t-109.4300 network services business models (3 cr)• digital economy increases productivity •...

NSBM 1

© Sakari Luukkainen

T-109.4300 Network ServicesBusiness Models (3 cr)

Sakari Luukkainen

Aalto UniversityDepartment of Computer Science and Engineering

NSBM 2

Background of the course

• technological innovation is the most important determinantof the long-term economic growth of industrialized nations

• to maintain the growth companies ought to have the abilityto continuous commercialization of new technologies

• significant technological change in the ICT industry during1990’s

• rapid growth of the Finnish telecommunications industry,production over quadrupled

• R&D expenditures biggest fixed cost, the investments haveto be made in an early phase, when the characteristics ofthe new market are not clear – ICT is cyclical industry

NSBM 3


Market uncertainty – ICT isrisky cyclical business

Source: Kauppalehti

NSBM 4


Finding a sustained path?

Source: Kauppalehti

NSBM 5


• Overestimated expectations have delayed technologicalchange

• Most of the success is related to GSM technologies, hyperprice competition in mobile voice and SMS

• No history data of business – difficult to forecast, unreliablemarket research

• Only 20 % of R&D performed by companies can be exploitedcommercially

• Incumbent companies face difficulties in managingtechnological discontinuities - new entrants more flexible

• However, VC financing has so far resulted in a very few newsuccess stories in ICT new entrant sector - asymmetricinformation in the technology financing market

Background of the course

NSBM 6


Background of the course• Current slowdown moved focus to consolidation

and cost reduction

• Industry moving towards service business

• Digital economy increases productivity

• Market uncertainty is however high - many technicalpossibilities open up with unclear market need -many failures and unexpected success – need forbusiness model design

• New innovation possibilities in mobile cloudcomputing, smart traffic, datacenters / greenICT, industrial Internet and sharing economy

NSBM 7


Goal of the course

• The course is especially designed to TelecommunicationsSoftware A2 Study Module and to Master's ProgrammesMobile Computing and NordSecMob

• To describe the challenges service providers face in offeringnew ICT services taking into consideration both the businessaspects and the fast developing technology requirements andpossibilities

• The course focuses on theoretical models of the networkservices commercialization process, practical business modeldesign tools as well as case examples related to emergingICT services

NSBM 8


Service innovation diffusion

Num

bero

fUse

rs

Time

Saturation

Launch

Takeoff

Criticalmass

Source: Rogers, 1995

NSBM 9Possibility for exponentialgrowth


Sources: Distimo, Foresman, 2010;Srivastava, Lara, 2006; Varian, 1999

NSBM 10Business model design of newservice in ICT industry


Technology push

Market pull

Many failures:Mobile TV, X.400 email,videophone, WAP, ERMESpaging, OVI Store

Unexpected success:I-mode, SMTP email,AppStore, Spotify, Skype,Facebook, Twitter

Business Model

NSBM 11

Course content structure


Core knowledge Supplementaryknowledge

Special knowledge

Scientific learning Factors affecting marketuncertainty

Factors affecting growth ofICT networks

Business model components

Innovation diffusion models

Characteristics of innovation

Open innovation

Ecosystems

Industrial dynamics in ICT

Digital economy and growth

Sharing economy

Economies of scale

Swicthing cost

Network effects

Metcalfe´s law

Complementarity

R&D as investment

Two-sided networks

Substitution

Professional learning Business model design

Classification of ICTbusiness models

Managing market uncertainty

Developing productitivitythrough ICT in businessprocess

STOF model

Canvas model

Research methods

Start-up development

Cloud computing

NFV

Mobile ecosystems

Green ICT

Industrial Internet

Smart traffic

NSBM 12


Graduating the course

• The preferred prerequisite for this course is basic knowledgeof telecommunications networks and management science

• 11 lectures (incl. intro), on Wednesdays in hall AS1, at 14.15-16

• Exam requirements consist of the lectures, theirsupplementary material and of the following book:

Mobile Service Innovation and Business Models

Bouwman, De Vos, Haaker (Eds.), 2008, Only Part 1 Theory

ISBN 978-3-540-79237-6

The electronic version of the book is available in the HUTlibrary.

NSBM 13


Course book

El. version:http://www.nelliportaali.fiQuick link: e-booksMyiLibrary

or through TEEMU

Outside campus area: seeremote access instructions

Hardcover: e.g. in Amazonca. 10 €

http://www.amazon.co.uk/gp/reader/3540792376/ref=sib_dp_pt/278-1146076-0916958

NSBM 14


Graduating the course

• First examination is 10.4.2014 at 9 - 12 in lecture hall T1 andthe enrollment to the exam is required

• Exam consists of three essay questions of which two iscompulsory, six concept definitions and one applied questionconcerning some real life business case

• The exam results will be published within a month in Noppa

• If you are interested in making bachelor or master’s thesisrelated to networking business contact Sakari Luukkainen

• Master thesis related to business is also possible in Master'sProgrammes Mobile Computing and NordSecMob

NSBM 15


Telecommunications(Application area,research target)

BusinessScience(Theory)

Internet(Application area,research target)

Networking Business

NSBM 16


Compulsory courses

S-38.3001 Telecommunications ForumT-109.5410 Technology Management in the Telecom IndustryS-38.3041 Operator Business

Example optional courses

T-110.5130 Mobile systems programmingT-110.5191 Seminar on InternetworkingTU-91.2005 Strategic Management of Technology and InnovationT-86.5300 ICT Enabled CommerceT-110.6000 Internet and Computing Forum

New master’s programme:Computer Science: Software Systems and Technologies Trackor Mobile Computing

Networking Business A3

NSBM 17


Business Assessment: Hierarchy ofStrategies

VisionCorporate StrategyDivisional StrategyProduct/Market StrategyMarketing TacticsCustomer Satisfaction

Source: Gorchels

Focus ondeveloping andleveraging corecompetencies

Focus oncustomer-specific needs

NSBM 18


Technology business management

ProductManager

R&D

TopManagement

Sales

Finance Purchasing

Production

Customers Legal

Marketing

NSBM 19


Balance of management activities

strategicstrategic

the goal the reality

short-term

day-to-day

short-term

day-to-day

Source: Gorchels

NSBM 20


Master/Bachelor Thesis Scope

· Emerging technology product strategy

· Development of innovation process

· New ICT enabled service commercialization

· Integration of ICT & business processes

· Business development of start-up companies

NSBM 21


Example theses

Business Model Development and Strategic Choices – the Case ofSite Logic

Implementing Mobile Information Systems in Maintenance Industry

Startup Crowdfunding - Case Ambronite

Disruptive Technologies and the Music Industry

Regulation and International Mobile Roaming

Evaluation of Software Defined Networking Products

Management of Energy Effectiveness in Datacenters

Near Field Communication in Mobile Ticketing – Business ModelAnalysis

Electronic Voting - Barriers of Adoption

NSBM 22

Future thesis topic key areas

Telco clouds – network functions virtualization

Smart traffic applications – connected cars

Sharing economy business models – e.g. Uber

Green networks and services – new value

Modular platforms of smartphones – e.g. Ara


NSBM 23


Employment opportunities

• Many new business possibilities open up with unclearmarket need - many failures and unexpected success -need for increasing attention of innovation management

• There is an increasing number of positions intelecommunications companies, which require techno-economic skills

• Networking Business studies will open up positions in e.g.product management, product marketing, sales, consultingand R&D project management in the ICTsector

NSBM 24


Agenda

14.1. Introduction, Sakari Luukkainen21.1. Theoretical frameworks, Sakari Luukkainen28.1. Business model design, Sakari Luukkainen4.2. ICT in business process, Sakari Luukkainen11.2. STOF cases, Olli Mäkinen25.2. Cloud computing, Sakari Luukkainen4.3. Green ICT, Tommi Mäkelä11.3. Mobile cloud computing, Sakari Luukkainen18.3. Mobile ecosystems, Juha Winter25.3. ICT start-up development, Aaltoes & Android Aalto1.4. Summary, Sakari Luukkainen

10.4. Examination

t-109.4300 network services business models (3 cr)• digital economy increases productivity •...

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