Monthly Archives: March 2012

GoTradeLive: A LinkedIn eBay on Steroids for Small Business Procurement to Groupon To.

GoTradeLive is launching its new, global, trading platform targeted at small and medium businesses in the US today. Its new free social commerce and commercial trading platform is poised to be as disruptive to the small business Procurement market as Coupa (Cabana) was when it was launched back in 2007 on Procurement Independence Day. This is not something the doctor says lightly.

So what is GoTradeLive? It is, simply put, a power-auction platform for small businesses on steroids. And what’s so great about that, you astutely ask because there are dozens, and dozens, of auction platforms out there ranging from free to seven figures in cost? It’s social. It’s networked. It’s mobile. It’s easy to use. It’s global (and multi-currency). It’s Free. It can be branded. And it’s proven — as it’s already been tested in Australia, New Zealand, China, and the UK, where they have offices.

Let’s take the benefits one-by-one.

  • It’s social
    You can create your own trading networks using a Facebook / Linked-In type interface and these can be public or private for public or private sales or trades.
  • It’s networked
    While the build-your-trading network ability of the Ariba or Ketera networks are not yet there, the building blocks are and you can see it’s coming. But the ability to define custom trading networks is unique.
  • It’s (a) mobile (platform)
    Like the consumer social networks and e-Commerce platforms, they have a mobile app that allows you to monitor your trades and bids from your mobile device.
  • It’s easy to use
    It’s as easy to use as Facebook, eBay, and other consumer sites.
  • It’s global.
    It has already been launched in Australasia and the UK and further global launches are already planned. It supports automatic currency translation for global buying and selling.
  • It’s Free.
    It’s using the Freemium model pioneered by sites like LinkedIn, DropBox, and BaseCamp. It literally costs nothing to use. No registration or account fees. No listing fees. No transaction fees. (However, if you don’t pay, you are subjected to ads and there is nothing to prevent an advertisement for a competitor’s product or auction appearing on your listing page.) Given that the cost of some platforms include transaction fees of up to 15%, this is a great deal.
  • It can be branded.
    For as little as $15 a month, which gives you one-user access, you can brand the site into your own trading platform (with your logo, colour scheme, etc.) and eliminate advertisements. Small Business Pricing is coming soon, and will start at less than $100 / month.

It’s a great social commerce platform for quickly moving slow, excess, or end-of life inventory and a great platform for many small businesses, especially those in retail, construction, and similar goods-based verticals, for spot-buying product needed at irregular intervals. And it has a lot of promise. This is one platform the doctor will be watching closely.

Trade Barrier Reductions

Late last year, as reported on World Trade 100 in Reducing Barriers to Trade, President Obama signed three new Free Trade Agreements with Colombia, Panama, and South Korea to eliminate tariffs and other barriers to U.S. exports, expand trade between the US and the respective country, and promote economic growth.

Columbia is the third largest economy in South and Central America and Panama is one of the fastest growing economies in the region, but it is the South Korea agreement that is of the most interest, especially considering the amount of electronics being imported by the US each year. And South Korea, which is the 15th largest economy in the world, does the most manufacturing in Information and Communication Technology (ICT) of all the OECD countries (Source: OECD ICT Outlook 2010) — almost 50%. And while 50% of global trade in manufactured ICT products takes place outside the OECD countries, dominated primarily by China, the fact that 50% takes place in OECD countries means that global buyers of ICT will soon have access to tariff-free trade on ICT products from the country producing almost 25% of the goods! (See the tariff schedules on the USTR page that reduces the tariffs on many products to 0.)

Under the FTA, nearly 95 percent of bilateral trade in consumer and industrial products will become duty-free within five years of the FTA’s entry into force, with most remaining tariffs eliminated within 10 years. And the almost unrestricted entry into the huge consumer market offered by South Korea will also benefit producers of ICT products, as demand there is almost as high as in Japan and parts of China. This is promising for globalizing ICT companies.

From the Land of D’OH: Timely Payments Make Effective Business

A recent article on how Direct Payments Will Save Government £40 Million a Year caught my eye not because improving efficiency in an organization that spends Hundreds of Millions processing paper will, obviously, save Millions, but because of this paragraph:

The government estimates that ensuring SMEs get paid more promptly will enable them to run their businesses more cost-effectively and pass those savings back to the government. It will also improve the cash flow of small businesses and their ability to plan for future deals.

Supply Chain experts and leaders have been preaching this for years. Slow payments force suppliers to take loans, at terms that are significantly worse than what a large buying organization can get. Sometimes, to make payroll and secure cash-flow when buyers take 60, 90, and even 120 days to pay, small/new/perceived-risk supplier organizations have to borrow at 20%, 30%, and even 40% per annum. This substantially drives up their cost of doing business — a cost that will, inevitably, be passed to the buyer with the short-term mindset. If the buying organization pays on time, or, if it needs to, takes out a loan based on its credit terms, which could be only 6%, 5%, or 4%, to pay on time, the supplier can operate more cost effectively and pass on those savings to the buyer. It is that simple.

But this is a government organization. We should be happy they figured it out before Mayan Doomsday and not The Date Heard Around the World. (At least this way some of us will see the beginnings of a government organization coming to its senses during our lifetime.)

Of course, if the UK government really wants savings, it should mandate that the NHS follow this advice. As the world’s fifth largest employer, it spends £110 Billion a year and processes Millions of payments. That’s a huge savings opportunity!

The New Technology Elite

Coming out in hard-copy form next Tuesday, March 27, The New Technology Elite is the next must-read book on your list (and is already available in The Kindle Store for those of you who want an early start). Vinnie Mirchandani’s latest release on how great companies optimize both technology consumption and production, it is a great follow up to The New Polymath, which chronicled profiles in compound-technology innovations (and which was reviewed here on SI in The New Polymath’s Ten Rules for Success), this book looks at “consumer” (tech) companies that have better technology in-house at a larger scale than most (IT) enterprises. With case studies ranging from the media poster child, Apple, through UPS to Valence Health and Taubman Shopping Centers (yes, shopping centers), it is a fascinating read on how the best product and service companies embrace technology at their core, and utilize it to do whatever they do better, and even innovate upon it in ways that even the big IT shops, who are supposed to be innovating this technology, miss. (For example, UPS had enterprise-ready PDAs [Personal Digital Assistants] long before such technology was generally available in the small business and consumer markets. And, in some ways, they out-innovated shops like Palm and Blackberry.)

The supply chain elite know Apple’s story all too well: optimize the supply chain, optimize the cost, and maximize the profit as the high quality items sell for a premium over competitor’s products. And many of us know about HP’s Quest for a “10 Out of 10” supply chain. And the logistics professionals will know about the decades of technology innovation at UPS, but how many of us know Valence Health, chronicled in Chapter 11?

The US health care system is flawed. As Vinnie astutely points out in Chapter 11 (which is an appropriate location for these factoids as Chapter 11 is a short-form reference to the US Bankruptcy code, and that is the path many traditional health care providers seem to be on), the average cost of health care in the US in 2007 was $7,290 — nearly two and a half times the OECD average of $2,984. And yet, U.S life expectancy, child mortality, and other health metrics are significantly worse than those of other developed countries. Plus, the number of medically uninsured in the US grew 16% from 39.8 Million in 2001 to 46.3 Million in 2008, which left almost 15% of the country uncovered despite record levels of spending. Three of the biggest flaws, according to Stockard (a co-founder of Valence Health) are:

  • Fee-for-service reimbursement
    Providers have no incentive to focus on improving the quality of care to bring costs down as they get paid per service, not per outcome.
  • Lack of population management
    There is no one party responsible for the health of the population as a whole with a focus on keeping people healthy.
  • Inability to measure quality of care
    Lack of comprehensive data across health-care providers and disagreement as to how to measure quality has created a void in measuring the quality of care and outcomes by individual providers.
    There is a lack of evidence as to the impact of different treatment patterns.

To combat some of these issues, Valence Health created an analytics-based product portfolio that provides a turnkey HMO solution capable of administering the financial, actuarial, data analysis, claims payments, customer service, and medical management functions of provider-sponsored health plans across the U.S. This allows groups of doctors and hospitals to come together in a clinical integration practice that allows them to collectively negotiate enhanced reimbursements from healthcare plans, something the FTC won’t allow them to do on their own. This provides a foundation for doctors to negotiate reimbursements based on quality of service and outcomes (instead of having to rely on the quantity of services to reach a profitable reimbursement level). This makes much more sense than a strictly-defined per-service fee as a cured patient will not generate future healthcare costs and is more beneficial to the insurer than a provider who keeps treating the patient indefinitely to cover the costs of having a patient. In addition, the meaningful data that can be pulled from the disparate information systems of various healthcare providers allow these providers to not only define a standard quality of care, but measure it against the benchmark. For the first time, many of these doctors and hospitals can move away from a fee-for-service reimbursement mindset, monitor their population, and measure the quality of care — which is a first step to overcoming many of the flaws of the current U.S. healthcare system. Using technology, Valence Health not only mastered the use of technology in its operations, but disrupted the health-care market.

And this is only one of the many examples of the innovative uses of technology that Vinnie chronicles in his latest tome. Many disrupted and made new markets, when the companies weren’t even looking, and all of them improved operations and customer service. If more companies followed the practices described in this book, maybe it wouldn’t be the case that I’m lamenting that, for the most part, Customer Service Has Gone To Hell in the average organization.

Vinnie starts the book off by quoting Led Zeppelin who always said that this is a song of hope before they performed Stairway to Heaven and it really is a book of hope. It shows that, with dedication and perseverance, companies can use technology to innovate products and operations and take themselves, and their customers, to a new level. Let’s hope that more than a handful of company leaders pick up the book and actually read it — cover to cover — as it is filled with insights well beyond the dozens of deep case studies and hundreds of success story references that it contains.