The Value Creation, Value Flows and Liability Debate

posted 14 Nov 2011 09:24 by Michael Boniface

Session Wrap-up

The Value Creation, Value Flows and Liability over Virtual Resources at the FIA Poznan sees a number of key messages to remember and lessons learned as summarized by Michael Boniface (session co-organizer, rapporteur):

The creation, distribution, and consumption of virtual resources is a foundation element of Future Internet and the digital economy. Disruptive innovations in virtualised infrastructures has reduced TCO, enabled faster time-to-market for new application and services, and improved business continuity/disaster recovery. Virtualisation is rapidly moving from its roots in computing to encompass all Internet-connected hardware from the network to the Internet of Things. In addition, disruptive innovations in content distribution and business models has moved virtual goods into a major revenue stream for the media and entertainment industry. Consumers are spending real money on intangible virtual goods with the estimated total European market for virtual goods alone in 2010 was estimated at $1.02 Billion which is comparible to the US. In the session, virtualisation and liability aspects were discussed from two perspectives:
  • Infrastructure Perspective: in order to explore value creation and revenue flows in Future Internet business scenarios for network and service co-management as well as to exploit such issues in the area of Future Internet of Things,
  • Societal and Business Application Perspective: in order to challenge business applications in Software as a Service context and services infrastructures for social and business innovation.

An Industry Perspective

The session kicked off with a motivating talk by Mick Haynes from Hitrail about the evolution of networks and service infrastructures within the railway industry. With the recent push by EU legislation for greater interoperability, cooperation and competition between railway operators, Hitrail are looking to Future Internet technologies such as Cloud and IPv6 to deliver reduced costs and greater efficiency. Hitrail support three main clients' including traditional large railways, low cost smaller railways and operators providing connections to other transport systems. Data is at the heart of thier network with requirements for real-time exchange, synchronization and global indexing of database across administrative domains.  Mick said the major challenge is to open their infrastructure to new types of services whilst still delivering connectivity, security, QoS guarantees and service reliability in critical applications such as reservation, availability, interchange, and freight consignment notes. 

Reducing Infrastructure Costs

Makis Stamatelatos, University of Athens led the infrastructure perspective arguing that virtualized resources are the foundation of the Future Internet but with so much complexity the identifying the distribution of responsibilities is tough. Cutting costs was the major focus of discussion within this perspective with management costs currently running at 30%. Sergi Figuerola from i2CAT said that GEYSERS goal is CAPEX reduction through the use and interconnection between virtualized infrastructures. GEYSER's identifies three roles physical provider, virtual infrastructure provider, virtual infrastructure operator. Sergi argued that a common information model is needed along with greater flexibility in actor roles. Such an approach would allow stakeholders to play multiple roles and allows for recursive combinations of infrastructures to be created and controlled. Value chain scenario analysis and role assignment is an essential part of the UNIVESELF project which aims to develop a unifying network management system.  Although, virtualization and autonomics have potential to reduce costs Martin Waldburger, University of Zurich, highlighted how accounting for high speed networks is a significant cost driver. With only nSecs per package processing time for a 10G link the risk of loss of information is increasing, at a time when the legislative requirements are becoming ever more stringent. 

Innovation and Service Commodities 

Man-Sze Li, IC Focus Ltd introduced the Services and Business perspective outlining the vision of the FInES cluster for Interoperable Service Utilities and Open Business Ecosystems. VLASTUIN, a European SME, said that Europe needed to create a value network environment for open innovation. Neutrality of services needs to be preserved and a new approach to intellectual property rights must be adopted that replaces the current Patent wars. Sergi Gusmeroli, Txt solutions, challenged the FI-PP asking whether the generic enablers were enough to bootstrap a universal business ecosystem? When a service is commoditized it becomes the enabler for innovation and the micro enterprise can join. Sergi called for the PPP to commoditize service capabilities through open processes for the Enterprise and to avoid just trying to protect value in service assets.

Questions and Answers

The final discussion was chaired by Professor Marcus Seifert, University of Bremen

What are the values for Europe, in respect to the other countries and continents?

Markus argued that we need to put these values into our interpretation of the Future Internet. The discussion contrasted the value of the Internet of Things and people. Should we consider things or the experience of things? How to protect the things we value? The US has a habit of amplifying their values on the Internet whilst in Europe we experience the continuous tension between Internet freedom and championing of European values. The way in which value is represented on the Internet is changing. With 600K iPhone apps and 500K Andriod apps micro values exist. For example, how would have thought that a customer would pay to drink a virtual glass of beer? Clearly, there's a shift in the balance between economic quantitative and qualitative values though online community interaction. Finally, the session highlighted the conflict/contrast between industries desire for greater openness in closed and structured networks and individuals and business desire for greater control/closure of open unstructured networks. This is the balance that is currently being played out within the Future Internet ecosystem.

Who should pay for the Future Internet?

Google's business model targets users but Google is also a "user" of infrastructure in similar ways to how the Enterprise is a consumer of the network. User's only pay when we use a resource and therefore the Future Internet needs the dynamics in the network itself. Economics would tell us that the value is the utility of thing, although we do not expect utility services to be commercially viable within the timeframe of 2020, not through conventional market incentives. There are lots of other models emerging (e.g. PPP) and alternatives to PPP to enable different parties to work together. Key challenge is that the economic models do not have enough conceptual tools to understand the nature of intangibles.

Where does Europe need to learn?

Where do we have to learn and develop to make benefit from the technologies as society, companies and policy makers?
  • Company: Look out of the box, entertainment, virtual world to try and get new business models and innovations, value is not only money, "serious gaming". Games is a forerunner of many internet services, research is always lacking behind the games market. Increase the collaboration between the games and the research community. 
  • Software Industry: the right to fail is important, in Europe we do not admit to failure easily, innovation and failure is part of the game but this must be matched with the responsibility to learn. How to rule the use of Facebook in an enterprise? Simple issue but difficult in practice to translate social into the enterprise
  • Research. Need to develop new approaches to interconnect students within Europe, beyond the exchange of students, publications towards interconnection in different backgrounds, challenge the trends proposed by industry, 

Links and Information

Statement Presentations

Rapporteurs/Organisers

  • Makis Stamatelatos, University of Athens
  • Man-Sze Li, IC Focus Ltd
  • Professor Marcus Seifert, University of Bremen
  • Michael Boniface, University of Southampton