The other nets: have it your way.

Okay. So you're convinced the Internet - its downsides notwithstanding has some keen advantages. But that doesn't mean you'll want to choose its public networks for your internal operations and communications. Because while you see clearly the benefits of organizing all your Files neatly in centralized data warehouses and arming your forces with Web browsers to access that data, you understandably have little interest in making your highly sensitive corporate files available to the millions of random surfers on the Web. Neither do you want to chance slowing down your business with overcrowded bandwidth and information highway traffic jams.

Enter the intranet, a networking technology that, properly applied, has the potential to transform your organization into a cohesive collaborative knowledge enterprise, while slashing internal IT operating expenses. And then there are extranets, which expand the intranet by allowing your enterprise to collaborate with its choice of distributors, suppliers, manufacturers, and customers. In some industries, extranets are already starting to revolutionize supply and demand chain management.

But as is the case with nearly all technology that appears to be racing on at the speed of light, you'll have to sift carefully to separate the real potential from the hype, and before you implement it, make sure you clearly understand the business case for your company.

The Internal Internet

Technically speaking, an intranet is a local area network (LAN) or a localized network setup within a company - that uses TCP/IP as its networking protocol, or language. In simpler terms, think of an intranet as your company's own private Internet. Because your intranet is designed around your company's specific needs, however, its usage model will be quite different from that of the Internet. Most often, an intranet leverages the network connections you already have by laying the common standard language on top of it, so that workers from any desktop and any operating system can communicate cost-effectively.

With an intranet, as with the Internet, data are housed on servers that users access with Web browsers such as Netscape Navigator and Microsoft Internet Explorer. Because intranets use TCP/IP, the same networking protocol as the Internet, they can utilize all the same applications as the Net and can integrate well with your company's Internet projects. For users accessing intranet pages with browsers, it will look and feel just like the Internet - it just won't be accessible publicly. Therefore, your company will gain much of the advantages of Net technology without having the world looking over its shoulder. "The promise of groupware has always been, 'We'll bring together everyone in the organization,"' says Ian Campbell, director of collaborative and intranet computing at Framingham, MA-based International Data Corp. (IDC). "But before the Internet, the reality was that it was impossible to bring everyone together in the organization because they were using different equipment. Now, the Internet has allowed those hardware platforms to use a browser; so as long as that platform has a browser, it can be part of the group environment."

An ROI to Smile at

The potential cost savings from intranet implementation and use appear to be fairly astounding, according to some recent studies. In fact, many industry experts argue that most corporations can't justify not implementing an intranet. IDC reports that a typical intranet ROI is well over a whopping 1,000 percent, with payback periods ranging from a mere six to 12 weeks. A considerable amount of cost savings results from reduced time, money, and other resources spent on systems integration and the maintenance of disparate operating systems and associated hardware. In the past, with traditional multi-operating system "patchwork" environments, there were ways to get everyone on the same page, but those solutions were always expensive, often didn't work well, required constant care and upgrading, and relied on internally developed software. In reality, no one ever really managed to build completely interoperable networks. More often than not, what you had in the average large company were some IT people maintaining networks for PCs, others hooking Macs together, and still others working with mainframes and other systems. That's clearly a waste, because it means you have expensive technical experts working on the same jobs of enabling electronic communications and database access on three or more completely different platforms.

If, however, your enterprise migrates to an intranet approach, your technology people will be able to limit the number of standards and application types with which they have to work. This, in turn, amounts to greater productivity from your employees and cost-savings in your IT department where staff no longer have to worry about running so many different operating systems. "In the morning, you can test the application, and in the afternoon, 4,000 people can use it," says Campbell. "That's the payback of the intranet its ease of deployment across the entire company."

With ubiquitous Web browsers serving as universal front ends to your corporate databases, training gets much easier. Workers, from entry-level clerks to your top analysts, don't need to spend hours or clays learning a new program to access every new database although Campbell says training will still be necessary for the backend applications. US West Communications, for one, deployed its intranet, clubbed the "US West Global Village," to more than 6,000 customer-service representatives and cut training time down to just five minutes of coaching, according to US West Communications CIO Dave Laube.

Beyond the Wire

Like proprietary groupware packages, such as Lotus Notes - and Domino, a Web-based front end for Notes that Campbell says gets high marks for its performance on an intranet - intranet architectures offer a number of options for communicating and distributing information enterprise-wide quickly, efficiently, and sans paper. These options include:

* E-mail lists Like traditional mailing lists. most e-mail programs allow those who communicate regularly with a particular department or group of people to create lists of e-mail addresses for those people. Or, alternatively, you can have a place set up on the network where employees can check in regularly and post information that the rest of the work force can access - much like an electronic bulletin board.

* Push technology Push is the latest rave on the news-gathering front. If "pull" technology, as it's now sometimes called, is the process of a client machine accessing a central sewer and pulling data down to the desktop, then "push" allows the server to send, or push, information automatically down to the desktop. E-mail is actually a form of push: one user pushes e-mail to the desktop of another user. More complex push technology, also referred to as "Webcasting" or personal broadcasting, gathers information from various places on a corporate network - or the Web, when used on the Internet - based on the user's pre-set requirements, and then pushes the information down to the user's desktop at specified times.

The canonical example of push technology is PointCast - indeed, Webcasting has been nicknamed "Pointcasting" - a software application developed by the company of the same name. PointCast acts like CNN's 24-hour news coverage, except it uses the Internet to publish articles and graphics. The same technology can be used within a corporation for up-the-minute coverage of company events. Bowling Green, KY-based Fruit of the Loom, for instance, uses PointCast push technology to deliver production reports, inventory analysis, and other data to employees via its intranet. The new system replaces paper reports that were manually generated from information housed on its intranet server. Now, the latest inventory information is automatically downloaded from the server every, hour.

On the down side, only the newest computers can use the push route for information distribution. But most industry experts believe that price wars and newer technology will lower costs to the point where the vast majority of desktop machines will have the capacity to utilize push.

* Internal Web pages Much like their Internet counterparts, these are ideal for spreading the word, complete with photos, charts, and graphics, from individual departments on up to the highest corporate levels. A CEO who has information or a personal message to share with the company can set up a Web page on the intranet, accessible by all, to be updated as often as necessary. Likewise, if you have information for only a select group - certain unit heads or managers - you can set up a page that's accessible only by those with a particular password or user ID.

Looking Before Leaping

Like most shiny new technologies, the intranet is not a panacea. You don't want to rash to put all your applications on an intranet or have every employee access every application with a browser. Simply put, the browser front end may not always be able to get the most robust performance or utilize all the features of the application, and that would be a waste as well.

"First look at the information you're bringing to the user and what those users need," says Campbell. For example, if you're looking at the members of your accounting department who are often interacting with the general ledger application, it's a good bet that the more expensive front end that came with that application will make better use of its features than a Web browser. On the other hand, not everyone needs a costly front end when they could be using a browser. Your line-of-business managers may only make an occasional query into the accounting general ledger to get the P&L for their business units; they don't really need all the functionality of an interface, and they don't have the time to learn to use it. But they do need the information contained in the database. "Those are the people for whom you want to look at an intranet as a vehicle to disseminate that information," Campbell says.

Extending the Intranet

The extranet, then, is something of an extended intranet - private, inaccessible to the public, but giving access to your employees as well as your distributors, suppliers. manufacturers, and anyone else your company chooses to include. Naturally, you could share data with partners, distributors, suppliers, and customers over the public Internet, but it's not likely you'd want to. If you did, you would have all the security woes that the Internet is prone to by its very nature. With an extranet, however, your networks are linked together by secure communications that travel over the Internet but are protected from its storms by such defenses as firewalls, which hold any would-be snoopers at bay. This allows you to create workgroups composed of members from different companies who can communicate as easily as if they worked in the same office. With the fight protective measures in place, this information can travel the busy streets of the Internet without fear of being intercepted by a virtual pick-pocket.

Because extranets allow for real-time collaboration and information sharing at relatively low cost. while reducing time-to-market, they are already revolutionizing supply and demand chain management, giving those utilizing them competitive advantage. "The [extranet] system is much faster in telling what has been demanded [up] to the point of production," says Paul Wahl, CEO of SAP America, a Lester, PA-based major business software provider. "So supply chain management becomes a strategic weapon for how to outgrow or out-innovate your competitor."

Heineken U.S.A., for example, developed the Heineken Operational Planning System, or HOPS, to combine forecasting and real-time replenishment with secure collaborative communications via the Internet. With just a modem and a standard Web browser, Heineken's trading partners access the password-protected HOPS Web site to collaborate on scheduling, forecasting, etc. "Apart from taking a ton of costs out of the system," says Heineken U.S.A. CEO Michael Foley, "it's forced the organization to change from being a vertical organization to a lateral one. Now the integration process involves the sales, planning, marketing, and production functions of the group. They're all interdependent on the smooth flow of the process, and that just wasn't the case before."

At the End of the Day

While it's helpful, and even interesting, to know and understand the differences between intranets and other kinds of networks, as well as how the intranet relates to the Web, the CEO's primary focus is more likely to be the business need and not the pipeline for getting information across. What should be clear is what information needs to reach which people in what form and how often in order to move the bottom line. A good CIO and IT managers can then determine the most cost-effective means of getting information into the hands of employees. "All hype aside, this is about delivering information," says Walt Wilson, director of marketing and industry business development for Lockheed Martin Information Systems & Technology. "Using a household analogy, this is the wiring anti the pipe behind the walls, but what you really care about is that the television and dishwasher work."

INTEGRATING THE INTERNET

Intranets are fast becoming an integral component of U.S. business, although their adoption still faces some potential inhibitors such as the difficulty of making a solid business case and the perceived difficulty of intranet management (1), according to a recent study by the Yankee Group, titled "Carpe Intranetum: Seize the Power of Intranets." With information becoming a key competitive weapon, the study reports that information access is the top driver of intranet growth today (2). Both Internet and intranet server software investments are likely to continue building at a steady clip. By 2000, the Yankee Group predicts, investment in intranet server software will have grown by more than 97 percent, double the growth in the amount spent on Internet software (3).

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CASE STUDIES

Industry experts agree that it may be time to sound the trumpets: Intranets have reached critical mass, with companies deploying them to reduce costs, streamline processes, and provide easier access to information for employees across the enterprise and around the globe. Here are two companies that have used intranets to their competitive advantage:

Putting Knowledge On-Line Booz, Allen & Hamilton, Inc.

When consulting giant Booz, Allen & Hamilton first deployed Knowledge On-Line (KOL), its Web-based knowledge repository that makes thousands of documents - analyses, competitive data, and business intelligence - available to its 7,000 globally dispersed consultants, there was no secure Web-based architecture. So the firm began with a traditional client/server system. Recently, however, in the interest of cost savings, the firm decided to move KOL to an intranet environment with Open Text's Livelink intranet suite of Web-based document management, workflow, and collaboration applications. "The cost of installing and maintaining client/server application software on thousands of KOL desktops worldwide would be massive," says CIO Ed Vaccaro. With the new intranet, Booz, Allen's consultants can access KOL's data as well as utilize sophisticated management and collaboration tools using only a browser on the front end. Among the benefits gained from this move, calculated by International Data Corp. (IDC), was an ROI of 1,389 percent; three-year savings of $21,298,800 against three-year costs of $3,511,150; and a payback period of 0.19 years.

Bridging the Gap Lockheed Martin Corp.

Having grown steadily through acquisitions and mergers from 40 combined companies in 1994 to more than 80 in 1996, Lockheed Martin clearly had an IT infrastructure constantly in flux. The task of getting through a merger smoothly is tricky enough without having to build connections between disparate systems. So when the Bethesda, MD-based company sought to make its policies and procedures available throughout the enterprise following its 1995 merger with Martin Marietta, an intranet made good sense. Each company individually had been moving away from paper-based manual distribution with mainframe storage of policy and procedure manuals, but because most employees did not have a direct connection to the mainframe, more often than not, policies were distributed to employees in hard copy. The intranet project took the automation a step further, running mainframe data through a filter to convert it to HTML (Hypertext Markup Language), or Web language. All policies and procedures were then available on internal Web pages, and every employee in the organization was given access to a Web browser. According to IDC, the company realized a number of annual benefits: $1,807,838 in direct reduction in staff time; $3,699,114 in productivity gains; $9,000 in communications savings; and $966,000 in mainframe upgrade savings.

CEO PIONEER

It would have been easy enough for Heineken U.S.A., the nation's largest beer importer with $600 million in annual sales, to coast along on steady profits and solid market share. But then, CEO Michael Foley doesn't always travel the easy road. It was not during a crisis, but rather when waters were calm, that he led his company through major operational changes to automate outdated systems with an extranet and secure a place in the hallowed halls of the Information Age. After a preliminary discovery that a huge chunk of costs were built into the company's supply chain, Foley (below, left) assigned a task force - a multifunctional group comprising senior executives from sales, marketing, logistics, and export - to begin careful analysis of the entire distribution process. "At that point in time, we really didn't see where we were going to end up," says Foley. "It began as a more exploratory process, looking deeper into things." The task force found a wide range of internal inefficiencies that were racking up hefty lead times and resulting in large transport costs. An archaic and laborious system was dragging lead time from order conception to product delivery out to 10 to 12 weeks - a process that should have taken minutes, given that Heineken's supplier was also its parent company. With issues of beer "freshness" becoming increasingly important, speed-to-market was critical. "So we said, let's re-engineer the whole thing from scratch," says Foley. "Let's see, if we had a clean slate, how would we do this again?"

And what they came up with was HOPS, or the Heineken Operational Planning System, developed with American Software, that combines forecasting and real-time replenishment with secure collaborative communications via the Internet. With just a standard modem, Heineken's partners can access a password-protected extranet Web site to collaborate on production and distribution, a demand-management rather than supply-management approach, says Foley. "You can't put the cart before the horse, or have the tail wag the dog. Being supply driven, the tail was wagging the dog. Being demand management driven, you're more responsive to customer need." HOPS automatically generates orders based on market activities, planning calendars, and promotional and pricing activity, combined with inventory levels and seasonality factors. Orders now reach the Holland brewery within five to six hours, rather than days, reducing lead time to four to six weeks. By year end, the company expects to have 100 distributors, or 80 percent of the business, on-line with HOPS.

While the change has clearly been enormously positive, getting there hasn't been easy. The new system has virtually transformed the organization from a vertical to a lateral one, says Foley, and the single biggest challenge was getting people comfortable with the change. "Naturally, there was some resistance. Some people said, 'My job is at stake, this threatens me."' he recalls. "But what we tried to do was bring a realization to them that this is just a new way of doing things, that it's exciting and...basically, get them to understand that they either hoist sail with us or jump ship." Once the project had been approved, Foley saw his greatest role in the process as being something of an emotional backbone, keeping the momentum going, reminding people of why they were putting in the tireless effort. For any project of this magnitude to succeed, he says, the CEO must be able to sustain faith in the business vision, to see the strategic goal. The newness of most strategic enterprise-wide technology can make any savvy CEO feel hesitant and uncomfortable. "But you know your business better than anyone, and you have good people around you who know what they're doing," says Foley. From there, you have to trust your instincts. "Go for it. Don't hesitate or look into it for too long. Believe in it, and be prepared to fail. We were; and the plan was to pick up the pieces, look at it another way, and try again. You have to do that. That's life."