A return on investment of 502% sounds good – maybe even too good to be true. What about 2,000%? Sounds incredible? Yet these kinds of return are within the reach of every company, according to research firm IDC’s study on the phenomenon of the intranet. The intranet has become even more of a buzzword in the corporate world than its parent, the Internet. In the two years since its inception, more than one in four UK companies have opted to implement an intranet system. And most seem delighted with the result. Could it be that IT is finally paying its way, producing an information system capable of generating instant and visible profits, instead of being a sink for flushing away cash? Audi reports savings of DM500,000 per year from its intranet system, still only in its infancy. Swedish Post found a return on investment of 2,052% on its intranet, as reported in IDC’s 1997 survey, The Intranet: Generating new revenues, increasing customer satisfaction, reducing costs, by Sean McGovern, senior telecoms consultant at IDC France. Not surprisingly, given such astonishing results, more and more companies are keen on the idea. AST’s IT Barometer survey of 1997, which interviewed 226 large companies in the UK and Ireland, found that a quarter of respondents have already set up an intranet, and of those which had not, 45% were planning to. In order to understand why the intranet has sprung up so quickly and become such a corporate phenomenon, it is only necessary to look at the technology behind it. In contrast to most corporate IT systems, the intranet is simple to use, simple to set up, simple to understand, and largely based on cheap or even free software – an attractive proposition. Unlike most inventions in the IT industry, intranets were not developed in a high-tech lab by high-powered programming geeks and presented to the world as a marvel of technological ingenuity. Instead, intranets are a prime example of the democracy that Internet technology has brought about in the world of computing. Intranets were first discovered as a phenomenon when large companies found that individual employees with little technical knowhow were using the Internet software at their disposal to create their own departmental services, in the form of mini-Internets open to a few users on a network. Intranet technology is disarmingly simple. It relies on the same technology as the Internet itself – documents written in hypertext markup language (HTML) and a browser capable of reading those documents. HTML is the language of the World Wide Web. As the name suggests, its primary function is the ability to set up hyperlinks within a documents. Hyperlinks are familiar to anyone who has used the Web. They are the phrases found in Web documents, usually underlined and in a different colour to the rest of the text, which, when clicked on, take the user to a different page or section of the text. HTML can be mastered by most vaguely-knowledgeable computer users in a matter of days, with only a little work – though learning how to do the fancy stuff takes a little longer. These days there are many software applications which can convert documents into HTML automatically. What some corporate users were doing, before the term intranet had even been coined, was making their own HTML pages and storing them on the corporate network. Then any user with access to that network, and a Web browser (such as Netscape Navigator or Microsoft Internet Explorer), could look at those pages. Browsers work by taking the user to an address on the Internet (usually denoted by http://). With primitive intranets, these were replaced by addresses pointing to the corporate network. Through hypertext links, these pages on the network were connected to each other. So a basic application might have been a departmental address book, where users put up lists of employees’ names and addresses, and linked them to the e-mail of the person listed, so that users could send a message at a click. These applications were necessarily limited – today’s corporate intranets are communication and organisation vehicles for whole companies. When IT vendors such as Netscape noticed this phenomenon taking place, the term intranet (for Internet within a private network) was coined. Then IT companies began to exploit the phenomenon, introducing software to make setting up an intranet easy. No longer did users themselves have to set up primitive systems of HTML pages. With the new software, companies can set up complete corporate intranets with complex workflow and management functions straight out of the box. Intranets in this way can offer the same functions as traditional groupware. Groupware is software for organising workflow and corporate communications, mainly enabling people to pass documents to each other and work on them together. However, groupware systems have often been regarded as expensive to set up and difficult to maintain. The attraction of intranets in the first instance was that the basic software needed – Web browsers – were free, and all that was needed in addition was HTML knowledge. Commercial intranet technology still claims to be less expensive than traditional groupware, though the pressure of intranets has brought down the prices of the latter. The main benefits of an intranet are that it unlocks access to corporate information to all users, and makes communication between different parts of the company much easier. Not just within the company, either: with extranets (see box, next page) companies can choose to open their intranet system to selected customers or suppliers, who can then use the system with the same ease as internal employees. In addition, because of the democratic nature of intranet technology, the system is perceived among the users surveyed by IDC as an “employee empowerment tool”, making it extremely popular among employees who are more used to difficult, off-putting technology. “What I like is that with an intranet development, things happen so much faster than in the old days of computing,” comments Keith Martin-Smith, PC services director at Dixons Mastercare. “We can set it up in man-weeks, not man-months, which is very motivating for our staff. It isn’t rocket science, and with good planning there is no risk to the company and its data.” What should companies be putting on their intranets? The answer is: everything. Chris Mathias, managing director of knowledge management firm Conduit Communications, cites the example of one anonymous client who asked what it is safe to put on an intranet. Mathias, who strongly advocates intranet usage as a means of flattening corporate management structures, believes that this is entirely the wrong question. Instead, companies should be attempting to make all their information available to employees, to enable everyone to benefit from corporate knowledge. The main players in the intranet market are two who have come from the Internet arena with Web browsers – Microsoft and Netscape – and two from the traditional groupware market – Lotus and Novell. Netscape’s main range of intranet software is its SuiteSpot server software, and the Navigator and Communicator Web browsers. Microsoft offers Internet Information Server with its NT operating system, and its Internet Explorer browser. Lotus has the famous Notes, the grandfather of groupware systems, while Novell’s GroupWise product builds on the firm’s experience of making network operating systems. Cost comparisons between the systems are extremely tricky, as each system offers a different pricing structure and different capabilities. Independent studies comparing the software abound, but there is little consensus on which is best, or offers most value for money. Choosing between these systems depends on individual corporate needs, and the software a company already has installed. Companies already using NT may prefer the Microsoft option, while Novell users could get a good deal on Groupwise. With Notes, a key advantages is the army of Notes developers already out there. Finding contractors to run your Notes site should be a fairly simple procedure – an advertisement in any IT weekly should yield instant results. On other platforms, it may be more difficult to find skilled developers with experience in the software. However, companies such as Microsoft and Netscape would argue that the skills needed are of a fairly low degree, compared with those needed to program Notes. Whatever the system used, all the studies we could find on the effects of an intranet on organisations reported widespread satisfaction among users and a positive return on investment. Consulting firm META Group conducted a major review of the phenomenon last year. Its research found that 80% of companies with an intranet generated a positive ROI, with an average annual return of 38%. META found that large applications can be developed for less than $100,000, and that the size of return involved does not depend on the size of the implementation. More importantly, META also believes that the success of an intranet is not dependent on the choice of technology involved, but on the choice of an application that fits a company’s line of business, and on the investment in support and development of that application. Advertising agency Saatchi & Saatchi opted for the more traditional end of the intranet/groupware spectrum, implementing Novell’s GroupWise product on a worldwide basis after a three-way review of Novell, Lotus and Microsoft products. The rollout of the system began last summer, and serves over 5,000 users in Europe and the US. “We were looking for one product that would provide us with superior out-of-the-box functionality, document management and easy access to the World Wide Web,” explains Andrew Halstead, European IT director at Saatchi & Saatchi. “Following a detailed review of the major products, we concluded that GroupWise was the only product that could deliver everything we were looking for.” While unwilling to discuss the possible savings of the implementation, which is still underway, Halstead mentions that one of the key advantages of standardising on a single system is that it cleared up the proliferation of e-mail products the company was using. Different e-mail packages do not always work efficiently with one another. Halstead also plans to extend the system to customers via an extranet, enabling the company to work remotely with clients on draft campaign material. London Underground saved at least £80,000 from the first application of its intranet: making the safety manual available to its employees. The manual, which is vitally important for the safe running of trains, has 13 volumes, and each station manager must have them all. By putting the documentation on an intranet, the company saved an estimated £80,000 in printing costs. The company also estimates that alternative ways to distribute the manual electronically would have cost up to £4m. London Underground plumped for Microsoft technology to run the system. “It took just over five minutes to set up Microsoft Internet Information Server,” claims Alex Bruty, consultant to London Underground on the project. “That’s compared to several days when we tried setting up an intranet site under the Unix operating system.” Keeping the system current is also easy, the company found. “Users know that they are looking at a single source of authoritative, up-to-date information,” explains Les Ampstead, business systems manager for network services at London Underground. With the success of the initial application, London Underground is now looking to expand its intranet to manage all its documentation, and extend the system to at least 3,500 users in the next six months. The charity Actionaid, one of the UK’s largest international aid agencies with an income of over £35m, set up an intranet last November to deal with its sponsorship programme. Actionaid derives a large part of its income from the sponsorship of over 100,000 children around the world. The intranet, when complete in April, will hold files on the progress of each child using text, graphics, photographs, sound and video. This will enable over 1,000 Actionaid workers and sponsors throughout the world to keep up-to-date on the progress of individual children and projects. Kerry Scott, head of IT at the charity, says that Actionaid has not yet done a full analysis of the cost savings, but they are substantial. “We make tremendous savings, especially in terms of time and getting information to distant locations overnight,” he comments. “There’s an extremely strong business case for this software.” Parcelforce set up its intranet over a year ago, using Microsoft software. The cost was in the region of £100,000, and although no analysis of the savings produced has been carried out, the system has made the business run more efficiently and proved extremely popular with users. In February, the company started up a new service on its Web site, enabling customers to track the status and whereabouts of their parcels over the Internet. This was a service many customers were asking for, and is likely to generate a lot of interest. That system was tried out on the company intranet first, says Paul Watkinson, IT consultant at Parcelforce. “We use the intranet as a testing ground for our Web site, so once we’re happy with the technology and are sure it works, we can go public with it,” he explains. “With the Web parcel tracking service, we expect substantial cost savings, as people can access the Internet site where before they would have had to phone us. It won’t save every phone call, but even if it saves 10% that’s an awful lot (of money).” Arguments for and against each of the main intranet systems could rage forever, but all companies should urgently examine the need for an intranet. Business gurus are lining up to tell us that the value of a company lies in the information it holds. This is not true – the value of a company lies in the information it shares, both within the organisation and with its customers and partners. Intranets have proved themselves to be efficient, cheap and effective ways to unlock corporate information and give all employees access to the data they need to do their jobs better. The Extranet: Inside out The extranet works on exactly the same technological principles as the intranet and Internet. It is a way of sharing an internal corporate intranet with selected suppliers and customers, via the Internet. Using a security system such as a firewall and an authentication software such as digital signatures, the extranet can be made secure from Internet intruders in the same way as a corporate intranet. Tesco, for example, has set up a pilot scheme to give seven suppliers access to its corporate intranet, in order to simplify supply chain management. The supermarket giant hopes to extend this system to all its suppliers if the pilot is successful. A report published in January by the Gartner Group suggests that by 2001, extranets will be the platform for 40% of business-to-business commerce. This will spark an explosion in the market for e-commerce, predicts Ken Fraser, Gartner’s principal European analyst for online software.
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