The Business Value of Centrinity Firstclass

Research Report #A14 For use in conjunction with Workbook #A14W The Business Value of Centrinity FirstClass

A Nucleus Research Report

Bottom Line First-time groupware purchasers will find significant business benefits in FirstClass support for tactical and strategic collaboration, information organization, and information access. For those already familiar with groupware, the reliability and scalability of FirstClass can present a reduction of IT and support personnel costs by up to 50% over competing systems, as well as a reduction in hardware and maintenance costs. Additionally, unified communication technology within FirstClass can provide significant savings in communication costs and productivity gains within the organization.

The Centrinity FirstClass Product The Centrinity FirstClass Intranet Server is a collaborative environment that provides users with messaging, calendaring and scheduling, threaded discussion, and chat capabilities as well as a development environment for creating custom applications and workflows. The server also supports unified communication, which enables users to use any telephone or PC to capture, consolidate, sort, and manage all of their messages regardless of origin or format.

The Business Value of FirstClass Nucleus Research has identified numerous benefits associated with improving business practices supported by groupware. The FirstClass environment supports improved tacti- Potential Return: cal and strategic collaboration, information organization, and information access, as do a number of existing group- IT and support person- ware applications. Additionally, FirstClass’s reliability, scal- nel cost savings of up ability, and integrated unified messaging capabilities pre- to 50% over competing sent other unique benefits for users. Nucleus Research has groupware products. determined that there are two types of organizations likely to benefit from an investment in FirstClass: • those moving from messaging-only environment • those upgrading from an existing groupware solution to FirstClass

Nucleus Research Incorporated www.NucleusResearch.comPage 1

This report examines the costs and benefits associated with both an initial FirstClass purchase and a competitive upgrade to FirstClass, and complementary sections in the Workbook facilitate calculation of the potential benefits from FirstClass from each perspective.

Purchasing FirstClass Nucleus Research has identified a number of key business practices that can be improved with the support of groupware applications. This report focuses on the business practices where Nucleus believes FirstClass offers significant benefits. The functionality within FirstClass supports improvement of a number of different business practices which have a clear bottom-line impact: strategic and tactical collaboration, information organization, and information access. Improvements in each of these areas lead to bottom-line benefits that can be calculated in the Work- book.

The value of strategic collaboration Strategic collaboration is the ongoing practice of sharing knowledge, ideas, and expertise within or among organizations and people to improve long-term performance. There are a number of groupware applications that support strategic collaboration, including Lotus Notes, Novell Group- Wise, Microsoft Exchange, and Open Text Livelink. The project folder environment and threaded discussion data- bases within Centrinity FirstClass also support strategic collaboration by providing users with a single organization point for all documents and communications surrounding a particular topic.

Organizations considering moving from an e-mail only solution to one such as FirstClass should review the Work- book to calculate the added value of FirstClass to their organization in strategic collaboration. Benefits derived from improved strategic collaboration are often long-term and likely to aggregate over time, provided strategic collaboration continues to be effectively supported within the organization. Key business benefits associated with improving strategic collaboration with FirstClass include the following: • Improved effectiveness of resource deployment (e.g., R&D). • Reduced cost of production. • Increased market share.

Page 2 • Improved profitability. • Increased earnings per share.

The value of tactical collaboration Tactical collaboration is the project or timeline-limited practice of sharing knowledge, ideas, and expertise within or among organizations and people to accomplish a specific task or goal. While strategic collaboration may be limited to leadership or knowledge workers within the organization, tactical collaboration is likely to occur at all levels based on some stimuli, e.g., a supervisor’s request or an announcement from a competitor.

Tactical collaboration is often a key activity area where groupware can support improved productivity and cost savings, because tactical activities take up Key to creating a greater percentage of the typical knowledge business value: worker’s workday than other activities. Addition- ally, because tactical activity occurs at all levels of For First-time groupware pur- the company, the breadth of return can be great. In chasers: general, you can estimate a 5% increase in the pro- 1. Tactical collaboration 2. Strategic collaboration ductivity of employees by deploying effective tactical 3. Information organization collaboration support. 4. Information access

Fewer groupware applications on the market have For upgraders: functionality to support tactical collaboration. So- 1. Reliability lutions supporting tactical collaboration include In- 2. Scalability stinctive eRooms, Lotus QuickPlace, and Open Text 3. Unified collaboration Livelink. The chat and conferencing features within Centrinity FirstClass also support team and enter- prisewide tactical collaboration. Although the FirstClass solution does not have the user-administrated project page features of some other products, it still provides users with a way to rapidly communicate and collaborate on a tactical basis when a task needs an immedi- ate response.

The value of information organization Organization of corporate knowledge and information is a key factor in the ability of companies to prepare documents for regulatory review, to reduce the time and cost required to produce product documentation, to leverage existing knowledge and expertise for new projects, and to maximize application of R&D resources. Depending on the needs of the individual organization, there are a wide range of information organization-supporting tools from which to choose – from complex high-administration con- tent and document management systems to basic docu-

Page 3 ment organization and Web publishing Collaboration and Information functionality found in many groupware Organization applications. Key factors to consider Company: Fastsigns when determining the level of information Every business needs signs, and the key organization technology needed within the to being competitive in providing them is organization include the nature, origin, leveraging the same tools and processes and format of information; the level of across multiple markets. Fastsigns is a granularity required; and the usability of sign shop franchising organization with the technology. A manufacturing com- more than 420 franchisees in the United pany with sophisticated ISO 9000 re- States and eight foreign countries. Fast- quirements may need hard-hitting docu- signs stores provide customers with cus- ment management from the likes of File- tom banners, menuboards, vehicle letter- net or Documentum to manage its infor- ing, and other custom sign products. mation organization needs; a services organization may gain much more value As the company’s business grew, Fast- from a Lotus Domino.doc or Centrinity signs recognized the value not just of FirstClass solution that integrates basic providing corporate information and advice to franchisees, but in supporting the document organization functions with col- exchange of ideas and advice among laborative tools. franchisees. Fastsigns started using Cen- trinity FirstClass to support information FirstClass’s archive searching capabilities sharing in the early years of the company enable users to rapidly search and access and used FirstClass 2.1 until early 1999. pertinent information within FirstClass discussions and documents to find the in- However, in 1998 a new IT director de- formation they need. Additionally, Web cided that increased traffic and Web ac- and FTP publishing capabilities enable cessibility demands warranted a new in- rapid and reliable publication of personal formation sharing solution. The company and corporate information to Web pages chose Lotus Notes because of Domino’s without the need for HTML skills. Web access capability, which FirstClass didn’t have, and Notes’s reputation for Key business benefits associated with supporting reliable extended collaboration supporting effective information organiza- and database applications. Fastsigns rolled out Notes in March of 1999. tion with FirstClass include the following: • Reduced product and documentation After a brief trial of Lotus Notes, the com- rework. pany returned to FirstClass because of its • Reduced communication and Web de- ease of use and low cost of administra- velopment costs. tion and support. Fastsigns uses • Reduced time and cost to develop mar- FirstClass to support collaborative confer- keting and technical documentation. ences on a wide range of subjects, access to corporate-standard documents, and The Nucleus Workbook for FirstClass pro- tactical Q&A groups among franchises vides details for calculating the direct and and company headquarters. indirect business benefits of improved information organization. Key success factors: • Reduced communication costs. • Reduced cost of sales due to im- The value of information access proved tactical and strategic collabo- The personal productivity of knowledge ration. workers is directly impacted by their ability to rapidly access information and re-

Page 4 sources they need, regardless of their location, to complete both strategic and tactical collaboration activities. The ease of use of a collaborative application is key to users’ ability to access information and be productive.

A number of different collaborative applications support information access, via a number of different technologies. Centrinity FirstClass’s information access strengths are found in its customizable workspaces and intuitive Win- dows-like design, but most of all in its integrated unified messaging, Palm Pilot, and pager notifier features. The business benefits of unified messaging are discussed later in this report as well as in Nucleus Research Note #A9, Centrinity announces unified messaging platform. The key value of unified messaging is in keeping all communications in one place, enabling end users to choose both the mode of communication and the time in which they respond or delegate a response. Don't underestimate the value of unified communication. Managing the flow of information is critical to achieving both the short term tactical goals associated with a project and the long term or- ganizational benefits of knowledge management. Without unified communication, the picture can be only partially complete.

Additionally, unified communication increases the fidelity of communication by providing a range of options for the sender. A sketch of a new product design may be better sent as a fax while the congratulations on a job well done to a team might be better delivered as a voice message.

Key business benefits associated with supporting effective information access through FirstClass include the following: • Reduced communication costs. • Increased personal productivity. • Improved prioritization of key tasks and activities to improve profitability. • Lower employee turnover. • Reduced IT and new employee training costs.

Please refer to the Nucleus Workbook for FirstClass to learn the methodology for calculating the real business value of employee time savings and productivity driven by improved information access.

Upgrading to FirstClass Nucleus has identified three key characteristics of FirstClass that may provide an organization with signifi-

Page 5 cant business benefits over their current groupware environment: reliability, scalability, and integrated unified messaging functionality.

The value of reliability As groupware grows in importance as a primary communication and collaboration tool for the enterprise, organizations look more and more to the tangible benefits gained from a groupware environment. In order for users to rely on groupware to communicate and collaborate, they must trust that they will not lose or be unable to access those communications.

In fact, the use of groupware to support external customer and supplier communication, real-time tactical collaboration where time is of the essence, and extended corporate strategic collaboration makes its reliability critical to its ability to provide benefits to the organization. Groupware can be a cost-effective framework to support collaborative e-business; however, the impact of system downtime when groupware is used to support customer or partner communication can be devastating.

Indirect business benefits from a more reliable groupware system include time savings, communication cost savings, and increased user productivity. From the cost perspective, the more reliable a solution is, the lower its cost to administrate and the lower the need for IT staff focused on basic application administration tasks (that are often the most costly to find and replace, and tend to have more churn than higher-level IT employees). Thus, direct business benefits from a reliable groupware system include reduced ongoing IT staff hiring and training costs.

Because it is so critical, reliability has become part of the marketing message for many groupware applications. However, FirstClass’s marketing message is supported by a number of tangible characteristics: • Product origin. Built to emulate a company’s telephone system or PBX by telephony engineers with a back- ground in voicemail applications, FirstClass was designed with high reliability as a key feature. • Engineering team. As software applications evolve over time, the ability of engineers working on it to understand the original code and add to it effectively directly affects reliability. The Centrinity engineering team for FirstClass is unique in that all of the software engineers who made significant contributions to product development are still part of the development team. As

Page 6 the product has evolved, the same team who developed the first version Scalability and Reliability Organization: The Open University have supervised program revisions

and continue to participate actively in The Open University was established ex- the product’s development. clusively to teach students remotely, pro- • User references. Rather than believe viding higher education courses to more the sales claims of any groupware so- than 200,000 students around the world. lution, Nucleus recommends contact- OU courses use a range of teaching me- ing user references with similar size dia including textbooks, television and ra- and type of users to get a true picture dio programs, audio and video tapes, of real-life reliability. Nucleus has computer programs, and the Internet. found in its review of FirstClass sites that high reliability significantly con- OU started using FirstClass in 1992 to tributes to reduced administration and support asynchronous communication recovery costs of the solution com- over systems with limited bandwidth. pared to other groupware applications. Today, the university has more than 103,000 FirstClass users. FirstClass is

used to support administrative tasks The value of scalability within the university; course collaboration A highly-scalable groupware system can among students, professors, and tutors; present significant cost savings in hard- and virtual student community activities. ware, software, and administrative costs for companies deploying to a significant Managing a constantly-changing mass of number of users (these areas are more students, course conferences, and tutors fully outlined in the FirstClass costs sec- presents unique challenges for a group- tion of this report and in the associated ware system. The OU’s FirstClass admin- Workbook). As in the case of reliability, istrators have found that the group ad- claims abound regarding the scalability of ministration functionality within FirstClass systems. FirstClass’s design clearly con- and the ability to devolve responsibility to tributes to its high scalability. Originally individual professors and tutors enable the system to run smoothly while reduc- developed for the educational market, ing administrative demands. Today, the FirstClass was designed as an application university supports all of its users on that could serve many users in distrib- seven FirstClass servers, managed by uted locations for organizations with lim- four administrators and two user support ited IT resources – as opposed to many specialists. groupware applications that were initially developed with workgroup-level collabora- Key success factors: tion in mind. • Low cost of personnel and support • Low cost of hardware and mainte- Again, references should not be over- nance looked as a means of evaluating the scal- • Low cost of user and administrator ability of FirstClass versus other group- training ware applications. Potential users should ask for site references who can provide perspective on the user-to-server and user-to-administrator ratio an application can comfortably support. In its review of FirstClass customers, Nucleus found many environments of more than 5000 users being effectively supported by one administrator on one server.

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The value of unified communication The value of unified communication is in bringing together not just messages and faxes but all sources and resources for collaboration. This enables users to manage, respond to, and delegate different messages from a single point. As the types of communication and the volume of non- personal work communication increases, effective management becomes even more important to productivity and competitive advantage.

A good rule for evaluating the potential value of unified communication to an organization is to consider the following: in your existing environment, how many different media do employees have for communication and collaboration? After the initial contact is made by telephone or in person, where do the ensuing communication trails go? How many times must employees refer to previous communications to make decisions, respond to new communication, or delegate tasks? How many different sources (message stores, phone conversation notes, paper files) must they return to do that? Each step beyond the initial contact is a factor in the time required to manage each communication, and multiplied by the number of potential “inboxes” for each employee indicates the potential time and productivity savings supported by unified communication.

Clearly unified communication support will affect users with different roles in different ways. Nucleus has identified key groups within the organization most likely to im- mediately benefit from a central communication and collaboration point supported by unified communication: • Senior management flexibility in accessing and managing communications can produce improved efficiency in dealing with tactical requests, improved financial ana- lyst and shareholder communication, greater employee satisfaction leading to reduced turnover, and reduced demand for administrative support. • Sales staff access to all information and communication surrounding a client or prospect enables sales people to shorten sales cycles, improve efficiency, increase return sales, and reduce communication costs. • Teleworkers in remote locations can ensure a standard- ized record and archive of all communications, supporting improved efficiency, reduced communication costs, and reduced office administrative support needs. • Customer support representatives using an UM solution can record and rapidly access all communications

Page 8 with customers for increased efficiency, increased repeat business, re- Information Organization and Access Organization: Richmond School District duced filing and record storage costs,

and potential improvement in cus- Educators know that ongoing positive in- tomer input into the product develop- teraction between teachers, administra- ment process. tors, parents, and students is the best way to ensure that children learn. In the Organizations can expect the most rapid Richmond School District in British Co- and significant returns to come from em- lumbia, Canada, that can be a challenge: ployees in these categories, so that is students are educated at 55 different where training and deployment efforts schools and resource centers across the should be focused first. For these em- district. In 1995, the district looked to an ployees, productivity gains of 10-15% can electronic system to support collabora- be expected based on support for current tion, information access, and sharing of activities; for other employees , expect best practices among schools and class- somewhat lower productivity improve- rooms. ment-based returns. The school district began by deploying FirstClass to 350 teachers and clerical Unified communication can also provide staff. Over time, it added access for direct cost savings in terms of IT admini- school board members and parents via stration and other communication ex- the Web, and today more than 2500 us- penses, outlined in the “FirstClass costs” ers access the district’s FirstClass sys- portion of this report and to be calculated tem — called RichNet — on a regular ba- in the associated Workbook. Unified mes- sis. saging can enable organizations to reduce IT and communication costs in general by RichNet provides teachers and staff with reducing the need for additional storage clerical task support, e-mail communica- and communication channels. tion, curriculum and community conferences, instructional resources, and access A number of groupware environments to- to reserve audiovisual equipment. Par- day provide APIs or platforms for third- ents, board members, and members of the community can access RichNet via party unified messaging functionality, but the Web to view board meeting minutes, Centrinity FirstClass is the only group- school policies, student course plans, and ware environment to have fully- homework assignments. integrated unified communication functionality. FirstClass enables users to use Key success factors: any telephone or PC to capture, consoli- • Reduced communication costs due to date, sort, and manage all of their elec- improved information organization tronic messages regardless of their origin and access or format. Please refer to Nucleus Re- • Low cost of administration and sup- search Note#A9, Centrinity announces uni- port personnel fied messaging platform, for a full discus- • Low cost of user training sion of the benefits of FirstClass unified communication.

Page 9 FirstClass Costs

Hardware Nucleus has found the lightweight nature of the FirstClass product to produce significant savings in server hardware over comparable collaborative environments – simply because FirstClass’s architecture enables many more users to be supported by a single server. Although server-to- user ratio clearly depends on the level and frequency of use and access to the application, Nucleus has identified a number of FirstClass customers running up to 50,000 users on a single server.

Software Pricing for Centrinity FirstClass is in line with other groupware solutions such as Lotus Notes and Microsoft Ex- change — companies can expect to pay between US$40 and $80 per user depending on total user volume. List pricing will vary considerably by number of users.

Personnel In many collaborative software environments, ongoing personnel and support costs are a significant expense in ongoing maintenance and reliability of the product.

In its investigation of current FirstClass users, Nucleus has found personnel costs to be relatively low compared to Microsoft Exchange or Lotus Notes environments with the same amount of users and activity, for three main rea- sons: • User deployment and management time is reduced by FirstClass’s group administration approach; • Ongoing backup and recovery management tasks are simplified because of FirstClass’s integration with the operating system directory; • CPU processes based on functional activity instead of individual users reduces demands on the system and thus need for constant monitoring. In many cases, one administrator is responsible for managing all support and maintenance needs for large FirstClass deployments.

Nucleus recommends that companies considering a FirstClass deployment request references of similar size and activity to better understand the personnel needs surrounding support of FirstClass, and use data from those reference sites to complete estimated ongoing personnel costs in the Workbook.

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Consulting Simplicity of design and deployment keep the consulting costs associated with FirstClass technology low. In addition, Centrinity’s recent announcement of a fully-licensed version of the FirstClass Rapid Application Developer (RAD) enables administrators and users to rapidly develop FirstClass-based applications. Some organizations may look to consultants and third-party developers to build complex applications.

Although the simplicity of development has its advantages, fewer third-party turnkey applications are available for FirstClass than for some other collaborative environments such as Lotus Notes or Open Text Livelink. That said, because RAD is included in FirstClass Gold, many companies may find that fewer basic applications are available from third parties because the applications can easily be built internally. Companies with specific custom application needs will find more complex applications available from FirstClass partners and third-party developers.

CIOs should keep in mind that the key to continuing to derive value from a groupware application is in leveraging it for custom application support; and should expect additional costs in years 2-3 associated with application development efforts.

Training The FirstClass development team has adopted a user in- terface similar to the Windows environment with which many users are already familiar, using folders and a pull- down menu to organize mail, calendaring, discussions, and other FC-based applications within the application view. The amount of user training needed will depend both on the sophistication of users and the complexity of applications within FirstClass. The FirstClass Web client may also require some training but may be a less training- intensive option for some users who will access only specific applications or groups within the FirstClass environment.

Other As with any other application deployment and in particular collaborative application deployments, there may be other costs associated with deployment, such as launch promotion and user incentives.

Page 11 CIOs may also want to consider the potential of FirstClass as a platform for supporting knowledge management ini- tiatives within the organization. Although knowledge management is not directly addressed in this report, Nucleus believes a groupware platform is an excellent base for building knowledge management applications. However, the potential benefits from KM to the organization should not be calculated without also calculating the potential other costs associated with training and encouraging user adoption and acceptance of KM applications supported by groupware.

Deployment Strategies Companies considering deployment of FirstClass should also consider the various options for how to most cost- effectively deploy FirstClass within their organization. The Workbook provides a methodology for evaluating the one- time and recurring costs and benefits of each deployment strategy.

Internally-supported FirstClass deployment The most common deployment strategy is most appropri- ate for an organization with sufficient existing IT resources to manage and support ongoing administration of FirstClass.

Key Benefit Factors • Customization ability. • Data access for knowledge management efforts. • Security control. Key Cost Factors • Training of IT staff for deployment, support, and administration. • Variable speed and cost of deployment. • Potential hardware purchase/upgrade requirements. • Retention of critical mass of IT staff.

ASP-supported FirstClass deployment Companies may also want to consider using an ASP to host and manage their FirstClass deployment.

Key Benefits Factors • Per-month user and fee flexibility. • Rapid deployment. • Reduced internal hardware/software fees. • Reduced internal IT staff needs.

Page 12 Key Cost Factors • Negotiable per-user monthly cost • Variable speed of access to applications • Potential network access upgrades • Future costs associated with integrating external data into knowledge management efforts.

For a full examination of the benefits and costs of various ASP-supported strategies, please see Nucleus Research Note# A5, The Value of ASP Services.

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