Global Networking, One company tells how it prospers amid skepticism about the Web's profitability

The Internet's explosive growth has made it a practical business tool. As computer technology proves more reliable, companies are entrusting even critical business systems to the electronic medium.

Many smaller, newer high-tech companies easily switched from paper to electronic operations. But many of the established telephone service providers found the transition far from simple. Why the difference?

The obvious reason is that the conversion means a significant change in thinking-from sharing business information with a select few to sharing information broadly-and a significant shift in long-standing infrastructure to eliminate paper-based systems.

Many service providers have made forays into electronic processing by automating some stand-alone systems or connecting their employees through e-mail and older technologies such as electronic data interchange.

Yet today, being connected is not enough. Using some electronic commerce is not enough. A business needs to be networked to all its important constituencies. Customers have come to expect open, interactive access to information, resources, services and commerce.

So how does a company build a global networked business? Where does it start and what does it include?

Cisco Systems, although not a service provider and certainly not a small start-up, pioneered Internet use as a service and support tool in 1991, and has been using it ever since to handle customers' inquiries and provide technical support.

That success can be attributed to three factors: * Expertise gained through networking marketplace leadership.

* Ability to scale for tremendous growth by using its internal network.

* Commitment to customers.

Cisco's networking leadership initially was a double-edged sword. As the market leader in moving data and enabling services on the Internet, the company's networking credibility was at risk. At the same time, its networking knowledge and a company culture that promoted networking were advantages in making a smooth transition.

The company deployed the Global Networked Business model using its Internetwork Operating System software, the same operating system that delivers network services and enables network operations in Cisco's products.

Cisco started by using its own hardware and software products to link computers so people could download information about the company. The information consisted of different levels of detail and confidentiality, and was made available depending on whether the audience consisted of customers, reseller partners, prospects, suppliers or employees.

The system quickly went from being a place to publish information to being a tool for interactive network commerce.

Today, customers can do all their business on-line-buy products, check order status, inspect prices, review network configurations, download software updates, obtain technical help, and download product and technical information. They can also register for seminars, read technical papers, download public software files, and buy promotional merchandise and Internet software.

The information and applications are linked to Cisco's internal operating systems and databases. For example, users access Cisco's troubleshooting engine to resolve networking problems. An open forum lets users collaborate with internetworking experts from around the world.

Benefits for all Customers have responded enthusiastically. Hits to the company's external Web page, www.cisco.com increased from 5000 each month in 1993 to more than 400,000 monthly by the end of 1996. More than 75% of registered customer requests today are handled on-line, and the customer satisfaction approval rating has increased 30% over the past few years.

About 13% of Cisco's orders, $200 million per year in revenue, are placed on-line. As a result, products arrive three days earlier than through traditional means.

Within a year, the company expects to surpass $150 million in sales each month, amounting to 25% to 30% of total sales.

Software downloads average 71,000 per month, providing around-the-clock global access to business-critical software and saving hundreds of thousands of dollars in shipping charges alone.

More than 20,000 support cases are opened or queried each month, eliminating the need for phone calls to the company's technical assistance center. Because each phone call costs an average of $200, 20,000 fewer calls translate into an average savings of $4 million per month.

More than 1000 customers registered on-line for seminars in December 1996, representing 24% of registrations and saving $3.50 each in processing costs. During the same month, 246,000 prospects logged in, accessing thousands of documents.

Because a significant portion of Cisco's sales are conducted through resellers, partners are given special access to the Web site and to documents and sales tool information via CD-ROM.

Partners get fast service and support, efficient product ordering and global access to a complete library of technical and product information. They can also initiate access for their Cisco customers and have created nearly 4000 user accounts. This feature extends Cisco's support capabilities to its partners' users, resulting in higher levels of customer loyalty.

On the intranet side, Cisco has dedicated nearly all its employee communication to the Web. Employees can make travel arrangements, submit expense reports, review benefits, report computer or telephone problems, register for training and obtain customer information on-line.

Michael Sullivan-Trainor, an analyst at International Data Corp., points to Cisco's networked business systems as a model. "To remain competitive, all companies must have a strategy for sales and support over the Internet, allowing customers access to the tools for service and support anytime and anywhere in the world," he says.

For service providers eyeing e-commerce, advice is simple. First, it's not necessary to be a trailblazer to be successful. Look at what competitors are doing, look at what companies outside the industry are doing, find out what has worked well and copy it.

Second, involve everyone. At Cisco, every department is responsible for maintaining the Web site. This means when a new product is announced, the supporting information is automatically on the Web the same day.

Businesses that have not yet realized that they are competing in a global, networked market are missing opportunities and letting competitors gain important economic advantages.

A globally networked business transcends the traditional barriers between customers and suppliers, building a collaborative environment and allowing customers to define the way they access information, resources and services. Once enabled, a globally networked business can expect to reach new markets and spur revenue growth.

Mike Heller is Marketing Manager of the Service Provider Market Unit at Cisco Systems, San Jose.