Business Model

The key elements of a business model are [1]:

  • Customer Value Proposition
  • Profit Formula
  • Key Resources
  • Key Processes

Customer Value Proposition — What's in it for them?

The customer value proposition is the service, and the understanding of how the service creates value for the customer / consumer. This value is not only for the immediate customer, but through understanding of the value chain to final consumers. The service includes not only what is to be sold, but how it is to be sold.

Profit Formula — What's in it for me?

The Profit formula needs to look at revenue, cost and margins models.

Key Resources — What do I need?

Key resources may include people, technology, equipment, information, channels, partnerships and alliances, finance, brand. These resources will need to be sourced and these sources maintained.

Key Processes — How will I deliver this?

What are the key service systems required to support the delivery of the service. This will include identification of activities and processes, policies, norms, metrics (SLA and KPI).

Service Science Analysis

A business model can be analysed using e3 service value models to understand Customer Value proposition and resources as value chains. The value logic can be analysed using Goal-oriented Requirements Language (GRL) [2].

Jacobs [3] sees a need to link Business Models to Process Models. In fact, the need is to link the Business Models to Service Systems, which include processes. The Process Meta Model can be directly used as a Service Meta Model. Services are therefore seen to have intention, product and context.

1. Johnson, M.W., Christensen, C.M. & Kagermann, H. 2008, 'Reinventing your business model', Harvard Business Review.
2. Weiss, M. & Amyot, D. 2007, 'Business model design and evolution', in M. Hörlesberger, M. El-Nawawi & T. Khalil (eds), Challenges in the Management of New Technologies, World Scientific.
3. Jacobs, S. & Holten, R. 1995, 'Goal driven business modelling: Supporting decision making within information systems', paper presented to the Conference on Organizational Computing Systems, Milpitas, California, United States.
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