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THE EVOLUTION AND PLACE OF THE BUSINESS MODEL WITHIN THE NEW WORLD OF DIGITAL BUSINESS Business model researchers are attempting to determine its meaning, boundaries, components, and relationships with other business aspects, such as business processes and business strategy.Magretta (2002) argues that the business strategy explains how Al-Debei et al. Defining the Business Model Proceedings of the Fourteenth Americas Conference on Information Systems, Toronto, ON, Canada August 14th-17th 2008 5 business organizations hope to do better than their rivals, whilst the business model describes how the pieces of a business all fit together. They see the business model as an interface or an intermediate theoretical layer between the business strategy and the business processes (Osterwalder, 2004; Tikkanen et al., 2005; Rajala and Westerlund, 2005; Morris et al., 2005).Some researchers see them as identical and use the terms interchangeably: Kallio et al. (2006) depict business model components as a set of business strategies.Figure 1.

THE EVOLUTION AND PLACE OF THE BUSINESS MODEL WITHIN THE NEW WORLD OF DIGITAL BUSINESS
Business model researchers are attempting to determine its meaning, boundaries, components, and relationships with other
business aspects, such as business processes and business strategy. There is already some consensus regarding the differences
between the business model and the process model (Pateli and Giaglis, 2003; Morris et al., 2005). However, the debate on the
difference between the business model and business strategy has not been resolved (Porter, 2001; Stähler, 2002; Pateli and
Giaglis, 2004). Some researchers see them as identical and use the terms interchangeably: Kallio et al. (2006) depict business
model components as a set of business strategies. Other researchers suggest that even though both concepts are related, they
represent different levels of information, useful for different purposes. They see the business model as an interface or an
intermediate theoretical layer between the business strategy and the business processes (Osterwalder, 2004; Tikkanen et al.,
2005; Rajala and Westerlund, 2005; Morris et al., 2005). Magretta (2002) argues that the business strategy explains how
Al-Debei et al. Defining the Business Model
Proceedings of the Fourteenth Americas Conference on Information Systems, Toronto, ON, Canada August 14th-17th 2008 5
business organizations hope to do better than their rivals, whilst the business model describes how the pieces of a business all
fit together.
The main reason behind this confusion is the shift that the business world experienced from the traditional way of doing
business to the new way of digital business, which is engulfed with high level of complexity and rapid change (see figure 1).
This new world of digital business has created a gap between the business strategy and business processes. Translating
business strategy into business process has become much more of a challenge.
Figure 1. Comparison between the World of Traditional and Digital Business
Business strategy
Business model
Business process model
Nature of Information
Highly aggregated
Tactical
Operational, highly detailed
A
L