What are the business benefits of networks?

ADS Networks are vital to a business. They are important for the cost savings and improved communications that arise from an internal network. Beyond this, they are truly vital, because they help a business reach out and connect with its customers, suppliers and collaborators. Through doing this a company can order new raw materials more rapidly and cheaply from its suppliers and can keep in touch with the needs of its customers. Figure 5.1 indicates the links that may exist between different partners. In some industries, such as the travel industry, travel agents and suppliers (such as the airlines) have made use of telecommunications links for over 25 years. In other sectors, however, most communications have been over the phone or in person, until more recently. The potential for e-business has been made possible by the use of the Internet technologies to reduce the    cost and complexity of linking companies.

When computers and telecommunications are integrated, they can provide many advantages. Take the simple example of a humble e-mail sent to a customer or colleague. This costs only a few pence and can be sent to any location in the world immediately. As well as the low cost and fast delivery, it can be integrated to work with the users’ other information needs, perhaps by supplying a spreadsheet as an attachment.

We will now look at the benefits that networks provide in more detail.

1. Reduce cost compared to traditional communications. Costs can be reduced in various ways depending on the type of communication required. If information has to be sent to another location, the cost of sending is very low compared to using a letter or even a fax. If face-to-face communication is needed to exchange information or solve a problem, then the traditional approach would be to jump into a car or onto a plane. Telecommunications now make this less necessary. Meetings can be conducted by conferencing, which not only includes video conferencing, but also sharing ideas through writing on whiteboards or  running shared software. Money is saved on transport and accommodation but, perhaps more significantly, the time it takes for people to travel to the meeting is also saved.
2.  Reduce time for information transfer. The benefits of shorter times for messages to arrive are obvious, but more subtle benefits can also occur through the rapid transfer of information. It is now possible for the global company to operate 24 hours a day by taking advantage of people working in different time zones. If someone is working on a product design in New Zealand, for example, they can dispatch it for review in Europe at the end of their working day. The review can then be conducted in Europe while the other team members are asleep and will be ready for review the next morning. Using this simple method product designs could be accelerated significantly. Customer service queries can also be turned around more quickly through the use of telecommunications.
3.  Enable sharing and dissemination of company information. Opportunities to share information are lost when it is locked in a filing cabinet or stored on an individual’s PC. By placing information on a server, either as a file or within a database, it can be made accessible to all departments that need it and the flow of information in the company is improved. This has proved to be one of the big benefits of intranets. A company selling through agents worldwide can provide information such as prices or technical specifications over an intranet. This information is always up to date, as there is no delay while price lists are reproduced and transported to the agents. Of course, this approach also helps in reducing costs.
4. Promote new ways of working. As well as the tangible benefits, introducing networks can facilitate a different approach to running a business. Setting up an internal network makes it possible to use group-working tools. Setting up a wide- area network makes electronic data interchange with suppliers possible.
5. Operate geographically separate businesses as one. Through using wide-area communications technology, it is possible to rationalise the operations of a company that originally operated as separate business units in different geographic locations, perhaps with their own working practices, procedures and reporting mechanisms. Linked business units can use common ways of working facilitated by video conferencing as shown in the case study. Sharing of information on best practices can also occur.
6.  Restructure relationships with partners. In the same way that different groups or businesses within a company can work more effectively together, different companies can also collaborate better. This may occur, for example, when new products are being designed or when a manufacturer is ordering goods from its suppliers.

To balance against the many benefits, there are, of course, disadvantages with introducing networks. The main disadvantages are:

1.  The initial setup cost may be high, and there may be a considerable period before the costs are paid off.
2. . When implementing or updating the network there may be considerable practical difficulties. Deploying cabling can be very disruptive to staff doing their daily work.
3. In the long term, companies become reliant on networks, and breaks in service can be very disruptive. For this reason investment in network maintenance is vital.
4.  Security is reduced through introducing a network, since there are more access points to sensitive data. Data may also be intercepted when they are transferred from one site to another. Despite these disadvantages, most companies still proceed with implementation and take care to reduce the risks of disruption and security breaches. In doing so, further costs will be introduced. Table 5.1 summarises the advantages and disadvantages of networks.

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