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Quantitative, Value-Driven Risk Analysis of e-Services
Abstract
Modern e-services are provided by networks of collaborating businesses. However, collaborators, and even customers, don't always behave as expected or agreed upon, and fraudsters attempt unfair exploitation, legally or illegally.Profitability assessments of e-services should therefore look beyond revenue streams and also consider threats to the financial sustainability of the service offering. More importantly, any such analysis should consider the business network in which the e-service is embedded. The e ³ value method is an established modeling and analysis method that allows enterprises to estimate the net value flows of a networked e-business. Recently, the method and its ontology have been extended to cover aspects related to risk, e.g., fraud. In this paper, we introduce four new software-enabled risk and sensitivity analyses, which build upon this extension. The techniques are quantitative and therefore support making motivated risk mitigation decisions. We illustrate them in the context of three realistic case studies.
... Business model representations are defined as a mix of textual and graphical elements, or an ontology [23], used as tools for improving understanding, analysis, experimentation and for defining underlying information systems requirements [14]. Value modeling, in particular, depicts transfers of economic value that take place between the actors of a value constellation [24]. A value model shows which actors are involved and which objects of economic value are exchanged [25]. ...
... Value-based process model design [37] X X X X X X X X X X X Heuristic E3tool [24] X X X X X X X X X ...
... To enable agile and informed business model design, software tool extensions that support the analysis of the impact of interdependence on profit or value could be implemented. Advanced risk analysis functionalities such as sensitivity analysis and methods for automated model generation, as proposed by [24], could be used to evaluate external or inter-firm alignment structures. Thus, we see a promising avenue of research in the evaluation, maybe using the ecosystem analysis concepts reviewed here, of the partner alignment structures embedded in platform value models. ...
Scholars have proposed many approaches to represent and analyze value creation. Value creation in ecosystems such as platform ecosystems often relies on a specific structure of partner alignment. Value modeling techniques can improve the understanding of how ecosystem risks and non-generic complementarities determine value creation and the alignment structures required. First, we conceptualize ecosystem analysis as a tool for alignment in the context of business innovation. Then, we carry out a structured literature review to identify existing techniques, which could support ecosystem analysis. Further, we provide a comprehensive overview of the value modeling techniques and integrate our ecosystem analysis conceptualization with existing classification frameworks. This integrative framework allows researchers and scholars to identify techniques that suit specific needs in terms of internal alignment reach, tooling, innovation phase and ecosystem analysis. Our results show limited support for ecosystem analysis. Still we are able to identify techniques that can provide a useful conceptual or tooling basis to enable ecosystem analysis.
... This study empirically concludes that both types of risk are driven by two factors, that is, the type of product, and the supply chain location. This implies that this study follows the quantitative analysis tradition in risk management (Behzadi et al., 2018;Ionita et al., 2018) by addressing an operational problem (Leone and Porretta, 2018;Lewis, 2003;Skorna and Bode, 2011). Furthermore, an interaction between the two factors may also exist, such that certain product types are especially prone to theft at specific locations along the supply chain (Farrell, 2015). ...
Purpose
The purpose of this paper is to explore cargo theft risk and security for different product types at different locations along a transport chain.
Design/methodology/approach
This study is based on a system-theoretical approach. The research method is deductive, as the analysis is based on secondary data and results from a questionnaire. The results are analysed based on supply chain risk management (SCRM) theories.
Findings
Due to substantial interaction effects, the type of product and transport chain location must be considered to determine the correct level of security. Specifically, the product type is more significant, since the general cargo theft risk is higher. Furthermore, the transport industry has three perspectives on security responses to cargo theft, namely, demanded, needed and actual security, which differ depending on the product type and transport chain location.
Research limitations/implications
This database is structured according to the global Transported Asset Protection Association organisational structure, which implies that there are three main databases: Europe, Middle East and Africa, Americas, and Asia-Pacific.
Practical implications
This study has both research and practical implications, as it examines security within freight transport from three perspectives, linked to general cargo theft risk and goods owners’ requirements.
Originality/value
This study addresses the contemporary SCRM problem of cargo theft using actual crime statistics and the industry understanding of required generic security levels.
... In addition, if we quantify money flows, we can simulate cash flow scenarios based on assumptions about customer need and prices, and we use the tools to assess risks, such as financial risks and vulnerability for fraud. We do not go into details here as they have been described elsewhere [35]. ...
Digital ecosystems and platforms require a business model, which is a model of how a business creates, delivers, and captures value. We argue that the business model should be a networked business model, as ecosystems and platforms are connected networks of organizations and consumers. Furthermore, we emphasize that a business model should be a conceptual model that is expressed using a (semi) formal language. This is not only needed in order to create an unambiguous and shared understanding of the ecosystem at hand; it is also a prerequisite for software-assisted analysis and for the use of other design techniques, e.g. for business process engineering, and ICT architecture design. We explain these two requirements concerning business modelling using a series of industry strength cases.Keywordsdigital ecosystemplatform
networkconceptual model
This paper examines weekly and annual seasonality in incident categories to find
patterns and trends in transport crime globally, concerning the value of stolen goods,
incident frequency and incident category. Secondary data is utilized to analyse a
contemporary challenge in logistics and supply chain research, namely theft and
robbery of goods during shipment. The research is based on the TAPA global IIS
transport-related crime database. Incident frequencies and mean values are analysed
primarily with chi-square tests and analyses of variance (ANOVAs). The results are
analysed and discussed within a frame of reference consisting of theories from logis-
tics and criminology. The main conclusion is that there is an annual as well as a
weekly seasonality of most incident categories, but the patterns vary among incident
categories. The results are primarily limited by the content and classification within
the TAPA IIS database.
Networked service value constellations, consisting of enterprises and customers working together to jointly provide a commercial service, can be analyzed from different modeling perspectives. Two such perspectives are (1) the value perspective and (2) the process perspective. Value models, describing the value perspective, indicate which economically valuable service outcomes are exchanged between the involved actors. However, a value model only shows what of economic value is exchanged, but not how this should be accomplished. Therefore, to understand a service well, an additional process model has to be designed, which shows the actual tasks to be performed by these actors as well as the time order of these tasks. A key problem is then how to construct such a process model, given an earlier designed value model. As the process model should put the value model into operation, there exists a clear relationship between both models. Previous work investigated this problem to a certain extent, but a well integrated and easy to use method is currently lacking. This paper proposes a step-wise method to design a process model for networked value constellations, given an earlier developed value model. The aim of this method is to support practitioners during the design of a process model; as a result, the proposed way of working should be tractable, well teachable, and easy to use, thereby following the same philosophy as with the value methodology, which is used to model the value perspective of networked value constellations. In addition to the step-wise method itself, the value of this paper lies also in the use of the method to explore services related to intellectual property rights (IPR) clearing.
Commercially provided electronic services commonly operate on top of a complex, highly-interconnected infrastructure, which provides a multitude of entry points for attackers. Providers of e-services also operate in dynamic, highly competitive markets, which provides fertile ground for fraud. Before a business idea to provide commercial e-services is implemented in practice, it should therefore be analysed on its fraud potential.
This analysis is a risk assessment process, in which risks are ordered on severity and the unacceptable ones are mitigated. Mitigations may consist of changes in the e-service network to reduce the attractiveness of fraud for the fraudster, or changes in coordination process steps or IT architecture elements to make fraud harder or better detectable.
We propose to use value business value models for the identification and quantification of risks associated with e-service packages. This allows for impact estimation as well as understanding the attacker’s business cases. We show how the value ontology — with minimal extensions – can be used to analyse known telecommunication fraud scenarios. We also show how the approach can be used to quantify infrastructure risks. Based on the results, as well as feedback from practitioners, we discuss the scope and limits of generalizability of our approach.
We describe case study research and explain its value for developing theory and informing practice. While recognizing the complementary nature of many research methods, we stress the benefits of case studies for understanding situations of uncertainty, instability, uniqueness, and value conflict. We introduce the concept of phronesis — the analysis of what actions are practical and rational in a specific context — and indicate the value of case studies for developing, and reflecting on, professional knowledge. Examples of case study research in managerial accounting, auditing, and financial accounting illustrate the strengths of case studies for theory development and their potential for generating new knowledge. We conclude by disputing common misconceptions about case study research and suggesting how barriers to case study research may be overcome, which we believe is an important step in making accounting research more relevant.
In network organizations and e-commerce, control mechanisms to guarantee interorganizational contract compliance enhance trust that business transactions are fair. In this paper, we propose a design technology, called e<SUP>3</SUP>-control, to develop such controls. The e<SUP>3</SUP>-control design methodology is an extension of the e<SUP>3</SUP>-value design methodology for business models, which models economic-value exchanges, rather than operational processes, between the organizations in a network. A methodology for designing control mechanisms should include three steps: (1) design an interorganizational value-exchange model of the network, (2) analyze interorganizational control problems within the network (i.e., possible violations of contractual obligations related to the value model), and (3) design control mechanisms to detect or prevent such control problems. The usability of the proposed e<SUP>3</SUP>-control design methodology is demonstrated in a case from the electrical industry.
Business value models and process models describe the same subject from a different perspective. Therefore, it is important that both models are consistent with each other. To do consistency checking, we construct an intermediate model that captures the physical transfers in a value model, thereby reducing the conceptual gap between value and process models. This physical transfer model can then be checked for consistency with a process model via the already existing "reduced model" approach. A reduced model is a simplified representation of a value model or process model, where common concepts represent aspects from both the value and process model. We illustrate our approach using a small case study in the electricity sector.
The analysis of the potential of emerging innovative technologies calls for a systems-theoretic approach that takes into account technical as well as socio-economic factors. This paper reports the main findings of several business case studies of different future applications in various countries of distributed power generation technologies, all based on a common methodology for networked business modeling and analysis.
Networked organizations, consisting of enterprises who exchange things of economic value with each other, often have participants
who commit a fraud or perform other actions, not agreed in a contract. To explore such opportunistic behavior, and to design solutions to mitigate it, we propose the e
3
controlapproach. This approach takes the valuable objects, which are exchanged between enterprises, as a point of departure, and
proposes a control patterns library to find solutions for various types of opportunistic behavior in network organizations.
The practical use of the patterns is illustrated by a case study in the field of renewable electricity supply in UK.
Field Methods are a collection of tools and techniques for conducting studies of users, their tasks, and their work environments in the actual context of those environments. The promise of such methods is that they help teams design products that are both useful and usable by providing data about what people really do. Participants in this forum will address: the origins and framework of Contextual Designthe application of field methods to task analysisa review of ways to adapt these methods to practical constraintsa discount approach to field studies.
Current e-business technology enables the execution of increasingly complex coordination processes that link IT services of
different companies. Successful design of cross-organizational coordination processes requires the mutual alignment of the
coordination process with a commercial business case. There is however a large conceptual gap between a commercial business
case and a coordination process. The business case is stated in terms of commercial transactions, but the coordination process
consists of sequences, choices and iterations of actions of people and machines that are absent from a business case model;
also, the cardinality of the connections and the frequency and duration of activities are different in both models. This paper
proposes a coordination process design method that focusses on the the shared physical world underlying the business case
and coordination process. In this physical world, physical deliveries take place that realize commercial transactions and
that must be coordinated by a coordination process. Physical delivery models allow us to identify the relevant cardinality,
frequency and duration properties so that we can design the coordination process to respect these properties. In the case
studies we have done so far, a physical delivery model is the greatest common denominator that we needed to verify consistency
between a business case and a coordination process model.
Ontologies are viewed as increasingly important tools for structuring domains of intrests. In this paper we propose a reference ontology of business models using concepts from three established business model ontologies; the REA, BMO, and e3-value. The basic concepts in the reference ontology concern actors, resources, and the transfer of resources between actors. Most of the concepts in the reference ontology are taken from one of the original ontologies, but we have also introduced a number of additional concepts, primarily related to resource transfers between business actors. The purpose of the proposed ontology is to increase the understanding of the original ontologies as well as the relationships between them, and also to seek opportunities to complement and improve on them.
Recent marketing and management literature has introduced the concept of co-creation of value. Current value modeling approaches
such as e3-value focus on the exchange of value rather than co-creation. In this paper, an extension to e3-value is proposed
in the form of a “value encounter”. Value encounters are defined as interaction spaces where a group of actors meet and derive
value by each one bringing in some of its own resources. They can be analyzed from multiple strategic perspectives, including
knowledge management, social network management and operational management. Value encounter modeling can be instrumental in
the context of service analysis and design.
Advancing service science requires a service-centered conceptual foundation. Toward this goal, we suggest that an emerging logic of value creation and exchange called service-dominant logic is a more robust framework for service science than the traditional goods-dominant logic. The primary tenets of service-dominant logic are: (1) the conceptualization of service as a process, rather than a unit of output; (2) a focus on dynamic resources, such as knowledge and skills, rather than static resources, such as natural resources; and (3) an understanding of value as a collaborative process between providers and customers, rather than what producers create and subsequently deliver to customers. These tenets are explored and a foundational lexicon for service science is suggested.
Business models are usually represented by a mixture of informal textual, verbal, and ad-hoc graphical representations. However, these representations typically limit a clear understanding of the e-business issues that confront the stakeholders, and often perpetuate the existing gap between business executives and the IT developers who This article presents an e-business modeling approach that combines the rigorous approach of IT systems analysis with an economic value perspective from business sciences. must create the e-business information systems. This article presents a conceptual modeling approach to
. Innovative e-business projects start with a design of the e-business model. We often encounter the view, in research as well as industry practice, that an e-business model is similar to a business process model, and so can be specified using UML activity diagrams or Petri nets. In this paper, we explain why this is a misunderstanding. The root cause is that a business model is not about process but about value exchanged between actors. Failure to make this separation of concerns leads to poor business decision-making and inadequate business requirements. 1 Introduction An important part of an e-commerce information system development process is the design of an e-business model. Such a model shows the business essentials of the ecommerce business case to be developed. It can be seen as a first step in requirements engineering for e-commerce information systems. Sometimes, an e-business model is represented using a standard process modelling method such as the UML modelling ...
Coordination processes are business processes that involve independent profit-and-loss responsible business actors who collectively provide something of value to a customer. Coordination processes are meant to be profitable for the business actors that execute them. However, because business actors are independent, there is also an increased risk of fraud. To compute profitability as well as quantify the risk of fraud, we need to attach value models to coordination process models. In this paper, we propose guidelines for deriving a value model from any coordination process model. Next, we show how our approach can be used to identify possibilities of fraud offered by a coordination process, as well as quantify the financial impact of known fraudulent processes. Finally, we discuss additional applications, such as identifying commercially superfluous tasks, or missing tasks needed to achieve a financially sustainable process.
Coordination processes are business processes that involve independent profit-and-loss responsible business actors who collectively provide something of value to a customer. Coordination processes are meant to be profitable for the business actors that execute them. However, because business actors are independent, there is also an increased risk of fraud. To compute profiftiability as well as quantify the risk of fraud, we need to attach value models to coordination process models.
In this paper, we propose guidelines for deriving a value model from any coordination process model. Next, we show how our approach can be used to identify possibilities of fraud offered by a coordination process,
as well as quantify the financial impact of known fraudulent processes. Finally, we discuss additional applications, such as identifying commercially superfluous tasks, or missing tasks needed to achieve a financially sustainable process.
Modern e-service providers rely on service innovation to stay relevant. Once a new service package is designed, implementation-specific aspects such as value (co-)creation and cost/benefit analysis are investigated. However, due to time-to-market or competitive advantage constraints, innovative services are rarely assessed for potential risks of fraud before they are put out on the market. But these risks may result in loss of economic value for actors involved in the e-service’s provision.
Our approach automatically generates and prioritizes undesired-able scenarios from a business value model of the e-service, thereby drastically reducing the time needed to conduct an assessment. We provide examples from telecom service provision to motivate and illustrate the utility of the tool.
This book provides guidelines for practicing design science in the fields of information systems and software engineering research. A design process usually iterates over two activities: first designing an artifact that improves something for stakeholders and subsequently empirically investigating the performance of that artifact in its context. This validation in context is a key feature of the book - since an artifact is designed for a context, it should also be validated in this context.
Meeting changing customer demands and business opportunities in a connected world makes it necessary for organizations to constantly innovate by means of value-creating collaborations. The goal of value modeling is to support the exploration of new business models from an economic point of view. The e3value approach to value modeling is based on an explicit ontology and supported by a graphical tool. This paper provides a structured overview and evaluation of e3value, and discusses two important issues. The first issue concerns the difference between a value co-creation perspective and an exchange value perspective. It shows that with some extensions, e3value can support both. The second issue is model quality. It argues that an ontology is not complete without model quality features and, as far as e3value is concerned, proposes to use the notion of “value cycle” as a soundness feature and as a replacement of the scenario concept.
Before technology is transferred to the market, it must be validated empirically by simulating future practical use of the technology. Technology prototypes are first investigated in simplified contexts, and these simulations are scaled up to conditions of practice step by step as more becomes known about the technology. This paper discusses empirical research methods for scaling up new requirements engineering (RE) technology.
When scaling up to practice, researchers want to generalize from validation studies to future practice. An analysis of scaling up technology in drug research reveals two ways to generalize, namely inductive generalization using statistical inference from samples, and analogic generalization using similarity between cases. Both are supported by abductive inference using mechanistic explanations of phenomena observed in the simulations. Illustrations of these inferences both in drug research and empirical RE research are given. Next, four kinds of methods for empirical RE technology validation are given, namely expert opinion, single-case mechanism experiments, technical action research and statistical difference-making experiments. A series of examples from empirical RE will illustrate the use of these methods, and the role of inductive generalization, analogic generalization, and abductive inference in them. Finally, the four kinds of empirical validation methods are compared with lists of validation methods known from empirical software engineering. The lists are combined to give an overview of some of the methods, instruments and data analysis techniques that may be used in empirical RE.
The paper provides a broad and multifaceted review of the received literature on business models in which we examine the business model concept through multiple subject-matter lenses. The review reveals that scholars do not agree on what a business model is, and that the literature is developing largely in silos, according to the phenomena of interest to the respective researchers. However, we also found emerging common themes among scholars of business models. Specifically, 1) the business model is emerging as a new unit of analysis; 2) business models emphasize a system-level, holistic approach towards explaining how firms “do business”; 3) firm activities play an important role in the various conceptualizations of business models that have been proposed; and 4) business models seek to explain how value is created, not just how it is captured. These emerging themes could serve as catalysts towards a more unified study of business models.
A method using expert judgement for the evaluation of software quality is presented. The underlying principle of the approach is the encoding of experts' tacit knowledge into probabilistic measures associated with the achievement level of software quality attributes. An aggregated quality measure is obtained based on preference statements related to the quality attributes. The technical objectives of the paper are
• to develop of a generic and operationally feasible measurement technique to transform the tacit knowledge of a software expert to a probability distribution depicting his/her uncertainty of the level of achievement related to a quality attribute;
• to develop rules for the construction of a consensus probability measure based on expert-specific probability measures;
• to derive a framework for specifying software quality strategy and for evaluating the acceptance of a software produced in a software development process;
The above technical developments are used to support group decision-making regarding
• the launch or implementation decision of a software version;
• the allocation of resources during the software development process.
Today's business managers face increased pressures to make sure that E-commerce (EC) investment has certain paybacks. They are attempting to find which investment will contribute effectively to their business benefits, thus determining whether money should be spent on these results. This paper develops a conceptual framework for evaluating web-based business-to-customer EC applications. The framework includes EC cost/benefit, EC functionality and customer satisfaction categories, each consisting of a set of factors. This paper then critically examines the inter-dependent and interrelated relationships among these factors through a group testing of hypotheses. The research is conducted based on a web exploration and two respective surveys: customer-oriented and company (supplier)-oriented. Through data analysis, findings are expressed into a factor-relationship model. The model shows how business organisations can use web-based EC applications to obtain further benefits by determining how EC investments can improve customer satisfaction in different ways.
In today's fast-changing competitive environment, strategy is no longer a matter of positioning a fixed set of activities along that old industrial model, the value chain. Successful companies increasingly do not just add value, they reinvent it. The key strategic task is to reconfigure roles and relationships among a constellation of actors--suppliers, partners, customers--in order to mobilize the creation of value by new combinations of players. What is so different about this new logic of value? It breaks down the distinction between products and services and combines them into activity-based "offerings" from which customers can create value for themselves. But as potential offerings grow more complex, so do the relationships necessary to create them. As a result, a company's strategic task becomes the ongoing reconfiguration and integration of its competencies and customers. The authors provide three illustrations of these new rules of strategy. IKEA has blossomed into the world's largest retailer of home furnishings by redefining the relationships and organizational practices of the furniture business. Danish pharmacies and their national association have used the opportunity of health care reform to reconfigure their relationships with customers, doctors, hospitals, drug manufacturers, and with Danish and international health organizations to enlarge their role, competencies, and profits. French public-service concessionaires have mastered the art of conducting a creative dialogue between their customers--local governments in France and around the world--and a perpetually expanding set of infrastructure competencies.
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