Home > Enterprise Architecture > B2B, Enterprise Canvas and the big picture

B2B, Enterprise Canvas and the big picture

I’m using enterprise canvas  since Tom put it out there and I still couldn’t figure out this problem with modeling the relations of B2B business model. Now I have a little better understanding of the problem and I think I can describe it here so that you can help me to find a solution.

As I don’t have a business education, I was always troubled by what is B2B. In Wikipedia  it is described as “commerce transactions between businesses”. Well, here I mean something completely different (help me if I’m completely lost). I don’t think that if you sell a product to another company you can define your business as B2B. That would still be a B2C business where a company is in the role of the customer. In a B2B scenario, your business has a direct relation to customers of its customers. Let me give you some examples:

  • Company A – Online hotel booking: A traveler searches for a hotel in Company A web site and books a room in a hotel. Here hotel is the customer and it’ll pay a commission for the reservation. Traveler is hotels customer. Company A provides the relation between traveler and hotel to the hotel.
  • Company B – Call center: A credit card owner calls customer service of the bank to unblock her credit card. Credit card owner is the customer of the bank. Bank is the customer of call center and will pay for the service call center did for the credit card owner.
  • Company C – Payment provider: An online-shopper buys an item from the website of a local store and makes a payment with credit card. Shopper is customer of the local store. Local store is customer of payment provider and will pay commission for the transaction.

In all cases there’s a direct relation with customers of customers.  Immediate question is how to model this relation with enterprise canvas? Well, so far I’m convinced that they are suppliers. At least, this is the most suitable place I can place them. They’re definitely not customers, they are not the one’s paying for the value provided. They are not getting paid as suppliers neither. But when we are talking about value chain, we must be careful about what kind of value we are talking about. In this case the value provided to them is not financial, it won’t show up in the accounting system. But failing in this relation can be very dangerous for all value chain.

My problem is the missing link between these two very important roles in the model: customer and customers of the customer as supplier. For a B2C business there’s no such relation, it’s not important at all. Simple examples, being about simple B2C businesses, doesn’t show anything missing in the model. Take a look at the Business Model Generation book. There is only one example in whole book which I can say is B2B is the Google search and you can see “customers of Google” in the list of customers. Business being based on online ads, how does that make sense???

But is this relation really important?  Let’s go back a little and look what does it tell us. All companies I listed above are doing a B2B businesses with their customers. Let’s turn the picture around and look from the customer point of view. They have their own value chain. Take Company A case, hotel has a value chain where traveler is the customer and Company A is a supplier. Company A is providing a service (mainly customer relations). So can we say those businesses that have a supplier relation with customers of their customers appear as suppliers of services in their customers value chains? This means there’s always a bigger picture. Payment provider will define a vision about making payments easier, cheaper, etc. But it’s business is just to make another business work. Does that mean some enterprises are _fundamental_ than the others? In the real big picture, when we think about a community, what are most fundamental enterprises? Do we live for a purpose? 🙂 This one is a joke, but you see where this one is going when we start to think about bigger picture.

Summary:
– Some businesses have an inherent relation with customers of their customers which is not modeled in enterprise canvas or business model canvas,
– How do we model this relation and showing relations to other enterprises? Can we use existing frameworks or do we need a different one?
– What are the effects of such relations in the big picture enterprise architecture?

Any comments, anyone?

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  1. tetradian
    January 16, 2012 at 22:45

    Brilliant questions, Iyigun, and a really good way to frame it / challenge it.

    This may take several iterations, so allow me to wander a bit and get it somewhat ‘wrong’, if you would?

    Starting point: Enterprise Canvas is just a way of modelling service-to-service relationships.

    For a service, ‘supplier’ is just a shorthand way of saying ‘some other service from whom I obtain services’; ‘customer’ is just a shorthand way of saying ‘some other service to whom I provide services’. (In a service-architecture, products are regarded as proto-services, a means by which one can deliver a service to oneself using the product, so in effect it’s the same as service-provision.)

    There’s no _fundamental_ difference between ‘supplier’, ‘customer’ and self (or rather, the service currently in focus’): they’re all services, in service-relationships. So you can easily have a context in which a ‘supplier’ and a ‘customer’ are actually the same entity.

    A ‘supplier’s supplier’ or ‘customer’s customer’ is just a chain of service-relationships _all within the same extended-enterprise_. (This is where the distinction I draw between ‘organisation’ and ‘enterprise’ becomes extremely important: the organisation is a _legal_ structure, the enterprise is a structure of shared-_intent_.) All of the players in the shared-enterprise connect to the vision and values (overall aims and overall ‘rules’) of that shared-enterprise (see the ‘ecosystem’ diagram in http://weblog.tomgraves.org/2010/07/02/enterprise-canvas-pt1/ ) – that ‘vertical’ connection is their commitment _to_ that enterprise.

    So within the value-network, we have the ‘horizontal’ exchanges of value, and the common ‘vertical’ connection which determines what ‘value’ _is_ in this shared-enterprise.

    Next, let’s look more closely at those ‘horizontal’ connections.

    In Enterprise Canvas, those connections are split into three parts, or three phases: the interactions that happen before, during and after the main-transaction. Note that most conventional process-models _only_ study and track the main-transaction – and that’s part of the problem we’re dealing with here. We need to track _all_ of the interactions, and with whom they take place; and we also need to keep track of how all these interactions link together, both in value-terms and over time. (Business Model Canvas does this quite well on the ‘Customer’ side, with the distinctions between Customer Relationships [mainly ‘before’], Channels [mainly ‘during’] and Revenue Streams [mainly ‘after’], but unfortunately it doesn’t differentiate much on the Partner/supplier-side.)

    Some of this is covered in Part 2 of the original series on Enterprise Canvas – see http://weblog.tomgraves.org/2010/07/03/enterprise-canvas-pt2/ . As described there, to explore each interaction I would strongly recommend using Nigel Green’s VPEC-T model (Values Policies, Events, Content, Trust – see http://en.wikipedia.org/wiki/VPEC-T ).

    What we now want to do is track the service-relationships and service-transactions.

    Let’s take your Company A example:
    “Online hotel booking: A traveler searches for a hotel in Company A web site and books a room in a hotel. Here hotel is the customer and it’ll pay a commission for the reservation. Traveler is hotels customer. Company A provides the relation between traveler and hotel to the hotel.”

    If we deconstruct this, we have at least the following players:
    T: traveller
    W (‘Company A’): website
    H: hotel(s)
    F: finance-handler (credit-card/clearing-bank – we won’t go into detail on that)

    So we have the following point-to-point service-exchange relationships, in primary time-sequence:
    H – W: provision of hotel-information (to populate the website)
    T – W: hotel-search (at browse-speed)
    T – W: request booking
    W – H: request booking-availability (at near-real-time)
    T – W: browse book-availability, place booking
    W – H: place initial hold for booking
    T – W: booking-deposit, using credit-card
    W – F: validate credit-card, place hold-charge
    W – T: booking confirmed
    W – H: booking confirmed
    (later)
    T – H: hotel services
    H – W: confirm booking-complete
    W – F: use token from H to obtain website-service payment
    T – H: check-out
    H – F: charge T’s credit-card
    (later)
    T – F: pay credit-card bill

    That’s a basic summary of the ‘main-transactions’ (plus or minus a few tweaks and changes in sequence).

    But the ‘transactions’ that actually hold the whole thing together revolve around _trust_ – see http://weblog.tetradian.com/2011/07/23/trust-and-the-enterprise/ . And most of those transactions take place _before_ and/or _after_ the respective ‘main-transactions’.

    In the old models, T would book direct with H, probably based on H’s public reputation – possibly via and on the recommendation of a travel-agent, which took on essentially the same role as W.

    Note how in the new models, there’s much more of a trust feedback-loop that in effect forms a T – T link: one T posts reviews on W of past experience at H, that next T uses to make decisions on selection of H. To make that work, there are a whole set of other ‘main-transactions’ that deal with the information needed for the trust-management.

    I’ll stop there for now: is that enough to get started?

  2. January 17, 2012 at 01:04

    Thanks for reply Tom. I completely understand the service-to-service relationships in the canvas. As you mentioned in one of your posts it’s also important to note that some of the services are not more important than the others. This relationships of services also enables recursiveness. That’s all good.

    I’m trying to look at this service relations from a different view. There’s an asymetry in this service-to-service relations because, again as you mentioned, enterprise and organization are not same things. Each organization defines a vision which is an anchor for enterprise. In the example, W would define a vision, let’s say, “find best hotel”. Within their enterprise there’ll be T, H and F. However each of these will define other visions. Let’s say F will have vision “making payments secure”. In their enterprise there will be different organizations. By using enterprise canvas we can create a model for each of these enterprises. That works fine. Missing part is W’s role in T’s enterprise from W’s point-of-view. That role somehow links T’s customers and suppliers. It also gives a deeper meaning to W’s service. I don’t think enterprise canvas is the right tool to capture this relation (and it doesn’t). If there’ll be a RBP enterprise canvas, that should have this in it. As I wrote in the begining, I don’t have answers neither. I cannot find a metamodel which would have entities which can explain RBPEA. Enterprise canvas is very useful, but I think there’s a need for a higher level metamodel to describe things in real big picture. What do you think?

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