EXTRANETS CREATING PATHS TO COMPETITIVE ADVANTAGE AND IMPROVED

EXTRANETS CREATING “PATHS” TO COMPETITIVE ADVANTAGE AND IMPROVED CUSTOMER RELATIONSHIPS

INTRODUCTION w Definition: Extranet is the extension of the Intranet over the Internet w 3 case studies of companies that developed Extranets – GE, Harley Davidson, and Toshiba America

General Electric’s Transaction Process Network (TPN) w Started by GE Lighting in 1996 w 60, 000 products from 6, 000 vendors w GE saved between $500 million to $700 million w Labor costs decreased by 30% w GE redeployed 60% of their staff to focus on strategic activities

HARLEY DAVIDSON’S H-DNET. COM w 1989: DOS based system – Still used paper forms • Difficulties reading handwriting • No way to track status besides calling the corporate office

H-DNET. COM (cont. ) w In 1995, Harley developed H-dnet ($1 billion) w What can be done online? – File claims and check claim status – Order parts, view engine diagram w 600 dealers in 6 months w Warranty claims are now processed in 48 hours w E-claims grew from 52. 2% in 1996 to 61. 4 % in 1997

TOSHIBA’s INTERNET FYI w Launched in 1997 w Annual selling costs decreased by more than 50% - from $1. 3 M to $600, 000 w 1997 to 2002: 96% of dealers switched to. FYI w In 2002: 80% of business through FYI

SO, HOW DO EXTRANETS HELP BUSINESSES? w Strategic Competitive Advantage w Customer Relationship Management (CRM)

STRATEGIC COMPETITIVE ADVANTAGE w Extranets help reduce costs – Paper/ hard copy/ printing costs – Order processing and tracking costs – Trivial? Think again!!! • These costs can decrease revenues by 14% w Extranets save employee time – Focus on customer concerns

STRATEGIC COMPETITIVE ADVANTAGE (cont. ) w Increased communication w Based on the Internet (Web Browser) – Platform independent – Global reach

STRATEGIC COMPETITIVE ADVANTAGE (cont. ) w Up-to-the-minute, real-time information – Faster response to demand changes – Lower inventory costs w Increase switching costs for customers – Profits too difficult to deny or give up

CUSTOMER RELATIONSHIP MANAGEMENT (CRM) w One common ground for people most important to a business – Suppliers, Vendors, Partners, Customers w Better knowledge of customers – Direct feedback – Track orders, seasonal fluctuations etc.

CRM (cont. ) w Extranets provide true CRM – 24/7 order placing, tracking, shipping – Self-service customers – Customized products w Creating “Electronic Embrace”

CONCLUSION w Not just a marketing tool, but an INVALUABLE COMMUNICATIONS TOOL AND MUCH MORE w Extranets reach out to a DREAM AUDIENCE

QUESTIONS