This paper focuses on business models and how new technologies influence business models. By reviewing literature it can be realized that research regarding business models and new technologies considers two different areas:
One area is the capture of value from new technological innovations. A new product development should be linked to the development of a respective business model by defining value strategies for the new development. A new technological development does not automatically mean business success. Hence, a business model design for the new development is a key element in order to create value out of the new development.
The other research area – and this is the focus of this paper - looks at how new technologies influence business models. After a short introduction a practical example will be given of how a cooperation adapted its business model due to digitalization.
Table of Contents
1. How new technologies change business models
2. How new technology affected Rolls-Royce business model
Objectives and Topics
This paper examines how digitalization and new technologies facilitate the transformation of traditional product-oriented business models into service-oriented ones, using Rolls-Royce as a primary case study.
- Theoretical foundations of business model innovation.
- Distinction between product-oriented and service-oriented models.
- The role of IT and data monitoring in service delivery.
- Practical application of business model canvas adaptation.
- Long-term benefits and resource requirements of digitalization.
Excerpt from the book
2. How new technology affected Rolls-Royce business model
Rolls-Royce is a well-known example of how technology can influence traditional business. One of the key drivers for business evolution of Rolls-Royce is digitalization. In recent years the sale of turbines was in focus. Nowadays however, turbines itself are not sold anymore. Rolls-Royce is now selling “power by the hour” which means that operating hours of these turbines are sold. Turbines are monitored by remote maintenance technologies which permanently analyze the status of respective turbines. If an incident occurs respective actions are initiated. Algorithms had to be developed in order to predict potential incidents. Hence, the supplier takes over risks of turbine failures and he has to guarantee the sold and promised operating hours. The customer buys a service. Due to the permanent monitoring the supplier is able to provide important data to the customer, e. g. fuel consumption, which the customer can use in order to improve his internal processes. For sure the gained data is useful for the supplier as well (tracking of failures (weaknesses of product), getting a big picture of customer needs). (Böhmann et al. 2013)
However, technology (IT systems) plays a crucial role in order to enable this new service-oriented business model. Technology needs to be integrated in aircrafts which is tracking data and simultaneously sending respective data to Rolls-Royce. As mentioned in the previous section: a good interaction between customer and supplier is the basis for this business model. There is a permanently ongoing interaction between Rolls-Royce and the airline and if a potential failure is realized a fast communication ensures the elimination of the error before the error occurs. (Böhmann et al. 2013)
Summary of Chapters
1. How new technologies change business models: This chapter introduces the theoretical concepts of business model adaptation, distinguishing between product-oriented and service-oriented approaches based on relationship duration and interaction frequency.
2. How new technology affected Rolls-Royce business model: This chapter analyzes the practical transformation of Rolls-Royce's business model from selling turbines to providing "power by the hour" through continuous monitoring and service-oriented IT integration.
Keywords
Business Model, Digitalization, Service-Oriented Business Models, Innovation, Rolls-Royce, Power by the Hour, Technological Innovation, Product-Oriented, Value Creation, Remote Maintenance, IT Systems, Customer Relationship.
Frequently Asked Questions
What is the fundamental focus of this paper?
The paper focuses on how new technologies and digitalization influence and transform business models within organizations.
What are the primary thematic fields covered?
The central themes include business model evolution, the transition from product-oriented to service-oriented business models, and the role of IT in enabling value capture.
What is the primary objective of this study?
The primary goal is to demonstrate how companies adapt their business models due to technological advancements, specifically through the transformation of product-selling into service-oriented operations.
Which scientific method is utilized?
The author utilizes a literature review of business model research and performs a case study analysis of Rolls-Royce to illustrate the theoretical concepts.
What is addressed in the main body of the paper?
The main body examines the characteristics of service-oriented models, presents the Rolls-Royce "power by the hour" business model, and provides a visualization of business model changes.
Which keywords best characterize this work?
The work is characterized by terms such as digitalization, business model transformation, service-oriented business models, and technological innovation.
How does Rolls-Royce generate value in its new business model?
Rolls-Royce generates value by selling operating hours ("power by the hour") rather than physical hardware, using data to monitor performance and predict failures.
What is the significance of the "Business Model Canvas" in this text?
The Business Model Canvas is used as a diagnostic tool to display the specific shifts in building blocks, such as key activities and revenue streams, during the company's transformation.
- Arbeit zitieren
- Johannes Köck (Autor:in), 2015, Business model transformation and innovation. How new technologies influence business models, München, GRIN Verlag, https://www.grin.com/document/378126
