Designing a business model ontology for service systems

Service Science researchers employ the service system abstraction to study value co-creation phenomena in economy and society. Models for describing and visually representing the components and properties of service systems facilitate scientific inquiry and application. Following the Design Science Research Methodology (DSRM) (Peffers et al., 2007), we develop an ontology (Gruber, 1993; Guarino, 1997) that guides the construction of service system models. We concisely present our design research using the six activities of the DSRM process. PROBLEM IDENTIFICATION AND MOTIVATION Service Science research aims at discovering underlying principles of efficiency, effectiveness, and economic viability of value co-creation by investigating the purposeful and mutually beneficial interaction of service system entities. Service Science researchers have called for more research on vocabularies, conceptual abstractions, and visual models to describe and represent service systems. Modelling service system entities and their interactions helps communicating and reasoning about their intentionality (i.e., goals), teleological and ontological nature (i.e., function and composition), internal operations (i.e., resource allocation and orchestration of service processes), and externalized behaviour (i.e., choreography of service interactions). The understanding of problems and solutions obtained through models and the possibilities they bring for analysis, offer support for applications of service system design, engineering, and management. DEFINE THE OBJECTIVES FOR A SOLUTION Interdisciplinary communication and collaboration is facilitated by a common conceptualization of research abstractions. Service Science has embraced the Service-Dominant Logic (SDL) of Vargo and Lusch (2004) as its philosophical foundation. Service system representations are faithful and useful if they commit to a service-dominant worldview and incorporate a focus on value co-creation phenomena. Our goal is to develop an ontology for describing value co-creation phenomena within service systems from a service-dominant perspective. Apart from offering a shared vocabulary of well-defined concepts, an ontology also defines other elements (e.g., relations, attributes, axioms) for creating faithful and useful service system representations. DESIGN AND DEVELOPMENT Rather than emphasising the artificial divide between goods and services, SDL is positioned as a worldview that regards all economic activities as exchanges of service for service, in which goods may be used to transmit the benefits brought about by service. The modelling of the creation, delivery, and transfer of value in networks of economic actors has been the subject of research in the Information Systems (IS) field. These models are referred to as ‘business models’ as they clarify the business context of information system requirements, thereby ensuring requirements completeness and traceability and helping the detection of conflicting requirements, their resolution, and the systematic exploration of system design choices. Due to their systemic and analytic character, these graphical and semantically rich representations also help in analysing the business itself, for instance by addressing problems of alignment (e.g., strategic fit) and organisational design (e.g., business architecture). IS researchers have developed business model ontologies that assist modellers in the creation of the envisaged representations; the ontology proposed by Osterwalder and Pigneur (2009) is a well-known example. Our design research draws from this knowledge base to develop a business model ontology for service systems. Our starting point is the Resource-Event-Agent (REA) ontology of McCarthy (1982). REA is a conceptual model of economic exchange that, unlike other business model ontologies, explicitly recognizes economic reciprocity as an ontological axiom (i.e., REA’s duality axiom). Figure 1 presents a partial and strongly reduced view of the core elements of REA. The model basically states that economic agents are entities in control of economic resources, which are exchanged through economic events (e.g., sales, purchases, payments). The duality axiom dictates that economic events are requited, i.e., economic resources are exchanged for other economic resources between provider and receiver agents. The specialisation of economic resources in goods, services, and rights indicates that REA does not commit to SDL. We therefore redesigned the REA ontology into a conceptual model of service exchange by investigating and reinterpreting its elements through the lens of SDL. Figure 2 shows part of our results in the form of a graphical model of the core elements of our ontology, which we call the Resource-ServiceSystem (RSS) ontology. RSS interprets REA economic events and agents as services and service system entities. These entities are configurations of SDL operand and operant resources controlled by them. Resources are provided by an entity to be integrated into the resources of another entity, which derives value from this integration. The duality axiom prescribes that this value creation is mutual. The provision and integration of resources is the service, which is an economic event (in REA terms) in which at least one operant resource of the resource provider acts upon one or more resources, of which the resource integrator controls at least one, implying that value is co-created. Figure 1: UML class diagram of core REA elements Other RSS developments include the modelling of the exchange of service for service as a process of interactions between service system entities (based on the Interact-Serve-Propose-Agree-Realise model (Maglio et al., 2009)). These results are not further discussed here (confer references in the Communications section for more information). Figure 2: UML class diagram of core RSS elements