The intranets described in the following paragraphs are similarly multifaceted. And while the companies fielding those networks have set them up only recently, they are already reaping the benefits.
The Brand Builder
When Walter F. Hamilton bought Children's Orchard from its original owners, in 1993, the only things growing fast were the company's pint-sized customers. Since then annual revenue growth at the toy and children's clothing business, which sells manufacturers' overstocks as well as new and secondhand merchandise, has averaged 24%--and last year it was up 30%. That reversal of fortune was brought about by Hamilton's two-pronged strategy of standardization and computerization. The company's intranet is a critical part of both.
Under the previous owners, Children's Orchard franchisees had close to free rein, buying whatever they wanted and marketing themselves however they liked. Hamilton, by contrast, wanted to unify the company's two wholly owned stores and 91 franchises into a single, powerful brand. That meant each store had to offer merchandise of comparable quality from a list of approved vendors. It also meant presenting a uniform face to the world, with carefully coordinated advertising and promotions.
The one area in which franchisees were already fairly uniform was technology--they didn't have any. A few stores owned graying PCs; others relied on ledgers and pencils. Company headquarters--with its scattered 286 PCs and nonexistent network--wasn't much better.
Hamilton attacked headquarters first--buying all new Pentium PCs and installing an NT network and Windows 95. He also launched an external Web site whose mission is recruiting franchisees. (The CEO estimates that 50% of new store owners come to Children's Orchard through the site.) And he hired Matt Stinson, who, under the title "project manager," helps Hamilton with the technology as well as other assorted duties. "The MIS department?" says Stinson. "I'm it, and before me it was Walt."
The franchisees were a tougher nut. Most Children's Orchard franchisees are women between the ages of 30 and 50, first-time business owners lacking even basic computer skills. Clearly, this was not the most fertile ground in which to plant seeds for the paperless business of Hamilton's dreams. The CEO considered requiring everyone to buy computers. But he thought that first he would give the franchisees a really compelling reason to do so.
The reason Hamilton came up with was an intranet: a one-stop source for news, peer support, and corporate services. The network was launched in January. To minimize the drain on the company's resources, Hamilton enlisted a local Internet-service provider (ISP) called Online Technologies Corp. to both run and maintain the site. (Stinson sends content to Online Technologies' programmers, who convert it to HTML and post it.) Franchisees use a password to access the intranet through a link on the company's external site. The intranet is strictly no-frills to accommodate users--and Hamilton suspects there are many--connecting at speeds of 14.4 Kbps. "We didn't load it up with a lot of pictures, but we have a lot of information," Stinson says.
Indeed, while the company's intranet isn't fancy, it is very useful. In addition to the usual suspects--newsletters, messages from the CEO, links to worthy Web sites--there's a page where franchisees can order Children's Orchard bags, tags, and other supplies by filling out a form that automatically charges their credit cards. Hamilton expects that by the end of next year all logo-identified supplies will be ordered that way. There's also a database of store statistics for benchmarking--franchisees use a query tool to determine, for example, how their stores compare with others in terms of sales per week or amount spent on advertising.
In addition, a live chat room that debuted in October fosters community by letting franchisees share ideas and commiserate over common problems. Hamilton is also counting on the chat room to save the company money: he plans to hold meetings there, eliminating frequent and expensive conference calls.
Taking into account phone calls, staff time, and paper and printing costs, "I would say, unscientifically, that the intranet could save us about $40,000 a year," Hamilton says. Of course, the technology won't save Children's Orchard anything if no one uses it, so Hamilton has written a clause into the company's new franchisee contracts (which go into effect next July) requiring franchisees to have Internet access.
But some of them, like Michael Spehn, require no nudging. Spehn's father bought the Lake Forest store with a partner in the mid-1980s, and Spehn joined him in the business six years ago. In 1993 he became a regional manager with responsibilities that include recruiting and training new franchisees, nurturing relationships with vendors, and developing advertising campaigns.
When Spehn saw what Hamilton was doing, he figured that what was sauce for the goose could also be sauce for the gosling. So he read up on Web programming, took some informal HTML lessons from a neighbor, and--in the space of a few weeks--fielded a site just for Southern California franchisees. The site, called Z-Link, is hosted by an ISP, and Spehn updates it personally at least once a week. When a flurry of great deals come in, he may post new notices on it several times a day.
In terms of design, Z-Link is almost identical to the Children's Orchard intranet, and Spehn works closely with Stinson and Hamilton to keep it that way. It also has a one-way connection to the parent site. Regional franchisees can click to the corporate network, but someone visiting the corporate network can't access Z-Link. That arrangement isn't meant to be exclusionary; it's just that most of Z-Link's content, so far, comprises merchandise offers from regional vendors and other geographically restricted news. But Spehn would like to broaden its scope. "We would like to make it possible to solicit and engage franchisees nationally," he says. "We'll say, 'If you know the answer to this one, chime in."
On the day the Beanies arrived, Spehn didn't announce his good fortune over the network. But he did post on the Deals page an announcement from a puzzle manufacturer that was willing to unload some overstock at less than a dollar an item. Clicking to the corporate intranet, he saw that 1999 budget projections were due and that Hamilton had written a new directive about advertising practices. He created a notice on Z-Link directing his constituents to both and added a few words about the company's plans to sponsor the TV program Barney & Friends. From there he traveled to a selection of external links and clicked to the Consumer Product Safety Commission, where he checked for recalls.
