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The new inside-out marketing

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Once simple bulletin boards for corporate memos and handbooks, intranets now increasingly offer procurement capabilities and more valuable employee marketing tools.

Through employee portals that act as doorways into Internet sites, employees can purchase anything from business necessities, like computers, to personal services or products, such as pet insurance for their favorite schnauzer.

Consider iGate Capital, an information technology holding company based in Pittsburgh. In August the company introduced a procurement strategy for all 10 of its global eService organizations, said Frank Corris, director of procurement services at iGate.

After considering applications from Ariba Inc. and PeopleSoft Inc., iGate selected PeopleSoft eProcurement software, which is built from Commerce One Inc.'s BySite e-procurement application, for the initiative.

Through a global trading portal on the company's intranet that links to preferred vendors' Web sites, its 3,000 U.S. employees can spend in four areas: computer equipment, office supplies, office furniture and courier services. Next year, employee portals will also be designed for iGate's 2,600 employees who work overseas.

"In 1999, we spent about $2.5 million on traditional office supplies,'' Corris said, adding that employees previously purchased supplies such as toner for copy machines from at least 25 different stores. "Of that amount, 41% were maverick purchases,'' he said, referring to purchases made outside the company's established sales channels.

Now employees order from two suppliers in each of the four categories, which helps spark competition and flatten prices. The company expects its buyers to make 70% of their purchases via the trading portal.

Although the program just kicked off, the company has already saved money. Negotiated agreements have reduced the cost of office supplies by almost 15% and copy machines by nearly 24%, Corris said.

Other companies, such as Sun Microsystems Inc. in Palo Alto, Calif., also are using intranets to perform double duty.

Once logged on to Sun's intranet, its 37,000 employees can access a company store that links them to external vendors such as a stationery store and a concierge for travel-related services. Employees can also buy products from Sun customers, such as General Electric appliances, Carrier air conditioners or Gateway computers.

"There's a big push now for this trade exchange,'' said Lisa Paul, human resource manager at Sun. "Our eSun initiative is to move all that we do on the Web and offer services to employees through the Web.''

One reason why intranets are gaining popularity as sales tools is that technology has caught up with the demand. Paul says there's no longer any need for companies to be concerned about security issues.

Keeping employees happy

Companies such as AT&T Corp., Aramark and Electronic Data Systems are using their intranets to sell personal services and products through employee portals, but are doing so with help from companies such as San Francisco-based Abilizer Solutions Inc. or Baltimore-based RewardsPlus.

"We offer a number of everyday things, ranging from grocery services all the way up to automobile purchases,'' said Keith Kuehn, VP-online marketing and communications at EDS, a high-tech and management consulting company based in Plano, Texas. "Our employees very much value and respect when we make offerings via our intranet.''

The company contracted with Abilizer several years ago to offer its 120,000 employees more than 65 different products and services. The Abilizer vendor list reads like a shopping center directory: Tower Records, Esprit, Barnes & Noble, The Men's Wearhouse, Toys "R'' Us and others.

But EDS is choosy about whom it selects. Kuehn said vendor products or services must save employees time, money or aggravation and be unique, credible or relevant to their needs.

The company also sticks with quality name brands that have a strong history and high level of customer service. That way, it won't get stuck fixing problems between employees and vendors.

There is, however, one form of crossover marketing that is taboo at EDS: banner advertising by external vendors. Kuehn said banner ads create a noise level that interferes with the intranet’s primary purpose: to relay work-related information.

In the future, he said, more vendors will engage in "association marketing'' by offering products or services tailored to specific groups. The company with the intranet enjoys the benefit of happier employees; the company selling products or services on the intranet is able to market to a large group of people rather than individuals.

"The value isn't going to be as much in the form of durable goods as in the form of services and time savings,'' Kuehn added. "That's where the real change is going to happen.''

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