SANTA CLARA, Calif. -- The Internet has caused a paradigm shift at two of the electronics industry's largest companies. By moving to an Internet-centric corporate-wide engineering and sales environment, National Semiconductor Corp. (Santa Clara, Calif.) and Cisco Systems Inc. (San Jose, Calif.) have saved millions, wracked up billions in new sales, found new ways of communicating on design projects, and implemented increasingly faster Web connections for engineers around the world.

"The Web is creating a 'venturi' [bidirectional] effect inside National," said Phil Gibson, director of interactive marketing for National. Making maximum use of its intranet, extranet and public Web capacities, National has saved $4 million in a few months, the company said.

At Cisco, the extranet that connects suppliers, partners and customers to the company's "Global Network Business" private intranet is now responsible for processing 32 percent of Cisco's business. "That takes us over a $2 billion run rate right now over our Web site," said Mark Tonnesen, director of information technology for Cisco. "Our immediate goal is looking at 60 percent."

Speed is becoming more critical for the design engineers--especially those overseas--who visit the companies' respective Web sites. National said it gets a million visitors to www.national.com each month, and Cisco said it gets about 750,000 to its Cisco Connection Online (CCO) site at www.cisco.com.

"Speed is everything in engineering, and that includes the speed of Web access and transfer times," said Gibson. "For a design engineer, the difference between taking up five seconds, as opposed to 10, is immense in productivity." The six-million 'hits' that National gets each month translate into the downloading of about 10,000 data sheets per day.

National wanted to address the access speeds that overseas users were finding, which were woeful in comparison to those for engineers in the United States. "It's startling how bad the network can be," Gibson said. The solution was found in the Overnet technology of Digital Island (Honolulu). Overnet detours traffic away from the overcrowded U.S. public Internet and puts it onto a private network based in Honolulu. In this way, Digital Island shortens the route that data travels, and reduces the minutes it takes for a user to download information and software from the sites of Digital Island's clients.

The private network eliminates the normal transfer to U.S.-based network-access points (NAPs) that virtually all international Internet traffic goes through. Even traffic between remote countries is routed through the four main U.S.-based NAPs. This traffic travels at a gradually slower pace as the amount of information the NAPs must distribute increases. Using the private network, Digital Island's Overnet can provide a single-point connection from 14 countries around the world to a client's Web servers. It will have 30 countries "turned on" by the end of the year.

Cisco was an early user of Overnet, which contributed to the $300 million in savings the company realized through its use of the Internet. "It's a critical single point of contact for engineers that are deploying our supporting networks around the world who use Cisco Connection Online as a tool," Tonnesen said.

"I recently went on a trip to Malaysia [which Digital Island hasn't 'turned on'] and accessed our sites," Tonnesen said. "The sheer length of time that information traverses the Internet is unacceptable. Digital Island helps us facilitate our positioning of POPs [points of presence] around the world for quick access for engineers."

Digital Island's business model "is a lot like the Federal Express method," said Ron Higgins, the company's founder and chief executive officer. "FedEx is able to scale the distribution engine--which is the planes--and they are able to manage and scale the hub [in Memphis] very efficiently. We're doing exactly the same thing, only in the information age. Instead of packages, we're dealing with packets."

The Overnet leverages one of the world's highest concentrations of international fiber in Hawaii. "We've got access to an enormous amount of bandwidth here, due to the high concentration of military," said Higgins.

Fourth-generation computing
The benefits of Overnet for National and Cisco "are evident," Higgins said. "What they're looking for is the 'fourth generation' of computing--the full deployment of application globally--with ubiquitous access for the user.

"We provide the ability to deploy an application at a fraction of what it would cost for them to set up mirror sites [POPs requiring additional servers in disparate locations] around the world," he said.

National's investment of $400,000 into the Digital Island service immediately saved the company $4 million in ISP charges, server hardware and software licenses that it would have paid to run mirror sites, Gibson said. "The travel and staff was immense in trying to keep multisite locations running, not to mention the continual monitoring of the sites' heartbeats," he said. "With the Overnet, it's all under one roof."

International traffic to National's Web site has grown sharply. "Two-and-a-half years ago, it was 95 percent U.S. design engineers who were accessing our external Web site," Gibson said. "Today it's about 50/50," with the growth coming on the international side.

"Using the Overnet gives us an international extension of a reliable, robust network."

National now has Overnet-enabled speed for 10 countries--Hong Kong, Japan, South Korea, Singapore, Taiwan, France, Germany, the United Kingdom, Australia and Brazil. "We had to make sure that access for a design engineer is robust, and we couldn't guarantee that outside the U.S., because of the multihop aspects of the Web and its assorted bottlenecks," Gibson said. "If you were in Hong Kong trying to log on to National's site, you were getting 25 to 30 seconds a page to load it, as opposed to 2 or 3 seconds in the U.S."

Engineers in Paris need just 6 seconds to transfer a data sheet on the Overnet, Gibson said, claiming that the mean time for National's 20 major competitors is 16 seconds. "Twelve of these even timed out--the document didn't even go through," he said.

Cisco's savings have come in the generally costly areas of service and support. "Roughly 40 or 50 percent of all of our service and support calls are handled over CCO," said Tonnesen. Given the average cost per call--at 350,000 calls per month--the savings Cisco expects by using the Web as the point of contact are $125 million annually.

"We also use CCO as our main center for distribution of software," said Tonnesen. "Upgrades, patch fixes, bug fixes--we do over 130,000 software downloads a month. That's $85 million in savings in printing and shipping CDs alone."

In addition, Cisco counts $50 million in savings on printing costs for documentation and more than $50 million in savings on recruiting and staffing costs, because many job candidates apply over the Web and because fewer workers are needed to process mail or phone orders.

Time savings also flow from Cisco's extranet, which processes about 38 percent of the money that moves into the company's order-management and shop-floor manufacturing systems, Tonnesen said.

Part of the flow
Cisco's comprehensive engineering intranet is now a part of the daily design workflow on projects, said Tonnesen. "We have this kind of customized Yahoo, like a 'My Yahoo' [an indexed database for Cisco-specific information] for engineers. They can go after information for their job from their area of the world."

There's also online access to intranet pages about bugs. Since Cisco's intranet is linked to the public Internet, "a customer can find that an engineer has applied a fix to a specific problem, and we can then release the software immediately," Tonnesen said.

Most of the tools that help collaboration over Cisco's intranet are "home-grown," Tonnesen said. "We use a lot of freeware tools, but we're working on an interactive collaborative-engineering Net. It will be able to connect the engineers, the tech-support engineers, and the customers simultaneously in real-time."

At National, the company's EDI order-placement system seems to be satisfactory for now, but Gibson hinted that ordering may soon see a Web shift. "Over the next two years, starting internationally, the potential channel growth is likely to drive the migration of sales over the Web," he said.

"Will all transactions be across the Web in some encrypted fashion? Maybe," Gibson said. "Anything's possible with the Web. It's part of the National culture now."

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