Information Technology Reference
In-Depth Information
5 Grid Business Models
George Thanos, Eleni Agiatzidou, Costas Courcoubetis, George D. Stamoulis
5.1 Introduction
A business model (BM) establishes a framework for the transformation of economic
inputs (e.g. resources and technological knowhow) into economic outputs (e.g. goods
and services) required by customers in a market (Chesbrough and Rosenbloom
2002). In simpler terms, a business model describes the way the business expects to
make money by interacting with customers and other players in the market.
Such a model can also be thought of as a mediator between technology develop-
ment and value creation. The ultimate role of the business model is to ensure that the
technological core delivers value to the customer. In order to achieve this, a number
of factors and functions must be analysed and specified, such as the value proposi-
tion of the new product, the target market, the potential value chain for the delivery
of the product or service, an estimation of the cost-structure, and profit potential
(Peterovic et al. 2001, Weill and Vitale 2001).
A well articulated BM is the foundation of the company's business plan. The
business plan serves as a decision-support tool and includes the additional level
of detail that needs to be identified and proved (as well as can be prior to execu-
tion) in order for the business to attract money from potential investors. It specifies
measurable goals, the reasons why they are believed to be attainable, and the plan
for reaching those goals (Siegel et al. 1993, Wikipedia 2009a). It may also include
background information about the company and a marketing plan. As it becomes
apparent, both are to a great extent related and equally important; without a good
business model, a business plan cannot be brought to effect and vice versa.
If you have developed a business model or plan, you already have a business
case established as this is a prerequisite of the aforementioned. That means you have
a business idea that once turned into a project (i.e. financed!) can lead your busi-
ness to a profitable product or service or in other terms you have a value proposition
for your customers. For example, when referring to the term “Grid business case”
in this document we imply that a company has defined a project where the provi-
sioning of a product or service and/or its value proposition is based on exploiting
the benefits of Grid technology. The pathway from that idea to the realisation and
sustainability of the actual project is described through a specific business plan.
The purpose of this chapter is to present an overview of the business models
adopted by Grid application and services providers in the market based on a study
and analysis of Grid business cases. The goal is to provide the reader with an over-
view of BMs from the perspective of a potential business adopter as well as of a user/
customer of Grid technology. To achieve that, we briefly discuss how the Grid BMs
evolved from traditional ones; we explain how a business case can be established
