The Internet and All its Potential.
Companies Finally "Get It".

An insightful article by the President & CEO of Telegraph.net,
Victor J. Cook, III.

Exclusive to Consultimes:

   The Internet is like a subtle joke. It takes most people a while to get it. Just ask Edgar Bronfman, President and CEO of Seagram, which owns Universal Music Group. In 1997 he called the Internet, "the CB radio of the '90s'." Today, Universal is scrambling to develop an Internet strategy to combat the free MP3 audio downloads available at thousands of sites. Or take Merrill Lynch Vice Chairman John Steffens. The online brokerages were laughing when he said Internet-based stock trading was "a serious threat to Americans' financial lives." It bought them a year. Finally, this summer, Merrill Lynch is unveiling its own online trading site. Along with many top executives, even (remember Netscape) Bill Gates, Mr. Bronfman and Mr. Steffens underestimated the Internet. Now, they are catching on. Andy Grove of Intel Corporation says that in five years' time, all companies will be Internet companies, or they won't be companies at all.

   The first wave of transformation has been selling over the Internet. Amazon, eBay and Dell Computer Corporation have eliminated several layers of distribution and retailing to build their business. "Be Direct" is the motto of Dell Computer Corporation. Ironically, existing channels of distribution and resellers, once considered a prime corporate asset and barrier against competitors, can turn into a ball and chain. This is what Compaq found. While Dell was selling computers to the public on its web site, Compaq would not allow anyone to buy, except through an authorized reseller, who then had to buy from an authorized distributor, who bought from Compaq. Each of these links in the chain got their cut, and took up to two weeks to move the machine. Compaq had a dilemma: How does a company compete with its own resellers? It's a problem faced by lower tech businesses as well. Furniture maker Herman Miller had to fight its resellers to open Hmstore.com. Herman Miller saw that the Internet opened a whole new market previously untapped by the resellers, who tended to be high-end architectural design firms possible through Internet technology.

   All of this change represents a fantastic opportunity for information technology consultants. The variety of skills to develop and implement an Internet strategy does not exist in most corporations. And the work must be done quickly. The only choice is to outsource. Trouble is, this is unlike staffing the needs of a particular software project or network rollout. Asking for a few web designers or programmers who know HTML on a three to six month temporary basis and putting them under a traditional IT manager is a sure recipe for failure. Internet projects require developing a strategy, designing an interface, implementing automation, and going through the entire process over again for each member of the value chain.

   From a technical standpoint, the Internet is about two things: universal connectivity and open systems. Together these make it possible to move an idea from concept to implementation, and in front of users more rapidly than ever. Internet businesses grow and take over market niches before the traditional brick and mortar businesses even realize what happened. But they don't do this by accident. There were many companies selling books on the Internet before Amazon came along. Now, to be "Amazoned" is to have your industry transformed by a company with a great Internet strategy.

   From a strategicstandpoint, the Internet is about opening systems to customers and partners so that your company's added value is perceived and delivered immediately and transparently. Many companies are not even as open with their own employees as Dell is with its suppliers.

   The Economist concludes its survey with a pithy statement, "In the past, the rules of business were simple: beat the competition into submission, squeeze your suppliers and keep your customers in ignorance the better to gouge them." The Internet changes these rules and brings a more collaborative, customer centric world. It can be frightening until you "get it". Psychologically, laughter is one step removed from fear, so embrace the Internet, and the joke will be on your competition.

Victor is a graduate of Massachusetts Institute of Technology with a B.S. in Geophysics. Additionally, he has a B.S. in Engineering and studied for his Ph.D in Computer Science. Before founding Telegraph.net, he was a professor of Computer and Information Systems at Palm Beach Atlantic College. For further information about Telegraph.net and their Internet consulting and software development credentials, email Victor at cook@telgraph.net.

Update: Victor is now CTO at Cybear, Inc., an internet -based physician's tool and consumer reference site. (Nasdaq: CYBA)