Last May, 150,000 employees at the Ford Motor Co. waved goodbye to the Microsoft Windows interface that they had grown accustomed to seeing when they logged on to their computers every day. No, their IT department hadn’t succumbed to Apple Computer’s slick marketing campaigns and forsaken all their PCs for Macs. Instead, Bipin Patel, director of information systems at the $141 billion US car manufacturer, was up to something a lot more radical: He had spent six months devising a way to replace about 1,000 intranets, each serving individual business units around the world, with a single portal for the entire firm.
For sure, that’s a lot more radical, and definitely more hip, than Apple’s sleek new Titanium Powerbook. But while Patel and Ford may be at the vanguard, they might not be there for long. Meta Group, an IT research and consulting firm, predicts that out of 2,000 of the world’s largest companies, 85 percent will use a portal by 2003, up from around 50 percent this year.
One conversation with Patel and it’s easy to see why the business case for portals is so compelling. Portals, he says, achieve two things for a company the size of Ford. First, they break down artificial barriers so that, for example, staff in one part of a company can retrieve information easily from staff in another part. Second, they put an end to the long hours that companies spend maintaining multiple stores of information found on local intranets.
Intranets grew out of groupware packages, such as Lotus Notes, to provide email initially. Though they have since expanded to become a repository for all sorts of documentation at companies like Ford, they have never succeeded in becoming a primary source of information for staff.
Simply put: Supply just hasn’t been serving demand. Staff at companies around the world have long hankered for personalized information combined with data and reports from corporate sources outside their immediate centers of command. As an example, Patel points to marketing managers at Ford who want financial results that are broken down by vehicle type. “Traditionally, they would have made a request to finance,” he explains, “and someone would have had to do lots of digging to find the information, and then faxed or emailed it to the right person. And if someone then wanted [similar information] in the sales department for a different vehicle, the whole process would have been repeated.”
Portals take a different approach. They let authorized staff send any queries directly to a database or application for a speedy response. They work in much the same way as MyYahoo, the first consumer portal that lets surfers customize content appearing on its home page from their own PCs. “The portal is the realization of the dream of integrating all the resources people need,” enthuses Jacques Halé, director of research methods at Butler Group, an IT research and consulting firm.
No Man Is an Island
That ability to connect “islands” of information throughout an organization is a powerful attraction. A survey of 68 corporate portal deployments conducted by Plumtree, a vendor that’s supplying the technology for Ford’s portal, found that managing content and documents, streamlining information distribution, and integration with enterprise applications are the three main reasons why they are set up.
But before any of that can happen, there’s some heavy lifting to do. Ford’s Patel, for one, concedes that it will take until October at the earliest before the firm’s finance department can start deflecting requests from other departments and sending them to the corporate portal. The reason is that the firm’s numerous back-end systems need to be connected to special “adapters” that allow them to communicate to the portal software.
Patel has had other work to take care of, too, including rallying the support of the portal’s users. To do that, he zeroed in on something that’s close to the heart of every employee — their paychecks. Indeed, according to Jim Flatley, vice president of worldwide field marketing at Plumtree, Ford will save around $18 million every year now that it has allowed staff to view their pay slips online via the portal rather than handing out paper versions.
Savings like that are hard to ignore, especially for CFOs who recently signed off on new portal projects. After all, portals don’t come cheap these days. Though Ford declines to say how much its portal cost, Plumtree says that its average contract size has increased to $459,000 from $40,000 two years ago, indicating a growing willingness among corporate clients to splash out on top-of-the-line portal products.
And it’s not just companies on the other side of the Atlantic that are investing in portals, says Charlie Abrahams, Plumtree’s European managing director, adding that the portal market in the US is about six months ahead of the UK and 18 months ahead of Germany. “European deployments, typically, will be multicountry and multilingual,” he explains. “That’s a level of complexity that means the customer probably takes more time considering it.”
If companies take too long to deliberate, however, they might find not only higher prices but also a different field of software and service providers than today. Currently, there are well over 100 vendors jostling for a place in the portal market, which IT analysts at Delphi Group predict will be worth nearly $2 billion in 2003, up from $37 million in 1998.
Essentially, the portal market has turned into a battlefield between pure-plays such as Plumtree, Linq, and Orbital, and the mighty software conglomerates like SAP and Oracle. It’s a market that’s ripe for consolidation, say IT experts.
But which vendors survive and which don’t isn’t necessarily the biggest concern among corporate knowledge management (KM) leaders these days. Instead many of them are focusing on how to convince skeptics of the benefits of using portals and other KM tools to bring “structured” information (such as databases and spreadsheets) and “unstructured” information (such as press releases and videos) together in a single location. To help, they’ve been searching hard for ways to measure and monitor their KM investments.
Their search is going to be a long one, contends Karin Breu, an academic from the Information Systems Research Centre at the UK-based Cranfield School of Management. She says that if CFOs “want to become serious about knowledge exploitation, they first of all have to appreciate the nature of knowledge.” In particular, what a company produces is “the result of a very complex set of factors when people get together to work,” she says. “To say, ‘Now that we have knowledge-sharing communities, the innovation rate has increased,’ is misleading. It could have also increased because of something else.”
Dave Snowden, the European director of the Institute for Knowledge Management, a research consortium set up by IBM in 1999, also questions whether achievements in KM can be measured. “[The] most significant aspects of human knowledge are probably not able to be codified,” he says.
That’s not the only problem Snowden sees with KM. He reckons that groupware, intranets, and portals are simply fancy ways to manage information, but not knowledge. And the only way that these tools can help firms manage knowledge is if they are combined with programs that focus on people, not technology.
Not so long ago, Manfred Aben, head of KM at Unilever, would have disagreed with Snowden. For several years, the E47.6 billion ($40.4 billion) Anglo-Dutch food and consumer-goods group brought in costly consultants and cutting-edge technology to help improve KM. It wasn’t long, however, before Unilever began retooling its KM strategy to reduce the role of technology.
Instead, a knowledge-sharing program — dubbed “The Unilever way” — was set up for staff around the world. Over the past three years, Aben has run 50 KM workshops, involving 500 staff. Such “communities of practice” meet face-to-face once or twice a year to share knowledge, develop practices, and agree on direction.
One recent example of how the program works can be found at a construction site for a bottled-sauces factory in Egypt. Unilever managers with experience in this niche flew to Egypt to work with local engineers. In the past, Unilever’s experts would have tried to work on the project from their own offices, using email. “By sharing all this expertise from around the world — and the community of practice was a truly global one — they actually built the factory in half the time, and at half the cost,” Aben claims. “That’s real money saved from just bringing people together.”
But this doesn’t mean that Aben has turned his back on KM technology. In fact, he says a corporate portal makes “plenty of sense,” and he’s currently considering whether to invest in one. Even so, Aben has learnt his lesson. “It is easy to find enthusiastic stories about corporate portals,” he says. “But if you scratch the surface a little bit, the main issue is not the technology. The major issue is content, and maintaining that content so that it is something really valuable.”
Anthony Sibillin is the technology writer for CFO Europe.