Business Models in PSI Reuse

BUSINESS MODELS FOR PSI RE-USE

Hype, Hope or the Next Big Thing?

www.ismb.it

Enrico Ferro - Michele Osella

Business Model & Policy Innovation Unit

2 Technology Intelligence for Government, Business and Society

Study financed by

Join the debate via Social Media!

#psi4profit

http://linkd.in/HF9Lei


“Venture capitalists and entrepreneurs should not

underestimate the value of government data. […]

As governments democratize data, there is a potential

for hundreds of startups and the birth of billion dollar

businesses based on this data.”

Vivek Kundra

Former U.S. Chief Information Officer

Foreword


However:

• The role of public agencies in creating, elaborating,

consuming and releasing information is often not

completely understood.

• PSI is recognized as a major, but so far under-exploited

asset, which could and should be a fundamental building

block of the “new economy” in the Information Society.

Public bodies are by far the largest producers

of information in Europe and not only.

“Commercial exploitation of Europe's public sector information” – Pira International for the European Commission (2000)

The Scenario


Paucity of

studies on

«downstream

information»

Focus on

«how much»

in lieu of «how»

Prominent Gaps in the Literature


Different Perspectives on the PSI Realm


Open Government Data

Data produced or commissioned by government

or government controlled entities which can be freely

used, reused and redistributed by anyone.

Public Sector Information

Information generated, created, collected, processed,

preserved, maintained, disseminated, or funded by or for the Government or public

institution.

Source: Open Knowledge Foundation

[opendefinition.org]

Source: OECD

[Recommendation C(2008)36]

Open Data

“Works” which are “open” in terms of: access,

redistribution, reuse, absence of technological restriction,

attribution, integrity, no discrimination, license.

Source: Open Knowledge Foundation

[opendefinition.org]

Open DataOpen

Government Data

Public Sector Information

Our perspective: all the broad spectrum of PSI

Boundaries of Public Sector Information


1. Are there profit-oriented

organizations capable of

generating revenues from

information produced by the

public sector?

2. What are the value creation

mechanisms present in this

sector? How is value created

and appropriated?

3. In light of non-rivalry and non-

excludability characterizing PSI

- when released as Open Data -

which are the key factors

playing a pivotal role in the

pursuit of sustainable

competitive advantages?

Research Questions


Adopted research approach: qualitative research

Predominant research method: case study

Type of case study: exploratory

Unit of analysis: single company

Case design: multiple case design

Distribution of units of analysis: holistic

Methodological Overview


Long list of enterprises re-using PSI or enabling the re-use

(mainly in the EU landscape) obtained through an extensive market research

~ 139 items

13 enterprises under the lens

Criteria for the theoretical

sampling

• Geographical location

(Italy, Europe, Rest of the World)

• Position in the value chain

(Re-Users, Enablers)

Mixed sampling approach

• Empirical sampling

(spontaneous collection of

exceptional cases “in the

limelight”)

• Theoretical sampling

(“structured” collection of

cases in light of the

prearranged research

purposes)

Sampling Overview


Long list distribution

Sample distribution

Units of Analysis


PSI Raw Data

PSI Processed

Data

Public

resources

Enterprise-

specific

resources

PSI-based

Value

Proposition

PSI-based

Revenues

Resource-driven

design

The Framework


Types of Data

Elaboration

Role of PSI in the

Value Proposition

Price Mechanisms

Make money

from data

Create value

from data

Make sense

of data

The Framework (cont’d)


Data aggregation

Data geo-referencing

Data validation

Data mash-up

Visual analytics

Types of Data Elaboration

Data structuring and classificationFinal good itself

Key ingredient of a service

Marginal ingredient of a product

Marginal ingredient of a service

Role of PSI in the Value Proposition

Key ingredient of a product

À la carte

Royalties

Subscription fee

Premium

Feature limited

Size limited

Time limited

Freemium Free

Advertising powered

Cross subsidization

Zero marginal cost

Price Mechanisms

The Framework (cont’d)


• Changes in governmental

boundaries

• The multi-actor PSI-centric

value ecosystem

• Archetypal actors

• Archetypal business models

• Entry barriers and sources

of competitive advantage

• Upside-down price logic

• Dissimilar market structures

for different re-users

Main Findings


Back-end Front-end

Policy sphere

Data sphere

Operative sphere

Decision

making

Data

provision

Data

integration

Service

provisionSystem

integration

Private sector

enterprises

GOV 1.0

From “Monolithic” Government …


Back-end Front-end

Policy sphere

Data sphere

Operative sphere

Decision

making

Data

provision

Data

integration

Service

provisionSystem

integration

Private sector

enterprises

Private sector

enterprises

Spontaneous

civil initiatives

Private sector

enterprises

Spontaneous

civil initiatives

GOV 2.0

… To “Extended” Government


PSI

generation

and

dissemination

PSI retrieval,

storage,

categorization

and exposure

PSI

re-use

“Fit-for-purpose”

products and services

PSI

consumption

Raw data Refined data

Governmental

bodiesNon-profit enablers

Private sector

enablers

Core re-users

Service

advertisers

Advertising

factories

Business

end-users

Governmental

end-users

Consumers

Spontaneous civil

initiatives

Profit-oriented

actors

Non-profit

actors

Legend

The Multi-Actor Value Ecosystem


PSI as

«bread and butter» PSI as

«attraction tool»

On the

front line

Behind

the scene

Position in the value

creation process

Strategic vision of the PSI realm

From Archetypal Actors …


#1 Premium product / service

#2 Freemium product / service

#3 Open Source like

#4 Infrastructural razors & blades

#5 Demand-oriented platform

#6 Supply-oriented platform

#7 Free as branded advertising

#8 White-label development

… To Archetypal Business Models


#1 Premium Product / Service


Provision of

high-value

features based

on PSI

Mostly

business

clients (B2B)

Lump sums or

subscription

fees

Creativity,

technical

expertise, financial

resources

Long or

medium term,

standardized

or customized

Data retrieval

and structuring,

development of

the application

logic

Web,

traditional

channels

(rarely)

Software

development and

maintenance,

CRM

#1 Premium Product / Service


#2 Freemium Product / Service


Provision of PSI-

based features

according to the

“value for

money” principle

Mostly

consumers

(B2C)

Medium or

short term,

standardized

Data retrieval

and structuring,

development of

the application

logic

Web, mobile

apps

Charges for

additional data

or advanced

features

Software

development and

maintenance,

CRM

Creativity,

technical


resources

#2 Freemium Product / Service

ISMB – Copyright 2012 25

#3 Open Source Like


Provision of

PSI-based

features in an

“open“ manner

Heterogeneous

customers (B2B,

B2G, B2C)

Long, medium

or short term,

standardized

or customized

Data retrieval

and structuring,

development of

the application

logic

Web

Payments for added-

value services and

for license variations

Software

development and

maintenance,

CRM

Creativity,

technical


resources

#3 Open Source Like


#4 Infrastructural Razors & Blades


Facilitation in

access to PSI

resources

Developers,

scientists

Cloud

computing

platforms

On-demand

payments for

computing

power

Storage

resources,

computing

resources

Short term,

standardized

Data exposure

via APIs,

provision of

computing

capacity

Management

and evolution

of the IT estate

#4 Infrastructural Razors & Blades


#5 Demand-Oriented Platform


Facilitation in

access to PSI

resources

Developers

Payments for

advanced

features or

refined data

Long or

medium term,

standardized

Data structuring

and

classification,

data exposure

via APIs

Management of

the IT estate,

data

maintenance

Providers of

cloud

computing

services

“One stop

shopping” data

platforms

Storage

resources,

computing

resources

#5 Demand-Oriented Platform


#6 Supply-Oriented Platform


Facilitation in

management

and exposure

of PSI

resources

PSI holders

(charged side

of the market)

Two-sided data

management

platforms

"Parametric" payments

based on data storage,

bandwidth

requirements, API calls

Long term,

customized

Long, medium

or short term,

standardized

Data structuring

and classification,

data exposure via

APIs, data

exposure via GUI

Management and

evolution of the IT

estate, data

maintenance

Developers

(non-charged

side of the

market)

Facilitation in

access to PSI

resources

Storage

resources,

computing

resources

#6 Supply-Oriented Platform


#7 Free as Branded Advertising


Provision of

PSI-based

services of

general

usefulness

Wide audience

of customers

Web, mobile

apps

Revenue streams

coming from non-

PSI-based

business lines

Creativity,

technical

expertise

Short term,

standardized

Data retrieval,

development of

the application

logic, brand

promotion

Software

development,

marketing,

service evolution

Software

development

companies,

communication

agencies

#7 Free as Branded Advertising


#8 White-Label Development


Development

and delivery of

white-label

solutions

based on PSI

Companies

willing to use

PSI as

"attraction tool"

Lump sum or

recurring

payments for

crafted solutions

Creativity,

technical

expertise

Long or

medium term,

customized

Customer

negotiation, data

retrieval,

development of

the application

logic

Software

development,

CRM

#8 White-Label Development


Presence of already established internal resources which are usable without incurring incremental costs.

Cumulated experience (acquired also outside the PSI world) coupled by absorption capacity that enhances an effective use of knowledge acquired from external sources. Static perspective

Learning curve

Efficiency

Dynamic perspective

Sources of Competitive Advantage

Vision at a glance


Degree of PSI openness

Extent of barriers

to PSI re-use

Closed PSI OGD

Effort for accessing PSI

Effort for differentiating the value proposition

Grey area

Entry Barriers…


Low High

High

Low

Extent of price

barriers

Extent of technological barriers

… and Sources of Competitive Advantage


Pricing Paradigm: the “Old-Style”

Locus:

the “Closed by

Default” realm


Locus:

the “Open by

Default” realm

Pricing Paradigm: the “New-Style”


Impregnable strongholds Fluid markets

Prominent business driving force Data volumes Application logic

Key success factor Aggregation Creativity

Amount of PSI encompassed in

re-use operations

Slew of datasets Few chunks of data

Degree of data diversity Homogenous data Heterogeneous data

Main barriers to the re-use Price barriers Technological barriers (not

always present)

Market concentration High Low

Target customers Mainly B2B and B2G entities Chiefly B2C audience

Re-users’ profile Well-structured companies Mainly start-ups

Re-users’ business approach “Evergreen” businesses “Groundbreaking” businesses

Pricing mechanism Premium pricing model Free / freemium pricing model

Dissimilar Market Structures …


Market share

Mark

et

gro

wth

High Low

Hig

h

Lo

w

Question marks Stars

Cash cows Dogs

“Evergreen”

businesses

operating in

oligopolistic

regimes

“Ground-

breaking”

businesses

operating in

fluid

markets

Growth-Share Matrix (a.k.a. BCG Matrix)

… For Different Re-Users


PSI re-use for profit purposes is not a marginal phenomenon at a European level.

Two "ideal types" of market have been found out: fluid markets vs. oligopolistic markets.

Four main positions have emerged along the PSI value chain.

Eight archetypal business models have been depicted.

A paradigm shift in terms of pricing is appearing at the horizon.

Conclusions


Extended Gov.

PSI is a pivotal pillar in the reshaping of governmental boundaries, creating more room for spontaneous civil initiatives and private business endeavors.

Business opportunities

The opening up of public data (in legal, technical and pricing terms), despite reinforcing the nature of public good, is compatible with its use in profit-oriented activities.

Competition

The increasing degree of openness and accessibility shifts the sources of competitive advantage to functional aspects as well as to knowledge of vertical domains, strengthening the competition in PSI-related market arenas and weeding out rent seeking.

Why opening data?

Policy Guidelines


Scale

The presence of a minimum efficient scale (national or international) calls for coordination activities aimed at promoting local initiatives.

Most wanted

Information sources taking the lion’s share regard geography and cartography, companies and finance, law and legislation.

Italian scenario

In the Italian ecosystem, noteworthy opportunities may stem from the immense cultural heritage, which nowadays seems to represent a largely untapped potential.

How opening data?

Policy Guidelines (cont’d)


Clear and long-term legal framework

Distinction between ownership and

stewardship of data

Guarantees about data quality

Continuity in the update of data

Tackling major

roadblocks on

the way to PSI

re-use …

Enabling

factors

Policy Recommendations


“We create value-driven and socially relevant technological innovations

in close collaboration with industry and government”

“We believe that changing the world is the only way to make it a better place”

“We believe in building the future we want to live”

“Do you want to be part of our next research venture?”

[email protected]

@egferro

[email protected]

@MicheleOsella

Let us Have Your Opinion!

Date post:	20-May-2015
Category:	Technology
Upload:	enrico-ferro
View:	13,017 times
Download:	0 times