Hosted Intranets Proving Their Worth

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In the spring of last year, Intranets.com was locked in a do or die situation. Its business model of offering companies a free hosted intranet, paid for by banner advertising, was essentially a flop. Make no mistake, the company had managed to sign on plenty of users for its free services. In fact, at its peak the Boston-based firm boasted as many as one million members in the U.S. However, less than 400,000 could be considered active accounts, and the advertising model simply couldn't keep up with expenses. In addition, at a time when dot coms were folding by the day, the term "free" no longer carried the same sales power that it did in the early days of the Internet boom.

"It was obvious the advertising model was dying," then chief executive Steve Crummey said. "There was a connotation that free equals bad or no value, and corporate users were getting tired of the commercialism." The company made a bold decision, notifying its users that they would have to begin paying for access to a variety of hosted intranet applications or face seeing their accounts switched off.

At the time there were very few successful examples of companies switching from a free to a subscription-based model. But for Intranets.com, the gamble has paid off. In the process the company has proven the business value of a hosted intranet not only for itself, but for big name competitors like Microsoft as well.

"We were very pleased with the results," says Rick Faulk, who took over the chief executive role from Crummey in August of 2001. "We had a strong conversion rate because at the end of the day, a lot of companies highly valued our product."

The company switched to the paid subscription model in June of last year, charging a fee of $29.95 per month for five users, and $5 per month for each additional user. Faulk says the company now has about 125,000 paying subscribers representing a little more than 5,000 companies or organizations. What's more, by switching to a paid subscriber model, Intranets.com has been able to get a better handle on the types of companies and users that value its services most, and can now target those segments.

Location, location, location

Real estate has been a prime example. The company found that a large number of real estate agencies had begun using the hosted intranet service as a primary communication device between their agents, many of whom operated from the road or home offices.

Intranets.com currently offers a total of 11 applications, including communications and collaboration, group calendaring, expense reporting, and a task manager.

Mike Nichols, managing broker for the Nashville, Tenn. office of ERA Woodmont Realty initially signed on to Intranets.com when it was a free service. He wasn't happy with the switch to a fee-based service, but also felt he couldn't afford to give it up.

"It was a pretty expensive proposition for us, because we have a lot of users," says Nichols, noting that the agency has about 80 realtors plugged into the hosted intranet from two different offices. "But it wasn't a tough decision. We really needed something that could tie our realtors together the way this was doing it. We don't have an IT department to develop a custom Intranet for us, so this was the only way."

Woodmont Realty uses Intranets.com for a variety of business functions, but most are centered around communication and document exchange. The calendaring application, for example, allows Nichols or other senior brokers to schedule sales meetings and automatically have reminders sent out to brokers by email. Another important function is a polling application, which allows Nichols to query agents on a variety of business matters without picking up the phone. The agency recently held a corporate retreat and used the polling function to find out what topics agents felt were the most important to be covered at the retreat. Agents also use the intranet to download various documents, including sales contracts. "Agents can spit them off when they're at home, or at a client's house. It's a big benefit," he adds.

Intranets.com recently added wireless access, so Nichols and his agents can now access phone numbers and addresses from a contact list stored on the intranet using a PCS phone.

Page II - Going Vertical and Microsoft

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