Hiking to the PhD Top!

Before the European Conference of Information Systems (ECIS 2007) I was invited for the ECIS doctoral consortium (DC) and had great discussions with PhD students from around Europe.

The DC - very well chaired and organized by professor Helmut Krcmar (TU Munchen) - was held at the Seealpsee nearby Wasserauen in Switzerland. The hinking tour was spectacular and showed the characteristics of a PhD journey.

Petal Power in The Economist

Interviewed by the Economist the merging of the two main flower auctions in the Netherlands is discussed, see Petal Power article. It is always difficult to communicate in "one liners" a complex topic that is critical for the flower industry of the Netherlands.

Here follows the questions that were asked and my answers.

Q. In particular, I am interested to know if you think the merger will indeed make the flower trading system more efficient, or if it is simply forestalling the inevitable development of a new, virtual trading system that will be inherently more efficient that any physical auction can be.

A by EvH. The proposed merger of the two largest Dutch Flower Auctions (FloraHolland and VBA) is a logical step into the direction of creating a larger electronic trading platform and lowering transaction costs in line with mergers in other industries such as the merger of NYSE and Euronext in the financial industry. Ajit Kambil and Eric van Heck, in their book Making Markets (Harvard Business School Press, 2002), have discussed that mergers allow market makers to realize economies of scale and better serve customers by giving them access to a wider range of products and trading opportunities, regardless of their location.

Indeed, the merger will give both auctions a greater scale, as well as larger operations and an extended customer base to share the fixed costs of future investments in technology, marketing and logistical operations. For buyers, the market efficiency in terms of finding the right product and the right seller via the Dutch auction system or the brokerage system will increase as well.

Q. The question is: will the effectiveness of the merged flower grower cooperative increase?

A. It is indeed critical to increase the service levels (in terms of quality and variety of flowers, delivery time, logistical costs, and the ability to react quickly to new customer demands (agility)) to their customers (wholesalers, retailers) and to the customers of their customers. Crucial are the implementation of smart logistical concepts and advanced information sharing with networked information systems among the different partners in the trading network.

Q. Do you think the latest developments in these systems will inevitably do away with physical auction clocks?

A. The transformation from marketplace to marketspace is not easy and is partly determined by the quality of the information that buyers can get out of the market. At the moment, most buyers get better information (about new products and the state of the market) when they are physically present in the auction halls. Improved digital information about the quality of flower products, the reputation of sellers, and the market state will however move buyers to the online trading platform. Physical auction clocks will stay (in the short run) but will be combined with online trading facilities. A hybrid model of offline and online combinations of different trading models (direct, broker, auction, reverse auction) will occur.

Q. And if so, is the merger a step in this direction?

A. The merger will indeed be a step into this direction. Important will be if the merged cooperative will be able to create the next level of customer service, logistical performance, and information architecture. Marketing, logistics, and information systems people have to work together to create the next generation trading platform.

The larger cooperative – every grower has one vote – might lead to better decisions (“the wisdom of the crowds”) but usually with larger groups the speed of decision making is going down.

The Singularity Is Near

I have read Ray Kurzweil's book "The Singularity Is Near". Impressive work in which he makes clear that the technology evolution (genetics, nanotechnology, robotics) is exponential. Supercomputers will match human brain capability by the end of this decade and personal computing will achieve it by around 2020. A key observation in the book is that information processes - computation - will ultimately drive everything that is important. Ray Kurzweil sets the date for the Singularity - representing a profound and disruptive transformation in human capability - as 2045. With regard to online auctions - following Ray Kurzweil's analysis - I think we will see online auction mechanism developed as coordination mechanisms among - for example - nanobots in human bodies. Information systems researchers, genetic researchers, and nanotechnology researchers that work together will come up with disruptive innovations.

PhD Research in Information Systems

Several great PhD researchers finished their dissertations the last few months. It was great to act as opponent.

Mario Duarte Canever at Wageningen University (my alma mater) defended his dissertation with the topic "From Fork to Farm - Demand Chain Management in the Agro-Food Business". He came up with a very interesting demand chain design framework with a first test in the Rio Grande do Sul Beef Business.

Erwin Fielt at Technical University Delft defended his dissertation with the title "Designing for Acceptance : Exchnange Design for Electronic Intermediaries". Erwin came up with a great theory of exchange design patterns.

Mohammed Ibrahim at Tilburg University defended his dissertation entitled "Trust, Dependence and Interorganizational Systems". He came up with the very interesting conceptualization of trust and dependence and empirically validated this new theory.

Thomas Acton at the National University of Ireland in Galway defended his dissertation with the title "Decision Support for Small Screen Information Systems". With the help of experiments Thomas showed that with the help of decision support tools that decision makers could compensate the effect of working with small screen systems such as PDA's. The "viva voce" examination in Galway was a very interesting experience.

Sanna Laukkanen at Helsinki School of Economics - see picture - defended her dissertation entitled "On the Role of Information Systems in Organization Integration: Observations and a Proposal for an Integrative Framework". She used very interesting survey and case studies to analyze the role of information systems and came up with a new theory to assess information systems as an integrative infrastructure. PhD defences in Finland are unique (they can take as long as 6 hours). I have asked 30 questions (somebody in the audience did the counting) and it took in total 2,5 hours. The discussion was excellent.

Portfolios of Exchange Relationships

During ICIS 2006 in Milwaukee (Dec 10 - 13, 2006) we presented our latest research on Portfolios of Exchange Relationships: An Empirical Investigation of an Online IT Marketplace for Small Firms .

With 1,200 participants and 132 presentations ICIS 2006 was very successsful. Thanks to the conference chair William Haseman and program co-chairs Detmar Straub and Stefan Klein. Great research and presentations and the HSE/RSM ICIS 2006 reception was well received.

Online Services Marketplaces

Our research was discussed in an article by Global Services written by Shyamanuja Das entitled Online Services Marketplaces.

Quote from the article:
“Online marketplaces have given the small buyers a place to go shopping for outsourcing services,” says Ulad Radkevitch, Research Scholar, Erasmus University, the Netherlands, and Co-author, Leveraging Offshore IT outsourcing by SMEs through Online Marketplaces — a research paper. Online marketplaces for IT services reduce costs of contact, contract and control for small buyers, argues Radkevitch in the research paper.

Online Flower Trading

Flower Auction Aalsmeer reported an explosive growth of their Online Remote Purchasing system called "Kopen op Afstand". By the end of 2006 around 150 million euro trade is executed via this online auction clock system, approx. 15 % of the total clock turnover. See Aalsmeer news.

Entry Barriers of Online Markets

At the Annual Informs Meeting 2006 (Pittsburgh, November 5-8, 2006) we presented our latest research on entry barriers. Our presentation The Effects of Supplier Entry Barriers on the Performance of Online Markets for IT Services was well received. We compared two online markets (one with high, the other with low entry barriers) and measured the impact on performance.

The Annual Informs Meeting had over 3,100 presentations with several great online auction tracks (around 85 presentations) all organised by Mike Rothkopf. Here you can search the program and sessions.

The Winner's Curse in IT Outsourcing

In November, 2006 Leslie Willcocks and Mary Lacity published their book Global Sourcing of Business and IT Services. The book provides an excellent overview of their research on the different aspects of sourcing.

One of the chapters includes the work by Thomas Kern, Leslie Willcocks, and Eric vanHeck on the Winner' s curse in IT Outsourcing (previously published as "The Winner's Curse in IT Outsourcing: Strategies for Avoiding Relational Trauma", California Management Review, 44 (2), pp. 47-69 .2002).

The Winner's Curse is an intrigueing phenomena: the winner ends up as the loser. In the article we analysed 85 IT outsourcing projects of which 31 projects had a negative impact on the client and 15 projects showed the Winner's curse characteristics. In total 12 projects were negative both for supplier and client and ended up in relational trauma. Lessons learned are provided that overcome these situations.

Theory and Practice of Information Markets

It was fun to be invited by the Helsinki School of Economics to discuss their new research program on the Information Economy. The seminar was held on a ferry between Helsinki and Stockholm (October 25/26/27, 2006). My presentation dealt with Theory and Practice of Information Markets. We discussed the research results and how these results can be applied in practice. On the way back from Stockholm to Helsinki we had some stormy weather, but we survived.

Online Procurement Auctions

The Seventh National Electronic Procurement Seminar was organized September 21, 2006 by the NEVI. There was a lot of interest in the results of the implementation of online auctions for procurement in different industry settings in the Netherlands. Companies such as KLM and Philips provided insights about how to creat value with online procurement auctions. My presentation about Online Procurement Auctions: Success for Buyers and Sellers dealt with different examples and key insights.

BPO as Strategic Partnering

Together with the Management Development Institute (MDI) in Gurgaon, India, we organized on August 24, 2006 a seminar on how to create successful relationships in business process outsourcing between European clients and Indian service providers. Several Indian service providers discussed how to deal with the European market and how to create win-win projects. Attached is the presentation BPO as Strategic Partnering of Prof. Saxena and Dr. Bharadwaj about the preliminary results of the MDI/RSM project. The project is sponsored by the European Union. For me it was the first time to visit India and although two days is short it provided me with some insights about the strenghts and weaknesses of the Indian economy.

Google Business Models

It was an honour to be invited as guest professor 2006 by the University of Munchen. One of the well-known online auction business models is Google. With a group of very dedicated students (related to the Center of Digital Technology & Management) different business models under development at Google Labs were analysed. The voting results with regard to the highest potential of the analysed Google Lab applications were as follows:

- Google Earth: 10 votes
- Google Talk: 3 votes
- Google Video: 2 votes
- Froogle: 2 votes
- Google Desktop: 1 vote
- Google Local for Mobile: 1 vote
- Google Pack: 1 vote

Total 20 votes

Also an interesting experience was that for the first time I was teaching a group where ALL had experience with online auctions (mostly eBay Germany).

Networks in Auctions

The bi-annual Smart Business Networks discovery event, June 14-16, 2006 was again very successful. Executives and scientists discussed the latest on smart business networks. What are critical smart components? What type of applications? What are excellent network strategies? How to develop the business operating system?

Ulad Radkevitch, Otto Koppius and I presented research on ego-networks (suppliers that all the time come back to buyers in auctions). Our empirical analysis comes up with a typology of ego-networks in auctions: small buyers, transactional buyers, relational (small) buyers, relational (large) buyers, and diversifiers. Here is the paper.

Who Will Be World Champion Soccer 2006?

Who Will Be the World Champion Soccer? That is the question that will be asked and discussed the coming weeks by millions (even billions) of people around the world. Will it be Brazil, Germany .... or even the Netherlands!

We would like to predict who will be the winner. One way of predicting is to use a prediction market. Prediction markets create the potential to aggregate information far better than traditional ways of information aggregation and forecasting. Prediction markets are so-called double auctions. Both buyers and sellers (therefore double) buy and sell their shares in auctions.

One of our students - Jérôme Martin - has created SoccerExchange. Here you trade Brazil shares or Germany shares and try to make some money by buying and selling these shares related to the question: Who Will Be The World Champion Soccer? So, let's trade.

Students Present Business Cases

Students in the Master Program of Business Information Management at RSM present May 17, 2006 their business cases for executives of Capgemini and Cordys at the Vanenburg Castle in Putten.
The presentations included a business plan and working prototypes of web based systems developed in the elective course Designing Web-based Systems. The winners - Maarten Fokkelman, Wilco Kuyper, Mohammed Tarrahi, and Zenobie Verkijk - came up with an excellent business plan including a detailed business web, a detailed cost/benefit analysis, and a great working prototype including links to advanced web services. See RSM%2019.JPG

Executive Program in Jakarta

In the Advanced Leadership Program at the Executive Center for Global Leadership (ECGL) in Jakarta critical IT Leadership issues are discussed with executives (Thursday May 4 - Saturday May 6, 2006). The following topics were discussed: strategy and the role of IT, business models, extending the enterprise to smart business networks, the next generetation IT infrastructure, IT investments portfolio approach, the role of the CIO, IT outsourcing and the winner's curse, managing IT projects.

The program is designed and executed by ECGL and RSM Erasmus University.

Presentations at ANU in Canberra

On Thursday April 27 and Friday April 28, 2006 I gave three presentations at the Australian National University (ANU) College of Business and Economics in Canberra for enthusiastic audiences.

The first presentation was a PhD workshop talking about So What, How, and Why of Information Systems Research. With PhD students from the School of Accountancy and Information Systems a lively discussion was undertaken about how to develop Information Systems Theory and the do's and don'ts of PhD research.

The second presentation dealt with the topic of Online Markets and the lessons learned from a decade of research in the Dutch flower industry. The presentation title was Moving to Online Markets.

The Q&A dealt with the role of proxi-bidding in online auctions, the role of logistics and transportations costs related to the bidding costs in the flower auctions, and the role of bundling and how it will have an influence on the optimal design of the distribution network.

The third presentation was about the Emergence of Smart Business Networks organized by the National Centre for Information Systems Research (NCISR).

Q&A dealt with the role of human decision making in the technology-enabled networks, the role of security and privacy in smart business networks, and how companies could share information in complicated network settings.

One of the participants - Tom Worthington - summarized my presentation very well at his web log.

The Beginning of the Beginning

This weblog will focus on the great subject of Online Auction Markets (OAMs). It will try to answer questions like

• what are online auction markets?
  
• what is so typical?
  
• why do these online auction markets exist anyway?
  
• why are online auctions - think about eBay and Google - so successful?
• what is the role of information and information technologies?
• how can you create value with online auction markets?
  

It will keep you up-to-date with a mixture of business, technology, and science.