Value Net

The Value Net is a domain-neutral tool - developed by an Italian academic, Cinzia Parolini - for mapping:

• The entities within a domain
• The activities these entities perform
• The connections between entities and activities

This approach takes the traditional analysis of value chains - by industry player or industry sector - and adds a new dimension (i.e. not just "who", but "what" and "how") that more accurately reflects the dynamic business models made possible by the Internet.

Parolini penetrates the belief that it is an accumulation of companies that comprises a value-creating system: instead, she suggests that this should instead be seen as a set of value-creating activities/assets that can be reconfigured. From her book, a series of checklists can be derived to analyse:

• The domain under consideration within context (e.g. an NIP application may address a specific business area, but this area will function within a wider context of people, players, business processes and information, which needs to be considered)
• Who does what, and whether this arrangement is both effective and determined (often, process re-engineering is only possible when the existing process is compared with an ideal one)
• What type of activites are being performed (e.g. are they concerned with production, or support?)
• Which activites are particularly high-value and where inefficiencies lie

One of Parolini's main ideas is that the Internet offers an entirely new way of managing information and connections, no longer limited by distribution or geographical constraint. This is fundamental to NIP's business model, where we look for ways to facilitate collaboration and information-sharing between people, departments, and companies.

A complementary part of this analysis is to identify the high-value "hotspots" within a given area, the nature of the current inefficiencies, and bottlenecks that exist in these "hotspots". Transaction cost analysis (originally developed by the economist, Ronald Coase) homes-in on the specifics of relationships between entities, assets and activities to suggest what these inefficiencies and bottlenecks might look like.

These "transaction costs" are centred around the areas of search, information, negotiation, decision-making, policing and enforcement - i.e. a loosely linear set of stages in relationship development that recurs in virtually every business context.

As a result, NIP has been able to look at what broad functionality is needed to support the management of these costs, and this has become an invaluable aspect of requirements-gathering, both in an industry sector, and for individual clients.