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An evaluation framework for viable business models for m-commerce in the information technology sector

Abstract

This paper presents a study of the characteristics of viable business models in the field of Mobile Commerce (m-commerce). Mobility has given new dimensions to the way commerce works. All over the world various stakeholder organisations are consistently probing into the areas where m-commerce can be exploited and can generate revenue or value for them, even though some of those implementations are making the business environment more complex and uncertain. This paper proposes a viable business model evaluation framework, based on the VISOR model, which helps in determining the sustainability capabilities of a business model. Four individual cases were conducted with diverse organisations in the Information Technology sector. The four cases discussed dealt with mobile business models and the primary data was collected via semi structured interviews, supplemented by an extensive range of secondary data. A cross-case comparative data analysis was used to review the patterns of different viable business components across the four cases and, finally, the findings and conclusions of the study are presented.

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Correspondence to Jairo Alberto Gutiérrez.

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Responsible editor: Hans-Dieter Zimmermann

Appendix—cross-case analysis: A summary of the data collected

Appendix—cross-case analysis: A summary of the data collected

Identified viable business model key factors Company A Company B Company C Company D
Dynamicity - Dynamic in nature - Dynamic in nature - Highly dynamic company - Business model is dynamic in nature as evolved from conventional language learning and training mechanisms.
- Has evolved over time with roll out of different payment options - Company has clear strategies to consistently evolve from core infrastructure owner and product vendor to a solution oriented company. - Known for its vision to stay ahead in the mobile communication industry and set examples for company branches in the rest of the world.
- Eventually recognised the potential of mobile based micro payments and business model was revised accordingly. -Formulated a whole new business model around conventional technology: Wi-Fi hotspots - Changed the existing business model behind their mobile portal to make it more adaptable and appropriate to increasing customer’s expectations and market needs. - Whole new value chain was created and partnerships were made to realize the new Apple iPhone based language learning tool.
Scalability - Low scalability. -High scalability - High scalability - Moderate scalability
- Source of revenue is limited to the parking costs only. - Enough scope of introducing value added and innovative capabilities to generate more revenue out of laid Wi-Fi framework. - Offers scalability to content service providers - Software based scalability
- Little scope for new partners to engage. - Ideal for organisations wanting to rapidly deploy their own Wi-Fi network (can leverage company B’s metro Wi-Fi) - Enhance the scalability of mobile data services - Scope for enhancements to the application
- Only driver for engaging new partners is significant cost reductions; however it’s a low profile service so already works on low margins. - Higher scalable platform that can adapt to a larger group of users. - Scalable internet access - Scalable to other platforms
- Only scalable in terms of geographic extension. - Room for more collaboration with Internet based partners. - Scalable to other languages
- Little scope for new partners to engage
User centric architecture - User centric - User centric - User centric - User centric
- Enhances customer experience - More freedom to access converged data services on the move - Only motive to change the business model is to meet the customer’s expectations around access to internet via their mobile devices. - Easy to use and portable language learning tool
- Well formulated less complicated business process - Better customer (travellers, civilians) experience through council operated public information portal. - Company C entered into partnerships with Internet branded websites and enabled access customers to their favourite internet websites using their mobile device at anytime, anywhere basis. - One time download model, thus less complex business process and high usability
- User oriented application design appropriate for diverse demographics and age groups
-easy to engage customers to pay for the service and encourages them over other parking spots not having mobile payment functionality, thus increases revenue. - Easy registration and payment process encouraging user to pay and use the services impulsively
Collaborations and partnerships - Explicit recognition of importance of collaborations - Explicit recognition of importance of collaborations - Explicit recognition of importance of collaborations - Explicit recognition of importance of collaborations
- Supported collaboration as well as partnership - Collaboration with the radio transmitter hardware vendor (cost of the equipment) - Collaboration with service provider for content and applications against share of revenue been passed over to the service providers. - Collaboration with essential service provides i.e. data translation services and software and IT based services.
- Collaboration between complementors i.e. third party software vender and third party vending machine providers - Collaboration with the city council, lease the SSID against allocation and provision of the installation sites by council. - Value based collaboration with branded internet websites. Primarily against more traffic and increase in number of members. - Partnership between start up company (Language training software company) and potential investors for start up investments against share in the company profit
- Joint venture partnership with competitor (other mobile operator) to make the investments more appropriate - Joint partnership with mobile device vendor to give its phone buyers access to the company B‘s internet services against fixed cost contract. - Collaboration with online application store operator for online profile and development kit against brokerage taken from the total revenue.
- Collaboration with the core supplier of the service i.e. city council supplying company A access to sell parking space to the customer via mobile phone. - Collaboration with various service providers with a business idea and in search of wireless network partners.
ROI arrangements - There exists an effective and rewarding revenue structure for all the participating actors in value chain. - There exists an effective and rewarding revenue structure for all the participating actors in value chain. - There exists an effective and rewarding revenue structure for all the participating actors in value chain. - There exists an effective and rewarding revenue structure for all the participating actors in value chain.
- Each participant has enough source of revenue to stay engaged in the value chain -Each participant has enough source of revenue to stay engaged in the value chain -Each participant has enough source of revenue to stay engaged in the value chain -Each participant has enough source of revenue to stay engaged in the value chain
- Company A is getting its revenue from service transaction costs and service charges from the councils. - Each participant has their distinct revenue generation logics. - Company C sells the content from service provider; keep the brokerage and passes over to the service providers. - Service providers (Language translation and software development) get revenue from language software owner against services they provide.
- Software vendor get their share of revenue partially from the service transaction cost and partially software installation and maintenance cost. - City council getting ROI in form of better customer experience, city marketing, easy access to information for tourists and an image makeover. - Internet branded websites gets their ROI from underlined business model in form of more traffic and increased number of registered members, while company B gets revenue by charging customer on fixed charge usage basis. - Apple keeps the brokerage out of total revenue accumulated by selling application and pass on the rest to the software owner.
- Vending machine vendors get their revenue directly from responsible councils and councils from the end products i.e. parking cost. - Alternative service providers having leased SSID through company B have their own underlined revenue models to generate enough revenue to stay involved in the value chain. - Investors get their revenue via dividends.
Organising model - Appropriate value chain partner with distinguished roles and responsibilities. - Appropriate value chain partner with distinguished roles and responsibilities. - Appropriate value chain partner with distinguished roles and responsibilities. - Appropriate value chain partner with distinguished roles and responsibilities.
- Complete and comprehensive organising model - Complete and comprehensive organising model - Complete and comprehensive organising model - Complete and comprehensive organising model
- Clear business processes formulated across key value chain partners - Evolving business processes across key value chain partner. - Clear business processes formulated across key value chain partner. - Clear business processes formulated across key value chain partner.
Responsiveness to the market trends - Mobile phone capabilities to pay small amounts effectively - Recognises the significance of convergence between mobility and telecommunication networks. - World emerging in web 2.0 era and customers expect to stay connected to internet. - Customers want their mobile phones to be multi tasking, and provide distinct services.
- Increase in customer’s expectations around using their cell phones for paying small amounts. -Customer’s high expectations around availability of connectivity, content and information on anytime, anywhere basis. - Opportunities beyond voice and basic data services. - Market is moving very fast towards handy, efficient, easy to use mobile based applications which they can use in their day to day life.
- Worldwide pilots around - Response to business needs for seamless communication. -Customer expects to be connected to Internet on anywhere, anytime basis - Prime aim being to reduce the number of different devices and have one ultimate package of all.
use of mobile phones to pay small amounts
- High penetration of mobile devices into mass population. - Access to high end content and converged voice, video and data services  
- Need to provide services beyond voice and text messaging services, more converged data services. - Support integration to attract as well as retain more customers to use the portal based internet services.
-mPayment service is perceived as convenient and useful by the potential customers
Interface (Ease of use, accessibility) - Easy to use - Easy to use portal based access to Wi-Fi internet. - Next generation mobile portal, highly usable and attractive interface (Company C recently had enhanced version of their online mobile portal). - Highly renowned for usability standards: Apple iPhone based interface.
- Transparent costs - Services accessible in prime locations like cafe, restaurants, CBD.’s in major cities, however not accessible everywhere. - Access to Internet on the basis of anywhere, anytime. - Highly usable software design, appropriate for diverse population across various countries as well as age groups.
- Easily accessible service vending machines - Enhanced Wi-Fi capable mobile devices used to access internet. - Good, user friendly interface leads to major internet based websites, quickly using the personal portfolio on the portal. - Easily accessible to external customers via Apple based application store.
- A simple to use txt based transaction model, usable by mass population.
-Highly optimised easy t follow process
- Encourages customers to pay through their mobile phones.
Service offerings (completeness of value chain activities) - Presence of all enabling services - Presence of all enabling services - Presence of all enabling services - Presence of all enabling services
- Complete value chain - Complete value chain - Complete value chain - Complete value chain
- No gaps were found in terms of services offered. - No gaps were found in terms of services offered. - No gaps were found - No gaps were found.
- Value chain partners have clearly defined service domains. - Value chain partners have clearly defined service domains. - Value chain partners have clearly defined service domains. - Value chain partners have clearly defined service domains.
Value Proposition - Good secure proposition - Next generation converged service provision for integrated video, voice and data. - Anytime, Anywhere mobile internet services, - Easy to use, low cost, language learning, translation and self testing application made on highly renowned usable apple iPhone interface libraries and components
- Easy to use low profile costing service - Access to high speed broadband on the move. - Next generation mobile portal to access enormous libraries of content and apps offered by company C. -Language support for more than 10 languages
- Enhanced/additional mode of payment for the customer. - Huge potential from the context of community services. -High value proposition for travellers, tourists or students studying abroad.
- Easily accessible and don’t require any special mobile device to function. - Easy to use an pay options, profile based login - No ongoing operational or data usages cost.
-Simple to use Txt based interface. - No connectivity is required so, extremely portable

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Sharma, S., Gutiérrez, J.A. An evaluation framework for viable business models for m-commerce in the information technology sector. Electron Markets 20, 33–52 (2010). https://doi.org/10.1007/s12525-010-0028-9

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Keywords

  • Business models
  • M-commerce
  • Evaluation framework

JEL

  • L14
  • L22
  • L80