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ABN AMRO Lease (AAL) is a subsidiary of ABN AMRO Bank (AAB) and is specialized in the funding of asset-based solutions. As a subsidiary, AAL has to follow some compliance regulations from AAB. Although AAL’s functions are separated from AAB, they overlap on an interface that controls the login credentials that enables the employees of AAL to make spreadings and ratings, which are crucial processes for credit requests.

At the moment, AAL encounters serious problems with the way the e-mail confirmation process from AAL to AAB works. To authorize AAL employees, a group of 30 managers of AAL receive an e-mail from AAB with a link that they need to click to confirm their subordinates are still working at the company. This is for security reasons, related to the compliance regulations of AAB. If the manager clicks this link, a confirmation signal is sent to AAB. If this is not confirmed (for example if the manager is on holiday and misses the e-mail) and the confirmation is not sent, the employees under the supervisor will be denied access to the system. It takes a few days for the AAL employee to regain access to the system.

The report will provide an analysis of the underlying cause of this problem and will give a solution based on both the short-term and the long-term. The problem stated by AAL concerning the authorization issue, is actually an underlying cause of the difference in corporate maturity. This can be explained with the theory of the corporate life cycle. According to James (1974) companies are not static, but changing over ‘their life’ as well as can experience multiple curves to facilitate continuous growth. These changes within the curve cycle could be placed into five different phases, namely birth, growth, maturity, revival, and decline. AAL is currently located just at the end of the birth phase (Kloos, 2016) whereas AAB is located in the revival phase. This gap in (technological) maturity results in a difference between the communication and lead times of the two companies.

On the short term, AAL encounters most problems with the way the e-mail confirmation process from AAL to AAB works. To solve this, our first suggestion would be the automation of this process.

On the long term, the consequences of the gap in maturity between AAL and AAB need to be minimized. As Behara (2006) stated, business process modeling (BPM) addresses how organizations can identify, model, develop, deploy, and manage their business processes. It enables enterprises to specify their business processes step-by-step. Service Oriented Architecture (SOA) is about bridging the gap between business and IT through a set of business aligned IT services using a set of design principles, patterns, and techniques (Behara, 2016). SOA offers services, while BPM uses services and these two meet each other in the business processes.
The proposed solution for AAL is to redefine the BPM and SOA parts parallel to each other.
This blog is written by Annemiek van der Sluijs (369253), Bernice Hiltrop (354824), Eda Yurdakul (34899), and Sanne Wijnands (371387)

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Platforms are becoming more popular and widely used in our society. We specifically focus on platforms in the music industry as this is very familiar to us and we use them on a daily basis.

In this blog, we would like to elaborate on the business model of Spotify and SoundCloud. You might not see them as direct competitors as we all know Spotify has a mono-homing structure, which is true as both platforms address different customer segments and attract different suppliers. Nevertheless, a change has occurred as of March this year, namely SoundCloud has introduced a similar revenue model as Spotify; a subscription model. If we would place the two models on the long tail graph, Spotify would be placed on the upper right corner and SoundCloud can be placed towards the end of the tail, however, moving towards the right side of the tail due to the implemented revenue model. This positioning can be explained, as Spotify has 75 million users and SoundCloud 175 million users on a monthly basis. Moreover, the difference in type of music offered is significantly diverse among the two. This is partly caused by the content based license model of Spotify in comparison to the ‘more open’ content generation of SoundCloud.

Interesting for Spotify and SoundCloud is that, aside from the suppliers of music and the users of the platform, a third party is involved. These so-called three-sided networks provide a three dimensional network in which all parties benefit from each other’s existence. The third party in this case consists of the advertisers. Three-sided networks have different effects on its parties, positive as well as negative. These are known as same-side network effects and cross-side network effects. Below we will elaborate on two examples of these effects.

Most of you know the advertisements on Spotify. Although advertisers on Spotify reach an enormous number of users, they also face negative same-side network effects. When the number of users grows, more advertisers are willing to pay for an advertisement on Spotify, resulting in a raise of advertisement prices. Moreover, a cross-side network will arise now that advertisers have joined the platform. A positive cross-side effect is that the supply of songs increases, when the number of users increases. However, when the number of listeners grows, the number of advertisements will also grow, as this is more interesting for advertisers. This is annoying for the listeners, thus forming a negative cross-side effect.

To conclude, the current business models in the music industry are experimenting a lot, but none of them are profitable. Therefore, a strong profit driven focus is expected in the future. Moreover, the topic of intellectual property will be interesting, as the trade-off between network value and privacy information is an continuous occurring dilemma, which will be important in future decision-making for the platforms.

This blog is written by team 63; Annemiek van der Sluijs (369253), Bernice Hiltrop (354824), Eda Yurdakul (348993) and Sanne Wijnands (371387).

Check out our video: https://www.youtube.com/watch?v=FmMt03ZjRb0

References:

http://www.sciencedirect.com/science/article/pii/S0024630109000569

https://informationstrategyrsm.wordpress.com/2014/10/11/platform-mediated-networks-itunes-versus-spotify-technology-of-the-week-team-37/

http://www.thesearchparty.com/blog/three-sided-network/

http://www.businessmodelsinc.com/free-drives-paid-the-business-model-of-spotify/

http://pigeonsandplanes.com/in-depth/2016/03/soundcloud-go

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In the article by Porter (2001) on Strategy and the Internet, I was surprised by the paragraphs where it was stated that internet is being used as a complementary aspect of business by existing companies such as Walgreens and W.W. Grainger. Defending the Internet as being cannibalizing existing companies – something I think the Internet is actually doing. The author is mentioning that “virtual activities do not eliminate the need for physical activities, but often amplify their importance” for three reasons. Concluding that the Internet will never replace the entire value chain of goods and services, moreover stating that traditional stores have an advantage over online stores. However, how sustainable are these three arguments? For example, consider the more recent article From Niches to Riches: Anatomy of the Long Tail by Brynjolfssson et al. (2006). In the article, it is indicated that due to the Internet, companies can offer a much wider range of goods and services resulting in changing behavior of the customers. The customer’s desire for variety is addressed by offering an almost unlimited range of products online. More importantly, changing, or better said enhancing, current business practices. Honestly, I am wondering how these (new) online stores, including the offering of a wider range of products, can compete against the brick-and-mortar stores. And thus conquer the three reasons mentioned earlier, if it is expected that customers are continuing to increase their wishes for the online concept or more specifically the wide range of tastes.

In line with these thoughts, I would the Internet not consider as an enabling Technology like Porter (2001) stated, but rather as a disruptive technology. To be clear on the definition of disruptive, I refer to a Harvard Business Review article named What is disruptive Technology by Christensen et al. (2015), which defined the following: a process whereby a smaller company with fewer resources is able to successfully challenge established incumbent businesses. Then also, arguing with Brynjolfssson et al. (2006), the Internet would not just be a complement but a core component of existing businesses. However, this might be a bold statement to make especially as Christensen et al. (2015) is mentioning a current problem where it is observed that disruptive innovations are easily given to new concepts, as the core concepts of a disruptive innovation are misunderstood as well as its basic tenets are being misapplied.

This leaves me with the following question, what role will the Internet play in the future of traditional (shopping) markets?

 

https://hbr.org/2015/12/what-is-disruptive-innovation

Brynjolfsson, E., Hu, Y., & Smith, M. D. (2006). From Niches to Riches: Anatomy of the Long Tail. MITSloan Management Review, 67-71 .

Porter, M. E. (2001). Strategy and the Internet. Harvard Business Review.