Wednesday, April 18, 2012

Emerging Business Models in PSI Reuse

                                   Join the discussion on Linked-in & Twitter: #psi4profit

Public sector information (PSI) has been under the spotlight for some time now, mainly for its double role as key driver in the promotion of transparency and accountability, and as important ingredient in the development of modern knowledge economies. Nevertheless, many barriers are still hindering the realisation of PSI full potential. Some of the obstacles concern its accessibility and reusability, others are related with a limited understanding among private actors about the mechanisms of value creation and the real business opportunities deriving from the integration of PSI into new or existing product and service lines.

Many of the studies so far published on the topic (e.g. PIRAMEPSIR)  focused on two main aspects: the quantification of PSI value (answering the question “how much is it worth?”) and upstream information (i.e., public information for which the PSI holder is the sole source and faces no signicant competition in its supply). All this in the belief that once data is made available to the public, the invisible hand of the market will take care of the rest.
The study we carried out (the colleague Michele Osella and I) takes stock of the contributions already present in the literature and proposes a slightly different angle from which to look at the problem. In fact, we concentrated our attention on downstream information in an attempt to answer a so far overlooked question: “How may a public good (PSI) be turned into a profitable business venture?”. In particular, we looked at the problem from a business model perspective in order to understand how value may be created, delivered and appropriated by a company.

More in detail, the exploratory study aimed at answering the following 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?

To answer the above questions we developed an analytical framework that, in combination with Osterwalder's business model ontology, was used to analyse the case studies selected. Such analytical tool proved very useful and could probably be adopted in the development and assessment of any data intensive business venture (see slides 12 to 14).
The main findings and policy implications emerged from the research work conducted are briefly summarized below. 

- The mapping exercise of the most significant experiences present in Europe, showed that PSI reuse by profit-oriented organizations represents a non-marginal phenomenon with heterogeneous levels of maturity among member states.   
- Two market types have been identified  (fluid vs. oligopolistic) characterised by different levels of openness with which PSI is released and different mechanisms of value creation (volume aggregation vs. creativity).  
- From the analysis of the value chain it was possible to identify four main strategic positions that may be employed for the classification of enterprises reusing PSI for profit. In particular, with reference to the role covered in the process of value creation it was possible to distinguish between enablers and tout-court re-users. From a strategic point of view, instead, it was possible to distinguish between enterprises that consider PSI as a key ingredient of their value proposition and enterprises that look at it as a complementary attraction tool. Among the latter, it is noteworthy to mention enterprises that make use of service advertising, that is to say: enterprises developing freely available services to which they associate a brand they intend to promote.
- The case studies conducted allowed to identify eight archetypal business models currently employed by the actors present in the PSI-centric ecosystem. In particular, the choice of the business model to adopt is function of the position covered in the value chain and of the strategic choices made.
- With the establishment of the Open Data framework a new paradigm in information fruition seems to emerge on the horizon. While in a world characterized by barriers hindering the access to information, its fruition is subject to a monetary disbursement. With the advent of a framework  oriented towards data openness (i.e. open by default), access to information occurs free of charge and different forms of payment may be required for restricting the access to derivative works.

- Opening up PSI, thus emphasising its non-rivalry, non-excludability characteristics,  does not seem to hinder its reuse in for-profit activities. The increase in openness and accessibility, in fact, seems to change the value creation mechanisms shifting the sources of competitive advantage from technological and financial aspects to knowledge about specific vertical domains and functional aspects.
- The main profit oriented activities identified are operating at national or international level. Such evidence suggests the presence of a minimum efficient scale necessary for rendering such activities financially sustainable. This result underlines the importance of coordination activities at European and national level in order to improve the impact of local efforts in terms of data openness.
- From the review of the business ventures selected, it emerged that the main sources of public sector information attracting more interest from the private sector at European level seem to be: financial, legal and geographical information. For what concerns Italy, there seems to a be a significant potential in the reuse of touristic and cultural information still to be exploited.
- The interviews conducted allowed to single out a number of policy measures that could significantly   contribute to foster the development of PSI reuse. They may be summarised as follows: 1. The definition of a clear legal framework capable of surviving periodical administration changes, 2. Higher standards in terms of data quality and updating, 3. The promotion of a new organizational culture among civil servants allowing to appreciate the value inherent in PSI as well as to clearly distinguish between property and stewardship of data.

The study was sponsored by the Government of the Piedmont Region, one of the most active European administrations in the open data landscape. The slide set below contains a slightly longer summary of the study, while the full report may be downloaded from the website of the Piedmont ICT Observatory. [FULL REPORT, POLICY BRIEF in Italian].

Enrico Ferro

Post Scriptum: Since the publication of this post, we wrote two short papers in English that were presented at international events organized by W3C, below you find the references and the links to the pdf files:

Ferro E. Osella M. (2012) "Business Models for PSI Re-Use: A Multidimensional Framework", Using Open Data: Policy Modeling, Citizen Empowerment, Data Journalism Workshop, European Commission Headquarters, Brussels [PDF]
Ferro E., Osella M. (2013) "Eight Business Model Archetypes for PSI Re-Use", Open Data on the Web Workshop,  Google Campus, London [PDF

The content of our study was inserted in the white paper published by the Government Agency for Digital Italy: "Guidelines for Semantic Interoperability Through Open Linked Data" (in Italian).

Finally, this post was cited in two O'Reilly Radar articles in USA, the links are provided below:
Article #1: "Open data economy: Eight business models for open data and insight from Deloitte UK"
Article #2: "Making dollars and sense of the open data economy"


View more presentations from Enrico Ferro

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  1. Nice post, Enrico. I've really appreciated your application of BM Canvas to the Public Sector. There’s a lot of stuff any decision maker should think over.

    1. Thanks a lot for your appreciation. I believe that shrinking Government budgets and boundaries will require civil servants to acquire new skills and perspectives.

  2. Very inspiring work.
    I am tempted to follow your path for my PhD thesis
    that deals with BM innovation in logistics based on the use of RFID data.

    best regards

  3. Yann,

    thanks for your comment. The framework we created is very flexible and I believe it may be applied to any type of data-intensive business. Good luck with your dissertation. Enrico.

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