e-Services are just as commercial services; however e-services can be fully ordered and provisioned via the Internet. Such e-services are often offered by a constellation of enterprises rather than just one. A question is then how to properly align these enterprises, such that they can provision e-services. Additionally, because e-services rely so heavily on IT, aligning business (essentially the service) with IT is also of importance. In this paper, we present a framework that can be used to structure various alignment questions that popup while designing value constellations for e-services. We illustrate the framework by a small case study.
1 Introduction
In the past few years, e-commerce – trading and selling products via the Internet – has
mainly been about physical goods, being things that can be dropped onto the floor.
Nevertheless in most countries, services form a significant part of total economic
activity. Services are deeds and performances of a mostly intangible nature [
Designing a networked value constellation offering e-services, e.g. for a managed domestic network or a streaming music service is not an easy task. One of the reasons for this is that many different perspectives (e.g. IT and business processes) of the participating enterprises have to be internally properly aligned with each other, as well as between organization themselves.
In this paper we propose a conceptual framework of alignment issues and problems. Ultimately, this framework should assist in designing networked value constellations for e-services, with automated tool support.
In this paper, section 2 introduces a case study that we use to explore and explain
our framework. In section 3, we present our framework. We illustrate the framework
using the case study (section 4). In section 5, we present our conclusions and discuss
potential directions of future research.
2 Case Study: Wireless Internet Access Provision in Hotels
Suppose a hotel would like to offer wireless connectivity to businessmen as an
additional service. Such a service can be provided as a joint service offering of the
hotel and of a Telecommunication Company (Telco). The hotel allows the Telco to
place WiFi access points (equipment used by the traveler to connect its laptop to), and
to place a router that connects the access points to the Internet. Alternatively, the hotel
can also buy and place WiFi access points itself, and obtain commodity Internet
access from an Internet Service Provider (ISP). How we can reason about these
alternatives from an alignment point of view?
3 Perspectives on Designing Networked Value Constellations
A networked value constellation offering e-services requires (1) alignment of the
participating organizations (e.g. enterprises and customers, or partners), and (2)
alignment of at least four separate perspectives (see Figure 1). The first perspective is
about understanding strategic business goals and objectives of the various enterprises
involved. We have proposed in [
Modeling the various perspectives is the necessary first step towards the design of networked value constellations. First, various case studies it was shown that many constellations are just too complex. They require thorough formal conceptualization in order to be able to create a shared understanding of the constellation at hand by all stakeholders involved. Additionally, tool support, relying on sound conceptualization, can help to detect inconsistencies between the various perspectives taken, and can provide traceability of design decisions taken.
Moreover, constellations that are formed to provide IT intensive services rely heavily on IT. The technological and commercial aggregation involves decision makers with different viewpoints from different disciplines. Business developers of value constellations who focus on more commercial issues should be able to express and explain the constellation to software engineers. On the other hand, engineers have the responsibility to address clearly technological issues that influence the successful implementation of the planned business idea. The language of modeling techniques can thus successfully support the decision making by maintaining the shared and common understanding.
The identified perspectives result in various types of alignment decisions: − alignment decisions between perspectives on a same organization (e.g. internal processes should contribute to realizing a value proposition of that organization) called intra-organizational alignment of perspectives, − alignment decisions per perspective between organizations (e.g. a multi-enterprise value proposition should allow all organizations to make profit with it) called inter-organizational alignment within a perspective, − alignment decisions between perspectives between organizations (interorganizational processes should contribute to realizing a multi-enterprise value proposition), called inter-organizational alignment between perspectives.
Since constellations have to operate in a competitive world, we first consider alignment from a profitability/economic value point of view: each enterprise in the constellation should be able to make a profit. The value proposition perspective focuses on revenues and expenses; the process and IS viewpoint cause expenses. Since an integrated view on these financials may help to reason about profitability, we propose to use the notion of value activity to bring the perspectives together from a financial point of view. Executing this activity generates revenues but also expenses.
In the following sections, we exemplify a few of the fore mentioned types of
alignment decisions. Additionally, we show how these can be integrated from a
financial point of view. We start with the value proposition viewpoint, and work our
way down to the information system viewpoint.
4 Forms of Alignment: A Case Study
4.1 Inter-organizational Alignment within the Value Proposition Perspective
The value proposition perspective is about understanding what organizations in a
value constellation offer each other of economic value. To do so, we use e3-value
(please consult [
Profitability sheets can be constructed, showing the net value flow, for each actor
and value activity involved. Since this construction process has been explained in
detail in [
The alignment activity from the value proposition perspective triggers the following questions that influence partnering decisions: − Which actors execute which value activities (e.g. the WiFi access activity is differently assigned in the two alternatives)? − Which value exchanges exist between actors (in the first alternative the traveler pays to hotel, in the second alternative to the Telco)? − How are expenses and revenues divided over actors (if the e3-value model is quantified using profitability sheets (e.g. a result of who pays to whom and thus can set prices))?
To be able to provide acceptable answers further investigation of perspectives is needed. 4.2 Intra-organizational Alignment of Perspectives: Value Proposition and Business Processes We now focus on WiFi access provisioning activity only. The value proposition already takes into account revenues and expenses but does not consider expenses for business processes and IT yet. Tables 2 & 3 show for a value activity of the value proposition perspective, the required operational activities on the business process perspective1, as well as expenses that go with it. As such, a value activity forms the linking pin to operational activities generating expenses and IT investments. Note that 1 In e3-value, a value activity is required to make profit, whereas an operational activity shows how a value activity should be performed and just may incur costs and not necessarily profit. this perspective shows some revenues that can not directly be quantified directly in terms of monetary units (e.g. ‘responsibility’). How to involve such effects in the decision making needs to be further researched.
following factors that indicate alignment activities: − Value activities (value proposition viewpoint) require operational activities (process viewpoint) as indicated for the WiFi access provisioning activity, − Executing operational activities involve expenses but also additional benefits for a specific organization not visible yet on the value proposition activity, and
party
party
/Hotel
− The distribution of such expenses and benefits triggers for inter-organizational alignment between value proposition and business process perspectives. 4.3 Intra-organizational Alignment of Perspectives: Value Proposition and Information Systems We also can relate value activities to the required investments and expenses in IT. Table 4 and Table 5 show expenses and revenues for IT. Expenses can be quantified, and there are intangible revenues (ownership).
Value proposition perspective Value activity: Wireless access provision (“WiFi access”) Assigned to: Hotel Information system perspective Infrastructure Wireless access points LAN infrastructure
Telco/ Hotel
Responsibility depends on the ownership
Between the value proposition and information system perspective we have found the following factors that indicate alignment activities: − Value activities (value proposition viewpoint) require information system components (both application and infrastructural driven) as indicated for the WiFi access provisioning activity, − These information system components involve expenses for a specific organization that are not visible yet on the value proposition activity (namely investment costs and reoccurring expenses, e.g. for maintenance), and − The distribution of such expenses and benefits triggers for inter-organizational alignment between value proposition and information system perspectives. 5
Conclusion and Further Research In this paper, we have proposed a four-perspective (ranging from strategic goals to IT) framework for discussing business/IT alignment in networked value constellations. Alignment can be between perspectives within a same enterprise but can also be between various enterprises in case of networked value constellations. Moreover, as a third dimension, alignment can be between perspectives spanning multiple enterprises. As a first criterion to align goals, value propositions, processes and IT, we propose to use profitability for each actor involved in the constellation. To that end, we need to collect financials (revenues and expenses) from each perspective, to make a first assessment whether each actor can be profitable. In next steps, other alignment criteria then can be considered. We will continue our research by exploring an industrial strength case study in the field of energy supply. Here, we will study the mentioned perspectives and use financial data to address alignment decisions.