Value Creation through Co-Opetition in Service Networks

Well-defined interfaces and standardization allow for the composition of single Web services into value-added complex services. Such complex Web Services are increasingly traded via agile marketplaces, facilitating flexible recombination of service modules to meet heterogeneous customer demands. In order to coordinate participants, this work introduces a mechanism design approach - the co-opetition mechanism - that is tailored to requirements imposed by a networked and co-opetitive environment

A Framework for Business Models in Business Value Networks

Business models are oftentimes considered as the most discussed and least understood aspect of the web (Rappa 2001). Despite a rough understanding that seems to be widespread namely an aggregation of essential, relevant aspects from economic branches providing a compressed overview on business activities dimensions, components, perspectives and core issues are depicted non-uniformly and confusing [PeKT01; Wirt01]. In particular, literature lacks contributions that particularly consider business model frameworks for networked economies, especially newly emerging loosely-coupled configurations as assumed in the business web theory. In order to address these shortcomings, we introduce a business model framework for business value networks as a result from an extensive literature review comprising two areas. Firstly, I conduct a state-of-the-art analysis of existent definitions of the term business model with emphasize on the elements that should be included, i.e. the relevant aspects of business activity. The study confirms the statements made by several authors: Some elements are broadly accepted a description of created and offered value, revenue models, and business actors was included in more than 75% of the literature contributions. However, there are substantial differences in other components, e.g. market consideration, cost structure, or technology. In this connection, I also present a segregation of the concept business model from related concepts. Secondly, I outline the characteristics of business value networks as a newly emerging organizational form of loosely-coupled business networks. As a result, the partner network and the roles of these actors, their core competencies, and the role of the customer are identified as crucial elements that are to be considered in business models of companies acting in business value networks. Resulting from the literature analysis and a brief outlook how the customers are likely to be integrated in value creation processes in future, I propose a business model framework for business value networks comprising the five basic pillars value creation model, partner model, value offering model, customer model, and profit model. These pillars are decomposed into eleven business model components value configuration, core competencies, position in value system, partners and their roles, service/product portfolio, target customer, distribution channel, customer integration, revenue, pricing, and cost structure. Thus, the contribution of this article is twofold. On the one hand an updated understanding of the concept of business models within business value networks shall be established. On the other hand, I provide a framework which shall serve as a basis for further research, be it for the creation of a business model taxonomy in networked economies, the analysis of existent networked business models, or the development of concrete business models in the business value network context

DATA QUALITY IN FINANCIAL PLANNING - AN EMPIRICAL ASSESSMENT BASED ON BENFORD\u27S LAW

Planning Processes play an important role in almost any business scenario. In particular, induced by the financial crisis, financial planning as a foundation for liquidity management is paid extraordinary attention to. Its quality and reliability is usually ensured by the use of information systems. Besides process efficiency, a key factor in liquidity management is the quality of the delivered planning data. More recently, business intelligence measures to increase data quality, for instance, realized through decision support services, find their way into the planning process. In this paper, we lay the foundation to include digital analyses of reported financial planning numbers into automated decision support services. In this vein, our contribution is twofold: First, based on a large and representative data set from a renowned, multinational enterprise, we empirically prove that financial planning numbers exhibit a certain, characteristic digit distribution, namely, Benford\u27s Law. Second, we investigate whether decision support services that incorporate intelligence based on Benford\u27s Law are appropriate to increase financial planning data quality. This question is tackled via analyses that relate detailed properties of the delivered data to Benford\u27s Law as a prerequisite for the integration of automated decision support services into business intelligence systems

Competition of Service Marketplaces: Designing Growth in Service Networks

The cloud computing paradigm gives rise to Web service marketplaces where complex services areprovided by several modular vendors. Recently more and more intermediaries are pushing onto themarket, thereby driving competition. Offering innovative business models which are capable ofattracting service providers and consumers is a reasonable strategy to beat competitors and to takeadvantage of network effects. We develop a mechanism that introduces a novel way of distributingrevenues among service providers – the power ratio. Its underlying presumption is not only tocompensate service providers who actually contribute to a complex service offered at a time, but alsoto pay out partners who are on standby – i.e. vendors that support the network’s variety and stability,but actually do not contribute to the complex service delivered. We show that a payment function thatis based upon the power ratio is a promising approach to draw in service providers as it outperformsa payment function that rewards vendors merely based on their actual allocation in terms of expectedpayoffs for different types of service vendors

Towards Objectives-Based Process Redesign

Continuously growing and changing multinational companies oftentimes struggle with heterogeneous degrees of standardization.Especially in case of redesigning business processes that have been historically grown over decades, the capability of handlingsemi-structures process is central. Nevertheless, for competitive advantages, it is essential for a company to work on the optimizationof all processes. Existing redesign techniques either focus on completely unstructured or structured processes. TheRedesign Model presented in this paper transforms processes with any level of structuredness into processes with an increaseddegree of standardization. Our technique consists of four main steps: (i) we extract the objectives for an efficient business processredesign from existing literature; (ii) we formulate a list of requirements an innovative redesign model has to fulfill; (iii) wepresent a design science based Business Process Redesign Framework including our Redesign model; (iv) we evaluate our modelshowing its applicability and completeness

Coordinating service composition

The fundamental paradigm shift from traditional value chains to agile service value networks implies new economic and organizational challenges. As coordination mechanisms, auctions have proven to perform quite well in situations where intangible and heterogeneous goods are traded. Nevertheless traditional approaches in the area of multiattribute combinatorial auctions are not quite suitable to enable the trade of composite services. A flawless service execution and therefore the requester\u27s valuation highly depends on the accurate sequence of the functional parts of the composition, meaning that in contrary to service bundles, composite services only generate value through a valid order of their components. We present an abstract model as a formalization of a service value network. The model comprehends a graph-based mechanism design to allocate multiattribute service offers within the network, to impose penalties for non-performance and to determine prices for complex services. The mechanism and the bidding language support various types of QoS attributes and their (semantic) aggregation. We analytically show that this variant is incentive compatible with respect to all dimensions of the service offer (quality and price)

INCENTIVES IN SERVICE VALUE NETWORKS – ON TRUTHFULNESS, SUSTAINABILITY, AND INTEROPERABILITY

The concurrence of technical and behavioral trends – such as lightweight approaches for service composition and a rising demand for customized services – fosters the emergence of a novel organizational paradigm: Service Value Networks (SVN). Distributed and highly-specialized service providers contribute to an overall value proposition. SVNs provide means for the ad-hoc composition of services that satisfies individual customers\u27 needs. However, the distributed nature of these environments and the opportunistic behavior of participants require a purposeful design of incentives. Our contribution is threefold: We (i) provide an auction mechanism – the Complex Service Auction – to coordination value creation in SVNs which is incentive compatible in dominant strategies (truthful). To restore budget balance – the prerequisite for a mechanism\u27s sustainability – and to implement incentives that increase a network\u27s degree of interoperability, we (ii) present the Interoperability Transfer Function (ITF). Applying an agent-based simulation method, we (iii) numerically show that this payment scheme limits strategic behavior of service providers and strengthens interoperability endeavors compared to a benchmark transfer function

Service Contract Automation

Today’s transition from a product- to a service-oriented economy implies fundamental technical, organizational and economic challenges. The trend of compensating missing core competencies by requesting business services from external providers to be integrated in internal end-to-end processes has recently gained tremendous momentum. Nevertheless, service level agreements between the parties involved are still specified for each service entity that is part of composite business services which results in a managerial overhead generated from multiple contractual relations. The contribution of this paper is threefold: (i) We analyze the fundamental requirements in the context of describing services, quality and agreements as well as their aggregation in a generic manner. Based on the results, we (ii) provide a holistic framework that enables the automation of service contracts for composite business services. Facilitating semantic technologies we provide means for describing service quality from a technical and business-oriented perspective, adequate metrics as well as quality aggregation operations in the context of composite business services. Furthermore, we (iii) evaluate our framework based on an industrial application scenario

OBJECTIVES-BASED BUSINESS PROCESS REDESIGN IN FINANCIAL PLANNING – A CASE STUDY

Semi-structured processes appear in many domains. Especially within multinational enterprises, it is often impossible to implement completely structured and standardized processes because of a rapidly changing environment. Nevertheless, semi-structured processes have a potential for improvement. In order to meet or even outreach compliance and governance requirements it is essential for an enterprise to exploit such a potential. Yet, existing approaches either focus on entirely unstructured or fully structured processes. The goal of this paper is to present a framework for innovative process redesign to improve a semi-structured process and to illustrate the potential of such a theoretical framework, taking Bayer AG as an example. We achieve this goal in three steps: (i) we present our Objective-Based Business Process Redesign Model, including a list of objectives for the improvement of semi-structured business processes; (ii) we conduct the case study by executing our Redesign Model; (iii) we present the practical process along with its implementation and evaluation. The evaluation of our case study shows the vast potential for improvement in semi-structured processes, implemented by a considerable reduction in time and complexity

How to Coordinate Value Generation in Service Networks – A Mechanism Design Approach

The fundamental paradigm shift from traditional value chains to agile service value networks implies new economic and organizational challenges. As coordination mechanisms, auctions have proven to perform quite well in situations where intangible and heterogeneous goods are traded. Nevertheless, traditional approaches in the area of multidimensional combinatorial auctions are not quite suitable to enable the trade of composite services. A flawless service execution and therefore the requester’s valuation highly depends on the accurate sequence of the functional parts of the composition, meaning that in contrary to service bundles, composite services only generate value through a valid order of their components. The authors present an abstract model as a formalization of service value networks. The model comprehends a graph-based mechanism implementation to allocate multidimensional service offers within the network, to impose penalties for non-performance and to determine prices for complex services. The mechanism and the bidding language support various types of QoS attributes and their (semantic) aggregation. It is analytically shown that this variant is incentive compatible with respect to all dimensions of the service offer (quality and price). Based on these results, the authors numerically analyze strategic behavior of participating service providers regarding possible collusion strategies