While you weren’t looking, portals grew up. No longer just a souped-up webpage with a stock ticker and a link to the employee handbook, the portal is emerging as a key component of the corporate IT infrastructure. New portal software products aren’t designed, as early products were, solely for managing and presenting Web content. The latest portal products are application-neutral middleware, and many portal vendors supply tools to help companies integrate portals with enterprise applications like ERP, CRM or e-procurement.
As a result, companies are deploying portals to support strategic business initiatives and using them as a tactical tool for managing enterprise applications. A portal helps jet-engine maker Pratt & Whitney pursue a bigger slice of the engine-repair business and enables Menasha, which makes packaging and industrial polymers, to reuse software for multiple business units. Portals also help CIOs get more use out of enterprise systems by hiding their complexity from technologically inexperienced end users.
The importance companies are placing on portals is reflected in CIOs’ spending decisions. Although spending on e-business projects was expected to fall in 2002, more than a third of the 874 executives surveyed by Forrester Research said they still plan to buy portal software. Meanwhile, Gartner Dataquest forecast last summer that portal sales would grow an average of 24 percent a year between 2001 and 2006.
Portals appeal to CIOs because they do a better job than earlier products, including business intelligence software and ERP systems, at delivering custom views of information and applications to end users, says David Gootzit, an analyst with Stamford, Conn.-based Gartner. Portals are better at that task than they used to be.
Portals bridge Legacy and New Systems
“It’s hard for people to get data out of our legacy [ERP] system,” says Mary Fonder, CIO with Maysteel, a Milwaukee-based maker of components for electronics and electric utilities.
CIOs such as Fonder are using portals to support business strategies and create a competitive advantage for their company. By getting information or executing transactions through a portal instead of by phone or fax, or accessing a legacy system, employees and customers get work done more quickly, which translates into added sales, bottom-line savings or both.
Maysteel’s goal is to make its operations more efficient, in part by standardizing the manufacturing process at each of its six plants in Wisconsin and Ireland. Part of the effort involves scrutinizing manufacturing quality, but getting the right data from the company’s ERP system was too hard for anyone who wasn’t a power user. With the economy in decline last year, Fonder knew she couldn’t afford a new ERP system, so she and her team wrote a portal application that lets Maysteel’s executives and quality control staff access the ERP data they need.
It took Fonder the better part of a year to convince her colleagues a portal could help the company use information more effectively. She made the sale by writing a demo that showed them examples of the applications and data a portal could deliver. “This [portal] was a fairly inexpensive way to get information for people more quickly,” she says.
Portal as a Customer Connection
While Maysteel has focused on improving internal efficiency with its portal, two other companies?employee benefits administrator Cigna and Pratt & Whitney?are using portals to attract new customers.
At Philadelphia-based Cigna, Executive Vice President and CIO Andrea Anania claims hers is the first company to integrate data from multiple health-care and retirement benefit plans, and that providing this information through its portal, MyCigna.com, will help the company increase its market share.
In October, Cigna announced that its customer base would drop between 4 percent and 5 percent by January. Patrick Welch, president of Cigna Healthcare, told investors that problems with an ongoing legacy systems upgrade had contributed to the loss. At the same time, Cigna said it had lost some new customers after raising prices on previously set contracts. Anania says the corporate HR departments that choose health insurers and 401(k) plan administrators look for vendors that offer robust employee self-service.
“It takes work off [HR representatives’] desks and makes the benefits package more visible to the employee,” and that, Anania says, makes Cigna more attractive. According to Cigna’s market research, many workers would manage their health and retirement benefits more actively if they had “adequate online tools.” By early September, 348,000 of Cigna’s 14.9 million customers had signed up for the portal that went online in June.
CIO Peter Longo of East Hartford, Conn.-based Pratt & Whitney is using a portal to help his company capture more repair business from customers that buy its jet engines. A division of manufacturing behemoth United Technologies, Pratt has a corporate portal that, during the past two years, has grown to support up to 4,000 employees, suppliers and customers using more than 100 applications. Among them is an application that helps the company reduce by 30 percent the time it takes to overhaul an engine. Pratt is using the improvement as a selling point to expand the engine-repair business, a $37.8 billion market in 2002, according to Denver-based consultancy Strand Associates. (Pratt declines to share market data but says it has manufactured 41 percent of the jet engines currently in service worldwide.)
Bruce Strand, CEO with Strand Associates, says using Web-based management tools has become common in the jet-engine industry as manufacturers try to win ongoing revenue from airlines’ maintenance and repair business.
Pratt’s Longo notes that just as car owners can choose to get a tune-up from a local mechanic rather than the dealer, airlines don’t have to return their engines to Pratt for regular maintenance. Many airlines, he says, have their own overhaul shops, and they choose whether to do the work in-house, send it back to the manufacturer or use a third party based on cost and time. By viewing the maintenance status of their engines through the portal, airline customers and Pratt engineers can make quicker decisions about whether to wait for one of an engine’s 28,000 parts to be refurbished or to install a new one.
“The customer is required to make these sorts of decisions about 100 times per engine,” says Colin Karsten, a client services manager at Pratt. The quicker these decisions are made, the sooner the multimillion-dollar engine is ready to fly again, saving the airline the cost of keeping its plane grounded.
If Pratt & Whitney can get repairs done faster than its competitors, it expects to get a larger share of the repair business. And the company is using its portals to get there.
That’s not to say that portals aren’t still doing what they’ve done for years: connecting employees with headquarters. Longo says Pratt & Whitney’s portal is helping the company get more use from its SAP investment. One example: Engineers?who, like lawyers, charge their time to specific projects?used to have to be at the office to fill out their time sheets in the company’s SAP system. But these engineers do a lot of traveling. Now that they can access the system from outside the firewall through the portal, the company’s personnel and project cost records are more accurate. While time sheet scorekeeping is not a big business problem, Longo says, the application is popular with staffers.
A Portal Makes a Good Application Factory
Although the portal-based applications like those at Pratt & Whitney and Cigna sound elegant, they didn’t arrive there overnight. Anania laid the groundwork for Cigna’s portal during the past three years, as the company invested in a shared e-commerce infrastructure. During this period, each business unit was developing its own Web-based applications that then had to be integrated into the portal. In the future, Anania will be able to use the portal to deliver common applications to customers of each business unit. Up next: instant messaging between consumers and Cigna service representatives.
Other CIOs who have deployed portals also report that the technology helps them to manage applications and data centrally. The IS department, in turn, becomes an in-house application service provider.
Neenah, Wis.-based Menasha provides custom portals for 250 customers of its five operating companies?a total of 3,000 end users representing $70 million in sales in 2001. Customers are able to place orders and view order status, inventory and logistics information from Menasha’s SAP system, as well as share online design collaboration tools.
Though the data presented through the portal is different for every customer of every business unit, all the customers use the core applications to access what they need. Menasha Vice President and CIO Edward Wojciechowski says that by delivering shared applications through the portals, he can deploy them quickly as they’re needed. For example, Wojciechowski’s team was able to take an order-tracking application written originally for Menasha’s customers and reuse it for the company’s internal sales force. “We have a framework [that gives us] the opportunity to deploy the content [users] want,” he adds.
The Maids Home Services International is another company that uses its portal as a customer connection center. At the Omaha, Neb.-based housecleaning services company, a portal has been essential for distributing corporate documents to its 140 franchises.
Though franchise owners are required to have computers and Internet connectivity, many weren’t very tech savvy when Director of IT Tony Vola deployed the portal two years ago. The attitude of many franchise owners, relates Vola, was “technology?who needs that stuff?” He chose a portal in part because it would be easy to use.
Distributing documents through the portal ensures the information franchise owners have?from operations manuals to memos about new cleaning procedures?is up-to-date and accessible to everyone. The home office saves money because it no longer has to mail reams of paper documents. John Gibbs, a franchise owner in Austin, Texas, who was part of a group that pushed for the portal, says he finds the site useful for obtaining marketing and advertising materials that he can easily tailor for his business. (Gibbs sends customers a quarterly newsletter.)
But Gibbs, a retired Air Force colonel, says he gets the most value from the portal’s online forums, where he can discuss business problems with other franchise owners. Gibbs and some colleagues used to run an e-mail discussion group to exchange advice, such as tips on how to repair damaged marble. The mailings became difficult to manage, so Gibbs and his colleagues pressed headquarters to provide chat rooms. As a result, corporate provides the administration, such as updating e-mail addresses and cataloging discussion threads. “That’s what we wanted them to do, take care of the administrative stuff and let us talk,” says Gibbs, who recently turned to the online forum to ask colleagues to review new features on his franchise website.
The Best Portals Fade into Other Apps
That Gibbs finds a professional networking channel at The Maids Home Services portal is not surprising. It meshes with the long-standing promise of portals: helping companies use the Web to extend existing applications and discover new ones.
“Portals allow you to push a lot of investment in back-end systems and dumb it down” for end users, says Nate Root, an analyst with Cambridge, Mass.-based Forrester. You could not, in fact, make a business case for the portal separate from the apps that run with it.
Wojciechowski says Menasha built its first portal with some internal “venture capital” he got from the board to develop an e-commerce strategy, but he always saw it as a tool for taking costs out of the supply chain. Some of those costs?such as time spent on the phone chasing down order information?have come out of the customer’s operations as well as Menasha’s. That’s helping the company retain customers and even increase revenue. Wojciechowski says he’s spent about $1.2 million on the portal so far, and he figures the company has gained about $1.4 million in new business?about 2 percent of revenue from portal users. Overall, the company, which logged just under $1 billion in net sales in 2001, saw business decline 6 percent.
At Pratt & Whitney, Longo counts the portal as part of the company’s IT infrastructure and says he can’t specify a return on the investment. Instead, he talks about the return the company gets from specific applications that run on the portal, such as the hours saved by generating online the bar-coded shipping labels suppliers need to ship parts to manufacturing plants. This and other supplier-related portal applications save Pratt 650 hours a month on receiving and warehousing operations. Meanwhile, at The Maids, Vola justified his portal project based on how much it would reduce the cost of mailing paper documents.
Anania says she’ll measure the success of Cigna’s portal through customer satisfaction surveys and by comparing usage of the portal with “what we were accustomed to seeing relative to hits on the homepage.” But the impact on the bottom line will be harder to measure. “We expect it will help us with retention,” she says, but customer retention is hard to attribute to any one factor. “If it’s been running at a steady state level and it improves, [I’m] confident the portal contributed to that.”