Group 2 B2B Exchanges
description
Transcript of Group 2 B2B Exchanges
Nov. 2003Nov. 2003
Group 2Group 2B2B ExchangesB2B Exchanges
Timothy BrasherTimothy BrasherTamira D. MeierTamira D. Meier
Stephen P. NicholasStephen P. Nicholas
www.neonultra.com/b2b_b2c_b2g.htmwww.neonultra.com/b2b_b2c_b2g.htm
B2B ExchangeB2B Exchange
Worldwide: B2B market for services projected to Worldwide: B2B market for services projected to grow from $403 billion (2000) to between $2.4 to grow from $403 billion (2000) to between $2.4 to $7.29 trillion (2004) $7.29 trillion (2004)
B2B e-commerce represents 7% of forecasted B2B e-commerce represents 7% of forecasted $105 trillion of total global sales transactions$105 trillion of total global sales transactions
All businesses will eventually buy on, sell on, All businesses will eventually buy on, sell on, host on or be marginalized by an exchangehost on or be marginalized by an exchange
www.emarketer.comwww.emarketer.com
B2B ExchangeB2B Exchange
Forecasted B2B Revenues WorldwideForecasted B2B Revenues Worldwide
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What is a B2B Exchange?What is a B2B Exchange? An e-marketplace where buyers and sellers exchange An e-marketplace where buyers and sellers exchange
goods and servicesgoods and services Purchase mechanisms – one of the following:Purchase mechanisms – one of the following:
* Auction* Auction * Reverse Auction* Reverse Auction* Aggregate Auction* Aggregate Auction * Catalogs* Catalogs* RFQ/RFP* RFQ/RFP * Matching buyers & Sellers* Matching buyers & Sellers* Value-Added Services* Value-Added Services
Examples of services:Examples of services:* Portal* Portal * Workflow Management* Workflow Management* Application Rental* Application Rental
B2B exchanges produce revenue via membership and B2B exchanges produce revenue via membership and subscription fees, transaction fees or some combination subscription fees, transaction fees or some combination
B2B ExchangeB2B Exchange
A B2B exchange is a cooperative among businesses A B2B exchange is a cooperative among businesses where each corporation shares resources of where each corporation shares resources of critical critical commoditiescommodities Critical commodities provide incentive to: Critical commodities provide incentive to:
collaboratecollaboratereduce costs reduce costs share gainsshare gains
CONTRIBUTIONCONTRIBUTION COMMODITYCOMMODITY DIFFERENTIATORDIFFERENTIATORCRITICALCRITICAL Critical CommoditiesCritical Commodities *** *** Critical Critical
Differentiators ***Differentiators ***
USEFULUSEFUL Useful CommoditiesUseful Commodities Eliminate/MigrateEliminate/Migrate
Lacity, Mary, and Willcocks, Leslie, Global Information TecLacity, Mary, and Willcocks, Leslie, Global Information Technology Outsourcing: Search For Business Advantage, Johnhnology Outsourcing: Search For Business Advantage, John
B2B ExchangeB2B Exchange
Potential competitors reduce costs through Potential competitors reduce costs through shared industry ventures (critical commodities)shared industry ventures (critical commodities)Supply Chain Management:Supply Chain Management: Web based trade exchange for procurementWeb based trade exchange for procurement Component suppliers bid via exchangeComponent suppliers bid via exchange Preferred supplier vs. open bidding?Preferred supplier vs. open bidding? Just in Time (JIT) inventoryJust in Time (JIT) inventory
Fixed Fixed networks vs. networks vs. virtualvirtual networks networks
www.covisint.com/cgi-binwww.covisint.com/cgi-bin
B2B ExchangeB2B Exchange
Value-Added BenefitsValue-Added Benefits Economies of scale - cut IT development and Economies of scale - cut IT development and
operating costsoperating costs Scalable common industry interfaceScalable common industry interface Cut deployment costsCut deployment costs View real-time dataView real-time data Increased visibility across supply chainIncreased visibility across supply chain Security/data integrity (128 bit encryption)Security/data integrity (128 bit encryption)
http://search.epnet.com/direct.asp?an=5271260&db=afh">Thttp://search.epnet.com/direct.asp?an=5271260&db=afh">The Dynamics of B2B E-Commerce.</he Dynamics of B2B E-Commerce.</
Three Categories DefinedThree Categories Defined
ConsortiumConsortium One or more business organizations pool leading One or more business organizations pool leading
vendors or buyers in a particular industryvendors or buyers in a particular industry
Public ExchangesPublic Exchanges Run by third party, open to all companies that meet Run by third party, open to all companies that meet
standardsstandards
Private MarketplacesPrivate Marketplaces Run by a single company and it’s key suppliersRun by a single company and it’s key suppliers
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Three Categories of B2BThree Categories of B2B
ConsortiumConsortium Global Food ExchangeGlobal Food Exchange CovisintCovisint
Public ExchangesPublic Exchanges Commerce OneCommerce One
Private ExchangesPrivate Exchanges Wal-Mart and DellWal-Mart and Dell FuelQuest, Inc.FuelQuest, Inc.
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Horizontal ExchangeHorizontal Exchange
Horizontal Portal ExchangesHorizontal Portal Exchanges Provides specializes services across Provides specializes services across severalseveral
industries.industries.Example: SteelNet.comExample: SteelNet.com
SalesinfoSalesinfo MarketsMarkets SuppliesSupplies
Supplied to customers across multiple domainsSupplied to customers across multiple domains
neonultra.com/b2b_b2c_b2g.htmneonultra.com/b2b_b2c_b2g.htm
Vertical ExchangeVertical Exchange
Vertical Portal ExchangesVertical Portal Exchanges Provides a set of services across a Provides a set of services across a singlesingle
industryindustryExample: VerticalNet.com Example: VerticalNet.com
TechnologyTechnology CommunicationCommunication EnvironmentalEnvironmental Healthcare/ScienceHealthcare/Science
Biosearch.com: biotechnology/life scienceBiosearch.com: biotechnology/life scienceDrugdiscoveryonline.com: pharmaceutical industryDrugdiscoveryonline.com: pharmaceutical industry
Case StudiesCase Studies
CovisintCovisint Automotive IndustryAutomotive Industry
FuelQuest, Inc.FuelQuest, Inc. Petroleum IndustryPetroleum Industry
FreeMarkets.comFreeMarkets.com Industrial Goods & Services Industrial Goods & Services
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www.covisint.com
Covisint Case Study
• Who Are They?• Background Information• What Do They Do?/Services• Benefits of Their Services
• Case Study Conclusions
Nov. 2003
www.covisint.com
Covisint
• The Global independent e-business environment for the automotive industry.
• Mission: Provide services that connect trading partners and improve their interactions within their supply chain.
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www.covisint.com
Who is Covisint?
• Covisint is the technology services company whose business-to-business applications and communication services connect the global automotive industry.
• They provide their customers with a common connection to suppliers, manufacturers and dealers in the automotive industry.
Nov. 2003
www.covisint.com
Background
• Founders:• Covisint was formed by
DaimlerChrysler, Ford, General Motors and Renault-Nissan. – PSA Peugeot Citroen has
also joined the initiative.
Nov. 2003
www.covisint.com
Background• Began Providing Services
– US – January 1st 2001– Europe, Asia Pacific, and Latin
American- July, 2001• Locations
– HQ – Southfield, MI– Amsterdam– Tokyo– Frankfurt– Paris– Brazil
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www.covisint.com
Covisint’s Background
• Industry Participants (Suppliers)
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www.covisint.com
Covisint’s Background
• Technology Partners
• Technology Providers
Nov. 2003
www.covisint.com
Covisint’s Services
• What do they do?– Works with manufactures, suppliers and
industry trade groups worldwide to define and implement effective common processes for the industry.
• Goals– Reduce costs– Increase efficiency– Enhance quality– Improve time to the market
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www.covisint.com
Covisint’s Services
• Procurement• Quality• Portal
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www.covisint.com
ProcurementCovisint Procurement dramatically reduces the
amount of time needed to complete sourcing activities.
• Auctions:– Becoming e-Enabled – Process Savings – Price Savings – Improved Decision Making – Benefits to both Buyers and Sellers – Return on Investment
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www.covisint.com
Procurement
• Covisint Catalogs– Reduced Purchasing
Costs– Controlled Buying– Process Savings– Lower Overhead
Costs
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www.covisint.com
Covisint Quality
• Covisint's Quality Solution Suite – provides industry standard web based tools to drive
and accelerate product and process quality improvements through enhanced execution of quality planning and management across the supply chain
• Problem Solver– To coordinate and manage problem solving
between customers and suppliers
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www.covisint.com
Covisint QualityCustomer Benefits:
• Decrease administrative cost and increase employee efficiency – reducing the paperwork expended in
communicating problems to their suppliers • Improve product quality and decrease costs from
faster problem communication and thereby faster resulting corrective actions.
• Evaluate supplier performance and identify opportunities for continuous improvement.
• Enables the process of implementing a secondary inspection process to ensure the delivery of quality parts.
• Provides an easy means to record and recover the financial consequences of quality problems.
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www.covisint.com
Covisint QualitySupplier Benefits
• Provides an industry standard method for responding to customer problems.
• Speeds resolution process through quicker and better understanding of the issues.
• Continuous quality improvement due to improved knowledge of the patterns of issues.
• Provides a customer accepted solution to a quality problem.
• Provides the means to track the cost of bad quality.
• Electronic ability to accept or challenge costs.
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www.covisint.com
Covisint Portal• The Covisint Portal allows industry participants
to access OEM applications, Supplier applications, and Covisint applications via one common framework.
• Reduce IT and development costs• Leverage Internet and automotive industry
standards• Cut Deployment costs• Increase visibility across supply chain• Best in-class security• Integrating applications
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www.covisint.com
Covisint Portal
• CSM: Global Market intelligence and forecasting services
• HCI Group LTD: International Business Resource Journals services and products
• Asia Talk, Euro Talk, Ameri Talk
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www.covisint.com
Covisint Portal128 bit encryption
• Security: Third party security certification by Trust Services.
• Audits validity, security, integrity, and maintainability
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www.covisint.com
Portal
• My Workspace: customized views of information – mix and match information from multiple companies into comprehensive view.
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www.covisint.com
GROWTH
• Covisint: continues path of acceleration membership growth (253%)
• 77,000 active users in over 15,000 companies
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www.covisint.com
Covisint: Is it working?
• Daimler Chrysler AG– “e –procurement” 10 billion euros 2001– Online bidding (5/2001) 3.5 billion Euros– “e-shop” online catalog reduce process costs by 50%– “e- docs” shared document– “Fast car” automotive development
Nov. 2003
www.covisint.com
COVISINT
• “The supplier portal supports our vision for an electronically-linked supply chain and will help DELPHI to support our customers requirements for responsiveness.”
J.T. Bohgbey CEO DELPHI
Nov. 2003
www.covisint.com
Covisint
• “Since launch we have responded to customer demands with flexible solutions that address their critical business needs and connect their supply chains. IT is the focus that has led to reductions in inefficiencies in our customer’s supply chains and enabled us to succeed where other exchanges have failed.”
Bruce Swift President and CEO of Covisint
Nov. 2003
www.fuelquest.com
FuelQuest Case Study
• Vision• Background• Services• Conclusion
Nov. 2003
www.fuelquest.com
FuelQuest Vision
• Lead the charge to transform the businesses of petroleum suppliers, marketers, and large petroleum buyers into service-driven, technology-savvy, and Internet-enabled industry leaders intent on winning market share and growing profits.1
Nov. 2003
www.fuelquest.com
FuelQuests’ Background
• Independent• First transaction October 1998• Industry leader in on-line petroleum sales
– Provided first web-based business-management solution for petroleum marketers
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www.fuelquest.com
FuelQuest Services
Provides and hosts web-based supply chain integration and collaboration technologies for the downstream petroleum industry.
Applications support procurement, management and sales of fuels and lubricants
Focus areas: price management, strategic sourcing, logistics optimization, remote inventory monitoring e-Procurement, and automated tax compliance
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www.fuelquest.com
Capital Partners• CIBC Capital Partners
– Merchant Banking Group– Venture Group– Private Equity Funds Group– Strategic Investments
• EnerTech Capital• Lehman Brothers Venture Capital Group • TechQuest Capital Partners, LLC
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www.fuelquest.com
Clients
• Over 900 Clients– Large Commercial
Users & Retailers
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www.fuelquest.com
Suppliers and Refiners
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www.fuelquest.com
Distributors & Marketers
Customer base: Over 650 small to medium size businesses
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www.fuelquest.com
Alliances
AIMS Accenture DM2 Software, Inc. Sun Microsystems
Microsoft Cisco IBM Oracle
Technology
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www.fuelquest.com
Alliances
• Accenture• FuelAccess • b2b Solutions
Marketing• Meridian Associates, Inc.• FTA • Petroleum Marketers
Association (PMAA)
Industry
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www.fuelquest.com
FuelQuest Solutions
• Supply Chain Management• eCommerce and Portals• Tax Automation• Consulting Services
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www.fuelquest.com
FuelQuest Solutions
• Supply Chain Management– Links customers, suppliers, terminals, warehouses,
distributors, carriers, and trading partners in one virtual enterprise.
• Replaces manual or linear SCM models– Circular model offers greater interaction, responsiveness, and
cost savings.
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www.fuelquest.com
FuelQuest Solutions
• eCommerce and Portals– Effectively sell and service existing customers with
online access to services and products– Reduce time to get business critical information to
dealers and distributors from one to seven days– Decrease overall mail sent to dealers, jobbers, and
distributors by at least 70%– Draw from existing applications for an inventory
report, or provide a new capability hosted entirely by the Portal
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www.fuelquest.com
Supply Chain Process
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www.fuelquest.com
FuelQuest Solutions
• Tax Automation– ZyTax providers Excise Tax compliance
technologies and consulting services• Reliable, scalable solutions tailored for any size
business. • Automates invoice calculations and compliance
reporting to local, state, and federal authorities.– Automates motor fuel excise tax calculation and
reporting.
Nov. 2003
www.fuelquest.com
FuelQuest Solutions• Consulting Services
– Professional Services– Integration Service – Application Development
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www.fuelquest.com
Success• FuelQuest remains successful:
– Acts as a hub• Independent marketers have own site
– Site contains news and information– Conduct transactions with their own customers
– Handles pricing on a one-to-one basis, not open bid market
– Online tools support contract business• Support contract business• Automate the RFQ
Nov. 2003
FreeMarket Case Study
• Background• Services• Case Study Conclusion
1=http://www.freemarkets.com/en/freemarkets/default.asp
What is FreeMarket
• “Empowers organizations… with the software, services and information to capitalize on the global economy.”1
• Improve supply management processes
• Expand reach and capabilities of supply mgmt organization
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FreeMarkets’ Background
• Company founded 1995• IPO December 10, 1999 (NASDAQ
FMKT)• IPO Price per share $48
http://www.freemarkets.com/en/freemarkets/literature.asp
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FreeMarket’s Background
• Customers:
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FreeMarket’s Mission
• “working hand-in-hand with our customers”
• “drive bottom-line benefits for the entire company”
• “providing a broad and deep mix of products and services”
• “offer… practical, configurable set of software and services”
Nov. 2003
FreeMarket’s Services
• Integrated Solutions• Software Solutions• Global Services
Nov. 2003
Integrated Solutions
• FullSource• Supplier Implementation Solution • Spend Visibility Solution • Sourcing Empowerment Package
http://www.freemarkets.com/en/solutions/integrated/fullsource/features.asp
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Integrated Solutions
• FullSource– getting faster results– minimizing supply risks– building capabilities– tackling tough spend
• Supplier Implementation Solution • Spend Visibility Solution • Sourcing Empowerment Package
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http://www.freemarkets.com/en/solutions/integrated/supplier_imp/features.asp
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Integrated Solutions
• FullSource• Supplier Implementation Solution
– Skilled, short term implementation resources– Project Management – Document Collaboration– Repeatable Process Library
• Spend Visibility Solution • Sourcing Empowerment Package
http://www.freemarkets.com/en/solutions/integrated/spend_vis/features.asp
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Integrated Solutions
• FullSource• Supplier Implementation Solution • Spend Visibility Solution
– Spend data collection– Data cleansing– Ad-hoc and historical analysis to impact
decision making• Sourcing Empowerment Package
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Integrated Solutions
• FullSource• Supplier Implementation Solution • Spend Visibility Solution • Sourcing Empowerment Package
– Assists buyers and suppliers with outsourcing decision
– Supplier training– Help desk
Nov. 2003
Software Solutions
• FreeMarkets ES™ • FreeMarkets QS™
http://www.freemarkets.com/en/solutions/software/es/default.asp
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Software Solutions
• FreeMarkets ES™– “..provides your organization with the technology
infrastructure necessary to achieve global supply management excellence.”
– Requirements Management – Supplier Relationship Management– Sourcing Management – Decision Management– Contract Management
• FreeMarkets QS™
http://www.freemarkets.com/en/solutions/software/QS/default.asp
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Software Solutions
• FreeMarkets ES™• FreeMarkets QS™
– “QS is a comprehensive, full-featured negotiation application that allows you to more fully automate the process of structuring and executing sourcing projects.”
– Multi-Language Capabilities– Multi-Currency Options– Time Zone, Date, and Number Displays
Nov. 2003
Global Solutions
• Application Services• GSM Services• Education Services• Consulting Services
http://www.freemarkets.com/en/solutions/services/application/default.asp
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Global Solutions
• Application Services– Market Operations Services – FreeMarkets Supplier Training
• GSM Services• Education Services• Consulting Services
http://www.freemarkets.com/en/solutions/services/gsm/Default.asp
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Global Solutions
• Application Services• GSM Services
– FreeMarkets FullSource– Sourcing Support Desk
• Education Services• Consulting Services
http://www.freemarkets.com/en/solutions/services/ges/default.asp
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Global Solutions
• Application Services• GSM Services• Education Services
– Sourcing with Online Markets – FreeMarkets QS Training
• Consulting Services
http://www.freemarkets.com/en/solutions/services/consulting/default.asp
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Global Solutions
• Application Services• GSM Services• Education Services• Consulting Services
– Organizational Transformation– Outsourcing– Low-Cost Country Sourcing
http://www.hoovers.com/freemarkets/--ID__59661--/free-co-fin-factsheet.xhtml * http://www.freemarkets.com/en/freemarkets/investor_relations/Q3%202003%20Earnings%20Script.pdf
Is it a Success?2002 2001 2000 1999
Annual Sales ($ mil.) 170.4 147.6 91.3 20.9Annual Net Income ($ mil.) (17.6) (295.2) (156.4) (21.8)
•80% of customers sign long-term contracts•54% of customers purchase multiple products•Profit Margins on renewals and fees are increasing•Reduced cost structure by targeting more specific markets, cutting consulting costs, reducing headcount from 1100 to 1000.
Nov. 2003
Case Study Conclusion
• Freemarkets has landed large, globally-reaching clients = well positioned to accommodate the growing global outsourcing trend
• Good customer service combined with product exclusivity generate revenue through contract renewals
• Survivability rate is high, but growth is too dependent on their niche market
ConclusionConclusion
Hurdles for B2B ExchangesHurdles for B2B Exchanges Financial Concerns - ViabilityFinancial Concerns - Viability
Pricing Pricing Transactions fees/subscriber feesTransactions fees/subscriber fees
Industry specific concernsIndustry specific concerns?Anti-Trust/FTC Regulations (Covisint)?Anti-Trust/FTC Regulations (Covisint)Competitors fears (FuelQuest, Covisint)Competitors fears (FuelQuest, Covisint)
ConclusionConclusion
Hurdles for B2B Exchanges continued:Hurdles for B2B Exchanges continued: Maintain VisionMaintain Vision
Role of CIO/ManagementRole of CIO/ManagementEvolve to meet demandsEvolve to meet demands
Consolidation – Dominant playersConsolidation – Dominant playersVs.Vs.
Multiple/Small Private ExchangesMultiple/Small Private Exchanges
http://archive.infoworld.com/articles/hn/http://archive.infoworld.com/articles/hn/xml/01/06/11/010611hnexchange.xmlxml/01/06/11/010611hnexchange.xml
ConclusionConclusion
Future visionFuture vision By streamlining the business process, By streamlining the business process,
providing hosted applications, and offering providing hosted applications, and offering value-added services such as supply-chain value-added services such as supply-chain management, some exchanges are flourishing management, some exchanges are flourishing in tough times. These successful exchanges in tough times. These successful exchanges have found their niche within a specific have found their niche within a specific industry and have emerged as members of industry and have emerged as members of the winners’ circle.the winners’ circle.