Case studies at the Center
Continuing series...
Subject:
If You Build It, Will They Come ?
Establishing Extranet ROI in Financial Services
April 27th, 2001
In January of 2000, a medium sized US discount on-line brokerage firm mandated the Center to build a high-performance Extranet to clear more trades and, as a result, increase revenue. Because GCIS had an explicit business goal, the project was measurable and easy to justify. By leveraging Internet technologies to build the Extranet, GCIS predicted that the financial services firm would be able to reach a new class of client - the small brokers who previously were excluded from the firm's leased line "extranet" because they lacked large IT infrastructures. By having the Center deploy our exclusive Dextranet™ portal solution, an IP-based Extranet, our client made it easier for brokers to do business with the firm, which led to:
Increased mindshare and number of brokers accessing our Dextranet™
Much higher retention of brokers and follow-through
Greater number and quality of financial transactions
Lower cost per transaction (reduced infrastructure and communication costs)
Improved quality of trade (fewer paper-based errors)
The first question the firm asked was: How much would revenue increase if the number of transactions increased by 10 percent, for instance ? The next step was to simply plug in the numbers. Consider this sample (simplified) calculation:
* Number of transactions per day without an extranet = 1,000,000All parties involved at the financial services firm agreed that a 10 percent increase in transactions was a modest prediction, particularly after the first year. In hard dollars, the firm has more than earned its money back, and, more importantly, it has earned the soft benefit of broker loyalty, which means continued ROI.
Getting More for Your Money
Understanding internal business processes and drivers is the key to success when deploying an
extranet. By planning extranet deployment around a well-defined, strategic business plan, CIOs will
have a better chance of proving how IT is helping affect the bottom line.
Other useful tips include:
* Investing in open-standard technologies that integrate easily with other solutions.
* Keeping deployment time to under six months.
* Remember that technology is an enabler, not a driver.
Additionally, Extranets are fundamentally changing how companies share internal resources and interact with the outside world. They are built with technology, but they are used by people. If a CIO does not keep that in mind, the extranet project may fail. Some common pitfalls to avoid include thinking tactically and saying the primary business goal is to "reduce costs." When designed strategically, extranets should make the users feel as though they matter, which keeps them coming back, which increases revenue.
Extranets should support high-level business plans and be seen as a knowledge management asset rather than a networking expense. Being an extranet champion requires a shift in business philosophy and management style, but the results are worthwhile. According to Computer Economics, a research firm that focuses on e-business, 78 percent of those companies that have already deployed extranets have experienced full or positive returns. ["Networking Potential - Increasing ROI Means Spending More"; 9/23/98] As long as the planning and implementation phases are clearly defined and extranet users have an incentive to log on, the potential for success can be realized.
(Click here to read the definition of what exactly is an Intranet and how does it differ from an Extranet).
The General Center for Internet Services can carefully design and build flexible and powerful Intranet portal applications and tools that will answer your most exacting and critical corporate needs in any industry. Upon contact, your GCIS technical representative will be more than happy to visit you and propose the best Intranex™ portal and Intranet solutions for your company or organization.
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