by Tim McMahon
Over time, enterprise information resources become fragmented--this is a fact. Organizations deploy structured data in multiple databases and scads of unstructured email and documents on servers throughout the company. Several years ago, many organizations put together intranets that bridged the gap between workers and some of the company's information. However, as time passed most have come to realize that this first generation intranet no longer meets the firm's needs. In fact intranets are often so severely under funded that they actually cost organizations dearly in lost time and resources. Consider Jakob Nielsen's Alertbox article from April 4, 1999. In writing about lost efficiency from corporate intranets Nielsen notes:
The cost of poor navigation and lack of design standards is . . .at least ten million dollars per year in lost employee productivity for a company with 10,000 employees. Worldwide the cost of bad intranet usability will grow to about $100 billion by the year 2001 unless better navigation systems are built and much stricter internal design standards enforced.
While there may be some hyperbole in Nielsen's article, the message is quite clear. First generation intranets, as important as they can be, cost organizations huge amounts in lost time and revenue. When quantified, this outlay can be staggering.
Organizations today, and tomorrow, have a task ahead of them. They need to pull this disparate universe of information into one coherent point of access. In short, they need a second-generation intranet that allows members of the organization to access more data than they have in the past. Fred Hapgood puts things in perspective with his CIO Web Business Magazine article about second-generation intranets. He writes that this must be a "collaborative medium that provides users quick, comprehensive access to everything their jobs require-files, programs and people, both inside and outside the organization-while capturing and managing each person's work so that others in turn can find and use it. The new intranet is less a resource itself than the delivery vehicle for all the resources any employee might need."
Therefore, the result of the second-generation intranet must allow workers throughout the organization to quickly and efficiently find the information that allows them to complete their work without wasting time or recreating work others have done. Depending upon the size of the organization, companies could retool their existing intranets to add additional functionality. However, the buzzword in information management is portals. Many large size companies are already taking advantage of portal technologies. Smaller and mid-sized companies are also beginning to hear that this technology may provide exactly the kind of fix they are looking for. A portal format will give users a customized view of the organization's services and information, enhanced by additional workflow features, search capabilities and discussion groups.
Outsourcing the Portal
In reviewing the options for portal deployment, decision-makers must take into account an emerging technology trend: application outsourcing. There are several drivers behind today's outsourcing decisions, none of which will be alien to the library community: Accelerating reengineering benefits; Freeing resources for other purposes; Improving company focus; Reducing operating costs; Unavailability of internal resources.
Accelerating reengineering benefits: Companies implement corporate portals with an eye to dramatic improvements in critical measures of performance such as cost, quality, service and speed. However, the need to increase efficiency can come into direct conflict with the need to invest in the organization's core business. As non-core internal functions are continually moved to the back burner, systems become less efficient and less productive. Many companies that provide outsourcing for IT applications like portals, promise to have the application up and running inside a few months. The benefits of this time sensitive roll-out are self evident.
Freeing resources for other purposes: Every organization has limits on available resources and portal development can tax large amounts of those resources. Outsourcing permits an organization to redirect its assets--people, machines and money--toward activities that add value to the core service market. People whose energies would have been focused on infrastructure management and internal application development can now be focused externally on the customer.
Improving company focus: Outsourcing allows a company to focus on its core business by having operational functions assumed by an outside expert. Portal companies, for instance, have researched and developed these applications from the ground up. There is no doubt that their core business is making portal deployment as hassle free as possible to its customers. Freed from devoting energy to areas that are not in its expertise, the company can focus its resources on meeting its customers' needs. With respect to portal development, the company can spend less time thinking about and constructing a complex application and more time working with the data that is now more freely available through the portal.
Reducing operating costs: Companies that try to do everything themselves often incur high research, development, and deployment expenses. Portal applications may run anywhere from $100,000 to $250,000, this figure is for the application alone. Factor into this the cost of system administrators and other staff required during the setup and maintenance of the portal and costs incline on a steep slope. An outside provider's lower cost structure, which may be the result of a greater economy of scale or other advantage based on specialization, reduces a company's operating costs and increases its competitive advantage.
Unavailability of internal resources: Companies will also outsource because they do not have access to the required resources within the company. Complex applications, such as portal programs, may require the expertise of networking specialists, database programmers and network administrators. Depending on which vendor and product are selected, physical resources such as Web servers, content creation tools, and other enabling technologies may also be required. Outsourcing is a viable alternative to building the needed capability from the ground up through new hires or expensive training.
Outsourcing: an old business model becoming very big in IT.
Application Service Providers (ASPs) are organizations or third parties that provide software applications over the Internet, typically for a fee. ASPs host and manage the applications from their facilities or from co-location center(s), and coordinate the ongoing support, maintenance and upgrades of the applications. By combining software, hardware, networking technologies and technical expertise, ASPs can provide superior performance and increased security, reliability and scalability over traditional corporate-owned, in-house corporate-run applications - without a significant upfront financial commitment. Industry analysts speculate that Application Service Provisioning may become the dominant model for software application delivery. ASP customers can rent services on a per-user, per-month basis (or several other payment models) at a fraction of the cost of purchasing, deploying and supporting traditional high-end business applications.
Laura Kujubu notes that the drive in outsourcing portals is being spearheaded by Hewlett-Packard and Yahoo. The companies announced plans in August for the creation of Corporate My Yahoo that will provide a set of services and technology designed to let companies meld internal and Internet information into a single secure point of access. The service is set to be available by the end of the year. Others, like Bizee.com and Glyphica are also positioning themselves to take part in this developing market. Epicentric also has its Epicentric Portal Service, in which an application service provider will offer Epicentric's applications on an outsourced basis. Plumtree Software will announce a similar offering by the end of the year. Another vendor, Autonomy, is also evaluating an outsourced portal service. It's a safe bet though, that the subset listed here will grow exponentially over the coming months and years.
Outsourcing concerns
While at first blush the concept of outsourcing the portal might look like a sound idea, there are come concerns. If products live on multiple ASPs in different parts of the country, you have to wonder what is more expensive or what is worse - trying to integrate software hosted by different people or buying it all yourself and putting it at your location and managing it that way. Other issues include security and retrieval of previous document versions. If the ASP decides to upgrade the portal application, will your organization still be able to successfully discover and retrieve all of the information it could before the upgrade? The answer is most likely yes. However, a skeptic's stance is not necessarily a bad position to take. Stable per-user costs are always another aspect that plays a factor in strategic decisions like collaborating with an ASP for portal deployment.
Launching a corporate portal is nothing to rush into. The commitment of human, machine and cash resources will be significant. In outsourcing the portal, you are guaranteed that the vendor's expertise will play a major role in assuring your organization a smooth transition. However, those interested in outsourcing should be aware that the most robust technology is not necessarily the most efficient; customers should look for a vendor that understands their business. A large component of the value a vendor brings to the deal is its understanding of what the technology means to your business and to those that work with its information on a daily basis. Inevitably, some vendors will have a better understanding of this than others will. As we look to the future and the looming explosion of information in the workplace, it is becoming increasingly clear that some type of single point access will be needed to provide workers with the tools and information they need to get their jobs done efficiently. Any organization will make hundreds of decisions before it rolls out a major application like a corporate portal. The right application, appropriate vendor and purchasing strategy are all critical decisions in the deployment process. Outsourcing the portal is just one more branch for consideration in that decision tree.
Tim McMahon is electronic publishing specialist at the American Mathematical Society. He can be reached at txm@ams.org.
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