1. Strategic Information Systems
Antoine HARFOUCHE, PHD
com
icto.info
e-marketing. webs.com
Tel

2. The impact of SIS on firm’s Business Models

3. Topics 1. Business Model 2. The impact of SIS on the pillars of the BM
3. SIS impact on the management infrastructure
- Crowdsourcing
- Crowdfunding
- Collaboration with suppliers
- Collaboration with competitors

4. Business Model

5. A Business Model
A business model can best be described through nine basic building blocks that show the logic of how a company intends to make money.
The nine blocks of the following model cover the four main areas of a business:
Customers
Offer
Infrastructure
Financial viability
The business model is like a blueprint for a strategy to be implemented through organizational structures, processes, and systems.
Source: Business Model Generation, Osterwalder and Pigneur 2010

6. The Business Model Canvas
This canvas will form the model of your analysis of your company.

7. Pillars of Business Model

8. Question
- What are the four areas covered by the BMC? - What is the most important block of the BMC?

9. The impact of SIS on the Pillars of the Business Model
SIS impact on the management infrastructure

10. Key Resources Physical Intellectual Human Financial Production
The most important assets required to deliver our value proposition, distribution channel, and customer relationships
Physical
Intellectual
Human
Financial
Production
Platform

11. Key Activities [Capabilities]
The most important activities a company must do, in order to deliver its value proposition, and makes its business model work.
Marketing
Engineering
Managing
Selling
Logistics
Problem solving

12. Key Partners
Who are key partners in terms of suppliers and intermediaries between the firm and its end-users? Which key resources are we acquiring from partners? Which key activities do partners perform?
Motivations for Partnerships
Optimization and economy
Reduction of risk and uncertainty
Acquisition of particular resources
and activities
Partnerships can be motivated by needs to acquire knowledge, licenses, or access to customers.
Example: Mobile phone companies that license Android, or insurance companies that rely on independent brokers.

13. Crowdsourcing
The recruitment and coordination of piece-meal work across the internet to achieve a goal.
Speeds up content creation
Gets clients and collaborators involved
Gets target audience involved
Offers diversity and creative choice
Drives development of scalable processes
(Bratvold, 2012)

14. Equivalent, or greater, utility under the Curve
Wisdom of the Crowds
Expert
$$$$
Masses $
Equivalent, or greater, utility under the Curve
Utility 10
100
1000
10,000+
# of Contributors

15. Crowdfunding
The process of aggregating many small sums from a large group of individuals to enable the commitment of a significant amount of capital to a project

16. Crowdfunding is nothing new…
Ancient history…?
Crowdfunding is nothing new…

17. Crowdfunding
Crowdfunding is an approach to raising the capital required for a new project or enterprise by appealing to large numbers of ordinary people for small donations
Social Media
Crowdfunding examples
Kiva.org - $325m funding raised, >777,000 lenders, ~800,000 entrepreneurs
Kickstarter.com – >24,000 projects funded, > $250m pledged to-date, 2m people have pledged
Kiva - Despite being only 39 months old it has raised over $87m, funding over 213,000
entrepreneurs. They have over 500,000 lenders worldwide.
Ebbsfleet United Football Club was bought by approximately 26,000
people each paying £35 - £910,000
Zopa - have over 300,000 members and total disbursals have reached £50m.

18. How does it work?

19. How does it work?

20. How does it work?

21. Different models
Donation based: Allows charities, or those who raise money for social or charitable projects, to gather a community online and to enable them to donate to a specific project.
Reward based: Enables people to contribute to projects and receive non–financial rewards in return, usually operating a tiered system where the more you donate the better the reward you receive. £%
Lending based: Projects or businesses seeking debt apply through the platform uploading their pitch, with members of the crowd taking small chunks of the overall loan.
Equity based: Enables the crowd to invest for equity, or profit/revenue sharing in businesses or projects. This form of the model has been the slowest to grow due to regulatory restrictions that relate to this type of activity.

22. Examples of the Different models
Borrow Dairy farmer from Kenya takes a second loan from Kiva to support his business in Kenya.
Click Funds for whistleblower site Wikileaks has been contributed through Flattr by 4217 people.
Equity Bubble & Balm, a consumer product company into fair-trade handmade soaps raised £74K for 15% equity in the company.
Donate Pebble E-Paper Watch, a customizable watch that can run apps for sports & fitness, received over $10mln, with donations linked to rewards.
Category cases

23. Different sectors Education and research Public services’ Business
Community and voluntary sector
Arts

24. Some possible benefits
More than money : time, assets?
Crowds of support – network effect
Innovative/high relevance ideas
New types of audience reached
Mainstream funders experiment could help us find out more…

25. platforms

26. The search for collaborative advantage
Seek out opportunities for horizontal as well as vertical collaboration
Co-operate to grow the cake, compete on how to slice it
Leveraging capabilities and knowledge through collaboration
Share assets in the supply chain where appropriate

27. Collaborative Relationships
Customers
•Risk-sharing contracts
•Collaborative transactions
Competitors
•Trade associations
•R&D Consortia
•Standard-setting bodies
•Industry lobbying
•co-epetition
Horizontal partners
•Benchmarking
•Collaborative logistics
•Joint MRO procurement
A company
Suppliers
•Risk-sharing contracts
•Collaborative transactions

28. Collaboration with suppliers

29. Collaborative Supply Chain
Use of digital technologies for organizations to collaboratively design, produce, and manage products through life cycles
Moves focus from transactions to relationships among supply chain participants
Use of EDI and Internet technologies for rich communications environment
Sharing designs, documents, messages, network meetings, videconferencing

30. Collaborative Supply Chain
Electronic data interchange (EDI) based collaboration
Buyer-side solution
Hub-and-spoke system
Serve vertical markets
Internet based collaboration
Net marketplaces
Private industrial networks

31. EDI based collaboration

32. Electronic Data Interchange (EDI)
Broadly defined communications protocol for exchanging documents among computers
Stage 1: 1970s–1980s—Document automation
Stage 2: Early 1990s—Document elimination
Stage 3: Mid-1990s—Continuous replenishment/access model
Today:
EDI provides for exchange of critical business information between computer applications supporting wide variety of business processes

33. Example of EDI

34. EDI based collaboration
Vendor Management Inventory

35. Vendor Management Inventory
Vendor Managed Inventory (VMI) is a procurement and planning practice in which a company delegate’s key inventory management functions to one or more of its suppliers.
Under this arrangement the supplier determines the items, quantities, and delivery schedules on behalf of the customer based on information it receives from the customer’s inventory and procurement systems.
Using VMI, manufacturers and distributors can anticipate customer needs and provide inventory more proactively than is possible using traditional procurement methods
This slide discusses the effects of timely and untimely information on a supply chain. Ask students what causes inefficiencies in a supply chain (parts shortages, underutilized plant capacity, excessive finished goods inventory, high transportation costs). These are caused by untimely information. Perfect information– or nearly perfect-- can result in a just-in-time strategy where inventories and buffers are reduced to nearly zero. But because of the lack of timely information, manufacturers keep safety stock of parts and inventory. Why is this an inefficient result? Another effect of uncertainties is the bullwhip effect. How can information slow or eliminate bullwhip effects?

36. Vendor Managment Inventory

37. VMI example: E.W.R.Plus
Producer
Distributer

38. Collaboration in the Supply Chain Internet based collaboration

39. Private industrial networks:
Topics
Net marketplaces:
E-distributors
E-procurement
Exchanges
Industry consortia
Private industrial networks:

40. Two Main Types of Internet-Based collaboration
Net marketplaces:
Bring together potentially thousands of sellers and buyers in single digital marketplace operated over Internet
Transaction-based
Support many-to-many as well as one-to-many relationships
Private industrial networks:
Bring together small number of strategic business partner firms that collaborate to develop highly efficient supply chains
Relationship-based
Support many-to-one and many-to-few relationships
Largest form of B2B e-commerce

41. Ways to classify Net marketplaces: By business functionality
Pricing mechanism, nature of market served, ownership
By business functionality
What businesses buy (direct vs. indirect goods)
How businesses buy (spot purchasing vs. long-term sourcing)
Four main types
E-distributors
E-procurement
Exchanges
Industry consortia

42. Pure Types of Net Marketplaces

43. E-distributors
Most common type of Net marketplace
Electronic catalogs representing products of thousands of direct manufacturers
Typically, independently owned intermediaries
Offer industrial customers single source to purchase indirect goods on spot basis
Typically, horizontal
Usually, fixed price—discounts for large customers
Example: W.W. Grainger

44. E-distributors

45. E-procurement Net Marketplaces
Independently owned intermediaries
Connect hundreds of suppliers of indirect goods
Firms pay fees to join market
Long-term contractual purchasing of indirect goods
Revenues from transaction fees, licensing consultation services and software, network fees
Offer value chain management (VCM) services
Many-to-many market
Example: Ariba

46. E-procurement Net Marketplaces

47. Exchanges
Independently owned online marketplaces
Connect hundreds to thousands of suppliers and buyers in dynamic, real-time environment
Vertical markets, spot purchasing in single industry
Charge commission fees on transaction
Variety of pricing models
Tend to be buyer-biased
Suppliers disadvantaged by competition
Many have failed due to low liquidity

48. Exchanges

49. Industry-owned vertical markets
Industry Consortia
Industry-owned vertical markets
Purchase of direct inputs from set of invited participants
Emphasize long-term contractual purchasing, stable relationships, creation of data standards
Ultimate objective:
Unification of supply chains within entire industries through common network and computing platform
Revenue from transaction and subscription fees
Many different pricing mechanisms
Can force suppliers to use consortia’s networks

50. Industry Consortia

51. The Long-Term Dynamics of Net Marketplaces
Pure Net marketplaces moving from “electronic marketplace” vision toward more central role in changing procurement process
Consortia and exchanges beginning to work together in selected markets
E-distributors joining large e-procurement systems and industry consortia as suppliers
Movement from simple transactions for spot purchasing to longer-term contractual relationships involving both direct and indirect goods

52. Net Marketplace Trends

53. Private Industrial Networks
Private trading exchanges (PTXs)
Web-enabled networks for coordination of trans-organizational business processes (collaborative commerce)
Direct descendant of EDI; closely tied to ERP systems
Manufacturing and support industries
Single, large manufacturing firm sponsors network
Range in scope from single firm to entire industry
Example: Procter & Gamble

54. P&G’s Private Industrial Network

55. Characteristics of Private Industrial Networks
Objectives include:
Efficient purchasing and selling industry-wide
Industry-wide resource planning to supplement enterprise-wide resource planning
Increasing supply chain visibility
Closer buyer–supplier relationships
Global scale operations
Reducing industry risk by preventing imbalances of supply and demand
Focus on continuous business process coordination
Typically, focus on single sponsoring company that “owns” the network

56. Private Industrial Networks and Collaborative Commerce
Forms of collaboration:
Collaborative resource planning, forecasting, and replenishment (CPFR):
Working with network members to forecast demand, develop production plans, and coordinate shipping, warehousing, and stocking activities to ensure that retail and wholesale shelf space is replenished with just the right amount of goods
Demand chain visibility
Marketing coordination and product design
Can ensure products fulfill claims of marketing
Feedback enables closed loop marketing

57. Pieces of the Collaborative Commerce Puzzle

58. Private Industrial Networks
Collaborative Planning, Forecasting and Replenishment (CPFR)

59. Collaborative Planning, Forecasting and Replenishment (CPFR)
Builds on “best-in-class” VMI implementations
Principles:
Builds on the trading partners’ competencies (includes several “scenarios”)
Working off a single forecast which imbeds the retailer’s view (of multiple suppliers’ plans) and the supplier’s view (of multiple retailers’ actions)
Making the whole supply chain more efficient

60. Collaborative Planning, Forecasting and Replenishment (CPFR)

61. Collaborative Planning, Forecasting and Replenishment (CPFR)

62. CPFR Process Model

63. Original plan is synchronized

64. Easily set up criteria, so that when exceptions arise…

65. Exceptions can be quickly spotted

66. Implementation Barriers
Concerns about sharing of proprietary, sensitive data
Integration of private industrial networks into existing ERP systems and EDI networks difficult, expensive
Requires change in mindset and behavior of employees and suppliers
All participants lose some independence

67. Question
- In which kind of SCMS the supplier tale the responsibility of proposing orders ? - How can a firm invest in Collaboration with supplyers while having thousands

68. Collaboration with competitors

69. Co-opetition: a definition
A business strategy based on a combination of cooperation and competition, derived from an understanding that business competitors can benefit when they work together.
A “non zero sum” scenario, in which the sum of what is gained by all players is greater than the combined sum of what the players entered the scenario with.
Source: D. Meyer, 15th March 2011 and istockphoto

70. Co-opetition Cooperative Competition
Co-opetition occurs when companies work together in parts of their business where they do not believe they have competitive advantage and where they believe they can share common costs.
Basic premise:
Co-opetition strategy and value creation leverage the alliance
Partner with other shippers (even competitors) to control logistics and transport costs
Load consolidation
Source: D. Meyer, 15th March 2011

71. Co-opetition

72. Co-opetition Partners
Producers, Customers, Consumers who drive producer demand and determine product eco-footprint
Shippers and Terminal Operators who generate the freight flows and provide the critical infrastructure for product flow
Logistic Service Partners (3PLs) who can design and implement optimised solutions and move the freight
Fourth Party Providers who can facilitate partnerships, referee blockages, find common ground
Governments who can assure that legal and regulatory arrangements are in place to support seamless collaboration
Source: D. Meyer, 15th March 2011

73. Co-opetition = Value Creation
Co-opetition does not simply emerge from coupling competition and cooperation issues
Co-opetition implies that cooperation and competition merge together to form a new kind of strategic interdependence between firms, giving rise to a co-opetitive system of reciprocal value creation.
Source: D. Meyer, 15th March 2011, and reubenmiller.typepad.com

74. The Prisoner’s Dilemma – The Importance of Trust
Source: