Digital Transformation Project team 46: Amphenol – Creating a platform to connect the world


For the Digital Transformation Project we looked at the current business and its use of IT of Amphenol Houten. This organization is a business unit of Amphenol Global, a major producer of electric connecting applications as USB and HDMI ports. Amphenol Houten is the link between its manufacturing partners and its customers.

Based on open interviews with business executives of the company, in combination with critically reviewing existing literature, the authors extensively analysed the current business model of Amphenol Houten in its current competitive environment as well as current technology driven business trends.

 Key findings – Amphenol Houten distinguishes two customer categories; big OEMs and small OEMs (including distributors that provide access to other, often even smaller OEMs), both representing different needs that requires different approaches. The big OEMs demand extensive coordination as their specific needs concern high complexity and very asset specific products. Profit margins are low, but large quantities are worth the investment to build long-term relationships. Small OEMs confiscate too much valuable time of the (sales) employees of Amphenol that should be assigned to the bigger OEMs, while the product concern lower complexity and more commodity characteristics. Large margins on low quantities make them valuable clients, but a big risk is that due to the characteristics of a market (rather than the current hierarchy) structure and –attractiveness, distributors that can go directly to manufactures eliminating Amphenol Houten as intermediary between them and the manufacturers. Another important finding was that Amphenol Houten follows an inconsistent IT strategy that flows from its business strategy. The organization has a reactive IT strategy for big OEMs following their requests with an overlapping overall strategy. The organization does not have an IT strategy for improving the information flow to smaller customers, this is because it does not think there is profit to improve things per customer but the organization is not seeing the potential for an overlapping IT strategy to improve their services to the smaller customers.

Main recommendation – Amphenol Houten needs to proactively start with the development and the implementation of an online platform that serves as a more automated intermediary between the suppliers and buyers of connectors. This platform should address the business needs stated, which are a more efficient sales process, a more consistent information and IT strategy and the need to defend against disintermediation. To optimally address this needs the authors advise the platform to be transparent, exploit same-side and cross-sides network effects, enable a high level of standardization, and use a reversed auction for pricing. This platform is shown underneath:

Platform Amphenol

Maxime van Egdom (409346me)
Koen Hut (416751kh)
Siebe Kylstra (412656sk)
Geert Kriek (440801gk)
Stefan van Winden (421142sw)

References:
Amphenol. (2014). 2014 ANNUAL REPORT AMPHENOL.
Eisenmann, T. R., Eisenmann, T. R., Parker, G., Alstyne, M. Van, & Eisenmann, T. (2008). Opening Platforms : How , When and Why ?
King, S. P. (2013). Two Sided Markets. The Australian Economic Review, 46(2), 247–258.
Malone, T. W., Yates, J., & Benjamin, R. I. (1987). Electronic Markets and, 30(6), 484–497.
Porter, M. E. (2003). Strategy and the internet. Harvard Business Review, March, 63–78.

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