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

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

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

HARLEY DAVIDSON’S H-DNET.COM  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.)  In 1995, Harley developed H-dnet ($1 billion)  What can be done online? – File claims and check claim status – Order parts, view engine diagram  600 dealers in 6 months  Warranty claims are now processed in 48 hours  E-claims grew from 52.2% in 1996 to 61.4 % in 1997

TOSHIBA’s INTERNET FYI  Launched in 1997  Annual selling costs decreased by more than 50% - from $1.3M to $600,000  1997 to 2002: 96% of dealers switched toFYI  In 2002: 80% of business through FYI

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

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

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

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

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

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

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

QUESTIONS