Strategic Information Systems Antoine HARFOUCHE PHD www antoineharfouche

Strategic Information Systems Antoine HARFOUCHE, PHD www. antoineharfouche. webs. com icto. info e-marketing. webs. com Tel 0651442331

THE IMPACT OF SIS ON FIRM’S BUSINESS MODELS

THE IMPACT OF SIS ON THE PILLARS OF THE BUSINESS MODEL ISI impact on the customer relation and on the cost structure

Topics • Customization • Pitfalls of Customization • SIS can Blend the BOS Framework with the BMC

Customer Segments & targets For whom are we creating value? § Who are the most important customers? § § § Mass Market Niche Market Segmented Diversified Multi-sided platform

Channels of communication and Information strategy Value Propositions are delivered to customers through communication, distribution and sales channels. § How a company communicates with and reaches its customer segments to deliver a value proposition. § Which Channels do our Customer Segments want to be reached? How are we reaching them now? Which are working best (or not working)? § Enabling customers to evaluate a firm’s products § Allowing customers to purchase § Providing post-purchase customer support

Channels Own Direct Channel Types Sales force Indirect Web sales Own stores Partner Channel Phases Partner stores Partner web sales Wholesaler 1. Awareness 2. Evaluation 3. Purchase How to raise awareness about the product? How to help customers evaluate the product's value proposition. How do we allow customers to purchase specific products and services? 4. Delivery 5. After Sales How do we How to provide deliver a Value post-purchase Proposition to customer support? Customers?

Customer Relationships, Trust and Loyalty The types of relationships the firm establishes with its customers. What types of relationships does our customer expect and how much does this cost? How does this support the value proposition? § Personal Assistance § Dedicated Personal Assistance § Self-service §Automated Services §Communities §Co-Creation

Customization

Augmented Product

Customization • • • Pure standardization Segmented standardization Customized standardization Tailored customization Pure customization

Customized standardization Kickers :

Tailored customization Longcha mp bag :

Pure customization

Modularity

Pitfalls of Customization

Pitfalls of Customization • Although some consumers express an interest in customized products, other large groups view them as costly distractions. • Some companies believe they can increase profits margins and customer loyalty by customizing products, but they must be careful to monitor the market to figure out which customers do and which do not. So. C 406

Pitfalls of Customization • Customization can be off-putting and an inefficient use of scarce resources. – The British Broadcasting Corporation discontinued the option to customize the BBC Web site because users do not have the time to customize it and found it more annoying than a generic Web site is. It also caused BBC technical complications, copyright and legal issues, and advertisement integration problems. – Some consumers believe customization has a negative impact on the environment and prefer conservation – An increasing number of consumers participate in community rentals and leases of products and sharing, in order to avoid the personal monetary cost and time consumption in the ownership of some personal items

Conclusion • • • Technology will change how people create, innovate and compete. Globalization will bring new competitors and new partners. Competitors will try every approach, explore every opportunity, exploit every weakness. No single approach to innovation will guarantee success. Each change reminds us that the future is uncertain; Scan provides early alerts to potential change. Opportunity Discovery, Scenarios, and Roadmapping help each competitive challenge to have an optimum approach and a strategic fit.

SIS CAN IMPACT THE PRICING

Revenue Streams For what value are our customers really willing to pay? § Asset sale [product sale] § Usage fee § Subscription fee § Lending / Renting / Leasing § Licensing § Brokerage fees § Advertising

Revenue Streams Pricing Mechanism Fixed Menu Pricing Predefined prices are based on static variables List Price Product Feature Customer Segment Volume dependent Dynamic Pricing Prices change based on market conditions Negotiation Price determined by bargaining skills and Price set by product, service, or other Value Propositions leverage Yield Price depends on inventory and time of Management purchase Price depends on the number and quality of Value Proposition features Price depends on the type and characteristic of a Customer Segment Price is determined dynamically based on Real-time-market supply and demand Price as a function of quantity purchased Auctions Price determined by outcome of competitive bidding

Cost Structure What are the most important costs inherent in delivering the value proposition? Which key resources are most expensive? Which key activities are most expensive? § Is our business model more Cost driven or Value driven? § Types of costs § Fixed § Variable § Economies of scale § Economies of scope Some business models, are more cost-driven than others. “No frills” airlines, for instance, have built business models entirely around Low Cost Structures.

Revenue Management • Set of techniques use to manage – Constrained, perishable inventory (time) • When customer willingness to pay increases towards departure • Applications: – Airlines, Hotels, Car Rentals, News Vendors • Main techniques: Open and close certain rate categories (rate fences) based on historical probabilities and forecasts of future demand

Fixed Prices Consumers Surplus Dead Weight Loss MC

Get a little more revenue

Maximize the Revenue ! Perfect (1 st degree) Price Disc.

SIS CAN BLEND THE BOS FRAMEWORK WITH THE BMC

The BMC Business Model Canvas COST-SIDE VALUE-SIDE § The BMC consists of a right-hand value and customer-focused side, and a left-hand cost and infrastructure side. § Changing elements on the right side has implications for the lefthand side.

Value Innovation ELIMINATE REDUCE RAISE CREATE § BOS is about simultaneously increasing value while reducing costs. § This is achieved by identifying which elements of the value proposition can be eliminated, reduced, raised or newly created.

Blending the BOS Framework with the BMC Business Model Canvas COST-SIDE VALUE-SIDE Value Innovation ELIMINATE RAISE REDUCE CREATE Blended Approaches

Blended Approaches § Blending BOS and the BMC lets you systematically analyse a business model innovation in its entirety. § You can ask the Four Actions Framework questions for each business model building block and immediately recognize implications for the other parts of the business model.

Example: Nintendo § With stiff competition from Xbox and Playstation, Nintendo pursued a fundamentally different strategy and business model with Wii. § The heart of Nintendo’s strategy was the radical assumption that consoles do not necessarily require leading-edge power and performance. § Nintendo shifted its focus to providing a new form of player interaction targeted at a wider demographic than the traditional gamer audience

Example: Nintendo ELIMINATE RAISE § Narrow market of hard core gamers § Console subsidies § New proprietary technology § High end console performance REDUCE § Console production price § Technology development cost CREATE § Motion control technology § Large market of casual gamers and families § Fun factor and group [family] experience § Motion controlled games § Off the shelf hardware component manufacturers

Example: Nintendo Off the shelf hardware component manufacture rs Game developers State of the art chip development High end console performance New proprietary technology Motion controlled games Motion control technology Fun factor & group experience Narrow market of hard core gamers Large Retail distribution market of casual gamers & families Game developers Console production price Profit on console sales Technology costs Narrow market of hard core gamers Console subsidies Royalties from game developers

QUESTION HOW CAN SIS LINK BOS WITH BMC?