Software partnerships and business models: Referral
The European Workshop on Software Ecosystems is an annual event which connects top notch researchers and business professionals in the field of software and platform ecosystems as well as business networks. Here is an example of a topic we will discuss at the event.
Referral
Referral means that the software vendor has outsourced lead generation to a partner company. The partner company creates the leads, passes the leads back to the software vendor. The software vendor pays a referral fee to the partner for a qualified lead and/or a closed deal with the lead.
Referral is very popular in the software industry. It can be used as a one-time or repetitive form of cooperation between two software companies. Advantages of referral are easy creation of the program and of the leads, low impact on both organizations, partner and software vendor, and limited risk.
A Referral program has a very low entry barrier and low maintenance effort.
Business Model Canvas for Referral
Mapping referral into the business model canvas results in the following: The value proposition of referral for the partner is the additional revenue he/she can get via the referral fee from SAP or the SAP VAR. Customer relationships: the software vendor has to care for the referral relationship to the partner and the customer. The key channel is the partner network.
Revenue streams for the software vendor are the usual license, support, maintenance fees.
Key activity is enabling partners to properly present, position and show the value of the solutions to customers. They might need marketing material, price lists, demo systems to make referrals happen.
The cost structure is referral fee cost besides normal software vendor cost structure.
More details and background information can be found in these books:
Software business models: Google´s Business Model
The European Workshop on Software Ecosystems is an annual event which connects top notch researchers and business professionals in the field of software and platform ecosystems as well as business networks. Here is an example of a topic we will discuss at the event.
Google is a software company that started in the search and online advertising business and has extended its business to many other areas. Google´s revenue is mainly from broker business.
What Google does successfully is matchmaking between online advertisers and potential customers. But Google has more products and services than just online advertising and search. Let us have a look at the business model. We start with the products/services offered and the business model archetype.
Besides of Google´s main business as a broker, Google is a manufacturer of the Google Search Appliance, which is a hardware appliance that includes Google´s Search Engine. Target customers are companies, that should use the search appliance for searching their intranet. Inventor business at Google is mainly focused on inventing products for the broker business and for other SaaS offerings like Google Apps, Gmail or Google Voice. The SaaS offerings are created by combining the business models Physical Lessor, IP Lessor and Contractor. In addition, Google acts as a IP Lessor for browser, operating systems and content of books.
Google business model canvas
Looking at all major Google businesses the following Google business model canvas can be created:
The key value propositions of Google circulate around free and easy to use offerings as well as apps for end users as well as online advertising and cheap online solution for corporate customers.
Customer relationships in the Google business model canvas are mainly highly automated mass relationships, while some direct relationships are kept for corporate customers.
Revenue streams of Google will be analyzed further down on this page.
If we look only at Google search, we find the following business model canvas:
Google´s revenue models
This overview of revenue models is limited to large sources of Google revenue. As mentioned above, the main source of revenue at Google is from their broker business, which we will analyze in a little more detail below.
Now let us have a look at Google´s revenue model for the broker business. As you may remember, there usually is a compensation for every product and service, not necessarily as a payment. In Google´s case the non-monetary compensation for their search offering is the key to Google´s fortune.
Here you can see that Google´s search business basically provides a search service to search customers and a PPC (Pay per click) advertising service to its advertising customers. The compensation for the PPC advertising service is payment per click on an advertisement. The non-monetary compensation for the search service is data about the user who is searching.
Google´s revenue model synergies
The Google business model has two striking advantages: The information about the search customers is provided to Google for free and Google sells advertising space, perfectly matched with the customer in-formation, to advertisers via an automatic online auction.
So Google leverages a revenue synergy between the search and advertising business. The revenue model allows the revenue generated in the broker business to be used to carry the sunk cost and operations cost of offerings like Gmail and others.
Find more information on business models in the following books:
Software partnerships and business models: Appstores - online marketplaces for partner products
The European Workshop on Software Ecosystems is an annual event which connects top notch researchers and business professionals in the field of software and platform ecosystems as well as business networks. Here is an example of a topic we will discuss at the event.
Appstore description
Large software or device vendors usually offer an Appstoreto sell applications based on their platforms. Customers of the Appstore gather there to look for complementing solutions from partners. Partners have the opportunity to advertise partner solutions exactly where customers are looking for the solutions.
Business model canvas for appstores
The value proposition of the marketplace for the partner contains two items. The first value proposition is access to the customer base of the appstore provider as well as to other partners and other visitors of the marketplace. The second value proposition is the additional revenue the partner can get from selling to the customers of the appstore provider.
Customer relationships: the software vendor has to care for the referral relationship to the partner and the customer. The partner might get engaged with customer segments containing customers of the software vendor, prospects of the software vendor, other partners of the software vendors visiting the marketplace and other visitors of the marketplace as well.
More details and background information can be found in these books: