Intranet Market A Billion Dollar Opportunity
Federal market integrators could become the foremost implementors of the new technology
If early estimates of the intranet market's growth are to be believed, federal government agencies could spend as much as $2 billion a year over the next few years.
If this happens, the very nature of information systems management in the federal environment will likely experience a dramatic transformation. While standards-based Internet protocols could replace or overlay proprietary networking architectures, World Wide Web browser-like universal clients could supplant vendor-specific groupware applications.
According to Zona Research, U.S. spending on intranet-related software alone will reach $1.2 billion by 1997. Several industry observers interviewed for this article indicated this figure will account for only 10 percent of the investment needed to deploy mission-critical applications for companies and institutions. When intranet-specific computer and networking hardware, along with professional services outlays, are taken into consideration, overall spending could breach the $10 billion mark by 1997.
"It would be reasonable to assume that between 10 and 20 percent of that spending will come from the federal market," says Jack Littley, senior vice president at BTG.
And given the reception that intranet vendors are having in federal circles, this could be just the tip of the iceberg.
"We believe there will be something like a 10-1 ratio of intranet to every Internet site in the federal government," says Dan Drost, Informix's business manager for Internet/intranets.
"Since there are roughly 800 Internet sites in the government today, you are talking about the establishment of some 10,000 intranet sites over the next two years," he says.
In many ways, emergence of the intranet represents a sort of unexpected return on investment in technology for the federal government.
"In fact, if you think about it, the Internet as we know it today came out of ARPAnet, Defense Data Network and MILNET initiatives -- all of which were important federal government networks," says Tom Haley, vice present of intranet services at Network Solutions, a wholly owned subsidiary of SAIC.
"If you define intranets as the deployment of Internet technology in private networks, it could be argued that the federal government has pursued an intranet strategy long before private industry even conceived it," he says.
Consequently, many observers believe that the federal government is likely to be one of the more aggressive implementors of the technology. But it is the incorporation and integration of marketplace-honed Web browsing technologies that really create new systems management opportunities within the federal environment.
Vicky Page, a senior research analyst with IDC government services markets who surveyed government MIS officials about Internet technology use, said there has been extraordinary growth in both the number and size of Internet technology-related budgets throughout federal agencies in general, particularly in the Department of Defense.
"Few departments lack an Internet/Web budget -- even down to offices that have just a handful of people," says Page. More importantly, the top two funded applications -- interagency and intra-agency communications -- account for 75 percent of those investments, reflecting the operational significance of the technology. Use of Web technology for communications to and from state and local agencies, to and from vendors, and between the federal government and the general public share the remaining 25 percent.
Driving this frenetic deployment of internal Web sites on departmental LANs -- another working definition of the intranet -- is the hope that intranets will deliver ubiquitous access to information on an anytime-from-anywhere basis; provide an important tool in the all-out fight to join disparate federal systems via a universal client; and offer inexpensive, collaborative, workgroup computing solutions.
While all three of these deliverables are important, it is the latter -- collaborative computing -- that has garnered the most fervent interest of federal MIS managers.
"So much of what the government does is process oriented," explains Littley.
"To get almost anything done, government workers and organizations have to go through a bunch of wickets. This [application of intranet] technology would allow them to go through these wickets in parallel instead of serially," he says.
But this begs the question, why not use one of several well-reviewed proprietary workgroup computing products in the market today? (i.e. Novell's GroupWise 5, Microsoft's Exchange and Lotus' Lotus/Notes).
The answer revolves around cost and a fundamental shift in the direction that network computing is likely to take over the next year. For the average government office, the robust products from the workgroup computing providers deliver more features than may be needed -- at a significant cost.
The workgroup offerings still represent an important solution for many mission-critical power users, but it is overkill for offices that may simply want to post updates to regulations or the employee directory on an internal Web site. Moreover, federal MIS managers are finding the central data repository approach to information dissemination more attractive than the messaging-based solution. This new view, says Littley, is a byproduct of the next conceptual stage of development in information management.
"When computers were first introduced, we managed data. Then the technology evolved to the point where we mastered the art of managing information. The next stage in development calls for managing knowledge. We are creating an environment where, if you need information on how to get something done, that information is out there on the departmental network and beyond, and can be accessed by your Web browser-based universal client," he says.
On the low end of the federal collaborative computing market, many agree that intranet-based workgroup solutions are resonating with users in the private and public sector alike.
Over time, this issue will become moot. Workgroup vendors have no intention of conceding any part of the market, and are consequently investing heavily into building intranet/Web features into their solutions. Intranet vendors, on the other hand, are teaming with application developers to make new offerings more feature rich. By the end of 1997, many observers believe it will be difficult to make the distinctions that currently exist.