The Virtual Corporation

THE INTERNET, GLOBAL MARKETS, AND SOCIAL MOBILITY ARE CREATING NEW WAYS OF WORKING.

By Joel Maloff

Business has always relied heavily on communication - from the earliest stone tablets and papyrus bills of sale to Pony Express, telegraph, telephone, and fax machine messages. With the advent of the Internet, an entirely new chapter is being writen.

The Internet is changing commerce as surely as did the telephone or railroads. For the first time, employees located in different parts of the world can communicate with one another in a timely and cost-effective manner. Customers in New York can view products sold in Toronto, Oslo, or Sao Paolo and can purchase them proprietary computer system thousands of miles away, conduct a real-time demonstration, and enter an order immediately.

We also live in an increasingly mobile society. Some 50 years ago, people flocked to cities to work, abandoning more rural areas. At that ime, it would have been a several-day trip for most of us to travel 500 miles or more. Today, we see many people moving back to rural areas as our cities continue to spread. Travel times have drastically shortened as well.

Employees are increasingly portable and diffused. How can organizations maintain communications sufficient to operate a business when workers are living in far-flung locations or traveling a large percentage of the time? One answer is the virtual office afforded by the Internet.

The Internet is an empowering tool. It enables organizations to grow without incurring the same degree of relocation expenses. It allows them to advertise and promote themselves to a much wider audience at much lower cost than ever before. It permits the creation of virtual companies in which no one works in a single location and all workers communicate across the network. Does the customer know or care? As long as high-quality products at fair prices are delivered and maintained, the answer is probably not.

The critical challenge for businesses today is to understand what the Internet is and is not, and to determine how to create a "virtual" business that is intellectually in tune with the company's branches, customers, and suppliers, yet physically remote.

How does the virtual business function? Consider the different ways in which businesses engage in communications:

• Internal communications include employee relations, distribution of organizational news, new job postings, and thousands of other subjects.
• Supplier communications include EDI (Electronic Data Interchange), other purchasing issues, accounts receivable and payable, interaction with legal and accounting organizations, materials requirements forcasts, and more.
• Marketing and sales communications cover everything from market information gathering, competitive analysis, product planning and image creation through the closing of orders for products and services.

By examining these areas, you can see how the virtual extension of business can offer immediate benefits. Furthermore, businesses that are slow to understand the implications of the Internet will find themselves lagging behind their more savvy competitors.

Organizations need to begin by examining how they communicate internally at each site today. Is there an office-wide electronic mail system? Surprisingly, many large companies have separate, incompatible mail systems in the same building. Clearly, before external access can be considered, internal communications systems must be examined for their unity. Once the internal environment is in order - including the development and propagation of proper-use policies - external communications can be contemplated.

Many companies are investigating telecommuting - pemitting employees to work from home rather than driving long distances each day to a physical office. Telecommunicating offers a variety of advantages to employees and employers. For example, telecommuters need not worry about traffic jams, snow storms, or how to care for children who are sick and home from school. Employees are more productive when they work in a comfortable home environment and can deal with other personal issues that pop up now and then.

For organizations with remote sites, the Internet provides an easy method of maintaining corporate-wide communication. A growing number of companies are establishing World-Wide Web sites for internal communication, for example.

Remote sites tend to feel like the Foreign Legion at times, and the Internet can help create a greater sense of closeness and feeling of team work that enhances overall company performance and employee morale. Employees can log in to receive the daily corporate news, hear portions of the CEO's speech to shareholders, establish an online employee comments area, or post the latest scores - from the company's softball leagues. An endless variety of useful information can be communicated to employees in an easy fashion.

Through the use of a carefully considered plan, organizations can create a virtual extension of themselves - even internationally - for relatively reasonable and predictable costs (see the sidebar "What It Takes"). A research facility in Italy, for instance, would be able to submit its findings to its New York headquarters quickly and easily. And the same employees in Milan would be able to receive the company's virtual newsletter online.

In an increasingly international economy, businesses use telephone, fax, and courier services to communicate with their suppliers, and these services can become expensive. In the past, companies have been limited to using suppliers that were local or known to them. Through the Internet, organizations have the ability to identify suppliers wherever they may be and to conduct business with them. Announcing a Request for Proposals (RFP) on appropriate newsgroups or other Internet forums can reach a wide group of potentially valuable providers.

Once business relationships have been established, organizations can explore how electronic communication may be mutually beneficial. Invoices can be sent electronically with paper to follow via snail mail. If the accounts receivable cycle could be shortened by an average of a few days or a week, the impact on the organization's cash flow could be considerable.

Placing orders online - whether done manually or using EDI - can save time and effort. The number of personnel required for purchasing may be reduced, permitting their transition into other areas of value to the company.

Lastly, the use of e-mail between suppliers and customers can be important. Because communication takes place in writing, a record of interactions can be maintained. Concerns can be voiced immediately without regard for time zones or office hours, and the original inquiry can be passed to the appropriate people for action and resolution. This method beats voice-mail telephone tag, especially when an annoying event has occurred.

Relationships between organizations and their suppliers will become increasingly electronic over the next several years. Paper will not disappear completely, nor will fax machines go away, but their use should drop considerably. Understanding the implications of this trend is an important competitive factor for vendors and customers, Vendors will need to be technologically adept to remain competitive and retain business. Buyers will deal with electronically enabled suppliers as a method of reducing their expenses and enhancing profitability.

Knowledge of market trends, buying behavior, demographics, and competitors' actions are important to most businesses. But obtaining this intelligence is growing more difficult as the volume of information overwhelms us. What is the limit on the number of magazines or newspapers we can effectively read and absorb? How do we cut through the noise to get to information critical to the organization's success?

The avenues the Internet affords to executives and workers for intelligence gathering are endless. They include mailing lists, newsgroups, and innumerable resources (see "Executive Edge", Jan. 7W; online at http://www.mecklerweb.com/mags/iw/archive.htm). But the Internet - if not properly understood - can make the situation even worse. How many news-groups can you read? To how many listservs can you subscribe before becoming overwhelmed? How can interesting and valuable Web sites be identified?

Instead of subscribing to hundreds of publications (many of which are never read) or avoiding Usenet News and listservs altogether, businesses are learning to employ Internet search tools and services to facilitate market research and planning.

Try conducting a search using the tools provided on Netscape's homepage or by accessing Yahoo (http://www.yahoo.com) and entering keywords of significance to your organization. It is important to remember that infomation available on the Intemet changes quickly. New data may be at a site you visited yesterday. Also note that no single search tool will locate everything of relevance, so it is a good idea to perform multiple searches using different tools, such as Lycos, WebCrawler, the World-Wide Web Worm (WWWW), and several others. News services such as Clari-Net (http://www.clainet.com), DowVision (http://dowvision.wois.nef), Ensemble Information Systems (htfp://www.ensemble.com), Farcast ([email protected]), Global Internet News Agency (http://www.gina.com/gina), Individual (http://www.newspage.com), InfoSeek (http://www.infoseek.com), and the Stanford NetNews Filtering Service (http://woodstock.stanford.edu:2000) deliver news and custom newsfeeds via the Net. Financial services such as Security APL's PAWWS (http:// www.secapl.com), Quote.Com ([email protected]), Ticker.Com ([email protected]), and Wong's E-Mail Quoter ([email protected]) deliver stock quotes and provide investor tips.

For gathering information from listservs, a search tool called InfoMagnet is available for trial use at http://www.shelby.com.All of these tools help to shorten the amount of time that personnel need to spend at libraries or outside the business conducting research.

The Internet also is becoming a medium for conducting focus groups and obtaining customer feedback. One way to accomplish this is through Internet chat forums. It is unlikely, however, that businesses would want to conduct focus groups in a highly public environment.

To address this issue, vendors such as net.Genesis (http://www.netgen.com) are providing chat system toolkits. Prospero Systems Research (http://www.prospero.com) has developed Global Stage, one of the first commercial chat systems allowing organizations to host live discussions with most visible means are the use of Web sites established by individual organizations or on cybermalls.

In both cases, it is important to think of a Web site along the lines of a trade show exhibit. In planning the exhibit, businesses must consider how it is to be used. Is it there simply to create or enhance the organization's image? Is it there to generate leads for later contact by sales people? Is it here to close business on the spot? Each of these is quite different and requires a different focus. Accomplishing all three via the same exhibit is difficult. The same is needed to meet a specific customer's requirements, provide the customer with a firm price quote and delivity date, and upon closing the sale, enter the order while still on site. In both cases the salesperson is more effective than previously, resulting in enhanced sales performance and sales commissions earned!

Salespeople and other knowledge workers can communicate with one another via e-mail, chat services, or mail reflectors to discuss such issues as new competitive threats, overcoming specific objections, or closing difficult accounts. The interaction in their own private virtual meeting halls on the Internet. Using these and similar tools, organizations can invite special guests to chat with a virtual Internet audience of up to 1,000 people worldwide, bypassing current commercial online services.

The Global Stage system is fully operational and began a beta program in early March 1995. Information and directions for online registration are available via the Internet by sending email to [email protected] and on the Web at http://www.prospero.com/globalstage.

During the initial three-month beta period, event producers will pay $195 per hour for access to the Unix server network which is operated jointly by Prospero and Genet Communications Inc. of Palo Alto, Calif. Fully licensed turnkey systems are due in June (pricing had yet to be determined at press time).

In addition, establishing a mail reflector can serve similar but non-real-time function. Anyone wishing to comment can do so via e-mail, and all users subscribed to the reflector will see the responses. This can yield useful feedback on a new product or a draft of a document.

Compare the fees associated with mail reflectors minimal and services like Prospero with the normal costs associated with focus groups. Savings and scope of coverage can be expanded substantially without a traumatic change in the way business is conducted.

There are several ways to use the Internet as an enhancement to sales. The true when planning a Web site.

Once a clear objective has been established, a server site acts as a virtual storefront, making an organization's products or services visible to a quickly expanding buyer universe. Keep in mind that the Internet is not only a single marketplace of 30 million users; it is hundreds or perhaps thousands of micro-markets. By using sound marketing and sales practices, businesses can identify their target customers, understand the technical capabilities of these prospects, and use the Internet to enhance sales performance.

The virtual company can capture buyers from anywhere in the world. By using new emerging techniques for secure transactions, it can capture impulse buys as well (see "New Deals," May IW). In addition, once a Web site has been established, valuable information must be provided to keep consumers coming back. One service designed to turn legacy documentation into potentially money-making services is the Basis Web server from Information Dimensions (http://www.idi.oclc.org; see News p. 14).

In addition to sales on the Web, the Internet can benefit traditional sales approaches. Salespeople carrying laptops can access their home computing systems through dial-up Internet connections and conduct live demonstrations of software products.

Sales of sophisticated systems can also benefit from Internet access. By logging .on to a proprietary-parts database, a salesperson can assemble the components among a sales force and other corporate decision makers can be very useful.

As we've seen, the ways in which companies can benefit from the Net are manifold and the value immeasurable. Marketing, selling, gathering intelligence, telecommuting, client service, and sharing corporate news are only a start. Business can be furthered by knowledge workers' ability to target useful Web sites, news services and other information resources, participate in discussion groups, and make key contacts.

The Internet allows organizations to extend their reach in new and exciting ways. Key personnel can work part-time from home and be more productive than ever before. Resources that were once thought to be too distant or too expensive are now within reach. Personnel who were unavoidably remote can now be brought closer as a result of enhanced communications.

With a clear plan and an investment in rational thinking, an extended office via the Internet is available to every organization. In the coming years, businesses will look back and wonder how they ever survived without Internet connectivity. Can you remember what it was like before fax machines and the PC? The Internet is here to stay. The key is identifying how it can best serve each individual organization.

Joel Maloff ([email protected]) is president of the Maloff Company, an Internet consulting firm in Dexter, Mich.

WHAT II TAKES

How do you implement an intracompany virtual environment? Each organization will need to evaluate its unique requirements for Internet access. For larger organizations and sites, it is likely that a dedicated connection to the Internet will be required. This normally consists of 56-Kbps or Tl services from an Internet access provider (IAP), a connection service from the local telephone company to connect the business site to the IAP, and other hardware or software as needed. These additional requirements will likely include some level of security, including firewalls. An organization can expect to pay on average of $550 to $1,500 per month in the United States for IAP service, with other expenditures required for the appropriate levels of security and functionality.

If you wish to restrict the use of the Internet primarily to intracompany purposes, a "closed user group" or "vitual private network" can be created through the use of encryption services. These can be software, hardware, or a combination that permits only those in the designated group to "see" each other, despite using the Internet for data transport.

Remote offices can be connected through dedicated services at their sites (they do not need to be provided by the same IAP) or through a dial-up Internet connection to a local service. Using SLIP/PPP (Serial Line Internet Protocol/Point-to-Point Protocol) access or a similar service, remote personnel can - without long-distance charges - connect to company resources as if they were physically there. The average price for SLIP service in the United States is $35 per month. Use of dial-up services requires a modem (at a minimum of 14.4 Kbps for aceptable performance) and a standard telephone line.

It's preferable that the phone line be separate from frequenthy used voice lines. Call Waiting creates unpleasant side effects on data communication - like dropping your session in the midst of a critical e-mail message. Deactivating Call Waiting will cause incoming callers to receive busy signals. When the number of users caling out from a location gets too large, it will be time to consider dedicated access.

Salespeople and telecommuters who work in a specific geographic area, such as Boston or Chicago, can obtain dial-up Internet accounts from any number of IAPS. These include the larger national (ie, BBN, Netcom, PSI, and UUNet) and regional providers (such as Panix in New York, Digital Express in Washington, and InterAccess in Chicago). In addition, America Online, CompuServe, Delphi, MCI, and Prodigy are readying dialup offerings nationwide. Software like Spry's Internet in a Box and lBM's OS/2 Warp offer occess through a variety of providers as well as through their own services. It is important that these providers offer local access service without a toll charge.

For those who are on the road more frequently and not in any one geographic area the majority of the time, most IAPs also offer 800-number service. These allow the use of SLIP acounts from anywhere in the United States or North America, depending on the service. There are, however, additional fees associated with 800 access that will need to be considered.

A 28.8-Kbps modem helps speed the transmission of information and enhance remote access. And for salespeople who provide demonstrations to large groups of people, an LCD panel that connects to a laptop's VGA port is useful. This allows for on-the-spot presentations directly from the computer, including live demonstrations of network accessed information as well as presentations using PowerPoint or other similar packages.