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Ontology-Based Operators
for e-Business Model De- and Re-construction
Jaap Gordijn (gordijn@cs.vu.nl)
Vrije Universiteit - Vuture.net (Centre for e-business research), De Boelelaan 1081a,
NL-1081 HV Amsterdam, The Netherlands,
Cisco Systems - Internet Business Solutions Group, Hoogoorddreef 9,
1101 BA Amsterdam, The Netherlands
Hans Akkermans
Vrije Universiteit - Vuture.net, and
AKMC Knowledge Management, Klareweid 19,
NL-1831 BV Koedijk, The Netherlands
ABSTRACT
We define e-business models as conceptual models that show how
a network of actors (a value constellation) creates, exchanges and
consumes objects of value by performing value adding activities.
In this paper we present a semi-formal ontology-based representa-
tion of e-business models that is useful in carrying out a prelim-
inary business and requirements analysis. In particular, we show
that a small set of generic ‘model deconstruction’ operators is able
to generate design variations on a given e-business model, so that
upfront analysis of the characteristics and consequences of a range
of alternative e-business models becomes possible. We illustrate
our ontology-based e
3
-value approach by a commercial project on
Internet news services.
Submission: K-CAP 2001, Canada
1. INTRODUCTION
Successful e-business information systems are often character-
ized by innovative ways of doing business. This is usually called
the e-business model. We define an e-business model as a concep-
tual model that shows how a network of actors creates, exchanges
and consumes objects of value by performing value adding activi-
ties.
Finding such an e-business model is a creative task. We can,
however, support this task by (1) an insightful way of representing
e-business models, and (2) a way of finding and analyzing ‘design’
variations on such models.
To find variations on an initial e-business model, and conse-
quently to assist in the elicitation of such a model, e
3
-value defines
e-business model de-construction operators (inspired by [7, 3, 8]).
These operators are part of an e-business model de-construction
and re-construction process, during which we de-assign activities
from their performing actors, tryto find alternative, and/or more ac-
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tivities by de-constructing existing ones, and re-assign newly found
activities to executing actors. Because we assume that activities
are profitable for at least one actor, re-assignment is possible. Es-
sentially, to clarify discussions between stakeholders, we split the
re-construction process into two questions: (1) which value adding
activities exist, and (2) which actors are to perform these activities?
In previous work we have introduced an ontology-based gen-
eral representation of e-business models ([4], see recent publica-
tions at http://www.cs.vu.nl/˜gordijn/research.htm). Based on this
e
3
-value ontology, we discuss in the present paper three generic
operators for e-business model de-construction: (1) the value activ-
ity de-construction operator, which breaks an activity into smaller
ones, but leaves the products/services offered or requested by the
original activity to its environment unchanged, (2) the value port
de-construction operator, which breaks a service/product offered or
requested by a value activity into smaller ones, and (3) the value
interface de-construction operator, which breaks combinations of
value objects offered and counter-compensations requested into
smaller pieces.
We illustrate e-business model de- and re-construction by one
of the e-business projects where we successfully applied our ap-
proach. The project at hand is about the provisioning of a value-
added news service. With respect to such a service, a regular news-
paper called the Amsterdam Times (a fictitious name, but based on
an actual commercial e-business project) wants to offer to all its
subscribers a service to read articles online using the Internet, but
such that it will make hardly any additional costs. Therefore, the
idea is to finance the execution of this business idea by the tele-
phone connection revenues, which originate from the reader who
has to set up a telephone connection for Internet connectivity.
This paper first introduces in brief the core concepts of our e
3
-
value methodology, which we use to formalize e-business models
(Sec. 2 ). In Sec. 3 we discuss both the general theory and an ap-
plication of e-business model de- and re-construction, and in Sec. 4
we present our conclusions.
2. E
3
-VALUE CORE CONCEPTS
To represent an e-business model, we use a lightweight ontol-
ogy consisting of interrelated core concepts, and we utilize a well
known lightweight scenario technique, called Use Case Maps [1].
This allows us to communicate e-business models easily to in-
tended users such as business consultants, and CxO’s. Moreover,
1
the agility of e-business projects (the need to define, explore, and
execute a business idea fast [5]) asks for an lightweight approach.
Below, we discuss the ontological concepts and the UCM scenario
concepts briefly (see Fig. 1 for an example). More information can
be found in [4], [1].
2.1 The e
3
-value ontology
Actor. An actor is perceived by its environment as an independent
economic (and often also legal) entity. By carrying out value ac-
tivities (see below) an actor makes profit or increases its utility. In
a sound and viable e-business model every actor should be capable
of making a profit.
Value Object. Actors exchange value objects. A value object is
a service, product or even a consumer experience. The important
point here is that a value object is of economic value to one or more
actors.
Value Port. An actor uses a value port to show to its environment
that it wants to provide or request value objects. The concept of
port (a notion adopted from engineering systems theory) is impor-
tant, because it enables to abstract away from the internal business
processes, and to focus only on how external actors and other com-
ponents of the e-business value model can be ‘plugged in’.
Value Interface. Actors have one or more value interfaces. A
value interface groups individual value ports. It shows the value
object(s) an actor is willing to exchange in return for other value
object(s) via its ports. Such willingness is expressed by a decision
function on the value interfaces, which shows on what conditions
an actor wants to exchange a value object for another value object.
The exchange of value objects is atomic at the level of the value
interface. Either all exchanges occur as specified by the value in-
terface or none at all.
Value Exchange. A value exchange is used to connect two value
ports with each other. It represents one or more potential trades of
value objects between actors.
Value Offering. A value offering is a set of value exchanges. It
shows which value objects are exchanged via value exchanges in
return for other value objects. A value offering should obey the
semantics of the connected value interfaces: that is values are ex-
changed via a value interface on all its ports, or none at all.
Market segment. In the marketing literature [6], a market seg-
ment is defined as a concept that breaks a market (consisting of ac-
tors) into segments that sharecommon properties. Accordingly, our
concept market segment shows a set of actors that share for value
interfaces an equal decision function. We realize that in practice
all actors behave differently and consequently cannot have equal
decision functions. However, to be able to design understandable
e-business models, we assume (as in marketing theory is done) that
some groups of actors constitute equivalence classes with respect
to their decision functions.
Value Activity. A value activity is performed by an actor and in-
creases profit or utility for such an actor. The value activity is in-
cluded in the ontology to discuss the assignment of value activities
to actors. Value activities can be de-constructed into smaller value
activities, but the requirement is that these still should be profitable
or increase utility for the performing actor.
2.2 Use Case Maps
Scenario path. A scenario path consists of one or more segments,
related by connection elements and start- and stop stimuli. It rep-
resents via which value interfaces objects of value must be ex-
changed, as a result of a start stimulus, or as result of exchanges
via other value interfaces. Thus a scenario path shows causal rela-
tions between value interfaces.
Stimulus. A scenario path starts with a start stimulus. A start
stimulus represents an event, possibly caused by an actor. If an
actor causes an event, the start stimulus is drawn within the box
representing the actor. The last segment(s) of a scenario path is
connected to a stop stimulus. A stop stimulus indicates that the
scenario path ends.
Segment. A scenario path has one or more segments. Segments
are used to relate value interfaces with each other, possibly via con-
nection elements, to show that an exchange on one value interface
causes an exchange on another value interface. Using connection
elements, sophisticated causal relations can be represented.
Connection. Connections are used to relate individual segments.
An AND fork splits a scenario path into two or more sub path,
while the AND join collapses sub path into one path. An OR fork
models a continuation of the scenario path into one direction, to be
chosen from a number of alternatives. The OR join merges two or
path into on path. Finally, the direct connection interconnects two
individual segments.
3. E-BUSINESS MODEL RE-
CONSTRUCTION IN E
3
-VALUE
The e-business model re-construction process consistsof the fol-
lowing steps, which we discuss in the following sections in detail:
1. Identification of an initial e-business model.
2. De-construction of the initial e-business model.
3. Re-construction of alternative e-business models.
3.1 The initial e-business model
The process of e-business model re-construction starts with a
representation of an initial e-business model. We assume the exis-
tence of an innovative e-business idea. Consequently, the goal of
this step is to articulate that idea more precisely, so that stakehold-
ers all have a common understanding about the idea.
The idea for the e-business model in this paper is to use a termi-
nation fee to finance a news article online service for subscribers
on a regular newspaper. Termination means that if someone tries
to set up a telephone connection by dialing a telephone number,
another actor must pick up the phone, that is, terminate the connec-
tion. If someone is willing to cause termination of a large quantity
of telephone calls, most telecommunication operators are willing to
pay such an actor for that (the termination fee). Because the news-
paper has a large subscriber base, it is capable to generate a large
number of terminations for an article online service. This idea is
formalized by an initial e-business model (see Fig. 1).
3.2 e-Business model de-construction
For de-construction, we de-assign actors from value activities,
but leave value exchanges between value activities intact. Then,
we repeatedly apply one of the three de-construction operators. As
we will show, it is possible to apply operators a number of times on
an e-business model. The next sections discuss the three operators,
along with their business rationale, and an example.
3.2.1 Value Activity De-construction
Business rationale.
Can we split a value activity, which initially is viewed as being
performed as a whole by one actor, into smaller activities, together
2
Legend
Read article
Provide
online
news
articles
Reader r
1
Amsterdam Times
Ope-
rator
Handle
traffic
telephone
connection
fee
telephone
connection
article
online
termination
termination
fee
termination
Value
Offering
Market
Segment
Actor
Value
Exchange
Value
Object
Value
Interface
Value
Port
Value
Activity
Start
Stimulus
Stop
Stimulus
AND fork
Figure 1: The initial e-business model showing that the Amsterdam Times funds its service by a termination fee offered by a telecom-
munication operator. The reader offers a termination opportunity and a telephone connection fee and requests in return an article
online and a telephone connection. The ports requesting/offering these value objects are grouped into one value interface from a
reader’s perspective because these objects are only of value in combination to the reader. By following the scenario path, it can
be seen that the Amsterdam Times resells the termination to a telecommunication operator. This operator also receives a fee for a
telephone connection, as result from reading an article. For each actor, initially one value activity is assumed that describes its value
adding process at best.
3
behaving as the original one, whereby each smaller activity poten-
tially can be performed by individual actors?
Focus.
The value activity de-constructor focusses on the internal struc-
ture of a value activity while keeping its value interfaces to the en-
vironment the same. It breaks down a value activity into smaller
ones, for instance to allow specialized actors to perform one of
these value activities.
Operator VAD : a → a
1
, ..., a
n
.
1. De-construct a value activity a with value interfaces i
1
, ...i
n
into value activities a
1
, ..., a
n
.
2. Assign each value interfaces i
1
, ...i
n
to one or more of the
de-constructed value activities.
3. Add, if necessary, extra value interfaces to the de-constructed
value activities, and relate these by value exchanges. Extra
value interfaces and exchanges can be necessary to ensure
that the de-constructed activities a
1
, ..., a
n
are from an envi-
ronment perspective equivalent to a.
4. Reconsider scenario segments, which hit the value interfaces
of value activity a.
It is possible that for a value activity a multiple alternative de-
constructions exist.
Example: De-construct the Handle traffic value activity into
two other value activities
Fig. 2 de-constructs the Handle traffic value activity into two
smaller value activities, which each can be potentially performed
by a single (different) actor. The two value interfaces of Handle
traffic can be found at the two smaller value activities, thereby pro-
viding the same interfaces to theirenvironment as theoriginal value
activity. The value activity Handle local traffic offers end-to-end
connectivity to a reader and gets paid for this, while it only ex-
ploits the local loop: the last miles from a local telephone switch to
the reader. Consequently, this activity should ’buy’ interconnection
from the Handle long distance traffic activity, and pays for this in
return. The latter activity exploits a telecommunication network be-
tween local telephone switches, and a web server for hosting news
articles. Buying interconnection is shown by adding value inter-
faces and value exchanges between Handle local traffic and Han-
dle long distance traffic. The scenario path is changed but hits the
same value interfaces as was the case for the Handle traffic value
activity.
Example: De-construct the Provide Online news articles value
activity into two other value activities
The de-construction shown in Fig. 3 essentially separates the
content creation (news) from the technical infrastructure needed to
deliver content to the reader. It can be seen as out sourcing Internet
service provisioning from a news provisioning perspective. Again
we need to add value interfaces and value exchanges to represent
that the Provide news articles value activity must acquire facilities
for Internet service provisioning. Note that the scenario path for
the de-constructed value activities hits the same value interfaces as
the original value activity. However, internally, the scenario path
splits to show that as a result of a termination/article online ex-
change, also a termination/termination fee and an Internet service
provisioning/fee is necessary.
3.2.2 Value Port De-construction
Handle local
loop traffic
Handle long
distance
traffic
inter
connection
inter
connection
fee
telephone
connection
telephone
connection
fee
termination
fee
termination
VAD: Handle traffic -> Handle local traffic, Handle long
distance traffic
Handle traffic
telephone
connection
fee
telephone
connection
termination
fee
termination
Figure 2: De-construction of the value activity handle traffic
into two value activities handle local loop trafficand handle long
distance traffic.
Business rationale.
Can we split products, services or combinations into smaller
products/services, which each can be delivered and consumed by
individual actors?
Focus.
Focus is to untangle offered or requested value objects, which
still are of value for actors. These objects can potentially be offered
by multiple value activities rather than one, and thus by multiple
actors. Because we change the value port, we change the value
interface of a value activity to the environment.
Operator VPD : p → p
1
, ..., p
n
.
1. For each value port p in a value interface:
2. Consider de-construction of value port p with value object o
into value ports p
1
, ..., p
n
with value objects o
1
, ...o
n
.
3. If de-construction is possible, de-construct also the peer-
ports of p. Peer ports are the ports p
i
, which are connected
by value exchanges to value port p. Note that a value port
p can be connected to multiple other value ports p
i
, repre-
senting that a value activity containing port p can exchange
objects with multiple other value activities.
(a) Dis-connect value exchanges connecting value port p
and value ports p
i
.
4
Provide
online news
articles
article
online
termination
termination
termination
fee
Provide
news
articles
article
online
termination
termination
termination
fee
Internet
service
provisioning
fee
Internet
service
provisioning
VAD: Provide online news articles -> Provide news
articles, Internet service provisioning
Figure 3: De-construction of value activity provide online news
articles into two value activities provide news articles and inter-
net service provisioning.
(b) De-construct value ports p
i
into ports p
1
i
, ..., p
n
i
in the
same way as p was de-constructed.
(c) Re-connect ports p
1
, ..., p
n
using value exchanges with
ports p
1
i
, ..., p
n
i
.
Example: De-construct the value object Internet service provi-
sioning into two other value objects
Fig. 4 de-constructs the value port Internet service provisioning
into two different ports/value objects: (1) Internet hosting provi-
sioning, e.g. hosting a web site, and (2) Internet access provision-
ing, e.g. exploiting a modem pool to offer access to the Internet.
3.2.3 Value Interface De-construction
Business rationale.
A value interface models the notion of one good turn deserves
another, consisting of value objects offered and value objects re-
quested in return. It is sometimes possible to split up a value inter-
face in more interfaces, for (1) de-bundling, and (2) smaller value
activities. Bundling refers to the business notion that an actor be-
lieves that if two or more products are offered as a whole, more
money can be earned than offering these products seperately (see
e.g. [2]). De-bundling refers to the opposite mechanism. We can
also apply value interface de-construction to split up the value ac-
tivity associated with the interface at hand. Essentially, we split up
an interface into smaller ones, whereby each value interface can be
associated with a new value activity.
Focus.
The focus is to find smaller value interfaces, that is value inter-
faces with a smaller number of value ports.
Operator VID : i → i
1
, ..., i
n
.
Provide
news
articles
Internet
service
provisioning
fee
Internet
service
provisioning
Provide
news
articles
Internet
service
provisioning
access
hosting
fee
VPD: Internet service provisioning-> access, hosting
Figure 4: De-construction of the value object Internet service
provisioning into two value ports access and hosting.
1. For each value interface i with value ports p
1
, ..., p
n
of a
value activity a:
2. Find (alternative) value interfaces i
1
, ..., i
n
grouping value
ports p
1
, ..., p
n
.
3. Reconsider scenario segments.
Example: An access and hosting value interface
Fig. 5 introduces two separate value interfaces for the Internet
service provisioning activity: one for offering Internet access and
one for offering hosting services. Creation of these interfaces takes
two steps. First we have to de-construct the fee port into two ports:
the access fee and hosting fee. This is necessary due to the defini-
tion of value interface. A value interface models objects of value
offered to the environment and the objects requested in return. We
therefore need ports who receive the objects requested in return for
offering access and hosting value objects. Second, we create two
value interfaces, representing hosting and access services.
Note we do not split the value interface of the Provide news ar-
ticles value activity. This value interface models that, for offering
articles online, we need both hosting and access for each scenario
occurrence.
Example: Access and hosting via value activity de-construction
It also possible to split up the Internet service provisioning value
activity into Internet access provisioning and Internet hosting pro-
visioning (see Fig. 6), but there is an important difference com-
pared to the previous example. Fig. 6 still shows a value activ-
ity called Internet service provisioning’ (although smaller than the
original one). This activity is profitable by offering a bundle of ac-
cess and hosting services, but must buy-in access and hosting from
another service. In contrast, in Fig. 5, the value activity Provide
news articles is responsible for acquiring both access and hosting.
3.2.4 Combining de-construction operators.
The three mentioned de-construction operators can be sequen-
tially applied. The following three cases appear regularly:
• A number of sequential value activity de-construction oper-
ations. In this case, we try to break up a value activity into
(alternative) smaller ones, but do not change anything visible
to the outside world.
5
Provide
news
articles
Internet
service
provisioning
access fee
access
hosting
hosting fee
Provide
news
articles
Internet
service
provisioning
access
hosting
fee
Provide
news
articles
Internet
service
provisioning
access fee
access
hosting
hosting fee
VPD: fee -> access fee, hosting fee
VID: {access,access fee, hosting, hosting fee}
Internet service provisioning
->
{access,access fee}
Internet service provisioning
,{hosting,hosting fee}
Internet service provisioning
Figure 5: De-construction of the value interface with four ports
into two value interfaces with each two ports.
Internet
service
provisioning
fee
Internet
service
provisioning
VAD: Internet service provisioning
->
Internet access provisioning, Internet hosting provisioning
Internet
service
provisioning'
fee
Internet
service
provisioning
Internet
access
provisioning
Internet
access
provisioning
access fee
access
hosting
hosting fee
Figure 6: De-construction of the value activity Internet service
provisioning into one for access provisioning and one for host-
ing provisioning. In contrast to Fig. 5, the Internet service pro-
visioning ensures that their existstill one bundle ofInternet ser-
vice provisioning, while in Fig. 5 an actor whowants access and
hosting must compose the bundle him/herself.
6
Internet
hosting
provisioning
Provide
news
articles
Internet
access
provisioning
access fee
access
hosting
hosting fee
Provide
news
articles
Internet
service
provisioning
access fee
access
hosting
hosting fee
VAD: Internet service provisioning
->
Internet access provisioning, Internet hosting provisioning
Figure 7: De-construction of the value activity Internet service
provisioning into one for access provisioning and one for host-
ing provisioning, using the value interfaces de-constructed in
Fig. 5
• Value port de-constructions, followed by value interface de-
constructions, and finally value activity de-constructions. In
this case, we try to find smaller value objects which can be
offered by separate value activities, which can be performed
by individualactors. Fig. 7 is an example of this. First we de-
construct the value interface of Internet service provisioning
into two smaller ones for access and hosting (see Fig. 5), and
then we de-construct the value activity into two smaller ones.
• De-bundling, a number of value port de-constructions, fol-
lowed by value interface de-constructions. Fig. 5 can be
seen as a case of de-bundling: we allow that the services
hosting and access are sold separately rather than as a whole.
Note that a value interface means that if a value object is ex-
changed via one of its ports, value objects on all its other
ports must be exchanged too, so after de-bundling, access
and hosting can be obtained as separate services rather than
as a whole.
3.3 e-Business Model Re-construction
De-construction of an e-business model means de-assigning
value activities and actors, and generating new value activi-
ties. During e-business model re-construction, we study the re-
assignment of value activities to performing actors.
First, we generate value activities configurations. These are con-
nected value activities, by means of value exchanges, which repre-
sent an e-business model, without their performing actors. Because
in this case study, we did not consider alternative de-constructions,
so we have only one such a configuration (essentially Fig. 8 with
omitted actors.).
Second, we re-identify actors, who are potentially interested in
executing one or more value activities. Actors are potentially in-
terested, if they expect to make a profit, or to increase utility by
performing the value activity. Re-identification means that we con-
sider new actors, which were not identified during development
of the initial e-business model. It is reasonable to expect that by
finding new, more specialized value activities, other actors than the
ones already found are interested to perform these.
Third, we make an actor-value activity assignment matrix (see
Table 1). This matrix shows actors, which are potentially interested
in performing value activities of a specific configuration.
Finally, using the actor-value activity assignment matrix, alter-
native e-business models can be extracted and represented using
our graphical technique. Fig. 8 shows one possible e-business
model. Other models are possible by choosing other assignments
of value activities to actors.
4. CONCLUSION
Finding innovative e-business models is a creative task. How-
ever, finding varations on such an e-business model can be facil-
itated by e-business model de- and re-construction. The starting
consideration for this is to separate the questions (1) which value
adding activities exist from (2) which actors are performing these.
To find e-business model variations, we have defined three de-
construction operators, which all have a clear business rationale.
The value activity de-construction (VAD) operator helps in finding
smaller value activities, which all can be profitably performed by
at least one actor. We keep the value interface invariant using this
operator, and only focus on the partitioning of a value activity over
a number of actors rather than one actor.
A value interface models that an actor, or value activity, offers
something of value to its environment, and wants something in re-
turn for that. The value interface de-construction (VID) operator
splits such interfaces into smaller ones. This may be done for two
reasons. First, splitting can be done for unbundling reasons: the of-
fering of value objects separately rather than as a bundle. Second,
de-constructed value interfaces can be used to de-construct a value
activity associated with these interfaces into smaller activities.
Finally, the value port de-construction (VPD) operator assists in
identifying new value ports/objects, based on an initial one, which
each can de delivered or requested by individual actors. Mostly,
the VPD operator is followed by the VID operator to address un-
bundling, or by the VAD operator, to distribute the offering of the
original value object over a number of actors.
Also, we have shown how these operators work out in a prac-
tical, non-trivial e-business modeling project. The representation
proposed in this paper of e-business models appeared valuable in
the project to illustrate complicated concepts such as call termina-
tion and interconnection to stakeholders, while the presented de-
and re-construction process proved important to find new value ac-
tivities, and to renegotiate assignment of these activities with the
performing actors.
Acknowledgement. This work has been partly sponsored by
the Stichting voor Technische Wetenschappen (STW), project nr
VWI.4949 on a Framework for the Electronic Sale of Information
Products. Also, we thank De PersCombinatie for their permission
to publish some of the e-business project results.
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[2] Soon-Yong Choi, Dale O Stahl, and Andrew B. Whinston. The
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7
Table 1: Actor - Value activity matrix showing which actors can potentially perform which value activity, and while creating profit,
or increasing utility by doing an activity.
Value activity Actor
Reader Last Mile Data Runner Hoster Amsterdam Times
Read article x
Handle local loop traffic x x
Handle long distance traffic x x
Provide internet access x x x x
Hosting x x x x
Provide news articles x
Read article
Provide
news
articles
Reader r
1
Amsterdam
Times
article
online
termination
Last
Mile
Handle local
loop traffic
telephone
connection
Hoster
Internet
hosting
provisioning
Data
Runner
Internet
access
provisioning
inet
access fee
access
Handle long
distance
traffic
interconnection fee
inter
connection
terminatio
n
fee
hosting
hosting
fee
terminatio
n
access
access
fee
Figure 8: A re-constructed e-business model by assigning newly discovered value activities to actors.
8
[3] Philip Evans and Thomas S. Wurster. Blown to Bits - How the
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