A value model describes the commercial aspect of business transactions. To perform these transactions, we need technology. For example, take the simple value model of shops selling products to customers. In this model, the customer pays the shop for a product and for transport, and the shop pays a logistics provider for transport.
What technology options exist to implement each commercial transaction in the business model? What activities can the actors perform with this technology? What does that mean for the business model? To answer these questions, we must analyze transactions. Let’s look at two examples.
Choosing product selection technology
As an example, consider the transaction between a customer and a shop. For this the customer must perform three activities, namely to select a product, to pay for it, and to receive the product. For the activity of selecting a product, we must choose technology. What technology options are available for this?
- The customer can go to a brick-and-mortar shop, browse the products on display there, and select a product. This requires brick-and-mortar technology and the physical technology to display products in an attractive way in the physical shop. The business model may have to be extended by a provider of window dressing services for the shop.
- The customer can browse a catalog printed on paper. This requires an extension of the business model with providers of layout and printing services for the shop, and with a logistics provider to send the catalog to customers.
- The customers can browse a catalog online, and then select a product. Now the shop needs web shop hosting, a webshop designer, software maintenance, and a helpdesk for customers. Some of this may be obtained from service providers, that have to be added to the business model. Also, the customer needs technology to access this webshop.
Suppose all three technology options are chosen. Then the shop needs a logistics provider to mail the paper catalog, and a hosting provider to host the webshop.
Choosing payment technology
As a second, shorter example, consider the technology options for payments of the customer to the shop:
- Accept cash in paper money; this requires a cash register in a brick-and-mortar shop.
- Accept debit cards; this requires some equipment, as well as a payment service from a payment provider such as a bank.
- Accept credit cards; this requires some equipment, as well as a payment service from a payment provider such as a bank.
- Accept a cryptocurrency; this requires an interface with e-wallets and a connection to the internet.
Some of these payment technology options again require a change in the business model. For example, the use of debit and credit cards requires the services of a payment provider.
To evaluate all these options in terms of their business impact, we extend the value model with the actors and transactions needed by them. In the following diagram, we assume all three product selection technologies have been chosen: selection in a brick-and-mortar shop, selection in a mailed catalog, and selection in a web catalog. Payment options have not bee selected yet.
This new model of the value network allows us to refine our estimates of revenue with additional expenses and more accurate esti,mates of the number of consumer occurrences per time period.
Choosing technology not only involves making a shopping list of new technology to acquire, but also designing an enterprise architecture in which this technology will connected with each other and with its technical and organizational environment. This brings is to the area of enterprise architecture design and, in particular, of process design.