This presentation outlines the challenges and opportunities of digitization and highlights the important role of data quality. The presentation uses a well-known business model conceptualization to illustrate successful digitization examples.

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DIGITAL BUSINESS MODELS AND THE
VALUE OF DATA
Prof. Dr. Boris Otto
Nice, June 6, 2014

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AGENDA
 Digitization and the Data Economy
 Data-Driven Business Models
 The Way Ahead

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Digitization is the overarching development today
affecting every industry
Source: Financial Times, 2014.

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The number of different data sources is increasing
46
54
Social media
(Facebook, Twitter, Blogs etc.)
66
34
Internet data
(Click Streams etc.)
47
53
Smart Grid
(Sensor data, machine data.)
43
57
RFID tags and barcodes
39
61
GPS data
51
49
Financial data
51
49
Mobile device usage data
What data sources do you exploit?
Source: The Economist Intelligence Unit Limited: Big Data – Lessons from the leaders, 2012, n = 752, figures are percentages.
Legend: already used planned to be used.

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Industrial Big Data is one key development in the Data
Economy

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The other one is Social Big Data referring to our digital
footprints
Source: http://edublogs.misd.net/ric17nicoler/2013/02/14/my-digital-footprint/, 2014.

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AGENDA
 Digitization and the Data Economy
 Data-Driven Business Models
 The Way Ahead

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Business model innovation is a prerequisite to sustain
competitive advantage
Source of the image: Jam Visual Thinking, 2014.

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Businesses have to answer the question as to how the
Data Economy affects business model innovation

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Digital Business Models leverage data-centric value
propositions Hybrid solutions
Convenience
Differentiation

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Customer value proposition goes beyond the business
logic of free pricing models such as Facebook etc.
If you’re not paying for it, you‘re not the customer - you‘re the product …

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adidas miCoach is a good example of data-driven
customer value
1
2
3

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Digital Businesses use multiple channels to interact with
the customer
Churn prevention
Recommender
systems
Personalized
offers

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Multi-channel integration is key to successful Digital
Business Models

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Digital Business Models use the power of data to
improve operations
Sales assistance
Supply chain
visibility
Inventory
mnagament

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Amazon patented “Anticipatory Shipping”
 End-consumer
centricity
 Shipment before
customer buys
 Speculative Shipping
 Reducing delivery
times by predicting
what buyers are going
to buy before they
actually do it
 Analyzed data includes
historical buying
patterns, preferences
expressed explicitly via
surveys/questionnaires,
demographic data,
browsing habits, wish-
lists and so on.
12-24-2013: Amazon US Patent

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Digital Business Models leverage the potentials of
ecosystems
Ecosystem
Collaborative
business processes
Converging
industries

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Competition is not within verticals any longer, but takes
place cross-industry
2004 2014
Internet Search
Internet Search
Automotive
Autonomous driving
Energy
Smart metering
Telecommunications
Fiber-to-the-Home

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Data is a strategic resource in Digital Business Models
Data

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“Native” digital enterprises use a new generation of
data management capabilities
“Modern data markets will employ a whole new generation of technology, processes, and data
science that supersedes the previous generation of data management systems”1
Cloud Computing
Big Data Software
Data Science and Machine Learning
APIs
Crowdsourcing and Social Processes
Organizational &
ICT Capabilities
Source: Elbaz, Gil: Data Markets: The Emerging Data Economy. © 2012. http://techcrunch.com/2012/09/30/data-markets-the-emerging-data-economy/. Requested on
2014-02-07.

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The “Smart Service Welt” initiative advances our
understanding of the “mechanics” of digital businesses
Data
Economy
Focus on
the
Individual
Data-
centricity
Hybrid
Service
Offerings
Converging
industries/
Ecosystems
Cloud
Platforms
New
Business
Models

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AGENDA
 Digitization and the Data Economy
 Data-Driven Business Models
 The Way Ahead

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Success is not guaranteed…

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Companies have to overcome a couple of challenges
52 %
Inappropriate organizational
structure
51 %
Missing IT infrastructure and
systems
46 %Poor data quality
45 %Lack of leadership
43 %Lack of functional expertise
31 %Lack of IT expertise
Source: McKinsey: Minding your digital business. In: MicKinsey on Business Technology (2012) Nr. 27, S. 24-31.

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The Competence Center Digital Consumer Business (CC
DCB) facilitates Digital Business Model innovation

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Please get in touch for further information
Univ.-Prof. Dr. Ing. Boris Otto
TU Dortmund University
Audi-Endowed Chair of
Supply Net Order Management
LogistikCampus
Joseph-v.-Fraunhofer-Straße 2-4
D-44227 Dortmund
Tel.: +49-231-755-5959
Boris.Otto@tu-dortmund.de
Fraunhofer-Institute for Material
Flow and Logistics
Director Information Management &
Engineering
Joseph-v.-Fraunhofer-Straße 2-4
D-44227 Dortmund
Tel.: +49-231-9743-655
Boris.Otto@iml.fraunhofer.de