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Special Report--ENTERPRISE: Technology: Networking
NETWORKING: A GIANT STEP FOR THE SMALL
Agents at Kim Dawson Agency Inc. in Dallas used to tack elaborate flow charts, each 2 1/2 feet long, to the office wall to keep track of which of 115 models were hired for particular fashion photo shoots. The decidedly manual system forced agents to wander around the room when booking models, often stumbling over telephone cords, checking a dozen different charts to make sure a model wasn't committed. Now and then, though, agents double-booked, forcing embarrassing cancellations later.
In 1991, though, the agency virtually eliminated the double-booking problem by installing 12 personal computers and a Novell Inc. network that linked its 11 agents. How? A local programmer developed software that checked to see whether models were already booked before they could be committed to a job.
The benefits of the system, which cost the agency $50,000, didn't stop there. Computer systems manager Tammy Meche says the network, which also allows agents to do bookings faster, has helped Dawson push sales up more than 50% in the past four years, to a projected $8 million in 1995--without adding any new agents. Says Meche: "We probably couldn't have done it without the network."
The lesson? Networking technologies--local-area networks (LANs), client-server systems, electronic mail--aren't just for big companies. Businesses as small as a single-person shop can reap tremendous benefits, including faster time to market, higher productivity, and closer contact with customers, by drawing on the same communications infrastructure that companies such as 3M, Citibank, and Caterpillar have deployed. It's possible to become wired for as little as $100--or as much as $500,000--depending on your ambitions.
Getting the technology right is never easy, but it can be especially daunting for small businesses. Many smaller companies don't have the in-house talent to get wired and keep a network humming. Or top management may be so swamped with other problems that it can't spare the time to learn the benefits of network technology. And small businesses have little margin for error: A botched network project that might cost a big corporation a penny of quarterly per-share earnings could wipe out a small one. So it's no surprise that many small businesses simply avoid thinking about networking. That could be a big mistake, says Clark Witmer, vice-president for logistics at Morton Metalcraft Co., a $55 million sheet-metal fabricator in Morton, Ill.: "Small businesses won't grow these days unless they construct the right technological platform."
When it comes to getting networked, in fact, small businesses can have some big advantages. In many cases, a small outfit hasn't been using technology for long, so it "doesn't have to plan around an installed base," says Andersen Consulting networking specialist Christopher Teeter. That means smaller companies can buy what works best for them without worrying about the thorny network-integration questions that bedevil large corporations with "legacy" computer systems. And lack of knowledge about how to install the system isn't the drawback it once was: There are thousands of small consulting firms and lots of network-literate college graduates to help out--for a price, of course.
CUSTOMIZED SETUPS. Good planning, though, is essential. Just ask Koch Supplies Inc., a $70 million manufacturer and distributor of butcher supplies based in Kansas City, Mo. When Koch needed new software to run its network--which handles everything from order entry to shipping--the company hired software maker J.D. Edwards & Co. to do a needs assessment and pulled in Arthur Andersen to run software trials. The selection process alone cost Koch $200,000, but it allowed the company to choose and customize a software package that has dramatically boosted the number of orders it can process in a day--to 50,000 from 1,000. Vice-President John Starr figures the system will cut inventory costs by $100,000 annually and save $100,000 in labor costs.
Still not ready for such a big commitment? You can still get started in networking--by simply opening an E-mail account. E-mail and fax services allow small companies to vastly improve their contact with customers and suppliers. Sharper Finish Inc., a $4 million Chicago manufacturer of commercial laundry equipment, uses AT&T Mail to fax delivery schedules, product announcements, and price information to its 175 worldwide distributors. Before signing up for the service last year, the company typed up newsletters and sent them via mail or fax. Now, an assistant types a newsletter into a computer and sends it out over the AT&T network. "We get information into our distributors' hands much more quickly now," says Vice-President Craig Roberts.
So what kind of network is the right kind? That depends on what a business wants to do. Simple E-mail is a must for a one-person office, while a LAN could be important in a business with as few as three employees where co-workers need to share information. Mark Ingwer, a consultant who does market research for telecommunications companies, uses CompuServe Inc.'s E-mail service to send proposals and queries to clients. CompuServe, which costs him $10 a month, also gives him access to the information-rich Internet. Recently, he pulled information on what the optimal applications are for wireless data communications off the Net. The information he has gleaned from the Net, he says, "has helped me put together some smart proposals."
Small businesses don't have to shy away from more sophisticated technologies, either. Audits International Inc., which conducts food-safety inspections for restaurant chains, including Taco Bell, equips each of its 120 inspectors with a Newton handheld personal digital assistant from Apple Computer Inc. and a Canon Inc. printer. The combination allows the inspector to print a report on the spot for restaurant managers, enabling them to address any problems immediately. In the past, when inspectors used multipage forms, it took several days to get out a report.
MORE SUPPORT. Still, adopting networking technology doesn't necessarily lead to corporate nirvana. It's easy to stumble. When Chicago-based Assist Network Development Inc., an installer of computer and telephone cabling, decided it needed to get more data to its nationwide offices, the company installed Lotus Development Inc.'s Notes, a popular groupware software program that allows people to work together on documents and schedules. But the company, which expects to post sales of $10 million this year, budgeted only $50,000 for a project that has now eaten up over $300,000 and taken nine months. The problem? Executives became so enamored with Notes capabilities that they kept ordering consultants to write more applications for them. "We didn't have proper controls," says CEO Stephen Watkins.
In general, groupware presents big networking challenges for small business. Most groupware systems require administrators to keep them current--and to stop them from running amok. That adds a layer of cost that small businesses need to consider, says Todd Miller, a partner in Revere Group, a computer consulting firm in Northbrook, Ill., that put in its own Lotus Notes system last year. The system's complexity forced the firm, which is 100 consultants strong, to hire extra support staff. "It's an inevitable and necessary evil," says Miller.
But would Miller junk his system? No way. He says Revere consultants now use the Notes system to swap information that allows them to solve thorny issues and write better proposals--just like bigger rival Andersen Consulting, whose Notes-based system is one of the industry's best. And that may be the ultimate benefit of networking technology for small businesses: It gives them many of the resources of their bigger rivals, without all the baggage that comes with size.By Kevin Kelly in Chicago