PART One Integrating the Internet Inside Your Company CHAPTER 1 Cutting Costs across Your Enterprise: How to Run a Tighter, More Competitive Ship Several years back, the first edition of this book began with the question: “Skeptics of the Internet’s influence on businesses often ask the question: ‘How much money have you made on the Internet today?’” The answer was, and still is: For most companies, that’s the wrong question to ask at this time. A trailblazing few—such as Dell Computer, which manages to ring up web sales to the tune of $16 billion a year—have transformed their web operations into profit centers. A better question to ask companies right now would be: How has the Internet made your operation run faster, smarter, and cheaper? Whether you’re a pur- chasing manager in a global enterprise or a two-man start-up in a basement, you will both have certain practices in common. Both companies buy office equipment, utilize communications networks and instruments, travel, employ personnel, and need to further exploit the Net to their respective ends in order to keep a competitive edge. This chapter will help you do this for your own company, as innumerable free or inex- pensive web-based business tools and solutions created over the past few years have changed the way that we conduct business. You’ll learn about the following: II Application Service Providers (ASPs) II Unified messaging II Fax over IP II Internet telephony II B2B exchanges 3 4 Chapter 1 II Customer service savings II Intranets and Extranets II Distributed printing Optimizing Your Purchasing Power In geek-speak, the Internet is known as an open-computing environment. This open- ness has a monumental impact on the marketplace as well. Putting scores of competi- tors within one click of each other makes for a truly open, and often brutal, marketplace. According to Internet research firm Jupiter Communications, the nonser- vice business-to-business (B2B) e-commerce marketplace in the United States will be worth $6.3 trillion, or 42 percent of the market, by 2005—as compared to the 3 percent of nonservice B2B trade conducted online in year 2000. Pretty impressive figures. In addition, about 92 percent of today’s online B2B sales are now direct, or made by one seller to many buyers. Jupiter predicts that 35 percent of online B2B transactions will be made using a net market with many buyers and many sellers or a coalition market with a consortium of buyers and sellers. Jupiter advises companies to incorporate Internet strategies immediately throughout their procure- ment and sales processes. So do we. Let’s begin. Why Buy When You Can Rent? You might recognize this reversal of the real estate adage, Why rent when you can buy? On the Internet, the opposite is true. As more and more web-supported products and services become available, it is increasingly common for businesses to “rent” the right to use a product or service from a particular company, and to manage that function over the Web (or incorporate it into their site). An application service provider (ASP) is a company that offers individuals or enterprises access over the Internet to applications and related services that would otherwise have to be located in their own personal or enterprise computers. The ASP market is exploding, especially for the small to midsized business market. Why should you reinvent the wheel and build an application internally, when you can rent and manage the solution over the Web? If it’s not part of your core business, then it makes perfect sense to tap into an ASP’s expertise and constantly improve applica- tion functionality. You can either piece together various solutions for your computing or business from a number of ASPs, or there are complete business solutions that you can tap into to handle all of your business needs at once. Each approach has its pros and cons. You might want the convenience of managing all of your web-marketing activities from a small-business resource like bCentral. But what if you have very sophisticated needs for an email list, and bCentral does not provide them? You may need to tap into a special mailing list provider to meet that need. Throughout this chapter we will explore both single-service applications and integrated suites of ser- vices. The great thing about the ASP market is that its offerings are constantly improv- ing. Even traditional software providers, such as Peachtree and Microsoft (see Figure 1.1) are moving to an ASP model so that you can pick and choose what works best for Cutting Costs across Your Enterprise: How to Run a Tighter, More Competitive Ship 5 Figure 1.1 Microsoft offers small businesses an ASP solution for Microsoft Office. you. As a business owner, this is a business trend that will have a very direct and pos- itive impact on your bottom line. According to eMarketer’s November 2000 ASP Report: Just over one year ago, there were fewer than 100 ASPs. As of May 2000, this num- ber reached 500, and as of October 2000 the ASP Industry Consortium counted 650 members worldwide. Not unlike the mushrooming growth of B2B exchanges, new application service providers are launching at a spectacular rate. A significant factor behind the growth of the ASP business model is the Internet and the success of network-based computing. In brief, the history of remote deliv- ery of software applications began in the 1960s as businesses shared mainframe computer processing by remotely accessing their services on an as-needed basis. In the 1980s, the development of desktop computing placed software applica- tions on the personal computer at the fringes of the enterprise network. But as client-server computing grew during the last half of the 1990s, the cumbersome task of upgrading and maintaining software applications at the edge of the net- work was switched to a more centralized location at the server level. The growing presence of the Internet, combined with increased and cheaper bandwidth, has further reasserted the vision of network-based computing in which the bulk of information is processed and stored at central locations on a network. Instead of returning to the dumb terminals of the past, however, so- called “thin-terminals” will be the personal computers of the future. Applications will be hosted and their data will be stored on central servers, while users will access the network from simple terminals equipped only with a browser and basic desktop software applications. 6 Chapter 1 The five reasons cited for using an ASP are: II Capital outlay is easier for small businesses that opt to use ASP services. II Monthly subscription fee, rather than up-front installation charges. II Upgrades and maintenance are handled by the ASP. II Start-ups get up and running more quickly with the resources provided by an ASP. II ASPs often have closer relationships with major software providers, thus speeding new product delivery and support. (Sources: Sun Microsystems 1999, eMarketer 1999.) Even industry leader Microsoft has gone the ASP route. You might ask, Why wouldn’t I just use Microsoft Office applications the old way, by installing the software? The answer is: time and money. Distributing and maintaining increasingly complex soft- ware applications on the customer’s desktop has become increasingly expensive in terms of customer service for the software providers. Every time an upgrade is made, millions of customers must be supported and walked through changes and incompat- ibilities. On the user end, the headaches and downtime that result from technical installations (and reinstallations) can cost thousands of dollars in lost productivity and IT support, even for the small business. The ASP model eliminates the specialized IT infrastructure (and headcount) required to make sure that everything is running smoothly. TIP If you’d like to start searching for ASPs for your particular needs right now, go to SearchASP.com, where you will find thousands to choose from (see Figure 1.2). Deborah Lilly, my speaking agent, agrees. “Our biggest challenge was the need to coordinate everyone’s schedules,” she explains. Lilly reviewed five companies for a web-based solution. “We used to handle this on an intranet, and had people dial-in on a dial-up network. They would access their calendar, they could change, add, synchro- nize, and then everyone could access it,” Lilly says. “But now there are too many of us to dial in.” Lilly looked at calendar solutions, and she discovered that having what she needed custom made would cost about $300,000. “None of the companies I looked at had a quick and easy solution, which was to ‘webify’ our Intranet,” she continues. “Finally, I said, Why reinvent the wheel?” She visited the Microsoft site to find a local service that could set her up with an ASP version of Microsoft 2000 Exchange Server with Outlook. “Microsoft has the only solu- tion now, today, that I could use,” Lilly continues. “It’s one that everybody already had, so there was no expense to go out and buy a $500 program for every employee. It made all the sense in the world to use the tools at hand” (see Figure 1.3). Lilly’s solu- tion runs $20 per user per month. “Best of all,” concludes Lilly, “there is no learning curve. If someone doesn’t know how to use Outlook, I send them out to get a tape at the local software store.” Cutting Costs across Your Enterprise: How to Run a Tighter, More Competitive Ship 7 Figure 1.2 At SearchASP.com, you can review hundreds of ASP solutions.