Can you make money on the Net?
Cisco Systems has been answering that question -- with a resounding yes -- for more than a decade. Its networking products have become the digital backbone of most corporate Intranets and of the Internet itself. The company has annual revenues of more than $4 billion, profits of more than $900 million, and a market value of more than $40 billion.
But Cisco doesn't make money just by building Net infrastructure. It also uses the Net to make money. Its Web site, Cisco Connection http://www.cisco.com , may be the highest-impact Web site in business today. Cisco uses the Web to deliver more than 70% of its customer support. It is selling products over the Web at a rate of more than $200 million per year and wants to increase its annual online sales to $2 billion.
Peter Solvik, 38, Cisco's chief information officer, is the driving force behind Cisco Connection. "We're using the Web to revolutionize our relationship with customers," he says. "We want quantum-leap results: lower costs, higher customer satisfaction, leadership in service and support." Solvik spoke with Fast Company about how he's achieving those results.
How important is the Net to Cisco's business?
We're achieving the highest impact on the Internet of just about any company around. That's an extreme statement, but there's a case for it. More than 500,000 times each month, an existing customer with a service contract contacts our company to report technical problems, check orders, download software. More than two-thirds of those contacts now take place electronically.
These aren't random the "hits" of Web surfers. These are registered customers using the Web to do business. They each have a private, password-protected relationship with Cisco.
How does this Web traffic translate into dollars and cents?
Two obvious ways: higher revenues and lower costs. We're now booking $10 million of business per month on the Web. Our goal is to surpass $150 million per month -- 25% to 30% of the company's total sales.
Cost savings are here now. During one recent month, we had 50,000 log-ins to the Web that eliminated the need for phone calls to our technical assistance centers. Each phone call costs us an average of $200, so 50,000 fewer calls meant $11 million saved in one month. That same month, we had 50,000 software downloads. We saved $500,000 in FedEx charges alone. That's another $6 million a year.
What advice do you have for other companies?
We've been blazing trails here, but you don't have to be a trailblazer to be successful. Look at what your competitors are doing, benchmark companies outside your industry, get track records of what's worked -- and then copy.
You've also got to involve everyone you can. We don't have a few all-powerful Web masters. Every department that communicates with customers -- marketing, public relations, documentation, engineering, customer service, technical support -- is responsible for maintaining our Web site. That means we can move incredibly fast. The day a new product is announced, we've got the manuals, the marketing information, the press releases, the reports on outstanding bugs. Everything goes automatically to the Web site.
Has this commitment to the Web affected how Cisco operates internally?
Teams at Cisco, like teams everywhere, create lots of documents and progress reports. But rather than save those documents to their own computers, people now save everything to their group's Web site. Then, before participating in a meeting, they simply print out what's on their Web site. The entire work process revolves around group interaction supported by a Web site. There's all kinds of positive feedback between the Internet and Intranets.
You can reach Peter Solvik at email@example.com