BUSINESS VALUE WEBS. EVOLUTION FROM VALUE CHAINS TO VALUE WEBS

BUSINESS VALUE WEBS

EVOLUTION

FROM VALUE CHAINS TO VALUE WEBS

Web for the WEB

• E- and m- businesses are artfully built by combining a variety of business models

• If the models generate separate revenue streams while sharing the same infrastructure a firm can more efficiently utilize resources and create additional value

Familiar model

• An industry traditionally has been viewed as a series of transactions and relationships among the set of firms

• Value chain

Internet and m- effect

• Linear, orderly set of relationships no longer holds leading to more complex and more broader set of relationships

Leveraging • Common standards• Connectivity• More detailed information about each other• Interacting in real-time

The essence of this effect

Firm spins its value web

Inside the firm

Outside the firm

Enterprise portals

Key mechanisms

Enhancement

add new functionality or improve a product or service that is currently offered

Expansion

add products and services within an existing business

Key mechanisms

Extension

adopt new business models or enter new business

Exit

drop product or service line or exit a business

Evolving an e/m-business

Extend

Expand

Strategy

Exit

Enhance

Quicken.com example

• Leading Internet brand in the aggressively competitive online financial services industry

• Launched in 1995 by its parent, Intuit

Quicken.com evolution

Started as an information aggregator (infomediary): accessed financial services news and information from a number of different information providers and added value

by synthesizing the content

categorizing and packaging information for easy search and retrieval

distribution over the Internet to consumers of financial services information

Mobile services?

Quicken.com evolution

• Objective: expand consumer base

• Action: do not charge consumers

no subscription fees for the services of the infomediary

• Generate revenue trough advertising

We now know that this was not a good model for revenue creation (works, but…)

Quicken.com: the beginning

• Strategy: The more consumers visit Quicken.com, the more valuable the site is to advertisers

1995- Fledgling dotcom established solid initial presence because of well-respected Quicken software brand

Would this advantage last?

Quicken.com: 1996

• Decision: Brand advantage would not last

1996-acquired QuickenInsurance

QuickenInsurance

• Initially operates as an information aggregator

consumers – enter information– compare quotes– fill out an application

QuickenInsurance-1996

• completed applications sent to insurance carrier

• insurance carrier sends them to traditional agents

• traditional agents close the sale

QuickenInsurance-1996-1998

Enhanced services--actions

• enable side-by-side comparison of different insurance products across key policy features

• add insurance calculators

• deepen educational content available on the site

QuickenInsurance-1998

Expanded product line

action:

• add to life insurance products, auto, home and other forms of insurance

Still an aggregator

How to extend this business model?

QuickenInsurance-late 1998

Extend

Sell insurance policies

With this move extended its business model to marketplace

Revenue generated trough transaction fees on completed insurance policy sales

Quicken.com: 1996-1999

Internally developed and launched 3 additional financial services aggregators:QuickenLoan

QuickenRetirement

QuickenInvestmentQuickenLoan soon started to underwrite its own loans and earning transaction fees becoming a marketplace/producer (similar to E-Loan)

Quicken.com: 1996-1999

Integrated its established offline consumer products (Quicken, TurboTax and small business products such as QuickBooks) to tightly link its large and loyal base of offline customers to online business

Objective: increase online business

Quicken.com: 1996-1999

Objective: increase online businessTransactions can be completed online

Self-service?

Launch retail shopping siteSell own software productsSell other consumer products: books, CDs, video

equipment, travel

Quicken.com: 1996-2000From simple aggregator to a vertical portal

Individual businesses within the portal represent a variety of business models:

aggregators

marketplaces

retailers

Note: Some of the businesses generated revenue, and some did not

Quicken.com Extensions

• QuickenBanking

• QuickenInsurance

• QuickenTurboTax

• QuickenBusinessThese businesses also host software applications for use by customers and suppliers and operate as digital infrastructure vertical portals

Revenue from hosting fees, software licensing and maintenance, and systems integration fees

Leveraging

• With each new business model, the company leveraged Quicken.com digital business infrastructure and increased revenue -generating capability of the business

• As a vertical portal able to generate additional referral and advertising fees

Leveraging

• Increased strategic options open to company for future expansions of business model

• Able to protect from competitive threat to any portion of the business

• Adapts and evolves fast

Evolving an e/m-business

Extend

Expand

Strategy

Exit

Enhance

www.quicken.com

Please take guided tour

Evolving an e/m-business

Extend

Expand

Strategy

Exit

Enhance

Do the same for

• Software firm Mongoosetech