The Wallis Report

1
Society for Information Management New York
ATOMIC e-BUSINESS MODELS Migrating from Place to
Space
December 10, 2001
Professor Peter Weill Director, Center for
Information Systems Research (CISR) MIT Sloan
School of Management Phone [phone], Fax
[phone]pweill_at_mit.edu http//web.mit.edu/
cisr/www

• 2001 Weill

2
Atomic eBusiness ModelsAGENDA

• Place to Space
• Challenges Facing Traditional Firms
• Atomic eBusiness Models and Initiatives
• eBusiness Model Schematics
• Lonely Planet
• Owning Assets and Payoff
• Implementing eBusiness

• 2001 Weill

3
e-Business Health CheckTimes they are a
changing !
Promise
Actual
Radical change
Migration
Led by dot coms
Led by traditional firms

Customers want e-Business
Segments vary in desire
e-Business cannibalisesfrom center
e-Business managed by business units
Just add web sites
Firm wide infrastructure
Must do to survive
High variability in returns

• 2001 Weill

4
eBusiness Models

• Describe the way a firm does business
  electronically
• Roles and relationships between consumers, allies
  and suppliers
• Flow of the product, service and information
• Description of the benefits and revenues to
  participants
• Who owns data, transactions, relationships,
  intellectual property
• Emerging from strategic experiments
• Many different ways to classify
• Atomic eBusiness models

Source P. Weill M. Vitale, Place to Space
Migrating to eBusiness Models,Harvard Business
School Press, April 2001.

• 2001 Weill Vitale

5
Atomic eBusiness Models

• Finite number of atomic models
• Describe the essence of the way business will be
  conducted (for both B2B B2C)
• Combined as building blocks to createan
  eBusiness initiative
• Have characteristics
• How money is made/Strategic objective
• Critical success factors
• Core competencies
• Information technology infrastructure
• Principles that prescribe compatibility
• Some combinations not compatible
• Can decompose an eBusiness initiative into atomic
  models to understand characteristics. Use
  business model schematics to analyse.

EIGHT ATOMIC eBUSINESS MODELS Content
Provider Direct to Customer Full Service
Provider Intermediary Shared Infrastructure Value
Net Integrator Virtual Community Whole of
Enterprise / Government
Source P. Weill M. Vitale, Place to Space
Migrating to eBusiness Models,Harvard Business
School Press, April 2001.

• 2001 Weill Vitale

6
Atomic eBusiness Models
Content Provider
Provides content (e.g. information, digital
products services) via intermediaries.
Direct to Consumer
Provides goods or services directly to the
customer often bypassing traditional channel
players.
Full Service Provider
Provides a full range of services in one domain
(e.g. financial, health) from own products and
best of breed, attempting to own the consumer
relationship.
Intermediary
Brings together buyers and sellers by
concentrating information (e.g., search agent,
auctions).
Shared Infrastructure
Brings together multiple competitors to cooperate
by sharing common IT infrastructure.
Value Net Integrator
Coordinates the value net (or chain) by
gathering, synthesizing, and distributing
information.
Virtual Community
Facilitate and create loyalty to an online
community of people with a common interest
enabling interaction and service provision.
Whole of Enterprise / Government
Provides a firm-wide single point of contact
consolidating all services provided by a large
multi-business organization organized by customer
events.
Note All atomic models are both B2B and B2C
except content providers. Source P. Weill M.
Vitale, Place to Space Migrating to eBusiness
Models,Harvard Business School Press, April 2001.

• 2001 Weill Vitale

7
eBusiness Intermediary Business Models
Electronic Markets e.g. Nasdaq

• Components
• of service
• Search
• Specification
• Price
• Sale
• Fulfilment
• Surveillance
• Enforcement

Speciality Auctions e.g. Manheim, Sothebys
Increasing Completeness of Service
Electronic Auctions e.g. eBay
Shopping Agents e.g. Jango
Portals e.g. Yahoo!
Electronic Mall e.g. iMall
Market Share
Source P. Weill M. Vitale, Place to Space
Migrating to eBusiness Models,Harvard Business
School Press, April 2001.

• 2001 Weill and Vitale

8
New Government Model
Government
Channel
Life Event
Education Channel
Turning 18
Land Channel
Moving House
Government Services
Public Access
Source P. Weill M. Vitale Place to Space
Migrating to e-Business Models,Harvard Business
School Press, April 2001.

• 2001 Weill and Vitale

9
CitySync
10
Lonely Planet
Content Provider Combination Virtual
Community ? Direct to Customer

upgrades
i
Traveler A
E.Korp
i

Thorntree Virtual Community
phone card
i

0
Lonely Planet
Traveler B
CitySync

Authors
0
Travelocity Yahoo

content
Traveler C
0
branded content
0
content
i
Images, maps

0
Traveler D
Borders Amazon.com
Users of Content
books
books
0
0
(e.g. flight magazines)
Source P. Weill M. Vitale, Place to Space
Migrating to eBusiness Models,Harvard Business
School Press, April 2001.

• 2001 Weill

11
Schematic Legend
Primary relationship The firm with the greatest
potential to own the customer relationship.
Owning the customer relationship provides the
opportunity to know the largest amount of useful
knowledge about the customer.
Firm of interest The organization whose business
model is being illustrated by the schematic.
Supplier An organization or individual from which
the firm of interest obtains goods, services, or
information. There is generally a flow of money
from the firm of interest to its suppliers.
Flow of money This flow is one-directional and
indicates a payment from one party to another, in
exchange for goods, services, or information.
Often there is a flow of product in the opposite
direction.

Customer An organization or individual who
consumes the firm of interests goods, services,
or information. There is often a flow of money
from the customer to the firm of interests
service.
Flow of product This one-directional flow
indicates a transfer of physical goods or digital
products from one party to another. Often there
is a flow of money in the opposite direction.
0
Ally An organization whose products help to
enhance the demand for the firm of interests
products.
Flow of information Messages flow through all the
electronic relationships, therefore only those
flows of information that are not digital
products are represented by this icon. This
information is often the result of research about
a product or service and is often free.
Electronic relationship A digital connection,
through which messages flow in both directions.
Often, but not always, this connection will be
the Internet.
i
Source P. Weill M. Vitale, Place to Space
Migrating to eBusiness Models,Harvard Business
School Press, April 2001.

• 2001 Weill

12
Ownership of Customer RelationshipData,
Transactions Intellectual Capital
Ownership of
Customer Data
Customer Relationship
Customer Transactions
IC of Whats Sold
Note All atomic models are both B2B B2C except
content providers
Source P. Weill M. Vitale, Place to Space
Migrating to eBusiness Models,Harvard Business
School Press, April 2001.

• 2001 Weill and Vitale

13
Synergies and Conflict between Atomic Models for
an eBusiness Initiative

• 2001 Weill and Vitale

Source P. Weill M. Vitale, Place to Space
Migrating to eBusiness Models, Harvard Business
School Press, April 2001. (Study of 50 eBusiness
initiatives.)
14
Evaluating an eBusiness Initiative

Channel
CUSTOMERSEGMENT
Channel
COMBINATION OFeBUSINESS MODELS
CUSTOMERSEGMENT
Channel

IT INFRASTRUCTURE CAPABILITY
Source P. Weill M. Vitale, Place to Space
Migrating to eBusiness Models,Harvard Business
School Press, April 2001.

• 2001 Weill and Vitale

15
IT Services for eBusiness
Have
Relative Investment
Applications Infrastructure
89.8
3.7
1.1
Internet policies (e.g. employee access, url
logging)
100.0
1.7
1.2
Enforce internet policies
93.3
1.9
1.3
Email policies (e.g. inappropriate and personal
mail, harassment policies, filtering policies)
100.0
1.8
1.4
Enforce email policies
93.3
1.9
1.5
Centralized Management of EC applications(e.g.
centralised EC development, common standards and
applications, single point of access, multimedia
applications.)
100.0
4.5
1.6
Centralized management of infrastructure capacity
(i.e. server traffic)
100.0
7.3
1.7
Integrated mobile computing applications (e.g.
laptop dialup and ISP access for internal users)
100.0
4.2
1.8
ERP services (shared and standard ERP)
92.3
5.9
1.9
Middleware linking systems on different platforms
(i.e. integrating web shopfronts to ERP systems)
86.7
7.1
1.10
Wireless applications (e.g. web applications for
wireless devices)
69.2
3.0
1.11
Application services provision (e.g. applications
used by business units and centrally provided)
75.0
2.6
1.12
Workflow applications
64.3
2.7
1.13
Payment transaction processing (e.g. EFT)
92.9
3.7
Source P. Weill M. Vitale, Place to Space
Migrating to eBusiness Models,Harvard Business
School Press, April 2001. (Study of 50 eBusiness
initiatives.)

• 2001 Weill, Vitale and Raisbeck

16
Summary of IT Infrastructure Investments for
Atomic Models
Source P. Weill M. Vitale, Place to Space
Migrating to eBusiness Models,Harvard Business
School Press, April 2001. (Study of 50 ebusiness
initiatives.)

• 2001 Weill and Vitale

17
Insights for Place to Space Migration via Atomic
eBusiness Models

• Atomic eBusiness models (compose ? de compose)
  eBusiness initiatives.
• Finite number of atomic eBusiness models each
  with different characteristics.
• Strive for primary customer relationships.
  Intermediaries will be powerful.
• Analyze eBusiness initiatives with schematics
• Leverage what you own relationship, data,
  transaction
• Where are the conflicts and synergies?
• Identify infrastructure needs for each model and
  initiative.
• Identify and invest in eBusiness building blocks
  and portfolio of initiatives

1
2
3
4
5
6
7
8

• 2001 Weill

18
Strategic Objective and How Money is Made for
Each Atomic Model
Source P. Weill M. Vitale Place to Space
Migrating to e-Business Models,Harvard Business
School Press, April 2001.

• 2001 Weill

19
Strategic Objective and How Money is Made for
Each Atomic Model (continued)
Source P. Weill M. Vitale Place to Space
Migrating to e-Business Models,Harvard Business
School Press, April 2001.

• 2001 Weill

20
Critical Success Factors and Core Competencies
for Each Atomic Model
Source P. Weill M. Vitale, Place to Space
Migrating to eBusiness Models,Harvard Business
School Press, April 2001.

• 2001 Weill

21
Critical Success Factors and Core Competencies
for Each Atomic Model (cont.)
Source P. Weill M. Vitale, Place to Space
Migrating to eBusiness Models,Harvard Business
School Press, April 2001.

• 2001 Weill

22
(No Transcript)