Freeband Business

Blueprint Method©
Handbook for successful cooperation in the
development and exploitation of innovative (mobile)
ICT-services
 Freeband Impuls how companies can deal with these
dilemmas in an effective and efficient
It is the aim of the Freeband Impuls
manner. Based on extensive
programme to promote public
literature and case study research we
knowledge of modern
have developed a method, called the
telecommunications technology and
Freeband Business Blueprint
applications. Freeband is based on
Method, for the development of
the vision of the next, ‘fourth’
viable business models for mobile
generation (4G) communication
ICT-services.
networks and services.
For additional information on the
Scientifically and technologically
Blueprint method, please contact:
speaking the Netherlands is a
forerunner in this area. One of the
Telematica Instituut
goals of Freeband Impuls is to
Edward Faber
reinforce this position by carrying out
Tel.: 053-4850448
research into new mobile applications
e-mail: edwardfaber@telin.nl
and the underlying technology.

Authors
The Ministry for Economic
TNO Telecom
Timber Haaker, Karin Oerlemans, Affairs is cosponsor of the Freeband
Marc Steen
Marc Steen and Henny de Vos Impuls programme, as part of the
Tel.: 070-4462280
government’s action plan ‘Competing
Published by e-mail: m.g.d.steen@telecom.tno.nl
with ICT-competences’. For
Telematica Instituut, Enschede, January 2004
additional information on the
Delft University of Technology
Freeband reference Freeband Impuls programme see
Harry Bouwman
Freeband./B4U/D3.9a www.freeband.nl.
TI/RS/2003/105 Tel.: 015-2788069
e-mail:
Copyrights B4U project w.a.g.a.bouwman@tbm.tudelft.nl
Copyright © 2004 Telematica Instituut. Personal In the Freeband project called
use of this material is permitted. You need the
Business 4 Users (B4U) the Or visit our website at
permission of the Telematica Instituut
Telematica Instituut, Delft University b4u.freeband.nl
(http://www.telin.nl) to copy and/or publish this
material for commercial or promotional purposes of Technology and TNO have
or to include in other works with the aim of selling investigated what dilemmas occur in
it or distributing it through servers or lists or for the development of ‘viable’ business
the reuse of any part of this work that is protected
models for mobile ICT-services and
by copyright in other works.
 FREEBAND BUSINESS BLUEPRINT METHOD

Freeband Business Blueprint

Method© P

This handbook is intended as a tool for developing a business model for complex, cross-
boundary cooperation between organizations in their attempt to develop and exploit
innovative (mobile) ICT-services.

The business model starts is developed with a specific service idea in mind. The result is a
balanced approach that brings together the four domains that make up the business model:
the Service Domain (service concept and value proposition), the Technology Domain
(technical functions and architecture), the Organizational Domain (tasks and agreements
regarding cooperation) and the Financial Domain (costs, investments, revenues and risks).

1
service
- What is it /what does it do?
- What added value?
- Who is the target group?

5 robustness 2 cooperation
- What if … ?
- welke activiteiten?
- welke rollen?
- wie levert wat aan wie?

4 3 technology
financial
- What revenues - welke apparaten?
- What costs? - welke kenmerken?
- What investments? - …..

7 cooperation
6 service
- exclusivity - quality
- Price - personalization - power - outsourcing - …
- User-friendliness – ease -

10 robustness
- Flexibility and adaptability 8 technology
- scalability - Security – system integration
- quality of service - ..

9 financial
9
- Division of risks ,
Costs and revenues

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FREEBAND BUSINESS BLUEPRINT METHOD

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 FREEBAND BUSINESS BLUEPRINT METHOD

Table of contents

1 Introduction ............................................................................................... 7
1.1 A business model and the four domains .......................................... 7
1.2 Concerning the Freeband Business Blueprint Method© ................... 9
1.3 Concerning this handbook ............................................................. 12
1.4 Conducting a Business Blueprint session ...................................... 12
1.5 References..................................................................................... 14

2 Quick scan Service domain: Value proposition from the customer ... 16

3 Quick scan Organizational domain: Roles and collaboration ............ 20

4 Quick scan Technology domain: Functions and architecture ........... 24

5 Quick scan Financial domain: Costs and benefits .............................. 28

6 Quick scan example “Megalithic Journey”........................................... 32

7 Connection and refining ......................................................................... 36

7.1 Robustness of the quick scan design............................................. 37
7.2 Refining the design ........................................................................ 38
7.3 Evaluation critical success factors.................................................. 41

8 Refining the Service domein: Value proposition from the customer . 44

8.1 Target group .................................................................................. 44
8.2 Context........................................................................................... 45
8.3 Value elements .............................................................................. 46
8.4 Price............................................................................................... 48
8.5 Effort .............................................................................................. 50
8.6 Service provision and processes.................................................... 51
8.7 Dealing with versions ..................................................................... 51
8.8 Branding......................................................................................... 52
8.9 Trust............................................................................................... 53
8.10 Personalization .............................................................................. 54
8.11 Results ........................................................................................... 56

9 Refining the Organisational domain: Roles and collaboration ........... 57

9.1 Division of roles.............................................................................. 57
9.2 Division of resources and competences......................................... 59
9.3 Partner selection ............................................................................ 60
9.4 Openness and exclusivity .............................................................. 60
9.5 Network complexity ....................................................................... 61

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 FREEBAND BUSINESS BLUEPRINT METHOD

9.6 Outsourcing.................................................................................... 62
9.7 Co-ompetition................................................................................. 63
9.8 Network orchestration .................................................................... 63
9.9 Involving customers and end-users................................................ 64
9.10 Results ........................................................................................... 66

10 Refining the Technology domain: Functions and architecture........... 68

10.1 Information and communication security........................................ 69
10.2 Quality of the service...................................................................... 71
10.3 System integration ......................................................................... 72
10.4 Scalability....................................................................................... 73
10.5 Standardization .............................................................................. 74
10.6 Accessibility to the target group ..................................................... 75
10.7 Accessibility to the providers .......................................................... 77
10.8 Use profile management ................................................................ 78
10.9 Results ........................................................................................... 79

11 Refining the Financial domain: Costs and benefits ............................. 80

11.1 Risks .............................................................................................. 80
11.2 Division of investments .................................................................. 81
11.3 Division of revenues....................................................................... 81
11.4 Appreciation of resources and competences ................................. 82
11.5 Measuring and quantifying revenues ............................................. 83
11.6 Phasing of investments .................................................................. 84
11.7 Results ........................................................................................... 87

12 Connections and follow-up .................................................................... 88

12.1 Connection domains ...................................................................... 88
12.2 Dynamics in time............................................................................ 91
12.3 Dynamics of the business model ................................................... 93
12.4 Follow-up actions after the Business Blueprint Method© ................ 94

13 Appendix: Evaluation Form Workshop ................................................. 98

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 FREEBAND BUSINESS BLUEPRINT METHOD

1 Introduction
ICT offers companies the opportunity to provide new and innovative mobile services. It has become
increasingly difficult for a company to market a service completely on its own. Because companies
rarely have the technological know-how, resources or infrastructure control that is required, in most
cases they will have to cooperate with others. Cooperation also means dividing the revenues in a way
that is acceptable to all parties involved. Setting up this kind of cooperation – of a business model that
includes several parties – can be difficult, in particular since the parties involved often operate in
different sectors, and each have their own approach and logic.

This handbook is intended as a tool for developing a business model for complex, cross-
boundary cooperation between organizations in their attempt to develop and exploit innovative
(mobile) ICT-services.

This method and handbook are the result of the Freeband Impuls B4U programme. It is the aim of the
Freeband Impuls programme to develop public knowledge concerning modern telecommunications
technology and applications. Freeband is based on the vision of the next generation communication
networks and services. One of the main objectives is reinforcing the leading position of the
Netherlands in the areas of science and technology, by focusing on the most urgently needed research
and new applications offered by new technology. The Ministry for Economic Affairs is cosponsor of the
Freeband Impuls Programme, as part of its action plan called ‘Competing with ICT-Competences’. You
can find additional information on the Freeband Impuls programme at www.freeband.nl.

1.1 A business model and the four domains

There are numerous ways to approach and define a business model, see: “Developing successful
mobile ICT-services with business models” (Haaker et al., 2004). We use the following definition:

A business model describes the way a company or network of companies

intends to earn money and create added value through the application of
technology.

This is a broad definition that includes various elements, which we divide into four domains – the four
domains together make up the business model:

Service Domain: The service concept and the value proposition that the organizations want to
offer

Technology Domain: Technical functions and architecture needed to realize that value
proposition

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 FREEBAND BUSINESS BLUEPRINT METHOD

Organizational Domain: Agreements concerning the cooperation between the organizations to

deliver that value proposition

Financial Domain: Costs, investments, revenues and risks, and agreements on how to devide
them among the organizations

In designing a business model one has to keep the added value for the customer and suppliers of the
service in mind. The viability – and with it the acceptance – of the business model is determined by the
extent to which it creates value for providers and customers (see Figure 1).

Value for
Waarde voor
customers
klanten

(+)

Viability of the
Levensvatbaarheid
business
business model
model

(+)

Value for
Waarde voor
Service providers
dienstaanbieders

Figure 1: Value creation and viability

The Freeband Business Blueprint Method explicitly defines the critical success and design factors for
the creation of value for providers and customers. These factors are based on literature research (
Bouwman & Van Ham, 2003), case study research (Faber et al., 2003) and on actual experience with
business models of mobile ICT-services (Bouwman et al, 2005).

To avoid any terminological confusion: ‘business case’ usually refers to an elaborated financial
analysis, which can be seen as an elaboration of the Financial Domain; a ‘business plan’ usually refers
to a plan that is designed to persuade decision-makers and investors, detailing, among other things,
the operational processes and the management team’s track record.

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 FREEBAND BUSINESS BLUEPRINT METHOD

1.2 Concerning the Freeband Business Blueprint Method ©

The Freeband Business Blueprint Method © is designed as a tool for when various organizations want
to work together in developing and marketing innovative mobile ICT-services.

It is a method that is especially useful in the early stages of innovations: the exploration and
elaboration of various ideas and options. It brings together four core disciplines: marketing, technology,
finance and organization, and facilitates the cooperation between the various organizations involved in
the business model.

As yet there are no methods for designing business models. There are, however, design methods that
focus on specific aspects of a business model. Quality Function Deployment, for instance, is a
common method for identifying user requirements. There are also various methods that focus on the
financial analysis of business cases. In addition, various brainstorming methods exist (‘brown paper
sessions’, ‘brainwriting’ and the ‘morphological analysis’) that are useful in the development of new
service concepts.

The Freeband Business Blueprint Method integrates the insights provided by these various methods
and techniques. Furthermore, it makes it possible to find a proper balance between the design
requirements and the strategic interests. The method is based on the four domains we described
earlier and which is presented in the business model framework in Figure 2.

BUSINESS MODEL

SERVICE CONCEPT
DIENSTCONCEPT
Value proposition
Waardepropositie
Target group
Doelgroep VALUE FOR
CUSTOMERS

TECHNOLOGICAL
TECHNOLOGISCHE ORGANIZATIONAL
ARCHITECTURE ORGANISATIE
ARCHITECTUUR ARRANGEMENTS
Service delivery ARRANGEMENTEN
Dienstleverings- Division roles
system Rolverdeling
systeem Network strategy
Netwerkstrategie
VALUE FOR
SERVICE PROVIDERS

FINANCIAL
FINANCÏELE
ARRANGEMENTS
ARRANGEMENTEN
Revenue model
Opbrengstenmodel

Figure 2: Business model framework

The FBB method is divided into three stages (see Figure 3). In the first stage, a rough sketch of a
business model is made using basic questions concerning the service concept, the technological
architecture, the organization and the financial arrangements. This first stage can be seen as a Quick
Scan.

In the second stage, the rough sketch is evaluated on the basis of six critical success factors. One
example of such a critical success factor is the extent to which the value proposition as formulated in

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 FREEBAND BUSINESS BLUEPRINT METHOD

the rough sketch appeals to the target group. The evaluation helps determine which parts of the
business model have to be modified.

This modification and fine-tuning takes place in the third stage. Here, the relevant basic information
provided by the Quick Scan is worked out in greater detail and the business model is refined using the
critical design factors. These factors arise from the critical success factors and serve as input for the
design choices that are made on the basis of the need to balance the interests of the various parties
involved. Adjusting these choices in turn influences the critical success factors. In the case of services
that are bound to a specific location, for instance, the design factor ‘personalization’ not only affects
the attractiveness of the value proposition, it also has an impact on the costs of the service.

New service concept

Nieuw dienstconcept
STEP 1

Basic information Quick

Quick Scan
Scan
Basisinformatie

Rough outline
Ruwe schets van
business
business model
model
STEP 2

Critical Compare
Kritieke Vergelijking
Success factors To CSF’s
Succesfactoren Met KSF’s
CSF’s

Yes
Ok
Ok
STEP 3
No

Critical Balancing with

Kritieke Balanceren met
Design factors Use of CDF’s
behulp van KOF’
(CDF’s)

viable
Levensvatbaar
business
business model
model

Figure 3: structure of the FBB method

Both refining the elements of the business model and balancing the interests lead to modifications in
the original business model design. Stages 2 and 3 can be repeated in an iterative process.

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FREEBAND BUSINESS BLUEPRINT METHOD

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 FREEBAND BUSINESS BLUEPRINT METHOD

1.3 Concerning this handbook

This handbook can be used in different ways:

Quick scan: first of all, the handbook is meant to be used in Business Blueprint sessions: creative
sessions in which four to six participants explore possible business models. They will use
Chapters 2 through 5 of this handbook, the so-called quick scans, which have been designed as
gap-exercises the participants can use during a session. Chapter 6 includes an example of the
results of a quick scan.

Refining: The handbook can also be used to refine business models, for instance after a session
has finished, or in a session that focuses exclusively on one of the four domains. Chapters 8
through 11 can be used in that respect. The emphasis is on the ‘critical design factors’ that have
been determined on the basis of dozens of case studies carried out within the B4U project of the
Freeband Impuls programme. During the evaluation of the Quick Scan design in Chapter 7, a
selection of relevant design factors is made.

The structure of this handbook begins with carrying out the four quick scans, in the order outlined
above (Service, Organization, Technology and Finance). After that, the information can be refined. In
Chapter 7 a refinement programme is determined on the basis of an evaluation of the value of the
business model in terms of the critical success factors. As such, Chapter 7 serves as a bridge between
the quick scans and the refinement.

Chapter 12 offers recommendations on how do deal with the connection between the various domains.
It also addresses the dynamics of the business model, in other words the evolution of the model over
time and its ability to adapt to changing circumstances. Finally, this chapter contains a few suggestions
on follow up activities.

This handbook can also be used to analyze, evaluate or adapt an existing business model.

1.4 Conducting a Business Blueprint session

A Business Blueprint sessions can be used for a number of purposes, and it will have a different set-up
and implementation depending on the specific purpose for which it is used. In one session the
emphasis will be on the service concept rather than the financial aspects. Another session may have
as its specific objective to investigate technological possibilities and limitations. Yet another may focus
on exploring the feasibility of an idea, or on writing the concept of a business plan.

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 FREEBAND BUSINESS BLUEPRINT METHOD

1.4.1 Structure, implementation and development

The structure, implementation and development of a Business Blueprint session depend, among other
things, on:

Available time and number of sessions: the time that is available and the number of session
may determine the order of refinement of certain domains, or the level of refinement.
Level of detail: when a service concept has not yet been worked out in great detail, this will have
to be remedied during the session.
Desired results: the nature and refinement of the desired results determine the structure of the
session and, for instance, the order in which the domains are discussed.
Participants and facilitator: the participants and facilitator strongly influence the success of the
session. A constructive attitude, communication and cooperation determine the quality of the
process and results.

1.4.2 Recommendations for structure and implementation

Based on our experiences with setting up and carrying out Business Blueprint sessions, we can make
the following recommendations:

Clear results: The facilitator has to make it clear what the intended results of the session are, and
focus on achieving them.

Multidisciplinary: Invite people from a variety of areas, cf. technology, marketing, operations and
business. Provided there is good communication and cooperation, these various disciplines can
complement one another.

Interested parties: Invite people from the organization who are interested and willing to
cooperate. This will make the session even more relevant and people will be more committed.
One way to do this is to present the session as a kick-off meeting.

Role-playing: During the session participants can play specific roles, for instance as an ‘advocate’
of a specific domain or as someone with a vested interest. This approach can be effective,
provided people focus on being constructive and it does not turn into a political game.

Preparation: Often more preparation is needed than people realize, especially with regard to the
Service domain. Being better prepared, for instance by collecting relevant information, will help
make a session more effective.

Facilitator: One person focuses on the role of facilitator, focusing exclusively on the process, on
cooperation and making sure the process is result-oriented (rather than the content of the
session). The facilitator will adapt his or her style to the participants.

Reporting: The facilitator makes notes of the decisions that are important to the process. In
addition, one of the participants makes notes of, for instance, the arguments and information that
may later be useful when the ideas will be refined.

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 FREEBAND BUSINESS BLUEPRINT METHOD

Creative process: A Business Blueprint session is a creative process: the facilitator and
participants use creative methods, such as ‘diverging’ (exploring ideas) and ‘converging’ (selecting
ideas) – while at the same time the process is a structured one.

Conclusion and evaluation: It is useful to evaluate whether or not the intended result has been
reached at the end of a session, and to plan and distribute follow-up actions when necessary.
Also, the participants can be asked to fill out an evaluation form.

1.4.3 Short Business Blueprint session

A short session is above all designed for a quick exploration of the possibilities of designing a viable
business model. The participants carry out quick scans of the four domains, and the facilitator may
force decisions in order to reach a satisfactory outcome within the allotted timeframe. The result of this
type of session is a list with blank spots and critical aspects.

A typical example of a short session (two to three hours) is:

10.00-10.15 introduction
10.15-10.45 quick scan Service domain: the service concept
10.45-11.05 quick scan Organizational domain: roles and relationships that are required
10.05-11.25 quick scan Technology domain: possibilities and limitations
11.25-11.40 short break
11.40-12.00 quick scan Financial domain: (distribution of) costs and benefits
12.00-12.20 relationship between the domains, and ‘what if …’ analysis
12.20.12.40 summary and inventory results
12.40-13.00 follow-up actions and evaluation

1.4.4 Longer Business Blueprint sessions

Longer sessions can take from four hours up to several days. Generally speaking there is a correlation
between the time available and the level of detail of the business model. Needless to say, there has to
be a balance between the time that is being invested and the objective and expectations concerning
the results. These are a few of the possible variations:
Two consecutive shifts: an extended quick scan and some refinement of all four domains
immediately afterwards.
One shift, followed by a few other shifts: a quick scan, followed by separate sessions on one of the
domains, which is then worked out in greater detail.
Two shifts with some time between them: an extensive quick scan of the Service and
Organizational domains, followed by the Technology and Financial domains – the time between
the two shifts allows people to gather information to back up decisions and to remove
uncertainties.

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 FREEBAND BUSINESS BLUEPRINT METHOD

1.5 References
For information on business models and the Business Blueprint sessions:
Bouwman, H., Faber, E. eds. (2004). Succesvolle mobiele ICT-diensten ontwikkelen met
Businessmodellen. Enschede, Telematica Instituut. (www.freeband.nl/essentials)
Bouwman, H., T. Haaker & H. De Vos (2005). Designing 3G+ Business Models: a practical
approach. Paper presented to the 26Th McMaster World Congress Management of Electronic
Business, Hamilton, Ontario, Canada, January 19-21, 2005, pp. 21
Bouwman, H. & E. van den Ham (2003). Business models and eMetrics, a state of the art pp. 65-
82. In: B. Preissl, H. Bouwman & C. Steinfield (Eds.). Elife after the Dot.com bust. Berlin; Physica
Verlag. ISBN 3-7908-0083-X
Faber, E. & Hille, S. (2003). Businessmodel voorwaarde voor succes ICTdiensten. Gepubliceerd
in Automatiseringsgids 23 mei 2003.
Haaker, T, H. Bouwman & E. Faber (2004). Customer and Network Value of Mobile services:
Balancing requirements and strategic interests. Paper presented to 25 th International Conference
on Information Systems. Washington DC, December 12-15., pp. 1-14.
(http://aisel.isworld.org/proceeding_pdf.asp?Vpath=ICIS/2004&PDFpath=2004RP01.pdf&Spath=)
Steen, M., Haaker, T. (2003). Learning about the Business Blueprint in the Dolmen sessions.
(https://doc.telin.nl/dscgi/ds.py/Get/File-32009/Learning_about_the_business_blueprint.pdf)

Scientific papers on business models:

Bouwman, H. (2003). Designing metrics for business models describing Mobile services delivered
by networked organisations. Paper presented to 16th Bled Electronic Commerce Conference
eTransformation, Bled, Slovenia, June 9-11, 2003.
(https://doc.telin.nl/dscgi/ds.py/Get/File-32006/Designing_metrics_for_business_models.pdf)
Bouwman, H. Faber, E., & Ham, E. van der (2003). Exploring Value Networks enabling Back office
access to content for mobile workers. Paper presented to Europrix scholars conference,
Tamperre, Finland, Nov 13-14, 2003. (https://doc.telin.nl/dscgi/ds.py/Get/File-
34485/Bouwman_Europrix_Scholars_Conference.pdf)
Bouwman, H, T. Haaker, M. Steen, H. de Vos (2003). The value proposition from end-user
perspective as main driver for creating complex business models. Paper presented to COST269,
Helsinki, Finland, Sept 3-5, 2003. (https://doc.telin.nl/dscgi/ds.py/Get/File-
33273/Cost_269_The_value_proposition_as_main_driver.pdf)
Faber, E. & Bouwman, H. (2003). Designing Business Models for Mobile Payment services. Paper
presneted to ICEB, Singapore, Dec 9-13, 2003. (https://doc.telin.nl/dscgi/ds.py/Get/File-
34155/Business_Models_for_Mobile_Payment_ICEB_2003_long.pdf)
Faber, E, & Bouwman, H. (2004). Descriptive framework and critical design issues. Enschede,
Telematica Instituut.
Faber, E., Ballon, P., Bouwman, H., Haaker, T., Rietkerk, O. & Steen (2003). Designing business
models for mobile ICT services. Paper presented to 16th Bled Electronic Commerce Conference,
Bled, Slovenia, June 9-11, 2003 (https://doc.telin.nl/dscgi/ds.py/Get/File-
32007/Designing_Business_models_for_mobile_ICT_services.pdf)
Haaker, T, Faber, E., Bouwman, H. Business models for real-time traffic information in cars: which
route to take? Paper presented to ICEC’03, Pittsburgh, Sept 30 – Oct 3, 2003.
(https://doc.telin.nl/dscgi/ds.py/Get/File-37591/ICEC_paper_final.doc)

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