System on chip design service e-business value maximization through a novel MCDM framework
Research highlights
► The System-on-Chip (SOC) design service industry is emerging at the moment when E-commerce has already become one of the most efficient marketing channels. Albeit the SOC design service firms intended to provide services over the internet, the e-business model definitions for silicon intellectual property (SIP) commercialization or SOC design services are not easy for both aspects of technology as well as business development. The authors proposed and verified a novel multiple criteria decision making (MCDM) based e-business model definition framework for maximizing the value-added of online SOC design services.
Introduction
In the past decade, the Internet has become an enabling technology in almost any industry and as part of almost any strategy (Porter, 2001). Uses of the Internet and e-commerce have converted the traditional way of running business and have thoroughly changed the channel of enterprise transactions (Shaw, Gardner, & Thomas, 1997). As industries in general, and high technology industries in special, are being reshaped and the nature of competition changes (Raisinghani, Meade, & Schkade, 2007), deciding on an e-business model, a competition strategy for the marketplace and a structure of business processes for the entire electronic trade course (Wang, 2001), has become daily important for modern high technology firms.
As stated by Young and Johnston (2003), there are a number of traditional business strategy theories that have been used to discuss business-to-business (B2B) e-commerce strategies: transaction cost economics, resource-based view, Porter’s market forces theory, and channel theory. However, there currently exists no comprehensive framework linking these theories into a method to rigorously assess value delivery strategies, and in particular to determine how to maximize the impact of the Internet as a value delivery channel (Young & Johnston, 2003). Raisinghani et al. (2007) also mentioned that although the strategy to rebuild a robust e-business model has not been as widely implemented as had been anticipated, it has had a significant influence on company performance.
Moreover, as the IC (integrated circuit) industry migrates to the System-on-Chip (SOC) era, a novel business model, the SOC design services, is emerging. Now, when the Internet is emerging while e-commerce has already become one of the most efficient marketing channels, most leading design service firms tried to leverage novel e-commerce business models to provide better services. The novel design services include online silicon intellectual property (SIP) sourcing, transactions, integration, etc. to assist customers of SOC design services in enhancing their innovation competences (INCs). The INCs, critical capabilities as well as resources for commercializing SOCs or SIPs, can shorten the time to market and thus, time to money, of both SOC design firms’ and design service customers’. However, defining appropriate SOC design service e-business models are not easy. On the technical site, R&D or production managers of the SOC design service firms are familiar with SOC technologies while do not really understand the needs of customers’ over the Internet. On the business site, sales or marketing managers of the SOC design service firms are familiar with online customers’ needs, wants as well as demands while are unfamiliar to SOC technology developments. Thus, how to establish a decision support framework for defining appropriate SOC design service e-business models to commercialize new SOC/SIP products or services has already become one of the most critical issues for the SOC design service firms. Meanwhile, the proposed framework can also enhance insufficient linkages between traditional business strategy theories and value delivery strategies through the Internet which was mentioned by Young and Johnston (2003) as well as Raisinghani et al. (2007).
Therefore, this research aims to establish a novel multiple criteria decision making (MCDM) framework, which intends to link between INCs being required by novel SOC design services. The proposed MCDM framework intends to maximize values of both the SOC design service e-business models and end SOC products of SOC design service customers’. The INCs, or evaluation criteria, are first summarized using the Delphi method. Then, the relationships between the criteria will be derived by DEMATEL (Decision Making Trial and Evaluation Laboratory). The weights of each criterion versus the goal of the MCDM problem, maximizing the values of SOC design services e-business models, then will be derived based on the structure of the decision problem by using the Analytic Network Process (ANP). After the criteria are derived, the relationships between the INCs (criteria) as well as e-business models will be derived by using the grey relational analysis (GRA) based on the weights of each criterion being derived by the ANP. Finally, the most appropriate e-business model with the highest grey grades which may compensate the current INCs of SOC design service e-business customers and maximize the value of customer’s products and thus, the value of the high technology e-commerce channel, will be selected.
A case study on commercializing a silicon intellectual property (SIP) being developed by an IC design house through an SIP Mall, a web based SIP e-commerce mechanism, being operated by an SOC design service firm will be used for demonstrating the effectiveness of the novel MCDM method. The case study results demonstrated that the IP commercialization model of the SIP Mall which may assist a small-scale IC design house without enough resources to commercialize its SIP products and maximize the SIP value through SIP verification, qualification, marketing, sales, technical supports, etc. will be the most appropriate e-business model to maximize the value of this SIP.
The remainder of this paper is organized as follows: In Section 2, the concepts of innovation, INCs, e-business models, e-business model evaluation and INC set expansion are introduced. In Section 3, an analytic framework and methods are proposed for constructing the evaluation criteria and e-business models’ definitions. The background of the SOC design service, SIP, SIP market and SIP e-business models will be described in Section 4. Then in Section 5, a case study follows, defining an e-business model for commercializing an SIP being developed by an IC design house which is in lack of SIP commercialization resources. Discussion will be presented in Section 6. Section 7 will conclude the whole article with observations, conclusions and recommendations for further study.
Section snippets
Innovation competence and e-business model assessment
Researchers have successfully explored the definitions of business models, e-business models, e-business model evaluation as well as innovation, INC, INC set expansion and resource based view. In the following section, the related literature will be reviewed.
Analytic framework and MCDM-based methods for an innovative e-business model definition
The analytical process for defining e-business models is initiated by collecting the INCs needed to develop design service providers’ INC using the Delphi method. Since any INCs to be derived by the Delphi may impact each other, the structure as well as the priorities of every INC will be derived by the ANP. Finally, the GRA will be applied to get the correlation between the INCs and the available e-business models. Based on the grey grades to be derived by the GRA, the most suitable e-business
SOC design service, SIP and SIP Mall
In the following section, the industry background of SOC design service, SIP, and SIP Mall will be introduced as a background for the empirical study of this paper.
An SIP e-business model definition by using the novel MCDM framework
The authors propose an analytical frame for defining a SOC design service e-business model for an SIP being provided by an SIP provider. SIP experts from the Taiwan Government, industry, and research institutes were invited to evaluate criteria by using the Delphi method. Then the structure between criteria and weights of each criterion will be derived by the novel MCDM framework by the experts. Finally, the relationship between the criteria and available e-business models will be derived
Discussion
As stated by Young and Johnston (2003), there are a number of traditional business strategy theories that have been used to discuss business-to-business (B2B) e-commerce strategy: Transaction Cost Economics, Resource-Based View, Porter’s Market Forces Theory, and Channel Theory. However, there currently exists no comprehensive framework linking these theories into a method to rigorously assess value delivery strategies, and in particular to determine how to maximize the impact of the Internet
Conclusions
The emergence of the Internet has changed the high technology marketing channels at the moment when e-commerce has already become one of the most efficient channels. High technology firms may skip the intermediaries and reach end customers directly. Albeit a number of traditional business strategy theories have been used to discuss e-commerce strategy, few comprehensive frameworks linking these theories into methods to rigorously assess value delivery strategies as well as Internet impact
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