Emerging Business Models for the Open Data Industry and Open Data Value Capability Matrix

Comprehensive Model

Fatemeh Ahmadi-Zeleti

Insight Centre for Data Analytics

National University of Ireland, Galway

Feb 27, 2015

Main Conference Room

DERI Building


Galway, IRELAND

Massive Literature Study

Massive literature study on the followings:

• ‘Entrepreneurship’

• ‘Business Models’

• ‘Business capabilities’

• ‘Open Data’

• ‘Innovation’

• ‘Firm’

The study returns a comprehensive model which identifies

relations between the above concepts. The model is then

broken down into two lower level models (next slides)

Top-Level Model

Low-Level Model Box A

Low-Level Model Box B

Top-Level Model

Emerging Business Models for the

Open Data Industry and Open Data

Value Capability MatrixFatemeh Ahmadi-Zeleti


National University of Ireland, Galway

Feb 27, 2015

Main Conference Room

DERI Building


Galway, IRELAND

Open DataData that are freely available to everyone to use and republish as they wish without

restrictions from copyright, patents or other form of control mechanisms

Public data sharing increases transparency, participation, and stimulates new products

and services

e.g. Public Sector Information (PSI)

Open Science Data

Open Data gained popularity with launch of Open Data Initiatives such as Data.gov,

Data.gov.uk and Data.gov.ie

http://dl.acm.org/citation.cfm?id=2612745


Open Data Cont.

[Open Data is] going to help launch more businesses… It’s

going to help more entrepreneurs come up with products

and services that we haven’t even imagine yet.

http://www.worldbank.org/content/dam/Worldbank/Feature%20Story/ICT_India_OpenDatainDevelopment.pdf

http://www.worldbank.org/content/dam/Worldbank/Feature Story/ICT_India_OpenDatainDevelopment.pdf

Introduction

• To realize the value of OD, companies need to acquire open data

business model (ODBM) and necessary capabilities

http://siliconangle.com/blog/2015/02/25/big-data-solutions-should-start-at-the-business-level-ibminterconnect/

• Today, businesses struggle to utilize OD (or if they do, they don’t

realize they are using OD) in their business in order to create value for

their stakeholders

Joel Horowitz, Director of Portfolio Marketing, Big

Data Analytics, IBM: “Where IBM has

succeeded in the last few years with Big Data”

is starting with the business level and working

backwards...

Big Data and OD solutions should start at the

business level

http://siliconangle.com/blog/2015/02/25/big-data-solutions-should-start-at-the-business-level-ibminterconnect/

Business Model

Business Model

A business model describes how value is created and

captured by an organization through the decisions made

and the resulting consequences

A business model is a conceptual tool that contains a set of

inter-related elements that allows a company to generate

revenue

It comprises a description of the value a company offers to

one or several segments of customers, the architecture of

the firm, and its network of partners for creating and

delivering this value in order to generate profitable and

sustainable revenue streams



Business Model Cont.

Shafer, Smith and Linder Business Model




Hamel Business Model




Kamoun Business Model

Basic building blocks of a business model and the external forces

that have an affect on these blocks

http://cdn.intechopen.com/pdfs-wm/18084.pdf

http://cdn.intechopen.com/pdfs-wm/18084.pdf


Osterwalder and Pigneur Business Model



Open Data Business Model

Open Data Business Model (ODBM)

• The demand for Open Data is increasing the idea for businesses to use Open Data to generate value and revenue

• Utilizing Open Data can help companies improve the productivity of current business processes and can lead to new products and services

• ODBM should be designed and developed accordingly so that businesses can generate value and revenuefrom utilizing Open Data



ODBMs are not undrestood very well:

• Revenue Models

• Pricing Strategies

• Distribution Models

• Marketing Techniques

• Architectural Models

e.g. Howard (2014): Open Source is ODBM

BUT

451 Group (2008): Open Source is not BM but a Distribution Model

A. Howard, “Open data economy: Eight business models for open data and insight from Deloitte U ,” O’Reilly Media, Inc., 2014.

The 451 group, “Open Source is not a Business Model,” New York, 2008

Problems identified...

Very few studies are available on BMs for OD

No OD Business value disciplines

No study on OD Business Value Capabilities

Addressing the Problems

4. Determining the ODBMs patterns and four core value disciplines for open

data businesses

1. Consolidating reported ODBMs in both academic and practice literature

(15 ODBMs)

2. Business Model Conceptual Framework (BMCF)

3. Describing 15 ODBMs based on a BMCF

5. Open Data Value Capability Matrix

15 ODBMs

Freemium: Offering is given for free

Premium: Offering is high end products and services and customer willing to use the

offer has to pay

Dual Licensing: [open source + proprietary licenses] Offering is provided as open

license for certain purposes and under a closed license for others

Support and Services: Offer is provided in a full package with complete support and

service of the business. E.g. Availability, bug fixing, etc.

Charging for Changes: Charges applied for changes in the offer

Increasing Quality through Participation: Increasing integration and participation of

the customer is a new organizational choice aimed at generating higher margins

Supporting Primary Business: Releasing an offer naturally supports the primary

goal of a business or organization

Demand-Oriented Platform: Charging for demand side of the offer [charging

developers the added value such as advanced services and refined datasets or

data flows provided upon the original raw open data] http://dl.acm.org/citation.cfm?id=2612745


15 ODBMs cont.Supply-Oriented Platform: Charging for the supply side of the offer [presence of an intermediary

business actor having an infrastructural role]

Open Source: The offer if provided in a complete open format [all source codes are open]

Sponsorship: Offer is provided for free to customers and obtaining revenue from some sponsors

Infrastructural Razor & Blades: Selling a product for a low price in order to generate revenues

from the complementary products

Cost avoidance: Reducing the cost of production [reduces the cost of data publishing by having

a sustainable publishing solution. same data to be published a number of times and in

different formats]

Free, as Branded Advertising: Generate revenue from strong brand advertising [Business

delivers commercial messages through visualized data which is also called “display

advertising”]

White-Label Development: Offer is developed by one business and is sold to other business

with white-label



Qualitative Analysis – Nvivo 10

ODBM Conceptual Framework



ODBM Framework – Level 1 & 2

Components

Value Proposition

Offer

Channel

Value

Knowledge Management

Value Adding Process

Strategic Operational

Value in Return

Volume of Sale

Income

Future Opportunity

Value Network

Actors

Support Infrastructure

Value Management

GovernanceAdministrationStructure Discipline

Value Capture

Profit Model Market Size



ODBM Framework Level 1, 2 & 3 Components

http://dl.acm.org/citation.cf

m?id=2612745


Describing 15 ODBMs Based on a BMCFFor each model we describe, the value propositions, core activities of the value adding

process, the network of stakeholders required to collaboratively deliver the value, specific

value produced and how the produced value will be captured.

ODBM Patterns Observed [15 to 5]

• Freemium

“Freemium”, “DualLicensing”, “Charging for Changes”, “Open

Source”, and “Free as Branded Advertising” models

[offer limited data free of charge and apply fees for

additional request]

• Premium

“Sponsorship”, “Support and Services”, “Demand-Oriented

Platform”, “Supply-Oriented Platform”, “White-Label

Development” and “Premium” models

[data is not offered free of charge]



ODBM Patterns Observed [15 to 5] cont.

• Cost Saving

“Increase Quality through Participation” and “Cost Avoidance” models

[Models reduce cost of opening and releasing data]

• Indirect Benefit

“Supply Primary Business” model

[Offer, naturally supports the primary goal of the business]

• Razor-Blade

“Infrastructural Razor and Blades” model

[Incomplete offer at a discount and complementary

offer at a higher price]http://dl.acm.org/citation.cfm?id=2612745


Open Data Business Value Disciplines

• Usefulness: tailors value proposition of the business to meet

usefulness of the business offer

• Process Improvement: tailors value proposition to match to

the needs of the customer for improving processes

• Performance: tailors value proposition for a better

performance

• Customer Loyalty: tailors value proposition to target customer

loyalty



ODBM Patters and Value Disciplines


Based on commonalities in the 15 ODBMs elaborated based on BMCF

Categories/Patterns: Based on commonalities in the Value Proposition

Value Disciplines: Based on comparison of Value Proposition and Value in Return


OD Business Capabilities

Open Data and Business Capability

Open Data Capabilities

Business

Creating Value

There are no scholarly studies available that

• gather OD capabilities,

• map capabilities to OD value chain

• and provide sophisticated tool for businesses to describe, design,

challenge, invent and pivot OD business capabilities

Moreover…

Understanding, using, and representing a set of OD capabilities for Open

Data businesses is challenging for many management teams

Problems

Addressing the Problems

Providing Open Data businesses with an Open Data Capability Matrix as a tool to

specify and develop Open Data capabilities for (virtual) organization needs

General Business Capability and Capability types

Open Government Data Value Chain (PSI)

Identifying OD Value Capability Areas and Capabilities associated with each type

Aligning Open Data Capability Areas to PSI Value Chain

Deconstruction of Open Data Capabilities (Open Data Capability Matrix)

General Business Capability

Value Capabilities: Set of capabilities required for creating/adding value to the product or offering.

• Competences: Complexity of the context within which an individual can operate.

• Business Process: Collection of related and structure activities that produce specific service

• Organization: The way people and systems work together in an organization

• IT Infrastructure: Technological foundation of Computer, Communications and Data. This

includes hardware, software, telecommunication, sensors and etc.

• Technological: Knowledge embedded in a product or process on doing practical things

• Management: Process of controlling things and people

Open Government Data Value Chain

Open Data Value Capability Areas

1. Data Generation

2. Data Processing

3. Data Storage and Computing

Facilities

4. Data Retrieval

5. Data Release

6. Publishing Solution

7. Providing Access to Data and

APIs

8. Data Usage

Aligning Open Data Capability Areas to

PSI Value Chain Open Data Value Capabilities

PSI Value Chain

Aligning Open Data Capability Areas to

PSI Value Chain

Open Data Capability Matrix Main

Components

General Business Capability Types

PSI Value Chain

Open Data Value Capabilities

Open Data Capability Matrix

Capability Matrix

The deconstruction of Open Data capabilities is a matrix of strategic

management and value chain analysis for Open Data businesses

It captures all capabilities an Open Data business require – from generating

data to final use and re-use of data - for creating and capturing value from OD

It is a strategic tool for Open Data businesses of any size to exercise and

exploit for their business

It allows Open Data business managers to identify what capabilities are

valuable and necessary to the business they are running

Open Data capabilities need to be specified based on business model.

Different business may have different matrix however they can share

competencies and resources

Next Step…

Analysis of existing empirical studies (digital, content, information, e-commerce and e-business)

Research outputs

F. A. Zeleti, A. Ojo, and E. Curry, “Business Models for the Open Data

Industry: Characterization and Analysis of Emerging Models,” in 15th

Annual International Conference on Digital Government Research, 2014.

BEST FULL RESEARCH PAPER AWARD

@ Digital Government Research Society of North America

F. A. Zeleti, A. Ojo, and O. Uusitalo, “Enabling Entrepreneurial

Growth in Europe through E-Government - The Case of Finland,”

Gov. Inf. Q., 2014.

F. A. Zeleti and A. Ojo, “Business Models for Open Data

Businesses,” in 8th international conference on theory and

practice of electronic governance, 2014.

F. A. Zeleti and A. Ojo, “Capability Matrix for Open Data,” in 15th IFIP

working conference on virtual enterprises, 2014.

F. A. Zeleti, A. Ojo, and O. Uusitalo, “Entrepreneurism and E-

Government in Finland: Barriers to Entry,” in 7th international

conference on theory and practice of electronic governance,

2013.

Research outputs cont.

Thank You@fatemehahmadi_

Emerging Business Models for the Open Data Industry and Open Data Value Capability Matrix

Business

Transcript of Emerging Business Models for the Open Data Industry and Open Data Value Capability Matrix