products are
  used/produced

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• Value scenario
• A value scenario shows a sequence of exchanges of
  value objects between value activities performed
  by actors
• Example buy music
• Two reciprocal value transfers are called a value
  transaction.

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• The value model can often be broken down into a
  set of value exchanges, but this is not
  necessary. For example

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value activity
actor
value object
value interface
value port
Simplified model Amazon bookshop
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How did Jeff Bezos characterize his firm?
Bill Gates laid it out in a magazine interview.
He said I buy all my books at Amazon because Im
busy and it is convenient. They have a big
selection and they have been reliable. Those are
three of our four core value propositions
convenience, selection, service. The only one he
left out is price we are the broadest
discounters in the world in any product category
But maybe price isnt so important to Bill
Gates.
Note that the value proposition does not
emphasize the core product (books etc), but how
Amazon delivers this product. We use the term
second-order value for these properties.
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Second-order values
Second-order value A second-order value is a
particular way of providing a value object.
Examples are reliable, friendly, and convenient
Complementary value objects value objects that
are offered together with the primary value
object (e.g. a user manual with a technical
product a reprint with an article published a
toy with a Mac Happy Meal). Also called
supplementary services . May also have
second-order values attached to them. Both
second-order values and complementary objects are
together called competitive values as they are
used to distinguish the actor from its
competitors offering the same primary object
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Competitive Value Model with second-order values
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Challenges

• Unified view of service
• Modeling support for business-level services
• e3value
• Clarify bridge between business-level services
  and IS services
• A value-based service design method

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Service Classification
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Service Layer Architecture (following Dietz
Enterprise Ontology)
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Service Design Method
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Example XYZ Financial Services
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Service table
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XYZ Financial Services (2)
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Design process from value model to IS/IT
services

• 1. Identify core services.
• 2. Introduce the resources needed.
• 3. For each resource, indicate the service that
  realizes this resource.
• 4. For each service, introduce additional
  enhancing services and relevant policies
• 5. Classify the web services using available
  generic web services.
• 6. Delegate services to a web service if
  appropriate
• - if web service is provided by another
  actor, set up service contract
• 7. Repeat the above (1-5) at the IS level
• - use business policies to determine policies
  that underlie service
• orchestration
• - use software service constraints to
  determine optimal granularity
• and coupling of services. If necessary,
  backtrack to business level
• 8. Repeat the above at the IT level

?
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Conclusion

• Service-oriented analysis and design requires a
  notion of service-oriented enterprise.
• Service-oriented analysis and design requires an
  ontologically grounded model architecture.
• Business reengineering needs to be performed at
  business level.
• Business/IT alignment can profit from a unified
  view of services
• E3-value diagrams can be used to explore
  (service) business models.
• Certain extensions are needed for a full coverage
  of the service ontology
• When going from core services to enhancing
  services, the diagrams quickly get cluttered and
  overloaded and additional representations, such
  as a service table are needed.