Assessing the Viability of Service Innovations: A

Structured Business Modeling Approach

Björn Kijl, Lambert J. M. Nieuwenhuis, L. O. Meertens and M. E. Iacob

University of Twente, School of Management & Governance,

PO Box 217, 7500 AE Enschede, The Netherlands

Abstract. Currently, business modeling seems to be an art instead of a science,

as no scientific method for business modeling exists. This causes many service

innovation projects to end after the pilot stage, unable to fulfill their apparent

promises. We propose a structured method to create “as-is” business models in

a structured manner. The method consists of the following steps: identify the

involved value network roles, recognize relations among these roles, specify

their main activities and develop a quantitative model using realistic estimates.

The resulting quantitative business model is suitable for analysis of the current

situation. This is the basis for further predictions, like business cases, scenarios

and alternative business model designs. We offer two extra steps to develop and

analyse these alternatives. Using our method may increase the viability of ser-

vice innovation projects by helping to improve the underlying service innova-

tion business model design.

1 Introduction

The use of information and communication technology (ICT) is increasingly prolifer-

ating in transportation. It is applied to support main functions like car management

and navigation. Other applications include navigation systems that guide drivers to

their destination taking traffic information into account and ICT systems that support

the entertainment of travelers with games, music, video and connectivity. Next to this,

traffic management systems are emerging that capitalize on the possibilities of ad hoc

car networks (e.g. by using sensor technology) in order to optimize traffic manage-

ment by for example adapting flows through changing the timing of traffic lights.

Also sensor and actuator networks may be used for increasing safety and lowering the

prevalence of car accidents.

This chapter is primarily based on L.O. Meertens, M.E. Iacob and L.J.M. Nieuwenhuis,

Developing the business modeling method, Proceedings of the First International Symposium

on Business Modeling and Software Design 2011 (BMSD 2011), pp. 88-95 and Kijl, B.,

Nieuwenhuis, L.J.M., Deploying e-health service innovations – an early stage business model

engineering and regulatory validation approach, International Journal of Healthcare Technolo-

gy and Management, Vol. 12, No. 1, 2011.

Meertens L., Iacob M., Nieuwenhuis B. and Kijl B. (2011).

Assessing the Viability of Service Innovations: A Structured Business Modeling Approach.

In Proceedings of the 1st International Workshop on Future Internet Applications for Trafﬁc Surveillance and Management, pages 29-43

DOI: 10.5220/0004472900290043

 SciTePress

The functionalities as mentioned above – car sensors, engine management, traffic

information systems, entertainment and telecommunications – have mostly been de-

veloped independently of each other. It is expected that in the near future, these tech-

nological systems will become integrated and less car / brand independent. In such a

context, these technologies may provide an architectural platform for many new ser-

vice innovations.

At the service platform domain we have to define and develop an environment

where interacting services can coexist. These new services are typically context

aware. Next to more technological challenges like service intelligence and service

management, assessing the commercial viability of these service innovations will also

be a critical aspect.

2 Early Stage Service Viability Assessment

For assessing the viability of future traffic management systems and related service

innovations in early project development stages, we propose to analyse the underly-

ing business models. A business model essentially describes how value can be created

(for users) and captured (e.g. in the form of profits) with a specific product or service.

In order to perform such an early stage analysis, we first need to identify all stake-

holders involved. One can think of individuals participating in the traffic as well as

organizations responsible for infrastructural services. However, a wide range of other

service providing organizations are also expected to play an important role, like gov-

ernments (probably interested in road pricing strategies and traffic management is-

sues), the energy sector (for fueling or taking care of charging electronic car batter-

ies), the health care sector (monitoring the wellness of drivers and their passengers),

telecom operators (connectivity), entertainment and media companies (video, music,

…) and of course also car manufacturers (by building excellent cars with competitive

services they may create the basis for open service platforms).

Typical business related research questions relevant for organizations involved in

offering new service innovations are:

− How will the value network that is needed for creating these new service innova-

tions exactly look like – which organizations need to work together and in what

way?

− Which revenue models can be used (relevant for private as well as private parties)?

− How can we optimally balance costs and revenues among the organizations partic-

ipating in the value network?

In earlier research projects (see http://www.myotel.eu and http://www.utwente.nl/

ewi/ucare/), we developed a structured business model validation approach aimed at

answering these questions and tested it on specific e-health service innovations.

After introducing the concept of business models in Section 3 and 4, we will de-

scribe our business modeling approach by describing the six steps it consists of in

Section 5. In Section 6, we will apply this approach to an illustrative case study.

3 Business Modeling Background

A business model is critical for any company. Its importance has been recognized

over the past few years by several authors that have created different business model

frameworks aimed at identifying the main elements of a business model (for example,

Osterwalder [9]; for an overview, see Pateli and Gialis [10], Al-Debei and Avison [1]

and Vermolen [14]). However, the state in which this field finds itself is one of pre-

scientific chaos [7]: there are several competing schools of thought and progress is

limited because of a lack of cumulative progress. Because of this, there are no clear

and unique semantics related to business models. The concept of a business model is

associated with many different definitions [14]. The elements of such a business

model differ significantly from one approach to another. Furthermore, to the best of

our knowledge, there are no methodological approaches in the literature for the de-

sign and specification of business models [14]. This lack of cohesion in the field

clearly diminishes the added value of business models for companies and makes

business modeling an art, rather than a science. This state of affairs motivated us to

propose such a method, which enables the development of business models in a struc-

tured manner. Thus the contribution of this chapter is three-fold:

− A proposal for a business model development method;

− A definition of the concept of business models and the identification of its core

elements, captured by the deliverables of the method steps;

− An illustration of the method by means of an illustrative case study from the

healthcare domain.

4 Theoretical Background

A simple analysis of the two words “business model” already gives an idea of what a

business model is about. On the one hand, there is “business”: the way a company

does business or creates value. On the other hand, there is “model”: a conceptualiza-

tion of something – in this case, of how a company does business.

We extend this common and simplistic interpretation of a business model as “the

way a company earns money” into a broader and more general definition of the con-

cept: “a simplified representation that accounts for the known and inferred properties

of the business or industry as a whole, which may be used to study its characteristics

further, for example, to support calculations, predictions and business transfor-

mations.”

The last part of the definition above, namely the indication of the possible uses of a

business model is of particular importance in the context of this chapter. The method

we propose not only facilitates the development of such a design artefact – a business

model – but also takes a business engineering perspective. Thus, its application will

result in essentially two (or more) business models: one that reflects the “as-is” situa-

tion of the business and one or more alternative “to-be” business models that repre-

sents possible modifications of the business as result of, for example, adoption of

innovative technologies or more efficient business processes.

To the best of our knowledge, such a method does not exist yet (Vermolen 2010).

In the remainder of this section, we position our work in the contexts of design sci-

ence and method engineering, to which it is related.

4.1 Design Science

A business modeling method can be seen as a design-science artefact. It is the process

of creating a product: a business model. We use the nine guidelines of Hevner et al.

[4] to frame how we use the methodology engineering approach from Kumar &

Welke [8] to create our method.

The first guideline advises to design as an artefact. Design-science research must

produce a viable artefact in the form of a construct, a model, a method, or an instanti-

ation. As said, we produce a method.

The second guideline tackles relevance. The objective of design-science research is

to develop technology-based solutions to important and relevant business problems.

Viable business models lie at the heart of business problems. However, our solution is

not yet technology-based. Partial automation of the method is left for future research.

The utility, quality, and efficacy of a design artefact must be rigorously demon-

strated via well-executed evaluation methods. We demonstrate the business modeling

method using a case study. We leave more rigorous evaluation for further research.

Research contribution is the topic of the fourth guideline. Effective design-science

research must provide clear and verifiable contributions in the areas of the design

artefact, design foundations and/or design methodologies. We provide a new artefact

to use and study for the academic world. The methodology may be extended, im-

proved and specialized.

Guideline five expresses the scientific rigour: Design-science research relies upon

the application of rigorous methods in both the construction and evaluation of the

design artefact. We aim to be rigorous through using the methodology engineering

approach. Existing, proven methods are used as foundation and methods where appli-

cable. Evaluation was handled in the third guideline.

The sixth guideline positions design as a search process. The search for an effec-

tive artefact requires utilizing available means to reach desired ends while satisfying

laws in the problem environment. Whenever possible, we use available methods for

each of the steps. Following the methodology engineering approach helps us to satis-

fy the laws for creating a new methodology.

The final guideline instructs us to communicate our research. Design-science re-

search must be presented effectively both to technology-oriented as well as manage-

ment-oriented audiences. This chapter is one of the outlets where we present our

research.

4.2 Methodology Engineering

Methodologies serve as a guarantor to achieve a specific outcome. In our case, this

outcome is a consistent and better-informed business model. We aim to understand

(and improve) how business models are created. With this understanding, one can

explain the way business models help solve problems. We provide a baseline meth-

odology only, with a limited amount of concepts. Later, we can extend, improve and

tailor the methodology to specific situations or specific business model frameworks.

The business modeling method has both aspects from the methodology engineer-

ing viewpoint: representational and procedural [8]. The representational aspect ex-

plains what artefacts a business modeler looks at. The artefacts are the input and de-

liverables of the steps in the method. The procedural aspect shows how these are

created and used. This includes the activities in each step, tools or techniques and the

sequence of steps.

5 Defining the Business Modeling Method

We defined six individual business modeling steps. We will concisely describe each

of these steps in this section, by using the following elements:

− Inputs of the step;

− Activities to perform during the step;

− Possible techniques to use for these activities, and

− Deliverables resulting from the step.

Each step in the proposed method requires specific methods, techniques or tools

that are suitable for realizing the deliverables. We will mention examples of those.

However, others may also be useful and applicable, and it is not our aim to be ex-

haustive in this respect. Table 1. shows an overview of our method.

Table 1. Business modeling method.

tep Inputs Technique or Tools

eliverables

Roles Documentation, do-

main literature, inter-

views, experience,

previous research

Pouloudi and Whitley

[12]

Role list

Relations Role list, stakeholder

map, value exchanges

e3-value Role-relation matrix

Activities Role-relation matrix,

role list, business pro-

cess specifications

BPM methods, lan-

guages and tools

List of activities

Quantification Process specifications,

accounting systems and

annual reports

Activity based costing Total cost of the

business “as-is”

Alternatives As-is business model,

ideas for innovations

and changes

Business model method

(step 1-4), brainstorm-

ing

One or more alter-

native business

models

Analysis Alternative business

models

Sensitivity analysis,

technology assessment,

interpolation, best/worst

case scenarios

Business case for

each alternative

5.1 Create As-Is Model

As mentioned in the previous section, our business model development method takes

a business engineering perspective. Thus, the first four steps of our method focus on

creating a business model that reflects the current state of the business. Therefore,

steps one through four create a so-called as-is model.

Step 1: Identify Roles

Identifying the relevant parties or roles involved in a business model should be done

as systematically as possible. The business modeler must carry out a stakeholder

analysis to identify all roles. The inputs to this step include for example documenta-

tion, domain literature, interviews, experience and previous research. The output is a

list of roles.

For an example of a stakeholder analysis method, we refer to Pouloudi & Whitley

[12]. They provide an interpretive research method for stakeholder analysis aimed at

inter-organizational systems. The method consists of the following steps:

1. Identify obvious groups of stakeholders;

2. Contact representatives from these groups;

3. (In-depth) interview them;

4. Revise stakeholder map;

5. Repeat steps two to four, until...

Pouloudi and Whitley do not list the fifth step, but mention that stakeholder analy-

sis is a cumulative and iterative approach. This may cause the number of stakeholders

to grow exponentially, and the question remains when to stop. Lack of resources may

be a reason to stop the iterative process at some point. Closure would be good, but

seems hard to achieve when the model is more complex. Probably, the modeler has to

make an arbitrary decision. Nevertheless, one should choose stop criteria (a quantifi-

able measure of the stakeholder’s relevance for the respective business model and a

threshold for the measure) before starting the process [11].

For step four, “Revising the stakeholder map”, the information on stakeholders as

gathered from interviews can be complemented with information found in the litera-

ture. The business modeler then refines the list of stakeholders by focusing, aggregat-

ing and categorizing.

Step 2: Recognize Relations

The second step of our method aims to discover the relations between roles. The

nature of these relations may vary substantially, but it always involves some interac-

tion between two roles and some exchange of value. Much of the work and results

from the previous step can be reused as input for this step. In theory, all roles could

have relations with all other roles. However, in practice, most roles only have rela-

tions with a limited number of other roles. Usually, these relations are captured in a

stakeholder map, which often follows a hub-and-spoke pattern, as the focus is on one

of the roles. This pattern may be inherent to the approach used, for example if the

scope is defined as a maximum distance from the focal or nodal role.

To specify all relations, we suggest the use of a role-relation matrix with all roles

on both axes as technique. Within this matrix, the cells point out all possible relations

among the roles. Each of the cells could hold one or more relations between two

roles. Assuming that roles have a limited number of relations, the role-relation matrix

will be partially empty. However, one can question for each empty cell whether a

relation is missing or not.

Cells above and below the diagonal can represent the directional character of rela-

tions. Usually, relations have a providing and consuming part (above and below the

diagonal) but sometimes constructions that are more complex occur, such as loops

including multiple roles.

The output of this step is a set of relations.

Step 3: Specify Activities

For a first qualitative specification of the business model, the next step is to determine

the main activities. Relations alone are not sufficient: the qualitative model consists of

these main business activities (business processes) too. These activities originate from

the relations identified in the previous step. Each of the relations in the role-relation

matrix consists of at least one interaction between two roles, requiring activities by

both roles. Besides work and results from the previous steps, existing process descrip-

tions can be valuable input. Techniques from business process management may be

used.

The output from these first three steps is a first qualitative business model, includ-

ing roles, relations and activities. It reveals what must happen for the business to

function properly.

Step 4: Quantify Model

Quantifying the business model helps us to see what is happening in more detail and

compare innovations to the current situation. To turn the qualitative model into a

quantitative model, numbers are needed. The numbers are costs and volumes of ac-

tivities (how often they occur). Together, these numbers form a complete view of the

costs captured by the business model.

Several sources for costs and volumes are possible, such as accessing accounting

systems or (annual) reports.

5.2 Develop To-Be Model

The as-is model, created in previous steps, is suitable for analysis of the current state

only. However, from the as-is model, it is possible to derive alternatives. Such alter-

natives can be created to assess how reorganisations, innovations or other changes

influence the business. These are the to-be models.

Step 5: Design Alternatives

From here on, we aim to capture a future state of the business in a business model. To

make predictions, the model may need further instantiations. Each instantiation is an

alternative development that may happen (to-be). Using techniques such as brain-

storming and generating scenarios, business modelers create alternative, qualitative,

future business models. These alternatives are used to make predictions. Usually,

such alternatives are built around a(n) (technical) innovation. This may include allo-

cating specific roles to various stakeholders. A base alternative, which only continues

an existing trend without interventions, may help comparing the innovations. Next to

the business model, ideas for innovations serve as input. The resulting alternative

business models show future (to-be) possibilities.

Step 6: Analyse Alternatives

The final step for a business modeler is to analyse the alternative business models.

Besides the qualitative business models, several sources of input are possible to quan-

tify the alternatives. Applicable techniques include sensitivity analysis, technology

assessment, interpolation and using best/worst case scenarios. Each alternative can be

tested against several scenarios, in which factors change that are not controllable. We

can use the models to predict the impact. This step and the previous one can be re-

peated several times to achieve the best results. The final output is a business case

(including expected loss or profit) for each alternative.

In the next section, we will describe by way of illustration the main results of the

application of our business model engineering approach to an e-health service innova-

tion project called Myotel.

6 The Myotel Case

The business modeling case consists of a so-called myofeedback based teletreatment

service, aimed at patients with 1) chronic neck shoulder pain or 2) whiplashes – di-

rectly in the R&D deployment phase of the service innovation project.

The myofeedback teletreatment system monitors muscle relaxation during daily

activities via sensors and actuators implemented in a wearable garment which is con-

nected to a PDA. The system provides continuous feedback when there is too little

muscle relaxation. The monitoring data is sent wirelessly – e.g. via a GPRS, UMTS

or HSDPA connection – to a back end system which can be accessed by health care

professionals. These health care professionals can use the system for optimizing

treatment, working more efficiently by saving on face-to-face contact hours with their

patients and giving them more personalized feedback as well (see Fig. 1 for a high

level architectural overview of the system).

Earlier clinical evaluation studies already proved the clinical effectiveness of the

specific treatment [3]. Clinical trials proved a work ability increase during treatment

for both the whiplash patients (of whom 68% were employed) and chronic neck

shoulder pain patients (of whom 100% were employed) that got treated with the tele-

treatment service. The work ability concept shows how well workers are able to per-

form their work [5, 6] – it can be seen as an indicator for employee productivity in-

crease or decrease.

Below, a concise description is given of the results of each of the business model-

ing steps as described above with a special focus on the “to-be” business models.

Fig. 1. The teletreatment service.

Step 1: Identify Roles

We organized a half-day business model design workshop for twelve experts within

the field of myofeedback and teletreatments from four European countries in which

the service could be offered – The Netherlands, Belgium, Sweden and Germany.

Based on the expert workshop, different value network roles and potential actors

were identified. A value network role is performed by a specific value network actor

who may perform the actual activities in the value network (cf. a specific actor play-

ing a certain role in a movie). All value network roles and possible value network

actors as identified can be found in Table 2.

Table 2. Value network roles, actors and activities identified by the experts.

Roles Actor

End user / patient Therapist patient

Network provider Telecom operator

Hardware provider (e.g. for communica-

tion devices and sensors)

Hardware company

Telerehabilitation (myofeedback) ser-

vice provider

(Spin-out) company / independent organiza-

tion

Health care professional Therapist organization

Software developer Company

Software platform provider Company

Insurance company Company

Employer (Non) commercial organization

Medical research & development or-

ganization

A (group of) medical institution(s) that sup-

port(s) the commercial exploitation of the

myofeedback service

Step 2: Recognize Relations

By developing a matrix with all value network roles on both the x and y axis, we

identified all possible relationships between the roles. This analysis formed the basis

for Step 3, defining the activities of the value network roles.

Step 3: Specify Activities

Based on the previous two steps, the experts identified the activities of each value

network role that had to be modeled in the quantitative model. Here we especially

focused on the most critical, so-called first tier roles as identified by the experts: the

service provider, the healthcare provider, the employer and the patient (because of

resources limitations and time constraints, we decided not to model the other, less

critical roles). According to the experts, these roles would be affected most by the

introduction of the new teletreatment service. For these roles, the experts also had to

identify the activities that are expected to lead to the most substantial cost and benefit

changes. These activities are italicized in Table 3 and modelled in the quantitative

model in the next step.

Table 3. Main value network roles, actors and activities identified by the experts.

Role Activities

Myofeedback service

provider

Manage telerehabilitation service (overhead)

Develop telerehabilitation market (marketing)

Acquire telerehabilitation customers

Build back office

Manage back office

Build device service

Manage devices needed for treatment

Train myofeedback service delivery personnel

Deliver myofeedback service

Request reimbursement myofeedback treatment

Receive payment for myofeedback service

Healthcare provider Develop telerehabilitation treatment

Train personnel telerehabilitation treatment

Diagnose patient

Consult patient with traditional treatment

Consult patient with telerehabilitation treatment

Request reimbursement treatment

Receive payment for treatment

Employer Employ traditionally treated employee

Employ telerehabilitation treated employee

Patient Undergo traditional treatment

Undergo telerehabilitation treatment

Step 4: Quantify Model

Based on the previous steps, we started to develop a quantitative model. We used a

traditional activity based costing approach to determine costs of the activities. For

each activity we determined the number of times N the activity is carried out and the

cost price P per activity. With respect to cost price, we distinguished between invest-

ments and yearly costs. Investments are onetime costs e.g. for training and education

(needed when new employees get involved) as well as investments for equipment

(needed when more devices are needed or old devices are worn out). Examples of

yearly costs are costs for personnel and housing. The volume and cost tables are part

of a spread sheet that simulates the provisioning of the telerehabilitation service in

year i from 2008 to 2018. Multiplying N

and P

gives the overall costs for year i for

each activity. The values for N

are based on an S shaped technology adoption curve

[13]. The values for P

are based on today’s market prices that develop over time, i.e.,

technology prices decline (deflating prices), whereas, e.g., salary costs for profession-

als increase (inflating prices). This enables Net Present Value calculations over the

ten years period as well.

For calculating the costs and benefits of the myofeedback teletreatment service, a

so-called variables cockpit was developed. This cockpit gives an overview of the

most important variables that influence the costs and volumes as mentioned before

and based on which the actual benefit and cost calculations can be made. Important

variables in this context are e.g. the hourly cost price of a health care professional, the

expected productivity increase resulting from treatment, the number of therapy ap-

pointments per treatment and the myofeedback device costs. All figures for the cock-

pit variables were determined based on results from literature research, medical re-

search results, surveys filled in by and related workshops held with the experts as

mentioned before.

Based on these variables, the volumes and costs for each of the activities identi-

fied were calculated over the period 2008 – 2018. Because the model was designed in

the form of a spread sheet, the model is very flexible: the effects of changing one or

more variables can be calculated directly. Based on a different set of cockpit variables

for different countries, the model can automatically estimate the expected volumes

and costs on a country-by-country level over the period 2008 – 2018. In this way, the

model formed a useful tool for evaluating the costs and benefits related to a new ser-

vice innovation like the telerehabilitation service in direct interaction with field ex-

perts.

Step 5: Design Alternatives

Based on the analysis, two alternative business models were developed – one in

which the insurance company of the end user or patient would form the main source

of revenue (see Fig. 2) and one in which the employer (or its occupational healthcare

/ disability insurance organization) formed the main source of revenue (see Fig. 3).

Step 6: Analyse Alternatives

The quantitative model as described in Step 4 revealed three critical insights (The

related figures as mentioned below show the calculations for the Dutch market. For

the other three countries, similar conclusions can be made):

1. The new myofeedback treatment is more expensive compared with tradi-

tional treatment – mostly because of IT related investments and opera-

tional costs (see Fig. 4).

2. Although the myofeedback treatment is expected to be more efficient

compared with the traditional treatment method (less treatment hours are

needed), the IT investments are likely to exceed the related labour cost

savings on a health care professional level (see Fig. 5).

Fig. 2. The first business model design alternative – the end user / patient as revenue source.

Fig. 3. The second business model design alternative – the employer of the end user / patient as

revenue source.

3. However, the expected absence reduction and productivity increase of

working myofeedback patients does compensate the investments needed

on an employer level (see Fig. 6).

ICT investments

ICT operations

Healthcare provider investment

Healthcare provider operations

Fig. 4. The cost benefit model showed that the new myofeedback treatment is more expensive

than traditional treatment – mainly because of ICT related investments and operational costs;

the total costs are expected to increase with about € 100 (from ~€400 to ~€ 500) per patient

with chronic neck shoulder problems.

€-4M

€-3M

€-2M

€-1M

€-

€1M

€2M

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

CostbenefitcalculationsfortheNetherlands

ICT inv ICT opr SP inv HC #1 inv HC #2 inv ∆ HC #1 opr ∆ HC #2 opr

Fig. 5. A graphical overview of the cost benefit analysis in the Netherlands; showing respec-

tively expected ICT investments and ICT operational costs, service provider and health care

professional investments and the expected operational benefits/costs for health care profession-

als.

Based on these three critical insights, we expected the second business model de-

sign (where the employer of the end user / patient formed the main source of revenue

source; see also Fig. 3) to have a higher viability than the first business model design

(where the insurance organization of the patient formed the main source of revenue;

see Fig. 2).

The service innovation is expected to deliver a more efficient, less labor-intensive

treatment, but these savings do not outweigh the related technological investments

and costs (see Fig. 5) – as a result, we don’t expect healthcare insurance organizations

to be very interested in paying for a new, effective but also more expensive treatment.

However, our analysis showed that the service may lead to an absence reduction and

productivity increase that is substantially outweighing the related technology costs

€-4M

€-2M

€-

€2M

€4M

€6M

€8M

€10M

€12M

€14M

€16M

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Costbenefitcalculations(includingemployer)fortheNetherlands

ICT inv ICT opr SP inv HC #1 inv HC #2 inv ∆ HC #1 opr ∆ HC #2 opr ∆ empl #1 ∆ empl #2

Fig. 6. A graphical overview of the cost benefit analysis in the Netherlands. Compared with

Fig. 5, now also the maximum employer benefits related to absence reduction and productivity

improvement are shown.

and investments (see Fig. 6). Therefore, employers may be more interested in paying

for this new service innovation than healthcare insurance organizations.

7 Conclusions

Three contributions are made in this paper. First, we created a business model devel-

opment method. Second, we defined the concept of a business model and identified

its core elements, captured by the deliverables of the method steps. Finally, we dem-

onstrated the method by means of an illustrative case study from the healthcare do-

main.

The business modeling method provides a way to create business models. Innova-

tors can apply the steps to systematically create business cases for their ideas. This

may help them to show the viability and get service innovations implemented. With

our business modeling method, we provided a new design science artefact to use and

study for the academic world. As business modeling has several goals, conducting

only the first few steps of this method may be sufficient in some cases. For example,

if one’s goal is to achieve insight in the current state only, the last two steps are not

useful.

The business modeling method could be extended further. Situational method en-

gineering seems suitable for this [2]. For example, for information system develop-

ment, it is interesting to analyse the possible integration of and linkages between

enterprise architectures and business model designs. Also, a domain analysis step

could be added before the role identification step (each domain requires different

improvements). The steps in the method could be further specified and detailed as

well. One way of doing this is to tailor the techniques discussed for each of the meth-

od steps. In the future, new tools and techniques may also support partial automation

of the steps.

In general, we expect that by using our method for early stage business modeling

the quality of the service innovation business models may be substantially improved.

By early stage interaction with the more technology oriented activities within a ser-

vice innovation project, we think our approach can play a critical role in maximizing

the added value of the project outcome.

References

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