Cigref TV presents its study : What business models fot the digital company
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Les modèles d'affaires dans l'espace numérique
The framework to define business models needs a brand new design within the digital space, because the impact of cloud computing, smartphones, the Internet of Things and other digital tools is changing the rules.
We see a first attempt in defining this digital company business model framework with the research of two renowned professors from the University of South California, Omar El Sawy and Francis Pereira. The name of their model is VISOR, which stands for Value proposition, Interface, Service Platform, Organizing model and Revenue model.
To understand what lies beyond the theory, let’s take a look at one of their case studies. The professors have applied the VISOR model to car-sharing operator Zipcar. This company rents cars by the hour at a price of 8 dollars per hour. The customer first pays an annual subscription and gets a card with an RFID sensor which unlocks the car doors.
In this case, the Value proposition consists in renting cars located in various places by the hour; the Interface is multimodal, using extended networks, and the Service Platform is based on a private network with access limited to members. Then, when it comes to the Organizing model, we find alliances, which are an important trend currently reshaping business models in the digital era. For Zipcar, this alliance consists in partnerships with universities or other entities where the cars are parked. Finally, the Revenue model is based on the annual subscription and the fee for a one-hour rental.
What’s even more interesting with El Sawy and Pereira’s work is their prospective description of what the car rental business model could turn into by the year 2020, starting from the current ZipCar model. They suggest that what is currently “unthinkable” might occur within the next few years: rental car agencies would no longer own the cars but lease vehicles from various partners nor charge for the rental. The Value proposition for the customer is thus the free service.
The Interface would shift from phone and internet reservation to virtual identification and authorization with keyless access to the car. Therefore the Service platform would be highly integrated and pooled with partners, meaning the Organizing model would consist in formal alliances with hotels, parking companies and government agencies. As a reminder, Zipcar’s activity currently relies on limited partnerships with hotels and travel agencies, giving a taste of what might happen. Last but not least: what about the Revenue model? Well, the professors answer this question by forecasting cross-selling of others services.
To sum up, the VISOR framework shows the traditional model will no longer work. Companies face fierce competition and the customer’s reluctance to pay. They are consequently led to offer free products and then have two options to ensure revenues: charging different levels of service by focusing on the interface, or reconsidering their organization and working with partners, for example by asking third parties to pay for access to their database.
Pour aller plus loin:
La Fondation CIGREF: www.fondation-cigref.org
Les Essentiels de la Fondation CIGREF: http://www.fondation-cigref.org/publications/les-essentiels/
La Collection Springer Briefs in Digital Spaces: http://www.springer.com/series/10461
The Future of Business Models in the Digital Era : an example, a Cigref TV's video