June 14, 1999

Intranet Applications Join the Move Toward Outsourcing

By Steven L. Telleen 

Q: In earlier articles you've discussed diversified management approaches to accommodate distributed content. But what about mundane employee processes that can be integrated together under a common management model? These can lead to reduced administrative costs, elimination of paperwork, and increased employee productivity. 

A: Many features on intranets are what might be called "commodity" processes, in that they provide information important to employees but are not directly related to the competitive position of the company. These commodity processes--which may include access to 401(k) or health insurance accounts--are centrally managed, and the objective is to drive the cost as low as possible, turning them into infrastructure. 

But recently, even those in control of commodity processes have distributed the responsibility for them to those who specialize in particular areas. This new type of outsourcing grows out of the location-transparency of Web-based resources and the improved access control that make it possible for an employee to click between a corporate intranet site and the site of a firm managing the company's 401(k) accounts without even realizing it. 

To the user, the functionality appears to be part of the corporate intranet. However, the Web server and the application actually reside outside on a third-party site. In addition to seeing such links in 401(k) and insurance management, others connecting to intranets offer recruiting, employee administration, customer support, and payroll tax calculation. On the horizon are the popular enterprise resource planning systems. 

It's important to note that the data is still managed by the employees of the company. Only the applications and computing infrastructure are managed outside. When a manager requests that a new position be opened for recruiting, he or she does not know or care if the computer and applications that process the workflow and the job postings are in-house or at GRS-Software or HireSystems. All that is important to the manager is his or her ability to create and manage the information. Likewise, it doesn't matter to customer support reps whether the information they enter, track, and update is being processed in the basement or offsite at eGain Communications Corp. 

This type of Web-based outsourcing is fundamentally different from earlier IT outsourcing. Earlier outsourcing was a matter of who managed the generalized IT support. Web-based outsourcing is done on a business-function basis, with the intranet portal integrating access for the employee. This type of outsourcing has the potential to radically transform the structure and cost of internal IT at many companies. 

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