08/01/1998

Can the Internet be a Profitably Instrument for Your Company?

By Todd Zeldin

ACG Professionals, Inc.

Over the past several years, the internet has become a dominant focus for many companies. Microsoft has invested billions of dollars exploring internet-related technologies and commerce, so much so that it has garnered significant attention by the Department of Justice to ensure that Microsoft is not destroying the competitive marketplace. Internet stocks have been hot despite returns that often underperform the S&P 500. Many non-technical companies are spinning off Internet-related divisions as a means of raising additional capital because of such high demand for tech-happy investors. With all of this attention, should your firm be investing more resources in web-based development and products?

Before you can intelligently evaluate this issue, you must make sure to dedicate sufficient human and capital resources to explore internet-based strategies. There are many to consider, ranging from hardware preferences, internet provider, off-the-shelf software versus custom development, and connectivity to other programs. As with any new technology, there are varying opinions as to how best to employ it, and you will be well served to seek professional guidance before you make any costly decisions. Additionally, the size of your company and your capital constraints often dictate whether you want to be on the leading edge or the bleeding edge, the latter group being the first to adopt a new technology.

In the very near future, the web will be the equivalent of a phone line for data. What telephones did for personal communication, the web is going to do information communication. From analyzing market information to brokering assets, the web is going to impact your primary business. The question is not if you will be impacted, but how significantly and when you will need to embrace these new technologies. So where do you begin in order to evaluate if your company should consider web-based alternatives today?

The first thing to do is contact friends in the industry to find out how they are using the web. You will probably discover that many firms today provide internet access and e-mail to its employees. If you eliminate the bad jokes you send and receive, there are significant advantages to e-mail. You can communicate to several people at the same time and allow recipients to respond at their convenience. You can also collaborate better and send files to each other, eliminating useless faxes and long voice mail messages. According to Lee Asher, VP of ACG's Financial Services Division, the use of e-mail has enabled the company to improve its next-day service and to offer same-day service for clients who outsource their analytical modeling and discounted cash flow analyses. Federal Express bills have also been reduced.

Secondly, you should evaluate how you are disseminating information today and whether the use of the web will facilitate future distribution of critical data. For example, brokers have traditionally spent a lot of time and money producing and distributing offering memoranda. By most estimates, the cost of production can easily exceed thousands of dollars. Furthermore, the information is static, making it more difficult and costly to distribute update.

To update its processes of dissemination, Clearwater, Fla.-based Colliers Arnold has developed a web site that contains detailed information about the Tampa market. As a vehicle for enhancing the number of investors who can evaluate possible acquisitions, Colliers Arnold posts several property listings on its web site. Upon completing a confidentiality agreement, users receive a password and can browse through these listings, reviewing key property statistics, rent roll information and photographs. Because this information is regularly updated, potential investors receive the most current information available, reducing the time it takes for them to perform their due diligence.

A third aspect to consider is how the web can be employed to better service clients. It is highly appropriate to survey clients today and find out how they would recommend you integrate web-based solutions to provide them with greater value. Doug Haney, President of Appraisal Services for CB Richard Ellis, is presently evaluating how the company can employ the web to better service its clients. According to Mr. Haney, market pressures to deliver appraisals faster and for less money are motivating reasons for exploring web-based solutions. If clients are able to communicate with CB Richard Ellis over the web -- gaining access to appraisal reports, discounted cash flow files, market comps, and project-based information – the firm will dramatically increase the number of reports it produces annually while reducing overhead associated with the production of these reports. Furthermore, the company will be able to better manage and evaluate its internal human resources. Although there are unlimited opportunities to employ web-based technology, capital constraints will require a prioritization of how best to deploy a web-based technology plan.

Sometimes web-based solutions are ways of reducing internal costs of maintaining information. By communicating via the internet or the intranet (the network within a single company), companies can streamline data maintenance and provide real-time access to critical data. For example, Chet Joglekar, CEO of ACG Software, Inc., recently completed a custom database system for UPS. The system offered several challenges, including an intranet-based database system that automates the process of tracking facilities and lease data in all of the international locations where UPS owns or leases properties. The system is tightly integrated with the UPS corporate intranet to allow regional and district real estate personnel to negotiate and manage leases, and permit corporate to review and approve the deals put together in the field.

From e-mail to corporate database systems, your business can prosper with the correct implementation of new technologies. It is imperative that you balance your internal needs with the demands from your clients, and that you choose technological alternatives that will facilitate meeting your financial goals. What may be the best solution for somebody else may not be your optimal choice; however, these new technologies demand that you give them their due attention. Remember that a generation that used to be considered twenty years is now considered a mere five years because of the impact technology has had on our society. Bridge the generation gap today so that tomorrow you will prosper.

If you would like to address any interests, you may contact Todd Zeldin at tzeldin@acgpro.com.