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 / First Quarter 1997 / Issue 6(originally published by Booz & Company)


The Wired Enterprise: Here Come the Intranets

It is safe to say that few if any of the intranet's progenitors foresaw its ability to disrupt and transform the organizations it touches. They were, after all, pursuing other goals, like on-line commerce and interactive television, when interest in corporate networks overwhelmed the planning for those markets.

It may be too early to place the intranet alongside the copier or the telephone, but its ability to democratize the flow of information within an organization is already having far-reaching effects.

"Ultimately a firm is just a massive information system -- at its core, it is a way of making decisions,'' said Sun's Mr. Raduchel. "Intranets change the way that operates because they rewire the central nervous system. It is a profound change.''

And Now It's Extranets

The term "intranet'' was coined to denote an internal network with an architecture based on the technology of the global Internet. But now, some of the most aggressive early adopters of intranets are looking for ways to open up these networks to the outside world, or at least a carefully controlled subset of the outside world, like their key suppliers or largest customers. They are building "extranets.''

There is a paradox here. One reason intranets have flourished is that they are relatively free of the two biggest problems on the Internet: performance and security. On the Internet, your performance is equal to the slowest link in a long ambiguous chain, and the best security measures money can buy are only a fresh challenge to the world's hackers. Intranet performance, by contrast, is determined by the bandwidth of your internal network, and if access is limited to internal users, security is a much smaller concern.

But as long as intranets remain strictly internal, their payoff will be primarily in cost savings and intangibles like improved interdepartmental collaboration. The value intranets add to an organization will be limited until they can reach out to encompass key transactions with business partners. Already, those companies that embraced the intranet early on are beginning to forge links outside the enterprise, acting on the assumption that the rewards will be worth the risk.

"It has begun to hit home what the benefits are to integrating these networks,'' said Marc Andreessen, co-founder and senior vice president for technology at Netscape Communications Inc., the leading provider of intranet software. "There is a great appeal to having the same type of system inside and outside the company. Now companies are starting to build extranets, taking intranets and connecting them together to reach out to customers and suppliers. Some of that is happening on the Internet, some on private networks.''

Most extranet applications are in their infancy, and in many cases, they have evolved from successful intranet programs. As with many of the first intranet applications, these are sometimes modest uses of a powerful tool, but the cost savings can be considerable.

At Silicon Graphics Inc., one of the first interactive applications on the intranet was a Web-based purchase requisition process, which automates and streamlines the purchasing of standard items. This consists of an on-line catalogue and electronic order forms, which employees can fill out and send on their way by clicking on the browser screen. Work flow software sends the virtual requisition to the appropriate manager for authorization, after which it is automatically routed outside the company, electronically or by fax, to the appropriate supplier, which can "drop ship" the requested supplies directly to the employee's desk.

The CSX Corporation, the giant rail transportation company, is currently rolling out TWSNet, a shipment tracking and processing application that uses Web technology and Sun Microsystems Inc.'s Java programming language to give customers access to the company's internal applications. The first phase includes shipment-status queries, E-mail, corporate address book, customer account information and an interactive shipment tracking map. Later phases will include freight-car ordering, freight claims and bill of lading submissions.

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