Deliverable D8.3 Business Model Archetypes of vertical industries and the 5G-TOURS commercial opportuni
Creators: name: Mitchell, Stuart
name: Osman, Hassan
Publisher: name: Zenodo
Year: 2021

description: This deliverable explores the advantages of 5G for the vertical sectors involved in the 5G-TOURS project in line with the European Vision of "5G empowering vertical industries". 5G-TOURS features consortium members from both the supply side and demand side ecosystems, and thus provides an ideal cluster within which to explore the innovations, their anticipated commercial appeal and the business dynamics surrounding their exploitation. The principal consideration in this deliverable is the demand side; the salient properties of which must be understood to anticipate the way in which empowering of the vertical may occur. Demand generation requires an understanding of the business models that underpin the opportunity; with the best fit emergent business models being different for each vertical sector and the place where the demand is to be served. The commercial considerations of a buyer in the sector are placed at the fore to enable a simulation of the strategic decision making that would be employed. This process of decision making is sometimes referred to as Optioneering. The business model archetype is based on the formulation of a generalised model for the sector and place, and we use the specifics of the network architectures, use cases (UCs), and settings of 5G-TOURS as exemplars of the considerations. Establishing the Innovations Evaluation Toolkit During the early stages of the 5G-TOURS project, there was an assertion of value propositions based on UCs and their technology drivers. As the project progresses, whilst the UCs are still a foundational element, the positioning of innovations within their sectors and the demand side dynamics increases in importance. In the mobile operator industry sector, telecoms technologies are the most prominent value proposition – a business operations critical component of the business model. Within the vertical industry sectors wireless is generally treated as a cost to the business. The way in which wireless can be used to create competitive advantage is often unclear. A Rough order of Magnitude (RoM) assessment of costs helps to assess the scale of the investment. For this reason, an essential aspect of building an investment case is a rapid assessment of cost. Methods of assessing cost for various deployment scenarios have been established in 5G-TOURS and initial insights gained from the Airport deployment are illustrative of the considerations: • In the Airport – the cost of infrastructure is 38% more to support the UCs over the cost to provide a baseline public service within the terminal buildings. • If the use cases were to be deployed separately the additional cost rises to 114% of the baseline. However, an integrated approach could save as much as 66% of this additional cost. • Whilst the potential for cost savings may seem obvious from the perspective of a single stakeholder, it stands to reason that greater economies of scale and greater overall benefit would be realised by capturing the 5G connectivity requirements of many more stakeholders. • Having the capability to allocate costs, albeit at a high level can promote transparency amongst stakeholders on both demand and supply sides which is important in ensuring proportionality and fairness. • at the same time fostering closer collaboration and coordination to bring about the anticipated benefits, increase vertical confidence in the technology and strengthen the ecosystems to expand wider and seek even greater value. The health and tourism verticals have also been analysed, but the results are less mature. The scenarios will continue to be developed over the next period and reported in the final deliverable. Costs are always to be evaluated when appraising the viability of investments in new solutions. However, the capability to determine credible potential socio-economic assessment of benefits is growing in importance. Work Package 2 of 5GTOURS has established a benefits framework that will allow for the qualitative and importantly quantitative evaluation of the innovations of the project. In this deliverable we have mapped the benefits framework to the industry sector. Key Findings • Each industry sector has differences in financial models (blending public and private), appetite for risk, preferred deployment, operations and maintenance models of their ICT systems. A “one size fits all model” for building, maintaining and operating 5G solutions that applies across all industry sectors that 5G-TOURS considers is not credible. • The approach to the rapid evaluation of deployment and key benefit and cost aspects is critical to the timely decision making as to the viability of a city solution. The requirements for a suite of cost-benefit analysis tools have been established and the baseline evaluation capability is demonstrated. • In earlier 5G-TOURS deliverables we found that as a category “5G Business Models” was poorly defined with few referenceable papers from the business modelling academic and research community. 5G-TOURS has chosen to go back to an assessment of relevant generic business models but based on a principle of putting the vertical sector demand ecosystem at the centre. This creates a more heterogeneous business narrative; however, there has now been sufficient analysis by the sector specialist Innovation Managers and the understanding of the value propositions in the sector to determine that this is the most appropriate approach. • The potential advantage of developing a device and end user experience-oriented solution on a unifying platform that is deployed and re-deployed in several vertical sectors has merits and is an approach to ensuring the portability of innovations that could become systematic and repeatable. By way of the robot-oriented UC we can demonstrate the potential for translation into an adjacent sector. Next Steps The transition from supply side ecosystem thinking to demand side ecosystem thinking, such that an articulation of proof points of the “why” and “how” of uptake of innovations is yet to occur. The focus of the project on delivery of technology demonstrators (the progress of which is greatly challenged by COVID-19) maintains a predominant solution delivery culture within the project. However, the approach and design of the project with significant opportunity for demonstrations, and workshops, where critical appraisal and feedback from external stakeholders will become a significant force of change will assist in the transition. A transformational journey is underway and as the project enters the final phase the time to quantify and bridge the gap. This deliverable establishes the business model scope and framing for the verticals. This qualitative framework guides the further quantitative assessments. 5G-TOURS has established an understanding of the pertinent commercial forces of the different industry sectors in earlier deliverables from WP8. However, high technology markets move fast, 5G-TOURS is a 3-year project and market readiness views must be continually re-assessed. This deliverable advances the business analysis to establish the innovations of the project and the considerations of the business strategy factors that should be considered in the planned deliverable D8.4. In particular, the considerations with respect to making recommendations on the ranking of the value propositions of the approximately twenty claimed 5G-TOURS innovations