The presentation contains a brief summary of an international exploratory study on the business models adopted by for profit organizations in the reuse of public sector information

1. BUSINESS MODELS FOR PSI RE-USE
Hype, Hope or the Next Big Thing?
www.ismb.it
Enrico Ferro - Michele Osella
Business Model & Policy Innovation Unit

2. Study financed by
Join the debate via Social Media!
#psi4profit
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3. Foreword
“Venture capitalists and entrepreneurs should not
underestimate the value of government data. […]
As governments democratize data, there is a potential
for hundreds of startups and the birth of billion dollar
businesses based on this data.”
Vivek Kundra
Former U.S. Chief Information Officer
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4. The Scenario
Public bodies are by far the largest producers
of information in Europe and not only.
“Commercial exploitation of Europe's public sector information” – Pira International for the European Commission (2000)
However:
• The role of public agencies in creating, elaborating,
consuming and releasing information is often not
completely understood.
• PSI is recognized as a major, but so far under-exploited
asset, which could and should be a fundamental building
block of the “new economy” in the Information Society.
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5. Prominent Gaps in the Literature
Paucity of
studies on
«downstream
information»
Focus on
«how much»
in lieu of «how»
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6. Different Perspectives on the PSI Realm
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7. Boundaries of Public Sector Information
Open
Public Sector Government Open Data
Information Data
Our perspective: all the broad spectrum of PSI
Public Sector Information Open Government Data Open Data
Information generated, Data produced or “Works” which are “open” in
created, collected, processed, commissioned by government terms of: access,
preserved, maintained, or government controlled redistribution, reuse, absence
disseminated, or funded by or entities which can be freely of technological restriction,
for the Government or public used, reused and redistributed attribution, integrity, no
institution. by anyone. discrimination, license.
Source: OECD Source: Open Knowledge Foundation Source: Open Knowledge Foundation
[Recommendation C(2008)36] [opendefinition.org] [opendefinition.org]
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8. Research Questions
1. Are there profit-oriented
organizations capable of
generating revenues from
information produced by the
public sector?
2. What are the value creation
mechanisms present in this
sector? How is value created
and appropriated?
3. In light of non-rivalry and non-
excludability characterizing PSI
- when released as Open Data -
which are the key factors
playing a pivotal role in the
pursuit of sustainable
competitive advantages?
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9. Methodological Overview
Adopted research approach:
qualitative research
Predominant research method:
case study
Type of case study:
exploratory
Unit of analysis:
single company
Case design:
multiple case design
Distribution of units of analysis:
holistic
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10. Sampling Overview
Long list of enterprises re-using PSI or enabling the re-use
(mainly in the EU landscape) obtained through an extensive market research
~ 139 items
Mixed sampling approach
Criteria for the theoretical
sampling
• Empirical sampling
(spontaneous collection of
• Geographical location
exceptional cases “in the
(Italy, Europe, Rest of the World)
limelight”)
• Position in the value chain
• Theoretical sampling
(Re-Users, Enablers)
(“structured” collection of
cases in light of the
prearranged research
purposes)
13 enterprises under the lens
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11. Units of Analysis
Long list distribution
Sample distribution
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12. The Framework
Resource-driven
design
PSI-based
Value
Proposition
Enterprise- PSI Processed
specific Data
resources
Public
resources PSI Raw Data
PSI-based
Revenues
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13. The Framework (cont’d)
Make money
from data
Price Mechanisms
Create value
from data
Role of PSI in the
Value Proposition
Make sense
of data
Types of Data
Elaboration
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14. The Framework (cont’d)
Types of Data Elaboration Role of PSI in the Value Proposition
Data aggregation
Final good itself
Data structuring and classification
Key ingredient of a product
Data geo-referencing
Key ingredient of a service
Data validation
Marginal ingredient of a product
Data mash-up
Marginal ingredient of a service
Visual analytics
Price Mechanisms
Premium Freemium Free
À la carte Feature limited Advertising powered
Subscription fee Time limited Cross subsidization
Royalties Size limited Zero marginal cost
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15. Main Findings
• Changes in governmental
boundaries
• The multi-actor PSI-centric
value ecosystem
• Archetypal actors
• Archetypal business models
• Entry barriers and sources
of competitive advantage
• Upside-down price logic
• Dissimilar market structures
for different re-users
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16. From “Monolithic” Government …
Back-end Front-end
Policy sphere
Operative sphere
System Data Decision Data Service
integration integration making provision provision
Private sector
enterprises
Data sphere GOV 1.0
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17. … To “Extended” Government
Back-end Front-end
Policy sphere
Operative sphere
Spontaneous
civil initiatives
Spontaneous
civil initiatives
System Data Decision Data Service
integration integration making provision provision
Private sector
enterprises
Private sector
enterprises
Private sector
enterprises
Data sphere
GOV 2.0
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18. The Multi-Actor Value Ecosystem
“Fit-for-purpose”
Raw data Refined data products and services
PSI PSI retrieval,
generation storage, PSI PSI
and categorization re-use consumption
dissemination and exposure
Governmental Business
Non-profit enablers Core re-users
bodies end-users
Private sector Service Governmental
enablers advertisers end-users
Legend
Advertising Profit-oriented
Consumers
factories actors
Spontaneous civil Non-profit
initiatives actors
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19. From Archetypal Actors …
On the
front line
Position in the value
creation process
Behind
the scene
PSI as PSI as
«bread and butter» «attraction tool»
Strategic vision of the PSI realm
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20. … To Archetypal Business Models
#1 Premium product / service
#2 Freemium product / service
#7 Free as branded advertising
#3 Open Source like
#4 Infrastructural razors & blades #8 White-label development
#5 Demand-oriented platform
#6 Supply-oriented platform
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21. #1 Premium Product / Service
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22. #1 Premium Product / Service
Data retrieval Long or
and structuring, medium term, Mostly
Provision of
development of standardized business
high-value
the application or customized clients (B2B)
features based
logic on PSI
Creativity, Web,
technical traditional
expertise, financial channels
resources (rarely)
Software
Lump sums or
development and
subscription
maintenance,
fees
CRM
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23. #2 Freemium Product / Service
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24. #2 Freemium Product / Service
Data retrieval Medium or
Provision of PSI- Mostly
and structuring, short term,
based features consumers
development of standardized
according to the (B2C)
the application
“value for
logic
money” principle
Creativity,
Web, mobile
technical
apps
expertise, financial
resources
Software Charges for
development and additional data
maintenance, or advanced
CRM features
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25. #3 Open Source Like
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26. #3 Open Source Like
Data retrieval Long, medium
and structuring, Provision of Heterogeneous
or short term,
development of PSI-based customers (B2B,
standardized
the application features in an B2G, B2C)
or customized
logic “open“ manner
Creativity,
Web
technical
expertise, financial
resources
Software Payments for added-
development and value services and
maintenance, for license variations
CRM
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27. #4 Infrastructural Razors & Blades
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28. #4 Infrastructural Razors & Blades
Data exposure Short term,
via APIs, standardized Developers,
Facilitation in
provision of scientists
access to PSI
computing
resources
capacity
Storage
Cloud
resources,
computing
computing
platforms
resources
Management On-demand
and evolution payments for
of the IT estate computing
power
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29. #5 Demand-Oriented Platform
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30. #5 Demand-Oriented Platform
Data structuring Long or
Providers of and medium term, Developers
Facilitation in
cloud classification, standardized
access to PSI
computing data exposure
resources
services via APIs
Storage
“One stop
resources,
shopping” data
computing
platforms
resources
Management of Payments for
the IT estate, advanced
data features or
maintenance refined data
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31. #6 Supply-Oriented Platform
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32. #6 Supply-Oriented Platform
Data structuring Long term,
Facilitation in
and classification, customized PSI holders
management
data exposure via Long, medium (charged side
and exposure
APIs, data or short term, of the market)
of PSI
exposure via GUI standardized
resources
Facilitation in Developers
Storage access to PSI (non-charged
Two-sided data side of the
resources, resources management market)
computing
platforms
resources
Management and "Parametric" payments
evolution of the IT based on data storage,
estate, data bandwidth
maintenance requirements, API calls
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33. #7 Free as Branded Advertising
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34. #7 Free as Branded Advertising
Data retrieval, Short term,
Software Provision of Wide audience
development of standardized
development PSI-based of customers
the application
companies, services of
logic, brand
communication general
promotion
agencies usefulness
Creativity, Web, mobile
technical apps
expertise
Software Revenue streams
development, coming from non-
marketing, PSI-based
service evolution business lines
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35. #8 White-Label Development
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36. #8 White-Label Development
Customer
negotiation, data Long or
Development Companies
retrieval, medium term,
and delivery of willing to use
development of customized
white-label PSI as
the application solutions "attraction tool"
logic based on PSI
Creativity,
technical
expertise
Software Lump sum or
development, recurring
CRM payments for
crafted solutions
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37. Sources of Competitive Advantage
Vision at a glance
Dynamic perspective
Learning curve
Cumulated experience (acquired also
outside the PSI world) coupled by
absorption capacity that enhances an
effective use of knowledge acquired from
Static perspective external sources.
Efficiency
Presence of already established internal
resources which are usable without
incurring incremental costs.
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38. Entry Barriers…
Extent of barriers
to PSI re-use
Effort for differentiating the value proposition
Effort for accessing PSI
Closed PSI Grey area OGD Degree of PSI openness
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39. … and Sources of Competitive Advantage
High
Extent of price
barriers
Low
Low High
Extent of technological barriers
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40. Pricing Paradigm: the “Old-Style”
Locus:
the “Closed by
Default” realm
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41. Pricing Paradigm: the “New-Style”
Locus:
the “Open by
Default” realm
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42. Dissimilar Market Structures …
Impregnable strongholds Fluid markets
Prominent business driving force Data volumes Application logic
Key success factor Aggregation Creativity
Amount of PSI encompassed in Slew of datasets Few chunks of data
re-use operations
Degree of data diversity Homogenous data Heterogeneous data
Main barriers to the re-use Price barriers Technological barriers (not
always present)
Market concentration High Low
Target customers Mainly B2B and B2G entities Chiefly B2C audience
Re-users’ profile Well-structured companies Mainly start-ups
Re-users’ business approach “Evergreen” businesses “Groundbreaking” businesses
Pricing mechanism Premium pricing model Free / freemium pricing model
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43. … For Different Re-Users
High Low
Stars Question marks
“Ground-
breaking”
High
businesses
operating in
fluid
Market growth
markets
Low
“Evergreen”
businesses
operating in
Cash cows Dogs
oligopolistic
regimes
Market share
Growth-Share Matrix (a.k.a. BCG Matrix)
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44. Conclusions
PSI re-use for profit purposes is not a
marginal phenomenon at a European level.
Two "ideal types" of market have been found
out: fluid markets vs. oligopolistic markets.
Four main positions have emerged along the
PSI value chain.
Eight archetypal business models have been
depicted.
A paradigm shift in terms of pricing is
appearing at the horizon.
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45. Policy Guidelines
Why opening data?
Extended Gov.
PSI is a pivotal pillar in the
Business opportunities
reshaping of governmental Competition
boundaries, creating more The opening up of public
room for spontaneous civil data (in legal, technical and
initiatives and private pricing terms), despite The increasing degree of
business endeavors. reinforcing the nature of openness and accessibility
public good, is compatible shifts the sources of
with its use in profit- competitive advantage to
oriented activities. functional aspects as well
as to knowledge of vertical
domains, strengthening the
competition in PSI-related
market arenas and
weeding out rent seeking.
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46. Policy Guidelines (cont’d)
How opening data?
Scale
The presence of a
Most wanted
minimum efficient scale
Information sources
Italian scenario
(national or
international) calls for taking the lion’s share
regard geography and In the Italian
coordination activities ecosystem, noteworthy
aimed at promoting cartography, companies
and finance, law and opportunities may stem
local initiatives. from the immense
legislation.
cultural heritage, which
nowadays seems to
represent a largely
untapped potential.
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47. Policy Recommendations
Tackling major Clear and long-term
roadblocks on legal framework
the way to PSI
re-use …
Distinction between
Continuity in the Enabling ownership and
update of data
factors stewardship of data
Guarantees about
data quality
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48. Let us Have Your Opinion!
ferro@ismb.it osella@ismb.it
@egferro @MicheleOsella
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