2 Kijl
2 Kijl
2 Kijl
.................................................................................................................................
Summary
We designed a business model for deploying a myofeedback-based teletreatment service. An iterative and combined
qualitative and quantitative action design approach was used for developing the business model and the related value
network. Insights from surveys, desk research, expert interviews, workshops and quantitative modelling were combined to
produce the first business model and then to refine it in three design cycles. The business model engineering strategy
provided important insights which led to an improved, more viable and feasible business model and related value network
design. Based on this experience, we conclude that the process of early stage business model engineering reduces risk
and produces substantial savings in costs and resources related to service deployment.
Research approach
..............................................................
Case study
.............................................................. An iterative, multi-method action design approach8,9 was
used to develop the business model. There were three steps:
The objective of the present case study was to design a
business model for a myofeedback-based teletreatment
(1) An initial qualitative business model was designed;
service MyoTel. The service was aimed at patients with
(2) A quantitative abstract cost benefit model was then
designed, based on the qualitative model and
interviews with experts;
Correspondence: Björn Kijl, School of Management and Governance, University
of Twente, PO Box 217, 7500 AE Enschede, The Netherlands (Fax: þ31 53 489 (3) A value network design was then derived, based on the
2000; Email: b.kijl@utwente.nl) two models and further interviews with experts.
Journal of Telemedicine and Telecare 2010; 16: 344– 353 DOI: 10.1258/jtt.2010.006009
B Kijl et al. Deployment of e-health services
Dynamic business model engineering workshop for 12 experts in the field of myofeedback and
teletreatments from four European countries (The
and validation Netherlands, Belgium, Sweden and Germany). The method
..............................................................
was based on a scientifically tested business model
Most business model literature has a static and qualitative development method.10
character. There has been little research on early stage The main question was which business model would be
development and validation of business model designs.13,20 needed for deploying the telerehabilitation service and how
In practice, business models are dynamic and change the related value and revenue streams would look. The
continuously – from the R&D phase to the market experts proposed to offer the myofeedback teletreatment
deployment phase – because of changes in market, technology service as a fee-based, full service with the health insurance
and regulatory environments.10,13 This dynamic character is organizations of patients as the primary revenue source.
depicted in the dynamic version of our business model analysis These organizations could reimburse the teletreatment for
framework as discussed in the previous section (see Figure 3).10 their patients. Because of its complexity and technological
Business models could be qualitatively as well as quantitatively character, offering the service in the form of an ‘off the
developed and tested, not only at the market stage, but also at shelf’ product was less viable according to the experts.
the implementation and R&D phases.20,21 Starting to think Table 1 shows the main value network roles, actors and
about business model designs during implementation or, even activities as identified by the experts. A value network role is
worse during the market deployment phase, is common, but it performed by a specific value network actor who performs
is very risky and costly.20 So also is not testing business model the actual activities in the value network (cf a specific actor
designs quantitatively.21 playing a certain role in a film).
In our business model engineering method we aimed to According to the experts, the most crucial role in offering
design an initial business model in the R&D phase of the the service would be that of the telerehabilitation service
innovation process and to quantitatively validate it in order provider. The medical R&D organizations, as well as the
to reduce risks, save costs and improve the chances of software platform provider, were also expected to be
successful deployment. In this way, the business model important because these roles are highly specialized and
could then be further improved in the subsequent phases of more difficult to replace than a hardware or network
implementation and market deployment.10,13,20 provider. According to the experts, good co-operation
between them would be a prerequisite for offering the
teletreatment service in the next stages of the deployment
Step 1: Designing an initial, qualitative process.
For a complete overview of the proposed value network
business model structure and related roles and revenue streams as proposed
..............................................................
by the experts, please see Figures 4 and 5. (The blocks in
In order to develop an initial qualitative business model for the diagrams represent primary value network roles,
the myofeedback telerehabilitation service, we organized a whereas the arrows represent the related activity flows in the
Table 1 Main value network roles, actors and activities identified by the value network. The nodal value network role of the
experts telerehabilitation service provider is centrally located.)
Roles Actor Activities
Figure 4 Initial telerehabilitation service value network structure with value streams
Figure 5 Initial telerehabilitation service value network structure with revenue streams
value streams or revenue streams. It could therefore be used costs for personnel and housing. The volume and cost tables
for designing new value network structures as well as are part of a spreadsheet that simulates the provisioning
validating and improving existing ones. of the teletreatment service in year i from 2008 to 2018.
The ACBM helped to answer the following question: Multiplying Ni and Pi gives the overall costs for year i for
which of the most relevant value network roles will increase each activity. The values for Ni are based on an S-shaped
the costs and which will decrease the costs related to technology adoption curve.22 The values for Pi are based on
implementing the new service? This is crucial information today’s market prices that develop over time, i.e. technology
for defining the money streams and their volumes. When a prices decline (deflating prices), whereas e.g. salary costs for
value network role sees a strong decrease in costs because of professionals increase (inflating prices). This enables Net
implementing the telerehabilitation service, this role may Present Value calculations ( present value calculations of
form an important revenue source for the telerehabilitation expected future cash flows) over the ten-year period as well.
service provider in order to compensate for the value created The ACBM was developed in the form of a spreadsheet
for this role by the telerehabilitation service provider. On the model. By changing the variables in the model, the
other hand, when a value network role has to incur more expected benefits and costs were automatically recalculated.
costs in order to offer telerehabilitation, then this role has to In summary, the ACBM was developed in the following
be compensated for the value created by this value network steps:
role.
(1) Identify the primary value network roles;
Modelling approach (2) Identify the main activities associated with each of the
roles;
The modelling principles underlying the quantitative
(3) Determine the costs related to these activities;
model are relatively simple. The basis of the model forms an
(4) Determine the volumes of the activities;
analysis of the most relevant value network roles in the
(5) Calculate the expected benefits and costs.
context of telerehabilitation deployment. For each of these
stakeholders the most important business processes and
activities are defined. For each activity we determine the
number of times N the activity is carried out and the cost 1. Identify the primary value network roles
price P per activity. With respect to cost price, we On the basis of interviews with the experts, four main value
distinguish between investments and yearly costs. The network roles for benefit and cost calculations were
investments are onetime costs for training and education identified: (1) the myofeedback service provider; (2) the
(needed when new employees get involved) and health-care provider; (3) the employer; and (4) the patient.
investments for equipment (needed when more devices The service provider offers the telerehabilitation service
are needed or old devices are worn out). Other costs are value proposition. Important activities of this role are
Role Activities
Figure 9 Final telerehabilitation service value network structure with revenue streams. The alternate revenue source role is
shown in bold type
(2) Although the myofeedback treatment is expected to be The cost benefit calculations part of our strategy revealed
more efficient compared with the traditional treatment three critical points:
method, the IT investments are likely to exceed the
labour cost savings (see Figure 7); (1) The new myofeedback treatment was more expensive
(3) The expected absence reduction and productivity than traditional treatment;
increase of working myofeedback patients does (2) The labour cost savings are not likely to compensate for
compensate the investments needed at the employer the additional IT costs;
level (see Figure 8). (3) The expected absence reduction and productivity
increase of working myofeedback patients do
compensate for the additional IT costs.
Step 3: Deriving a viable value Our ACBM falsified the initial value network structure that
network design resulted from the first step, where the experts expected that
.............................................................. the teletreatment service would be cheaper than
conventional treatment methods. The introduction of the
Based on the previous two steps the initial value network
myofeedback treatment based on the initial value network
design was updated in the form of two alternative value
structure and related business model design is expected to
network structures.
be difficult due to a lack of incentives for health-care
Because employers (as well as their occupational
insurance organizations to reimburse myofeedback
health-care/disability insurance organizations) and not the
teletreatment. Thus the teletreatment leads to higher
private health-care insurance organizations seem to profit
treatment costs, which may not be attractive to health-care
most from implementing the myofeedback service, a
insurance organizations. However, employers of patients
revenue model based on payments by employers (or their
would receive most benefits related to implementing the
insurance organizations) seems to be more feasible. A related
myofeedback service. Consequently, these organizations
alternative could be to offer the service directly to employees
should be seen as the main potential revenue source and
via the health and safety departments of their employers.
therefore as having a critical value network role.
The value network structures were validated in the form
We conclude that our early stage business model
of eight semi-structured expert interviews with
engineering strategy reduces risk and results in service
organizations that could potentially fulfil critical roles in
deployment costs and resources savings. This is because it
the value network design (such as health-care professionals,
led to business model and related value network design
insurance organizations and potential myofeedback service
improvements that would otherwise have been unknown or
providers). Based on these validation interviews, the first
learned at a much later phase of the deployment process.
alternative value network structure (a revenue model based
Although the results are encouraging, the method needs to
on payments by employers) was the preferred option, in line
be further validated. A more thorough analysis of
with the results of the ACBM. One possible change was
environmental factors like market, technology and
proposed by the experts: they proposed to extend the role of
regulatory environments1,10,13 could be included in the
the software provider in the initial value network structure
future. In the context of new e-health services, regulatory
(see Figure 4) into that of a system integrator which
environments may have a major effect on deployment,
integrates the software as well as hardware components
technological quality and user acceptance.1,2
needed for the myofeedback service. Because of such a
change, the myofeedback service provider could focus on
the delivery of the teletreatment service without the need
for resources to handle technical problems. The resulting
value network design is shown in Figure 9. References
1 Broens TH, Huis in ’t Veld RM, Vollenbroek-Hutten MM, Hermens HJ,
van Halteren AT, Nieuwenhuis LJ. Determinants of successful
telemedicine implementations: a literature study. J Telemed Telecare
2007;13: 30 –9
Conclusions 2 Spil T, Kijl B. E-health business models: from pilot project to successful
.............................................................. deployment. IBIMA Business Review 2009;1:55 –66
3 Amit R, Zott C. Value creation in e-business. Strategic Management Journal
We have described an early stage business model and value 2001;22:493 –520
4 Chesbrough H, Rosenbloom RS. The role of the business model in
network development approach for an e-health service in capturing value from innovation: evidence from Xerox Corporation’s
the R&D phase. We proposed an iterative, multi-method technology spin-off companies. Industrial and Corporate Change
and combined qualitative and quantitative design strategy 2002;11:529 –55
5 Hermens HJ, Vollenbroek-Hutten MM. Towards remote monitoring
for developing the business model and related value and remotely supervised training. J Electromyogr Kinesiol 2008;18:
network. Insights from surveys, desk research, expert 908– 19
interviews, workshops and quantitative modelling were 6 Ilmarinen J, Tuomi K, Klockars M. Changes in the work ability of active
employees over an 11-year period. Scand J Work Environ Health 1997;23
combined to develop the business model and refine it in (Suppl. 1):49 – 57
three design cycles. 7 Ilmarinen J. The Work Ability Index (WAI). Occup Med 2007;57:60
8 Cole R, Purao S, Rossi M, Sein MK. Being proactive: where action research 15 Afuah A, Tucci CL. Internet Business Models and Strategies: Text and Cases.
meets design research. In: Proceedings of 26th International Conference on New York: McGraw-Hill Higher Education, 2000
Information systems (ICIS). Las Vegas, USA 2005:325 –36 16 Osterwalder A, Pigneur Y. Business Model Generation. Wiley, 2010
9 Järvinen P. Action research is similar to design science. Qual Quant 17 Bults RGA, Knoppel DF, Widya IA, Schaake L, Hermens HJ. The
2007;41:37 –54 myofeedback-based teletreatment system and its evaluation. J Telemed
10 Bouwman H, Faber E, Haaker T, Kijl B, De Reuver M. Conceptualizing Telecare 2010;16:308 –15
the STOF Model. In: Bouwman H, Haaker T, De Vos H, eds. Mobile 18 Sandsjö L, Larsman P, Huis in ’t Veld RMHA, Vollenbroek-Hutten MMR.
Service Innovation and Business Models. Berlin: Springer-Verlag, 2008: Clinical evaluation of a myofeedback-based teletreatment service applied
31 –70 in the workplace: a randomized controlled trial. J Telemed Telecare
11 Teece DJ. Business models, business strategy and innovation. Long Range 2010;16:329 –35
Planning (in press) 19 Kosterink SM, Huis in ‘t Veld RMHA, Cagnie B, Hasenbring M,
Vollenbroek-Hutten MMR. The clinical effectiveness of a
12 Haaker T, Faber E, Bouwman H. Balancing customer and network value in
myofeedback-based teletreatment service in patients with non-specific
business models for mobile services. International Journal of Mobile
neck and shoulder pain: a randomized controlled trial. J Telemed Telecare
Communications 2006;4:645 –61
2010;16:316 –21
13 Kijl B, Bouwman H, Haaker T, Faber E. Developing a dynamic business
20 Mason H, Rohner T. The Venture Imperative: A New Model for Corporate
model framework for emerging mobile services. ITS 16th European
Innovation. Boston: Harvard Business School Press, 2002
Regional Conference. Porto, Portugal 2005
21 Tennent J, Friend G. Guide to Business Modelling. 2nd edn. (Economist
14 Pateli AG, Giaglis GM. A research framework for analysing eBusiness Books). Bloomberg Press, 2005
models. European Journal of Information Systems 2004;13:302 –14 22 Rogers EM. Diffusion of Innovations. New York: Free Press, 1995