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Group 11: Christian, Mads, Hanne, Pia 24-10-2012. Questions. What are the roles of the various trade communities of CrimsonLogic ? What is the motivation for suppliers and buyers to use CrimsonLogic’s communities? What are the challenges for CrimsonLogic?
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Questions • What are the roles of the various trade communities of CrimsonLogic? • What is the motivation for suppliers and buyers to use CrimsonLogic’s communities? • What are the challenges for CrimsonLogic? • What value-added services can CrimsonLogic offer to a supplier-centric community?
Agenda • Background • B2B E-Commerce hub • Products: TradePalette / TradeNet • Trading community formation • Competitors • Motivation to buy communities • Challenges • Value-added services to offer a supplier-centric community • Recommendation
Background • 1988 - Formed by 4 government-linked companies in Singapore • 2002 - Name changed from SNS (Singapore Network Services) to CrimsonLogic in line with its internationalisationand service area expansion aims • Ownership • International Enterprise Singapore Board (55%) • Singapore Telecom • Civil Aviation Authority of Singapore (CAAS) • Port of Singapore Authority (PSA) • Originally VAN (value-added network) service provider, later ASP (Application Service Provider) • In addition, CrimsonLogic offers systems integration, consulting and licensing services • Worldwide 500 employees (2004) • Headquarter in Singapore • Advanced nationwide information infrastructure • Singapore government is trying to develop it into an international e-commerce hub • Location for many multi-national companies
B2B E-Commerce hub • Electronic marketplace • Requires 2 or more business entities interacting with each other directly or through an intermediary • 3 types • Supplier-centric • Marketplace typically set up by a dominant supplier • Buyer-centric • Marketplace for purchase and acquisition set up by buyers • Intermediary-centric • Marketplace set up by a third party, such as CrimsomLogic, to attract both the buyer and seller businesses to interact • Essential that intermediary company represents large numbers of members
Products: TradePalette and TradeNet TradePalette TradeNet TradeNet Supplier/ Forwarders Buyer/ Regulatory Authorities = EDI VANs = Internet EDIs/XML
Trading community formation Buyers Suppliers Suppliers Suppliers Buyers Buyers TradePalette Traders TradePalette Traders TradePalette Traders Current position Step 1 Few-to-One-to-One Buyer-Driven Formation Step 2 Many-to-One-to-Few Buyer-Driven Formation Step 3 Many-to-One-to-Many Buyer-Driven Formation & Supplier-Driven Formation • Normally created on the initiative of a large buyer • Buyer proposes adoption of the application for data communication with each supplier • Particularly, large buyers have the bargaining power to require adoption of the community • A small community is formed between buyer and some of its suppliers • No. of suppliers gradually increases over time, as buyer’s request for the system to be adopted is taken up • More buyers start to initiate B2B procurement and community grows • Suppliers want additional buyers to join the community in order to enhance the operational efficiency from economics of scale (Ability to produce goods and services and services on a larger scale with fewer costs) CrimsonLogic setup: 1) Sends letter to supplier endorsed by the buyer 2) If supplier agrees to join, CrimsonLogic charges a fee based on the number of electronic data transactions made in addition to a fixed subscription fee
Major competitors • Primarily competition from Singapore-based companies rather than global competitors • Extra services and own communities • Offer server outsourcing • Out-license solution package on the customers’ terms against a license payment
Recommendation • Move from buyer-centric to supplier-centric community offering the value-added services • Move customers from TradeNet til TradePalette • Increase price for TradeNet to make it more attractive to migrate to TradePalette to ensure a higher number of users and to make the application a state of the art standard • Create lock-in effect • Ensure integration with existing systems in order to make it difficult to switch to new system • Introduce upgrades that offer enhanced capabilities in return for the investment of additional time learning the new features • Reward customers when they suggest new buyers / suppliers to the community • Incorporate new proprietary features into your products and services to raise switching costs • Obtain status as preferred standard solution to both buyers and suppliers • Try to get hold of large suppliers / buyers, as they may be influential because they dictate to others the format in which they insist on receiving information and help establish or promote a product standard • Standardisation instead of customisation • A standardised solution is more cost effective • Compatibility / standardisation creates benefits for the members, as they can mix and match their trading across the platform with different stakeholders and intermediaries using the same standard • Differentiation compared to competitors • Close relation to the Singapore authorities
