A Business Case Method for Business Models
L. O. Meertens, E. Starreveld, M. E. Iacob and L. J. M. Nieuwenhuis
Department of Industrial Engineering and Business Information Systems, University of Twente, Enschede, The Netherlands
lucas@lmeertens.nl, eelcostarreveld@gmail.com, {m.e.iacob, l.j.m.nieuwenhuis}@utwente.nl
Keywords: Business Case, Business Model, Method.
Abstract: Intuitively, business cases and business models are closely connected. However, a thorough literature
review revealed no research on the combination of them. Besides that, little is written on the evaluation of
business models at all. This makes it difficult to compare different business model alternatives and choose
the best one. In this article, we develop a business case method to objectively compare business models. It is
an eight-step method, starting with business drivers and ending with an implementation plan. We
demonstrate the method with a case study for innovations at housing associations. The designed business
case method can be used to compare and select the best business model successfully. In doing so, the
business case method increases the quality of the decision making process when choosing from possible
business models.
1 INTRODUCTION
Due to shortening product lives, intense global
competition, a disruptive and agile environment,
business models need to be renewed more rapidly
and more frequently (Chesbrough 2007). In addition,
the chosen course of action is of great importance
for the future performance of organizations. With
the renewal of business models, multiple possible
directions can be defined. A recent example is seen
in the automotive industry. Car manufactures need
to choose if they want to produce cars running on
alternative energy, and next, which type of energy.
Hybrid, bio-fuel, electric, or hydrogen are all
options. Making the choice is hard, for each of the
alternatives require a business model change and the
success of the produced car is unsure. This is an
example of the need for a method to objectively
compare alternative business models, and choose the
best course of action.
A business case can be of help to form the
answer to this question. A business case is a tool for
identifying and comparing multiple alternatives for
pursuing an opportunity and then proposing the one
course of action that will create the most value
(Harvard Business School Press 2011). Making a
business case for the possible business model
alternatives, gives the decision makers a solid and
objective as possible basis, to make the best choice
(Meertens et al. 2012).
Choosing one of the business model alternatives,
should be well considered. Instead of a gut feeling,
each of the alternative’s consequences, impact, risks,
and benefits for the organization, should be assessed
as objectively as possible. This will result in a better
choice, and better organizational performance.
However, the main problem is that it is unclear
how alternative business models can be compared to
choose the best course of action. A business case
could be one of the solutions, for it compares
alternatives in terms of costs, benefits and risks.
Existing problems are that it is unclear how a
business case should be made from a business
model. Also, it is unclear what good business case
components are, and which business model
components are of relevance for the development of
the business case.
2 METHODOLOGY
The research design is based on the design science
research methodology (DSRM) by Peffers et al.
(2007). This method is chosen because it creates an
artefact as solution to a problem. In this research, the
problem is the unstructured decision making of
potential business models. The artefact designed is a
business case method which enables objective
comparison of business models. Further, the DSRM
enables process iterations, so that it is possible to
33
O. Meertens L., Starreveld E., Iacob M. and Nieuwenhuis B.
A Business Case Method for Business Models.
DOI: 10.5220/0004773800330042
In Proceedings of the Third International Symposium on Business Modeling and Software Design (BMSD 2013), pages 33-42
ISBN: 978-989-8565-56-3
Copyright
c
2013 by SCITEPRESS Science and Technology Publications, Lda. All rights reserved
adjust previous phases to increase the quality of the
artefact. However, because the review of academic
literature is less emphasized, the method is adjusted
to include the valuable academic literature in the
process. For the literature study, the five-stage
grounded theory method for rigorously reviewing
literature by Wolfswinkel et al. (2013) is used. This
method assures solidly legitimized, in-depth
analyses of empirical facts and related insights,
including the emergence of new themes, issues and
opportunities (Wolfswinkel et al. 2013). Figure 1
shows the five sequential steps integrated with the
DSRM method.
Figure 1: DSRM process of Peffers et al. (2007) with the
grounded theory method from Wolfswinkel et al. (2013).
Starting with the first step of the DSRM of
Peffers et al. (2007), the introduction to this article
identifies the problem. Namely, the need to
objectively compare business models. Following the
DSRM, we identify the research objective: design a
structural method to create a business case of
business models, to be able to objectively compare
the assessed business models, and choose the best
alternative. We present the literature review of
business cases and business models, which increases
our knowledge on the subject, elsewhere.
3 THE BUSINESS CASE
METHOD
This section creates a new artefact in the form of a
business case method. The design of our business
case method is based on the two approaches
identified by literature review: Ward et al. (2008)
and the Harvard Business School Press (2011). Both
of them have a list of components. These lists partly
overlap, yet each has distinct advantages and
disadvantages. Based on the comparison of these
two approaches, eight main components can be
identified, which Table 1 lists.
In contrast to the business case method proposed
by Ward et al. (2008), this method does take
alternatives into account, similar to the model of
Harvard Business School Press (2011). This is
because in most cases more than one solution can be
thought off and applied to reach the goal. Therefore,
it would be bad to go with the first possible solution
without putting some effort in the quest for other
compelling solutions. Furthermore, the third point,
alternatives, is different from the business case
methods proposed in the reviewed literature, in
which authors only look to the benefits that the
proposal brings. Of course, the benefits are
important for the business case. The possible
negative effects, however, cannot be dismissed.
Therefore, a good overview of not only the benefits
but also the disadvantages should be presented in the
business case as an overview of the caused effects of
the proposed project. According to Ward et al.
(2008), organizations who overstate the benefits to
obtain funding are the least likely to review the
outcome and less than 50% of their business case
projects deliver the expected benefits resulting in
unsatisfied senior management.
Table 1: Components of the business case method.
1. Business driver
The cause, problem, or opportunity
that needs to be addressed
2.
Business
objectives
The goal of the business case
stating which objectives are aimed
for
3. Alternatives
Representing the options to reach
the objectives
4. Effects
Positive and negative effects that
come with the pursued alternative
5. Risks
Risks that come with the pursued
alternative
6. Costs
Costs that come with the pursued
alternative
7.
Alternative
selection
Based on gathered data the best
alternative is chosen
8.
Implementation
plan
Plan which explains when and how
the alternative is implemented
As the components are the main concepts of the
proposed method, we clarify all eight components
individually in this section.
3.1 Business Drivers
The meaning of the business drivers originates from
the business case method by Ward et al. (2008) and
has not changed. The business drivers stand for a
statement of the current issues facing the
organization that need to be addressed. These can
either be problems or opportunities and ideas with
enough potential to make it worth pursuing. Applied
to business models, the business driver is most likely
to originate from the need for business model
Third International Symposium on Business Modeling and Software Design
34
innovation. Chesbrough (2007) argues that due to
shortening product lives, even great technologies can
be relied upon no longer to earn a satisfactory profit
before they become commoditized. Practice has
learned that even great business models do not last
forever. Therefore, he argues, a company needs to
think hard about how to sustain and innovate its
business model. For future markets will be smaller,
more highly targeted (and effective), and the new
environment will require different processes to
develop and launch products successfully.
3.2 Business Objectives
The business objectives are the goals of the
innovation. Both methods discussed in the
theoretical framework advice to set business
objectives. They state which business drivers are
addressed and how these are hoped to be achieved
with the proposed project. This can be one or more
specific aspects of the strategy that need to be
improved or modified; one or more of the business
model components that need improvement; or
processes or products that need to become more
efficient and better address the needs of customers.
3.3 Alternatives
The alternatives represent the available options to
reach the objectives. At the start of this section, we
describe the reasoning to include identification and
assessment of alternative solutions in the method.
Summarized, the argument is that it would be
unwise to go with the first idea that comes along that
addresses the business drivers, without investigating
whether other, perhaps better, alternatives exist.
Sometimes, the benefits of a single specific
opportunity or idea are assessed. In such cases, it
might be hard to find a substitute or alternative to
the opportunity. Thinking of alternatives and
assessing them increases the chance of pursuing a
better-balanced alternative, instead of the first that
comes to mind. All alternatives need to be compared
with the current situation.
Amongst others, identification of alternatives can
be done by assigning a senior manager with the task
to define and launch business model experiments
(Chesbrough 2007). Harvard Business School Press
(2011) proposes brainstorm sessions as a tool to
identify alternatives. Both tools can be used to
identify alternative business models. Next to those
tools, market assessment tools or SWOT analysis
may be suitable to come up with alternatives.
3.4 Effects
The effect component is the largest of all. This is
because a variety of actions needs to be performed
with the effects to create a consistent and structured
overview of the effects on the organization per
alternative. Effects are the positive (benefits) and
negative (disadvantages) effects that an alternative
causes. First, effects need to be identified. Second, it
is important to come up with measures for each
effect. Third, each effect must be connected to an
owner. This increases involvement with the project
within the organization, and stimulates owners of
benefits to help establishing the alternative when it
is approved. Fourth, each effect needs to be placed
in the framework in Table 2 (Ward et al. 2008). For
each effect, the framework determines the type of
organizational change (do new things, do things
better, or stop doing things) and the degree of value
explicitness (from observable to financial).Fifth and
final, a time frame is estimated per alternative. This
time frame gives information of when the project
starts, when it delivers results, and when it finishes.
Each alternative goes through these five steps.
3.5 Risks
The fifth component is concerned with risk
assessment of each alternative. Risk is defined as the
probability that input variables and outcome results
vary from the originally estimate (Remenyi 1999).
How risks are assessed depends on the situation and
needs further research per case. Amongst many
others, the “best case/worst case scenario” method
can be used to assess the risk of the alternatives.
With this method, two scenarios are developed and
the effects of each scenario on the organization are
estimated. In the first scenario, the alternative will
perfectly result in the expected benefits. In the
second scenario, the worst reasonable possible
situation will evolve caused by the alternative.
3.6 Costs
Costs are one of the most important aspects of a
business case. The costs give an indication of the
total expected investment costs, and expected profit
over a specific time period. The investment costs
represent the money needed to implement the
business model change in the organization. Also, in
the costs section, the expected payback time is
calculated to indicate how long it will take for the
break-even point is reached.
A Business Case Method for Business Models
35
Figure 2: Business modelling connected to the business case method.
3.7 Alternative Selection
After gathering the data for all alternatives in the
previous steps, the best option can be chosen by
weighting the expected effects against the expected
calculated costs. Harvard Business School Press
(2011) suggests that the best alternative is partly
chosen based on feelings. However, if the risks are
translated into expected costs, this can be added to
the costs-effect equation. Then the alternatives have
to be compared based on the non-financial effects
and the total expected costs/profit of the alternative.
Many methods to do this exist, varying from
complex to rather simple (e.g., the direct-rating
method, point-allocation method, and analytical
hierarchy process; Van Ittersum et al., 2004).
Third International Symposium on Business Modeling and Software Design
36
3.8 Implementation Plan
Now that the best alternative is selected, it is
important to develop a plan of action. Tasks, roles,
objectives, resources, dates, and responsibilities are
parts of this implementation plan. The level of detail
of an implementation plan varies depending on the
case. The plan lays out how progress can be tracked
and success measured when the proposed solution is
put into action. Without this, actual success of a
business case is hard to verify.
4 CONNECTING THE BUSINESS
CASE METHOD TO BUSINESS
MODELLING
In this section, the developed business case method
is applied to the business model concept. Figure 2
visualizes the connection. The figure shows the
business case steps on the left. The sources, types of
information, or input for each of those steps are on
the right.
The first step contains the business driver.
Business drivers for business model innovation can
come from different sources. In general, shortening
product lives, intense global competition, and the
disruptive and dynamic environment are the main
sources (Chesbrough 2007). This can lead to one of
the three causes for business model renewal. The
business objective represents the goals that the
business model change aims to achieve.
The next step is identification of alternatives. In
this step, multiple business models can be developed
with the focus on meeting the business objectives.
Next, the effects, risks, and costs of each of the
business model alternatives are assessed. The effects
represent the positive and negative non-financial
effects that alternatives cause. The effects can be
represented with a framework for business case
development (Ward et al. 2008).To assess the risks
of the project, one of the risk assessment methods
described in literature for project management can
be used. The risk assessment part should at least
cover the points of Remenyi (1999). The risk can be
represented in a probability vs. impact matrix.
Often, the expected financial benefits, and the
costs of the project, are the most important part for
decision makers using business cases. In the costs
section, changes in the business models costs and
revenue component need to be assessed. The cost
component of a business model must cover costs
created in other components (Iacob et al., 2012),
such as key activities. Next to the expected costs and
profits, the payback period and return on investment
should be presented.
Using a multi-criteria method, the most suitable
business model can be selected in the seventh step.
After that, an implementation plan can be developed.
During step three till eight, alternative business
models should be compared to the current business
model to assess the changes and effects that it
causes. For example, in the fourth step, only the
effects that differ from the current business model
are assessed. The reason for this is that the other
effects remain the same for both alternatives, and
thus only increases the size and complexity of the
business case.
5 METHOD DEMONSTRATION
AND EVALUATION: DEA
LOGIC AND HOUSING
ASSOCIATIONS
Having created the artefact (business case method),
the next step is to demonstrate it. We use a case
study of the company DEA Logic, which provides
products and services for Dutch housing
associations. The main two stakeholders in the case
are the company DEA Logic and the Dutch housing
associations. The innovation is developed by DEA
Logic, and the target customers for this innovation
are Dutch housing associations. The innovation will
have an impact on the business model of the Dutch
housing associations.
DEA Logic is an engineering company
specialized in advanced electronics, security
software, and consulting in information technology,
information management, and building management.
Over the last years, DEA Logic developed an access
control system called C-Lock, which has a major
position in their product portfolio currently. The C-
Lock system can be extended with multiple
solutions. This way, apartments can be better
adjusted to the needs of the tenants. In this case,
DEA Logic wants to discover whether their product
is favourable for (Dutch) housing associations. A
business case needs to be developed.
In the Netherlands, a housing association is a
non-profit organization, which’ mission is to build,
manage, maintain, and rent houses and apartments.
The responsibilities are defined and assigned by the
Ministry of the Interior and Kingdom Relations.
Each housing association is private, but can only
operate within boundaries set by the Dutch
A Business Case Method for Business Models
37
government. Therefore, housing associations do not
differ much. In addition, all housing associations
have more demand than supply currently, which
causes waiting lists. The houses they rent are
favourable for citizens with a low income (an annual
income of € 43.000 is the maximum). The
associations are tasked to supply good housing
possibilities for the relatively more vulnerable and
poorer people in society. Similar constructions exist
in other countries. For example, the United Kingdom
has government-regulated housing associations with
the same goal; to provide housing to people on a low
income or people who need extra support.
Thanks to the public character of the housing
associations, all needed information for this case is
public and presented on websites of housing
associations, the government, and the central fund
for people housing. For the scope and purpose of
this research, applying the DEA Logic case on
Dutch housing associations in general is sufficient to
demonstrate the designed method.
The data and numbers used in the business case
are based on calculations by DEA Logic, and
internet sources. For reasons of confidentiality, the
numbers are not accurate. The business case gives an
indication of the order of magnitude of the costs
difference between the two discussed alternatives. If
in the future, a housing association would like to
realize the project, a new business case has to be
made, to assess the effects of the innovation on their
specific situation. For the purpose of demonstrating
the business case method, the used numbers and
accounted variables are sufficient.
DEA Logic develops technological and
electronic innovations for real estate amongst others.
The C Lock access control system is one of those
products. The latest innovation for newly built or
renovated apartment buildings is IP-infrastructure.
In the current situation, each apartment in a building
complex is supplied with public utilities and digital
infrastructural connections. In the Netherlands, each
apartment is provided with at least a telephone line,
television cable, intercom system, and often
fiberglass connection for internet. Each of these
connections makes use of their own wires. The main
idea of IP-Infrastructure is to supply each apartment
with only one TCP-IP connection, combining
telephone, television, intercom, and internet, as well
as other possible data connections.
This infrastructure not only reduces
infrastructural costs and materials of newly built or
renovated apartments, but also increases the amount
of possible functionalities. The currently developed
functionalities are derived from the C-Lock access
system, and can be connected to the receiver easily.
Tenants can choose individually which solutions
they need. The core of the innovation is to increase
apartments’ flexibility, functionality, and luxury,
and to minimize the maintenance costs.
The C-Lock and IP-Infrastructure innovations by
DEA Logic are suitable for Dutch housing
associations, for they build, rent, manage, and
maintain apartments for a diverse target group. The
target group is diverse, as their customers are young
as well as old people. In addition, families with
children and people who need daily nursing support
belong to the target customers. Introducing DEA
Logic’s innovations increases the suitable target
group for each apartment, as it can be adjusted to the
needs of the tenant more easily. Furthermore, the use
of IP-infrastructure decreases maintenance costs.
The innovations affect the housing association’s
business model. Renting out C-Lock solutions and
IP-infrastructure becomes a new key activity. DEA
Logic becomes a new key partner, together with
several service providers. Also the value proposition
is extended, for apartments are more secure and
luxury. The suitable customer segment for each
apartment increases, as it can be adjusted to the
needs of various tenants. Finally, a new revenue
stream is added, for the IP-infrastructure is rented
out, in combinations with C-Lock solutions, in
addition to the traditional rent of apartments.
Therefore, DEA Logic’s innovation and Dutch
housing associations form a good combination to
test the business case development method.
The following eight paragraphs represent the
eight steps of the business case method. We compare
two scenarios. In both scenarios, the same apartment
complex is built with one hundred apartments. The
first scenario represents the current situation. In the
second scenario, the IP-infrastructure is
implemented together with C-Lock solutions.
5.1 Business Drivers
Based on the vision and strategy of the three largest
housing corporations (CFV 2012), their mission is to
build, manage, and maintain quality tenement
housing for people with a low income and
vulnerable groups in society. Therefore, it is
preferable that building, managing, and maintenance
costs of houses to be low. Housing corporations
continuously seek possibilities to reduce costs and
still deliver high quality, and affordable homes for a
large and diverse target group. IP-infrastructure, in
combination with the variety of possible C-Lock
solutions provided by DEA Logic, is an innovation
Third International Symposium on Business Modeling and Software Design
38
that contributes to the corporations’ mission.
5.2 Business Objectives
In accordance with the business drivers, the pursued
objectives of the IP-infrastructure presented in this
business case are the following:
Reduce maintenance costs
Increase compatibility with target tenant group
Increase quality of living environment
Increase security of tenants
• Increase luxury
5.3 Alternatives
The yellow post-its in Figure 3 show the current
business model of a Dutch housing association. The
value proposition offers low-priced rental houses in
a good living environment for people with low
income belonging to vulnerable groups in society.
Revenue is generated via monthly rent and subsidy
from the government.
Figure 3: Business model of Dutch housing associations
with IP-infrastructure and C-Lock solutions.
The blue post-its in Figure 3 are additions that
show an alternative business model of a housing
association with an apartment complex with IP
infrastructure. In addition to the current key
activities, renting out infrastructure and solutions
form a new key activity. DEA Logic becomes a new
key partner of the housing corporation, as they
provide the solutions and maintain the system.
Furthermore, the customer segments are extended
with a target group including tenants who require
special care. The fourth change is in the revenue
stream building block. Next to the rent of houses and
state subsidy, the housing corporations receive rent
for the use of the IP-infrastructure by tenants.
Next to changes visible in the business model,
many benefits of IP-infrastructure are within the
tactical set of the current business model
(Casadesus-Masanell & Ricart 2010). Therefore,
they do not influence or change the business model.
However, the resulting business case includes those
effects as well.
5.4 Effects
Implementing IP-infrastructure in renovated or
newly build apartment buildings affects the
organization. Table 2 presents the effects of the new
IP-Infrastructure compared to the current, classic
infrastructure. The table structures them according to
two factors. Horizontally, they are categorized
according to the type of required organizational
change. Vertically, they are categorized according to
the degree of explicitness. Because the only
difference between the two alternatives, in terms of
business model, is the revenue model, other effects
of both alternatives are equal. Therefore, they are
represented in only one effects overview table.
Table 2: Effects of IP-infrastructure
Degree of
explicitness
Do new
things
Do things
better
Stop doing
things
Financial
Rent C-Lock
solutions and
IP-
infrastructure
Reduce
maintenanc
e costs by
not
replacing
door locks
&
nameplates
Quantifiable
Measurable
Increased
target group
Increased
security
Observable
Dependable
on non-
standardized
technology
In line with
mission and
vision
Increase
quality living
environment
5.5 Risks
As with each innovation, risks are involved. To
assess the risks, we use a construction project risk
assessment method (Tah & Carr 2000). This method
is suitable, as renovating or building the apartment
complex is a construction project. Most risks can be
prevented, resulting in a very low overall project
risk. However, some risks of the IP-infrastructure
alternative remain, due to the following two points:
1. The technology is new. So far, it has been
deployed in one apartment building only.
A Business Case Method for Business Models
39
2. The technology is developed and built by one
company. The current market does not provide
any substitutes that work with the same
infrastructure.
These two points are interconnected. A small change
exists that the technology does not work as good as
was hoped for, or the subcontractor stops supporting
the technology. In that scenario, the costs to
transform the infrastructure back to the current
standard are high. Other risks for both alternatives
can either be prevented, or do not have a negative
influence on the organization. The total risk of IP-
Infrastructure, before prevention, is one and a half
times the risk of the classic approach. This is mostly
because the classic infrastructure is used almost
everywhere and has been improved over time.
5.6 Costs
The cost difference, between the current situation
and the IP-Infrastructure alternative, depends on two
variables. First, the number and type of C-Lock
solutions affect the costs. The second variable is
time. Time is important, as the housing association’s
objective is not only to build apartment complexes,
but also to maintain them. Therefore, the cost
overview also includes maintenance.
To compare the costs of both approaches, an
indication of the costs for an apartment complex
with 100 apartments is calculated. Only the costs for
the infrastructure and the C-Lock solutions are
covered. The other building costs are equal for both
alternatives. Because the costs for construction and
maintenance of the infrastructure and the C-Lock
solutions vary from situation to situation, several
assumptions and raw cost estimates are used.
Table 3 shows estimates of construction costs,
yearly maintenance costs, and yearly profit, per
function. Next, the maintenance costs and profits are
extrapolated over five years to get more insight in
the breakeven point of the alternatives. The initial
costs for the IP-Infrastructure are higher compared
to the current situation. However, the difference is
not very big, and within three years, the IP-
Infrastructure in combination with the access C-
Lock solution is cheaper than the current alternative.
Table 3: Estimated costs of construction and maintenance,
and estimated profit.
5.7 Alternative Selection
The effects, risks, and costs of IP-infrastructure,
compared to the classic infrastructure, are discussed
in the previous sections. Based on this information,
one of the alternatives needs to be selected. Looking
at the effects, IP-infrastructure is the best choice as it
increases the amount of target groups, quality of
living, and security of tenants. Additionally, with the
new technology, apartments become more luxury.
The risks, however, are one and a half times higher
than with classic infrastructure. Again, this can be
reduced using available risk prevention options.
Initial costs of IP-infrastructure are higher, but
within four years it becomes cheaper than the classic
alternative. Depending on the functions, the
estimated IP-infrastructure savings are around
70.000 after five years. Initial costs are higher, yet
maintenance costs are much lower.
IP-infrastructure offers new functionalities and
increases security of tenants, quality of living, and
target group. Risks are higher, but can be prevented.
Initial costs are higher, but money is saved due to
the low maintenance costs over time. Therefore, IP-
infrastructure is the best alternative to choose.
5.8 Implementation Plan
After their board of directors approves this project,
the housing association can implement the project.
In this phase, however, it is too far stretched to
determine an explicit implementation plan.
6 DISCUSSION
The objective for designing the business case
development method to compare business models
was to design a method to create a business case of
business models, to objectively compare the
assessed business models, and choose the best
alternative. Because of the abstract descriptive
nature of business models, it is often required to
involve more tactical and operational details, only
implicated by changes in the business model.
Deciding which details are useful and which are not
must be judged by the maker of the business case.
This allows for a certain amount of subjectivity.
Table 4 represents which method steps are objective
and which are open for subjectivity.
During creation of the business case, one of the
experienced difficulties was switching between
abstraction levels. A business model is an abstract
representation of an organization. Processes and
Function
Costs (€)
Infrastructure Access Intercom Care Communication
Old New Old New Old New Old New Old New
Construction
(Initial)
13,000 26,000 30,000 30,000 52,000 50,000 800 400 - -
Maintenance
(Yearly)
500 1,000 11,250 6,950 16,500 7,000 3,600 1,800 750 0
Profit
(Yearly)
- - - - - - - 300 - -
Third International Symposium on Business Modeling and Software Design
40
products are on a more tactical or even operational
organizational level. The outcome of comparing
business models in the business case depends on
choices made in organizationally lower abstraction
levels, like the tactical and operational level. The
distinction between a process or product business
case, and a business model business case needs to be
made. In the first case, focus is on cost and benefit
comparison of the innovated process or product. In
the second case, it is about choosing the best
alternative way of how an innovated product or
process affects the business model.
Table 4: Assessment of the objectivity of the business case
method.
Method step Objective / Subjective
Business driver Objective
Business objectives Objective
Identification of
alternatives
Subjective
Effects Subjective
Risks Subjective
Costs Objective
Alternative selection Objective / Subjective
Implementation plan Subjective
Furthermore, we found some empirical evidence
supporting the “strategy – business model – tactical
set” framework by Casadesus-Masanell & Ricart
(2010). In hindsight, the case study is mostly a
product innovation within the tactical set of the
building association’s business model. Some minor
changes were made in the business model. This
made it hard to devote the business case to the
business model, and forced us to include more
operational aspects in the business case. This is not
per se negative for the demonstration, the method, or
the outcome of the business case, but the goal and
focus of the designed method, is to objectively
compare two business models, in contrast with
assessing the costs and benefits of a product
innovation.
A limitation of the research is due to an almost
complete lack of academic literature about business
cases. The concept is used often, but without a well-
designed and widely accepted methodology. As well
as for the business model concept, it would have
been better if a general accepted business case
development method would have existed in
academic literature for the reliability thoroughness
of the research.
Overall, the method does what it is designed for.
It is a method to develop a business case, which
allows different business models to be compared,
and the best one to be chosen as objective as
possible.
7 CONCLUSIONS
The designed business case method to objectively
compare business models can be used to compare
and choose the best business model successfully, as
demonstrated by the case study. The goal of this
research was to increase the quality of the decision
making process between possible business models,
by developing a method to objectively compare the
alternatives. Based on literature research, the
business case method was designed. This method
contains the eight components that Table 1 lists.
The case study showed that the developed
method can be used to compare business models and
choose the best one. However, the output of the
business case depends partially on the people
making the business case. Steps 3, 4, 5, and 7 are
relatively subjective steps, which gives freedom to
decision makers. Further research is needed to
establish the effects of this decision freedom on the
quality of the outcome of the business case. Still, the
method fulfils the defined goal of the research.
ACKNOWLEDGEMENTS
This work is part of the IOP GenCom U-CARE
project, which the Dutch Ministry of Economic
Affairs sponsors under contract IGC0816.
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