Here's a simple sum. What's 65 x 10 x 250? Finished? The answer isand varied - not least a reduction in training days - but in almost all circumstances the extra benefits which accrue are greater than expected. Julian Patterson investigates. very roughly what any company running a call centre with 200 staff could expect to spend on days lost to staff training each year. For any accountants reading this, the workings are as follows: most call centres will lose - "churn" - about a third of staff each year (65). Their replacements will require roughly two weeks training (10). And the fully loaded cost per employee is around #250 per day.
The total, for those without a pocket calculator or simple multiplication skills, is #162,500 and it excludes the cost of the training itself.
It's a big number, but it could have been avoided.
Now let's take another example. You're in charge of millions of pounds of investment capital for emerging markets. With the right information you could make a killing. The information is out there. Your colleagues in Chile, Sierra Leone and Vietnam are all sitting on it - the latest tax regulations, national trading figures, crop forecasts, whatever - but you need to bring all this stuff together to form a coherent picture of the risks of investing. It's not possible to get that picture in time, but on a hunch backed up by a few phone calls and a flurry of Emails, you put all of your corporate investors' money into the construction industry in the Far East. A few weeks later, you are summoned to see the boss.
He is holding a copy of the FT, he looks far from pleased, the headline "Economic collapse forecast for Asia" is clearly visible. Oh dear.
Now imagine that instead of an ancient, proprietary application that resists modernisation as stubbornly as the common cold resists a cure, you had written a program to talk to the customer database, perhaps using one of several re-development tools on the market, and slapped a browser on the PCs of each of the operators to display the results. How much training and retraining would the system entail? Put it another way, how much training does the average person need to find their way around a Web site?
Consider the risk management example. What if the information locked away in filing cabinets, remote databases and the heads of your colleagues in far flung corners of the world could be made accessible to you and your fellow managers in London via simple search tools of the kind familiar to anyone who has searched the Web? How much difference might up-to-date information have made to that disastrous investment decision?
Both these scenarios are real, they represent typical problems faced by modern organisations and, in both cases, an intranet could have provided a solution.
There is no question that intranets - simply the deployment of Internet technologies for an organisation's internal use - represent a revolution in computing. Not a revolution like that promised by the last, here today, gone tomorrow, computing architecture and the one before that, but a lasting and radical change in the way computers and networks are deployed in business.
This revolution will result in the development of cost-effective, flexible systems capable of changing with the needs of the business, and delivered on time.
According to Roger Willcocks, managing director of Internet development tools specialist Intelligent Environments, "it's a revolution because we're talking about the low cost, zero maintenance distribution of data, information and applications to any community of users. With this technology, for the first time the IT department won't be able to say it can't be done."
Intranets do not represent a little piece of the IT market, but an enormous chunk. To put this in perspective, Zona Research has forecast that the market for Internet products will reach $2 billion (#1.22 billion) next year, but that figure will be dwarfed by demand for intranet hardware, software and services which Zona expects to reach $13 billion (#7.92 billion) in the same period.
The part played by the Internet in all this can't be overstated. The spread of the Net provides the universal communications that makes it possible for intranets to reach anywhere in the world where basic telephony is available. It also provides a set of standard networking protocols, at the heart of which is IP, plus a standard way of displaying information at the user end, HTML. Last but by no means least, it provides a new and very simple model for the way users interact with computers. The Web has encouraged the development of easy to use graphical interfaces. Anyone who can find their way around a Web site will find other applications displayed in a Web browser which already look familiar.
"The implications for end-user training are huge - they are going to see the same interface for any number of different resources, internal and external. Skills will be more quickly acquired and when people leave they should be easier to replace. In addition,there will be more flexibility in growing and updating the system. It means, for instance, that the user interface won't need to be rewritten every time part of the application code changes," says Alex Fry, technical director of multimedia developer JKD.
Cast your mind back a few revolutions to Open Systems Interconnect (OSI), the international effort to standardise computer communications. In many ways, the Internet represents the culmination of the same dreams of openness, interworking and universal access. "The difference," says Fry, "is that the people driving open systems 10 years ago stood to make a lot of money from it. There were attempts to involve users in the specification of standards, but the whole effort remained mired in proprietary interests.
The Internet has evolved very differently and, ironically, it's uptake by users that has forced the tidal wave of development."
So what are companies deploying intranets for? The question is almost impossible to answer, because the answers are almost as diverse as the reasons for having computers at all. Broadly, though, we can identify the usual suspects: cost savings from reductions in the use of paper and other consumables, and improved efficiency - perhaps as the result of quicker access to information. There is a third reason for having an intranet, the benefits of which are harder to quantify, and this is to drive or support cultural or business change within an organisation. BT, the UK's biggest user of computers and potentially one of the biggest suppliers of intranet services, also runs one of the biggest intranets in Europe and has managed to realise all three of these potential benefits (see case study above).
"The basic requirement is not for an intranet or any particular technological approach. What most customers want is simply the ability to work together.
However if you lay all the factors out - cost, the level of skills required or available, and ease of integration with whatever the organisation has now - the chances are you'll be talking about an intranet solution," Fry says.
More often than not, the main elements of the solution will already exist within the organisation. The computers, the networks, the data, even the applications will be there; the last step is to add the intelligence to pull all this stuff together. Willcocks' firm, Intelligent Environments supplies Amazon, a development tool for building Web-enabled applications from scratch and for finding new ways to distribute the applications and data locked away in legacy systems. Similar tools are available from several other suppliers, and numerous companies from small consultancies and software resellers to major players such as IBM and EDS provide intranet planning and development services.
Most intranets are cost-justified on the basis of one or more well-defined objectives. However, other objectives can usually ride for free on the back of the network's primary purpose and, in many cases, benefits that weren't even dreamt of at the outset begin to appear as the intranet becomes established.
"In many corporate intranets, you will find that uptake skyrockets because one particular application is there. It might be something as mundane as a train timetable but it gets people using the system and once they are there you can offer them all manner of other services," Fry says.
The usual words of caution apply. As with any IT project there is no point in embarking on an intranet without knowing what it is for, but as one of IBM's slick "e-business" television commercials makes clear, bandwagon-crazed senior managers sometimes forget this basic principle.
Andrew Robins, business development manager at PNC, a systems integrator which specialises in intranet solutions based on Lotus Domino, says, "It is not unknown for the MD to storm into the IT manager's office and demand a solution within six months without ever properly identifying the problem.
If you don't know the objective, you don't know the requirements and you can't even guess at the outcome, you have a recipe for disaster."
A fundamental part of the planning phase is a cost/benefit analysis.
"The most important factor with any IT investment is that you have to be able to recover the cost," says JKD's Alex Fry. "As well as capital costs there are cost of ownership issues, such as training and management time to factor in, some of these can be hard to measure but they can be measured."
Nobody is surprised to read about failed IT projects, but a statistic from US research company the Standish Group suggests the failure rate is shockingly high - in excess of 80% according to a recent report.
Adopting an intranet strategy offers no guarantees of success, but should make it more difficult to fail. The use of standardised components, such as browsers, minimises the negative effects of other changes: client machines don't all need to be running the same operating system to use the application, for instance, and even a wholesale change of operating system at the client end would have little or no effect. On the other side of the standards coin, a consistent architecture allows for development skills, once acquired, to be reused on other projects.
In many companies, the infrastructure is already largely in place and, with the right tools, new applications can be deployed extremely fast.
Not only that, but with incremental development and reuse of applications and data, return on investment can be dramatic, says Intelligent Environments' Willcocks. "Normally you would expect pay-back from a project within two years - here we are routinely talking about two months or even two days.
When was the last time you got so much for so little out of IT?"
One of the hardest benefits to quantify is also the benefit which should be most prized, what Fry calls "raising the level of people's ability to do their jobs". At the lowest level this is about making information more accessible, making it easier to find phone numbers or customer details, for example.
You might put in an intranet to achieve savings in time or paper, "but once the technology is established, there are going to be benefits to your business that you couldn't see in advance", Fry says. "We hear a lot of talk about empowering the individual and some of it sounds phoney, but opening up information to those who need it can mean more than improving efficiency, it might also mean an improvement in morale and this has real value for companies in terms of staff retention," he says.
Intranets are, by definition, the inwardly focused application of Internet technologies, but the reality is that for most companies, there are no clear demarcation lines between the internal and external worlds. In the investment banking example given at the beginning of this article, the company concerned is developing the risk management system for use by its own executives who will use it to advise corporate investors. In due course, the bank does not rule out opening up part or all of the system for direct use by customers.
- September 1: Managing your intranet and moving on to extranets.
BT case study: hard savings, soft benefits
BT embraced intranet technology in 1995, probably before the term was coined, and provides perhaps the supreme example of what can be achieved.
The benefits the company has been able to realise include phenomenal cost savings, improved information flow, higher morale from "open" employee communications and rationalisation of an internal messaging system threatened with chaos.
In 1995, BT discovered it was using 176 variants of 13 different messaging platforms. These were quickly cut to just three compatible packages and a Web interface, and protocols were introduced as the standard for information-sharing.
Stunning cost savings were achieved almost immediately by using the intranet to distribute policy documents and by scrapping the printed version of the internal phone directory in which are listed details of over 120,000 employees. In 1995/96 the company reckons it managed to save #310 million rising to #745 million the following year and still achieving savings of #142 million in 1997/98, the last year for which figures are available.
So successful has it been, that the intranet paid for itself 10 times over in its first year of operation.
Although these numbers have grabbed most of the headlines, Angela Barrow, BT's intranet manager, believes the bigger revolution has been in democratising information. "From the lowest to the highest, everyone in the company has the same access to information unless there is a good reason not to grant it. We've found this has had a very positive effect on morale. At a practical level, it has also helped stop the rumour machine. Rumours still start, but as soon as they do the first place people go is to BT Today (the company's electronic news service) which is updated several times a day." Such is the openness of the BT culture, that if a rumour isn't found to be supported by official company information, it will generally be disregarded, Barrow says.
Another feature of the network that has helped make it successful is that the 80,000 staff who use it have developed a strong sense of ownership.
Nominated staff set the strategic direction for the network and specify new services. "Franchise holders" in each of the company's divisions hold publishing licences allowing them to update the information in their domain.
And where is the IT department in all this? "We realised early on that it was critically important that users were in control of the overall direction of the network, but they can't go it alone - it's a close partnership with IT. The users set the direction and the IT community provides support."
Barrow acknowledges that, important as some of these benefits are, they would probably not have been enough to justify the original effort to establish the intranet. Her advice is to identify one area in which it is possible to make a quick win with easily quantifiable returns. "All our business cases need to be justified on the bottom line, not on the wider and softer benefits," she says. In BT's case, the cost justification was made on the strength of the electronic Desktop Directory, which continues to be the most popular application on the network with more than 800,000 accesses a week.
Whatever an intranet is set up to do, she argues, "other benefits will become apparent, even though they may have been impossible to predict at the outset".
Remaining obstacles can usually be overcome with a bit of lateral thinking.
"It may be that you require all the users to have a multimedia PC, which would be hard to justify but not if you were already looking at replacing machines for some other reason, say as part of preparations for the year 2000," she says.
The BT example suggests that successful intranet strategies must start with a well-defined financial objective, even if it isn't the main goal.
"You may never be able to quantify some of the benefits in financial terms, but you have to be able to jump through the financial hoops to make a start," Barrow says.
Business benefits of an intranet
Intranets promise open, flexible, scalable, adaptable and ultimately effective systems with the following characteristics.
- Reduced staff costs through the use of more effective systems and extended BPR analysis that combine systems across the supply chain.
- Lower development, support, infrastructure, hardware network and telephone costs.
- Reduced project implementation risk so that more projects succeed in achieving their business objectives. This is done by enabling the business user to participate more closely in the implementation of the business process, especially the definition of the process itself, using new types of development tools that enable business rules to be entered directly.
- Increased business effectiveness through the use of the best user interface for the task, be it a browser, client/server GUI application or even interactive voice response over the phone.
- Improved business flexibility by the use of systems written in the language of the business itself.
- Exploiting the existing investment in systems and data.
(From Building Intranet Applications, by Laurence Shafe, founder of Intelligent Environments.)
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