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Computer Giants Capitalize on Intranets

January 1, 1998
by Polly Schneider
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HEALTHCARE IS STILL waiting to see the promises of the widely hailed intranet. Those who are experimenting with intranets are largely in the first phase of development: publishing large and frequently updated material such as phone directories, company newsletters and human resources policies on easily accessible internal Web pages. While this activity can create vast improvements in information sharing, it may not be considered a strategic use of the intranet. The next phase, interactive applications for say, requesting supplies or customer literature, requires a higher level of commitment and skills that many healthcare organizations just can’t yet muster. Meanwhile, the financial industry--which has always been ahead of the curve in using technology to improve services--is investing heavily in the intranet model.

When planning for the future of your intranet, the companies to watch closely are not only the banks and brokerages, but those who, through research and development, helped create the intranet concept: Sun Microsystems and Digital Equipment Corp. Both organizations have taken intranet and Internet strategies to the next level: reengineering business operations and processes.

Sun: Brewing Java-land
The Web is theworkplace at Sun. Internally alone, an average of two million emails are sent a day--that’s around 100 per employee. More than 1,000 internal Web servers provide 250,000 pages of information to Sun employees; on top of this, users download a total of 1.5 GB of data a day from the Internet. The company’s goal is to have every application on the network rewritten in Java and every employee equipped with a Webtop (browser interface to the desktop) by the end of June, according to Bruce Elder, worldwide healthcare industry manager. Today, Sun’s intranet stores and distributes all of the corporate knowledge, according to Eric Peterson, director of Web services engineering in Sun’s Enterprise Network Services Organization, Milpitas, Calif. "It is the corporate information infrastructure," he affirms. The company reports it is saving an estimated five percent annually on document distribution and workflow from the intranet--about $25 million.

So far, human resources applications on the intranet have offered the most value in helping people work more efficiently. One of the more successful is SunTea, a completely automated expense reporting system employees can file from the road and receive an expense check in a matter of days. The company reports an initial savings of $2.5 million from SunTea. Other programs for processing bonus checks and raises are also helping to drastically reduce lengthy approval cycles. Managers are using a capital assets management system to order and track department equipment; "SunU" offers online courses; and the entire corporate library is indexed and accessible online. All of this is allowing employees to work faster and get to key corporate resources from wherever they may be, Peterson says.

The intranet is also playing a hand in changing the role of the IS department. With users now creating and publishing Web pages, IS can work on providing better service, according to Peterson: "It frees us up to take care of other things than content creation. We’re now change agents." In effect, he says, IS is becoming an Internet service provider by managing and packaging the information and tool sets. The new environment is also for the first time relinquishing some of the control IS has over information management. "It’s almost impossible to place traditional controls in a Web-based environment," Peterson observes. "It’s a real challenge to let go of certain things."

An unexpected trial at Sun has been managing user expectations for the hottest, coolest features and designs--especially tough in a company where many employees are already tech-savvy and experimental. Peterson says the company limits the use of graphics, animation and multimedia to save bandwidth and ensure that employees--especially remote users--can get to information quickly.

The pervasiveness of Internet culture at Sun is tearing down the walls between the outside and inside--getting rid of firewalls in those areas not deemed mission critical--to the point where the term "intranet" may soon become obsolete. "Over time there won’t be a distinction between the intranet and the Internet," Peterson says.

Digital: An intranet pioneer
Digital’s interest in the Internet dates back to 1977 when the company linked up to the university-based ARPANet, predecessor to the Internet. "We’ve always been a networking company, so back in the old days… everyone in the company had electronic mail," says Kathleen Warner, VP of the Internet/intranet deployment office at Digital, Maynard, Mass. "It was a way of doing business for us, and we were connected to our employees around the world."

Digital brought the technology--client/server architecture, an IP backbone and the graphical user interface--in-house in the early ’90s for research. In 1994, the company launched its first external Web page, and soon after, began to build its intranet. Today the intranet has grown to one million pages and 2,000 Web servers that service some 45,000 users.

Digital dumps a lot of money into its intranet--$13 million in 1996. Yet, the company reports a return on investment of $28.7 million over the last three years, largely from cutting costs in printing, software distribution and database consolidation. The intranet has also given rise to an increase in telecommuters, which saves the company $2,500 per person.

A literature ordering system is one of the more popular applications; salespeople out in the field often need quick access to product literature for customers. "Their ability to view it online, know what’s in stock and when they can get it, is very productive for them," Warner says.

However, companywide enthusiasm for the intranet has its drawbacks. Early on, Digital had to learn how to manage a consistent design and structure of Web content across the corporation, since employees were changing the templates. A more universal concern in business is information overload, which Warner concedes is "serious." With so much information being pulled or pushed onto the desktop, what is the effect on employee productivity? "We decided to keep an open environment, not to filter out anything, and to educate employees on the appropriate use of the Internet and the intranet." Decreases in productivity or abuses of the intra/Internet have not been much of an issue at Digital, she says.

The company is currently researching several emerging technologies that could bring more value to netizens. Integrated telephony will allow people to "read" voice mail from browsers; "knowledge worker browsers" will push information to you and filter out stuff you don’t want; voice recognition, VRML (virtual reality markup language), Java, ActiveX and audio/video streaming will have a strong future, according to Warner.

Healthcare: Getting real
Healthcare’s slower pace in moving to an intranet-run business is not so much caution as a lack in know-how. Explains Karen Guenther, Digital’s health industry business development manager: "The issue is they don’t have the staff, they don’t have the expertise. To find Java programmers is tough." Healthcare-specific outsourcing firms are growing to help meet this need, says Doug O’Boyle, program director, healthcare IT strategies, Meta Group, Inc., Stamford, Conn. "We’re beginning to see a number of small vendors emerging offering Web development services to healthcare."

Yet the extent to which an organization can transform its operations through an intranet model really depends on the nature of the workforce and the business need. For companies in which a large number of employees do not use computers on the job, the intranet may never be the predominant form of communications. At Allegiance Health Care, McGaw Park, Ill., a medical supplies and services firm, paper will not be eliminated because more than half of its 22,000 employees work in manufacturing--and many of them do not have a computer. "(The intranet) is more driven by the individual business units right now," says Judy Foreman, manager of employee communications and Web master for Allegiance’s intranet. "Some units see it as more valuable than others."

To some the intranet is just glorified email: to others, it is a whole new culture with unlimited possibilities. "There may be a false expectation that IT can provide services a lot faster, cheaper, better… because of the way-cool technology," Guenther warns. Keeping user demands in check with what the business is trying to accomplish, and what IT can realistically provide, will be the challenge of any organization venturing into the ’Net frontier.


Growing Industry Seeks Handsome ROI

AS MORE AND MORE BUSINESSES JUMP ON THE intranet craze, the industry is beginning to measure the use and effectiveness of deploying them. A recent study of 55 companies conducted by the Meta Group, Stamford, Conn., showed that 80 percent of those surveyed had generated a 38 percent positive return on investment (ROI) over a period of roughly three years. The companies ranged in size from $2 million to $35 billion, covering nine vertical industries; the average total investment (capital, operating and staff) over the three-year period was $7.5 million.

Interestingly, the study found that size, number of users and vertical industry of an organization had little to do with how successful an intranet was in achieving benefits or ROI. Even the amount of money a company invests in its intranet may be irrelevant. "We couldn’t find any correlation on any of these factors," says Kip Martin, senior consultant with Meta Group.

What does seem to make a difference, however, is the types of applications companies deploy. Those organizations deploying mission-critical business applications, such as sales force automation, tended to see a higher ROI than organizations using only low-risk publishing applications that simply transfer paper-based information online. The highest ROI-generating applications fell under the categories of customer service, inventory management and database access.

At the same time, organizations must consider the risk inherent in porting core business processes like sales force automation or order management onto the intranet. "If you’re choosing a mission-critical application, you are putting at risk those very processes," Martin reveals. The study cited organizational culture as another factor central to an intranet project’s success.

One of the oft-cited benefits of an intranet is the ability to drastically reduce paper and printing costs; however, this may not be realistic. While manuals and directories can be updated and distributed online, employees are still printing documents from the screen. "We haven’t saved any trees in the process," says Eric Peterson, director of Web services engineering in Sun’s Enterprise Network Services Organization, Sun Microsystems, Milpitas, Calif. "We won’t get rid of paper. We’ll just get people more efficient at getting the information they need."

Part of the rationale for paper’s solid future is because of its pervasiveness in society, according to Karen Guenther, health industry business development manager at Digital Equipment Corp. "It’s a cultural and educational change. Culturally people are still paper-oriented and the presentation is something we learn to digest… that has not necessarily been applied to the new technologies."

In healthcare, the biggest ROI may be a quality of care return rather than a financial return. Organizations are beginning to share clinical information on intranets through browser front-ends to legacy systems, says Bruce Elder, Sun’s worldwide healthcare industry manager. Nonetheless, he says, the tools do not necessarily ensure better care: "Just because I have a ’Net-based medical record doesn’t mean as a physician, I will make better decisions."


Technology Forecast

Sun’s Eric Peterson shares Internet/Intranet trends in progress:

1) "We are witnessing the transitioning of text-authoring environments." HTML editing tools will become as sophisticated as traditional text editing tools in popular word processing applications.

2) "Content management is another challenge." As the number of Web pages internally and externally quickly multiply, IT organizations will need to find tools oft used in publishing--such as publication management software--to help maintain and manage the reams of information going online.

3) A pilot program called Sun.Net will make it possible for employees to access email, calendars and other desktop files from any compatible browser--a kiosk in the airport, a WebTV box in a hotel room. "All of a sudden you don’t have to bring the laptop with you wherever you go."


Polly Schneider is senior editor at Healthcare Informatics.



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