
Keynote
Remarks of
Troy A. Eid, Chief Operating Officer
InfoTEST
International
Sun Microsystems
Computer Company
Telecommunications & Cable Summit
Dallas, Texas
April 29, 1997
hank
you. About this same time last year, I was privileged to address another
distiguished gathering of Sun Microsystems clients in Berkeley. I have
a confession to make: In preparing for today's remarks I thought about
recycling what I wrote for last year's conference. That was California
and this is Texas. Besides, I figured you've never heard of me anyway,
so why should you care? Meanwhile, admittedly at cross-purposes but
knowing my thoughts were sinful, I prayed that the Lord would lead me
not into temptation.
Well, He
certainly delivered me from evil: I plowed through my speech from May
1996 and found it to be hopelessly outdated. About the only thing that
could be easily resurrected were some tasteless jokes about Microsoft.
At least the best things in life never change. To his credit, Mr. Gates
has finally figured out that Java isn't just something they serve at
Starbucks.
Past
Predictions
If you're
still curious, you're welcome to download last year's remarks from the
InfoTEST International web site (www.infotest.com). The text talks a
lot about intranets, but never mentions today's topic -- the extranet
-- although in my defense the word wasn't even invented yet. By the
way, the speech reads better if you skip over my predictions about the
imminent and wide-spread arrival of cable modems for high-speed Internet
access.
In case
you're wondering why Sun invited me back at all, it turns out last year's
speech stumbled upon one correct prediction: that Java would dramatically
accelerate the Internet's transformation from a corporate curiosity
to one of the driving forces in the global economy. If anything, that
forecast wasn't optimistic enough. Information Week captured today's
reality in the opening paragraph of its March 31, 1997 cover story:
Java has
reached a turning point. Less than two years old, the programming language
is moving from being an unproven but promising technology to becoming
a reliable tool for building business-critical enterprise applications.
I'll say
more about Java in a few moments. But first, let me expand on the "extranet
evolution": The ongoing commercial transformation of the Net from a
relatively obscure defense research and academic network, to the World
Wide Web, to intranets of increasing sophistication that will soon reach
beyond individual enterprises to become the primary electronic channel
for full-scale business collaboration.
The
Last Four Years
Looking
backward, we now know that each of the past four years has been marked
by a defining step in the Internet's commercial evolution. In some respects,
1993 may have been the most important but least appreciated year of
all. I'm not just talking about technological breakthroughs like the
Mosaic web browser, the precursor to Netscape Navigator. Nineteen ninety-three
was also the year when our industry faced off against federal policymakers
over the vision of a government-directed National Information Infrastructure
(NII) modeled on the interstate highway system of the Eisenhower days.
Fortunately, the government blinked. A Byte magazine cover story from
about this time entitled, "Building the Data Highway," captured the
viewpoint that has since prevailed:
One fact
must be made clear about the National Information Infrastructure: The
government is not planning to dig a trench from New York to San Francisco,
fill it with fiber-optic cables, and call it a data highway. Rather,
the information highway will be privately built, owned and operated.
. . . In fact, much of the data highway already exists in the vast web
of fiber-optic strands, coaxial cables, radio waves, satellites, and
lowly copper wires now spanning the globe.
Note that
in keeping with the conventional wisdom of the early 1990s, Byte's expansive
definition of the data highway never mentions the Internet. The 16-page
article eventually mentions the Internet, but predicts that "[a] unification
of phone and cable systems could bypass the Internet and threaten its
relevance. . . ." The really important point, and the prediction that
Byte got right, is that the government regulators took the bus and left
the driving to us. Before we knew it, the Internet was leading the development
of the NII -- not from Washington or Brussels or Tokyo, but from the
grassroots.
Nineteen-ninety
four was the Year of the World Wide Web. Mosaic gave way to Netscape
Navigator and large corporations began their rush to establish what
was euphemistically called a Web "presence," which for most essentially
meant putting some pages up and seeing what would happen. On a personal
note, 1994 was the year I finally said farewell to corporate law practice,
after waging an unsuccessful campaign to connect our 450-employee firm
to the Internet. In fact, when I pitched our firm's executive committee
on the benefits of joining the Internet, one of the senior partners
cut me off in mid-sentence:. "But Mr. Eid," he said, "the last thing
this firm needs is another health club membership."
A Newsweek
cover story called 1995 "The Year of the Internet," but what they really
meant was that the Web had ceased being the exclusive domain of big
corporate users and started becoming a mass commodity. For the first
time, most of the Web's users were people more likely to read TV Guide
than Electrical Engineering Times. And that lead to a really strange
development: Once consumers really started throwing money at the Internet,
the number of consultants who claimed to have played a crucial role
in creating the original Internet and its predecessor, the ARPANet,
mysteriously began growing exponentially from a handful of people to
a cast of several thousand. Nonetheless, there is absolutely no truth
to the rumor that Bill Gate's book, The Road Ahead, describes the six-year
old Billy writing on the chalkboard of his kindergarten class for the
first time and sketching a complete network diagram for the entire Internet.
The
Rise of the Intranet
Last year,
1996, will probably best be known as the Year of the Intranet. One of
the best definitions of an intranet comes from John Dodge, editor of
PC Week:
Intranets
are private business networks running over the Internet, typically serving
a single organization. They are bounded by firewalls, which is software
functioning as a membrane determining who and what can get inside the
network.
Virtually
all the Fortune 500 companies say they have an intranet or plan to deploy
one in the near future, mostly to share information among employees
and to collaborate on projects. A recent survey of 52 large companies
found that the number of intranet users at those companies was 5,905
in late 1996. That number is expected to more than double this year
to 12,408. The intranet's competitive advantages were underscored last
year by a study of four major companies by International Data Corp.
showing that intranets provide an average return on investment of more
than 1000 percent and pay for themselves within six to 12 weeks.
Nor is
the trend limited to corporate users. For instance, the U.S. General
Services Administration -- the federal government's landlord and civilian
procurement arm -- now provides intranet access to its entire workforce.
Not surprisingly, the market for coordinating the development of additional
intranets is about to explode. According to one estimate, the global
intranet market will grow 122 percent per year through the year 2001,
when it will be worth nearly $22 billion.
The
Year of the Extranet
This year
is shaping up as The Year of the Extranet. Internet World/Spring '97
was marked by a series of extranet announcements by several major vendors.
So popular are extranets that The Wall Street Journal recently felt
obliged to devote an entire article to explaining how companies that
prefer to market their products using the term "extranet" have triumphed
over competitors that liked terms like "infranet" and "exonet."
You've
probably heard the rumor that Sandra Bullock will soon star in a sequel
to the movie The Net called The Extranet. Bullock's character in The
Net was of course a free-lance software developer whose identity is
wiped out by Internet hackers. In The Extranet, Bullock is stalked by
the psychotic IS department manager of a multi-national manufacturing
company, who repudiates her access to the company's Web-enabled, Java-powered
distributed product data management system. In sheer desperation, Bullock
is forced to cobble together her virtual team's product design schematics
using Lotus notes and loses the entire contract. Fortunately, as in
The Net, the producers of The Extranet manifest a sophisticated grasp
of the Internet's underlying technology -- like the scene where Bullock
uses a Sun workstation to bust through the company's firewalls and the
workstation bursts into flames.
So what
is an extranet? There is not exactly universal agreement on the definition,
but here again I think PC Week's John Dodge captures it well:
[Extranets]
are business networks that erase the traditional boundaries of the enterprise.
Conceptually, they bind together related groups of companies known as
trusted circles or affinity groups . . . [by] open[ing] up the intranet
to customers, suppliers and other[s].
Like the
intranet, many of the essential building blocks of the extranet have
been around for years. It would be a mistake, however, to think of the
extranet merely as yet another Wide-Area Network (WAN) or Virtual Private
Network (VPN). Most WANs and VPNs could not venture very far beyond
a single company or institution without running into system incompatibility
problems. In contrast, extranets harness at least three of the Internet's
greatest advantages:
1. The
Internet's reliance on open technical standards.
2. The
Internet's increasingly proven and cost-effective enabling technologies.
3. The
Internet's large and exponentially growing user base, which MCI's Vint
Cerf estimates will reach 200 million users by the year 2000.
The result
is the emergence of an extremely powerful channel for business collaboration
across the entire supply chain and throughout the virtual corporation
of the 21st Century.
The
InfoTEST Manufacturing Extranet
This may
be a sweeping vision, but the extranet is about bottom-line business
priorities. For example, the industry alliance I represent, InfoTEST
International, is currently prototyping an extranet for major manufacturers
including Caterpillar, the world-class maker of heavy earth-moving equipment
headquartered in Illinois but with manufacturing sites, suppliers, dealerships
and customers around the globe. InfoTEST's pilot project is called EPR,
which stands for Enhanced Product Realization. Our goal is to help Caterpillar
and other U.S. manufacturers use the public Internet infrastructure,
and Internet technologies like Java, to respond to customer requests
for product modifications -- say, design a new part for one of those
big yellow tractors in Asia or Europe or Latin America -- in just five
days, instead of the current average response time of up to several
months.
This is
a market research project for us, not a near-term commercial solution,
but we're doing it for a solid business reason: to help Caterpillar
and our other corporate sponsors more effectively position themselves
in this rapidly evolving commercial marketplace. To give you an idea
of the challenge we face, I'm told that manufacturing a single Caterpillar
D-11 tractor depends on managing relationships with more than 1,300
different suppliers. Think for a moment what it would mean for Caterpillar
and any number of companies if we could leverage the Internet to respond
to customers' or dealers' requests for a product modification; design
and test the replacement parts -- not just sequentially, but concurrently
with key suppliers and virtual solutions teams; and deliver the finished
parts for installation on the customer's tractor in the field, all within
a single week. That is the kind of competitive edge that our customers
will expect, and that the citizens of our country will deserve, in the
years ahead.
The fact
is, Corporate America and much of the rest of the business world is
indeed evolving rapidly toward extranets. We're not there yet. But a
growing number of enterprises are moving in the right direction. If
the advent of extranetworking matches the pace of other defining moments
in Internet history, the Day of Reckoning will probably come much sooner
than any of us expect. So the question arises: Will our businesses evolve
along with the Internet? Will our companies and our customers be ready
to leverage the competitive advantages of Internet technologies -- as
well as the public Internet infrastructure -- as commercial extranets
become a reality?
'Private
Internet' Services
The distinction
between the Internet's enabling technologies and the public Internet
infrastructure helps explain why the development of the extranet is
an evolving process of continuous improvement rather than a one-time
phenomena. We already know that WANs using the Internet Protocol (IP)
-- often called "private internets" -- are an increasingly vital means
for communicating within and across enterprises. Importantly, many IP-based
WANs are capable of carrying voice signals as well as data communications.
Among other things, this means using the Internet to make telephone
calls via personal computer is no longer the exclusive province of starving
computer science graduate students.
And to
almost everyone's surprise, Internet telephony no longer poses a doomsday
threat to the long-distance phone revenue generated by the major carriers:
Both Sprint and MCI have recently announced plans to link circuit-switched
networks with integrated voice-data IP networks. Other major carriers
are expected to follow suit. Savvy telecom executives know that sometimes
the best way to lead is to find a parade and march in front of it. One
can almost hear the collective sigh of relief as carriers and their
customers achieve cost-effective voice-data integration using IP networks
-- in some cases with less pressure to use relatively more expensive
technologies like Asynchronous Transfer Mode.
In the
near future, several companies plan to unveil products that should boost
Internet telephony using the new cross-platform Java Telephony API.
Sun Microsystems is launching a development kit called JavaTel that
allows users to build telephony functions, such as call control and
routing, into Java-based applications. Lucent Technologies is likewise
expected to introduce what it's calling PassageWay software, an applications
development tool that links to any telephone system. These companies
know a market when they see it: A recent survey shows that only 13 percent
of companies currently are using computer telephony, but fully half
plan to use it within the next two years.
Beyond
supporting unified voice, fax and data communications, IP-based WANs
can enable a vast range of mission-critical business applications, such
as on-line billing, ordering and procurement; electronic data interchange
(EDI); inventory management; database marketing tailored to individual
customers -- the "market of one" -- and many others. Consequently, several
leading telecommunications providers are pioneering private Internet
services. Again, these are typically IP-based WANs, with guaranteed
levels of security and quality of service, that can extend a company's
intranet beyond its firewalls.
Proprietary
Extranets
Not to
be outdone, several Internet Service Providers (ISPs) -- starting with
UUNET, a subsidiary of WorldCom, Inc. -- have announced what it claims
is the world's first commercial extranet service. The UUNET service,
called ExtraLink, enables subscribers to communicate with each other
using UUNET's high-speed backbone and local access provided by MFS.
Security is provided by encryption at the router level, creating a virtual
private network that UUNET claims is about 20 percent less expensive
than Frame Relay and "far less expensive than private lines."
ISP offerings
such as the UUNET ExtraLink service are yet another important stage
in the extranet evolution. However, such services should properly be
seen for what they are: Vendor-specific, proprietary network services
rather than true extranets. This distinction will become increasingly
crucial in the coming years. The extranet's greatest potential advantage
is to leverage the entire public Internet infrastructure -- and not
just "private Internets" -- to do business virtually anywhere in the
world with a vast and growing web of customers, suppliers, dealers and
strategic partners. UUNET's ExtraLink is a case in point: It only works
for UUNET customers who subscribe to the service, and it relies on UUNET's
own high-speed backbone and local access provided by MFS instead of
using the public Internet infrastructure.
It would
be a serious mistake to minimize the value of proprietary extranet services.
On the contrary, services like ExtraLink exist largely because today's
Internet lacks security and does not yet support the full range of mission-critical
business applications. Yet harnessing the power of the public Internet,
with its vast and growing universe of users, will become increasingly
attractive both as the Internet grows and as its enabling infrastructure
improves.
By analogy,
the breathtaking commercial growth of the Web, especially since the
launch of Netscape Navigator 1.0 in December 1994, attests to the advantages
of tapping the public Internet for advertising, and increasingly as
a marketing and sales channel. Granted, a few companies have chosen
to make all or part of their web sites accessible only to a limited
number of users -- in Walt Disney's case, to paid subscribers of the
Microsoft Network. Yet the overwhelming number of companies that maintain
a serious Web presence are already generating substantial business value
despite the Internet's current limitations. More extensive on-line business
collaboration -- applications like multi-point videoconferencing over
the Internet, for example -- are the undiscovered country. But I suspect
some of the explorers of that uncharted world are in this room today,
and what you and others will do in the years ahead will keep on defying
the conventional wisdom.
Internet
Commerce & the Global Economy
It is arguably
no coincidence that the rapid development of the Web and enterprise
intranets since 1994 coincides with the emergence of the information
technology (IT) industry as the undisputed driving force in the U.S.
economy for the first time in history. In the past three years, the
IT sector has contributed 27 percent of the growth in U.S. gross domestic
product, compared with, for instance, 14 percent for residential housing
and 4 percent for the auto sector. At the same time, business spending
on IT has risen by nearly 45 percent. During the past year alone --
as the number of corporate web sites has doubled every two-and-a-half
months, and as enterprise intranets have become increasingly mainstream
-- fully one-third of U.S. GDP growth has come directly from the IT
industry. There are now more than 9 million U.S. employees in the domestic
IT sector. Studies show that IT companies have a greater "multiplier
effect" -- the ability to generate jobs throughout the economy -- than
traditional industries like automobile manufacturing. In some cases,
nearly seven additional jobs are created throughout the economy for
every one new IT job.
If anything,
the growth of Web-enabled electronic commerce and the extension of intranets
beyond the enterprise will probably accelerate these trends. Business-to-business
e-commerce today represents just 4 percent of the total U.S. Internet
economy of $15 billion. But that amount is expected to rise to more
than 33 percent, or $66 billion, of a total Internet marketplace that
will be valued at nearly $200 billion just three years from now. Even
today, several early adopters are finding they can make real money by
leveraging the Internet's potential as an interactive marketing and
sales channel instead of a forum for traditional advertising. In the
IT industry, Cisco Systems recently announced that it will soon be the
world's first company to hit an annualized run-rate of $1 billion worth
of products sold over the Internet. Cisco claims that this past January,
13 percent of all its product orders came through its web site.
Nor is
Internet commerce limited to business-to-business applications. For
instance, Chrysler Corp. predicts that within four years, 25 percent
of its sales will come through the Internet, up from less than 2 percent
last year. Chrysler expects its dealerships may consolidate as savvy
buyers use online resources to comparison shop beyond traditional geographic
boundaries. At the same time, extranets will provide business opportunities
for new entrepreneurs. For instance, a California-based company called
Auto-By-Tel has already signed up 1,600 auto dealers across the United
States who pay up to $4,000 a month for their information to be listed
on the company's web site. Auto-By-Tel claims the referral service typically
brings a 30 percent rise in sales -- all at the expense of non-Auto-By-Tel
dealers.
The
Role of Java
In the
broader context, we are evolving toward non-proprietary extranets that
can provide end-to-end, any-to-any security using the public Internet
infrastructure. Within the next five to 10 years, thanks in large part
to technologies like Java, these extranets will become a primary channel
for doing business worldwide. We're not just talking electronic mail
or EDI over the Internet. The extranets of the New Millennium will support
the entire suite of mission-critical business applications that world-class
companies and institutions use today, but which now depend almost entirely
on proprietary systems and leased telecommunications lines.
Java is
already proving to be essential to the extranet evolution in at least
two ways: First, Java is demonstrating its power to perform the heavy-lifting
that extranets will require. This means enabling complex collaborative
programs like customer service, order entry and product data management.
Second, projecting Java beyond the desktop is an integral part of Sun's
overall strategy of making the same programs run on every server and
beyond -- Unix, Windows NT, whatever. It will accelerate the industry's
transition to open systems while helping to enable the kind of any-to-any
functionality on which extranets ultimately depend.
The
Challenges We Face
In the
meantime, the vast majority of today's non-proprietary extranets --
including the InfoTEST manufacturing extranet I spoke of earlier --
will remain in the prototype stage. Other high-profile extranet experiments
include:
* PowerAg,
a pilot agricultural extranet that will reportedly be developed by Electronic
Data Systems Corp. during the next six years at a cost of $26 million.
* An ongoing
extranet testbed to link Big Three auto dealers supported by the Automotive
Industry Action Group, a 1,200-member trade organization.
* A separate
prototype extranet for Ford Motor Co. dealers called FocalPt aimed at
supporting the sales and servicing of cars and trucks for Ford dealers
worldwide.
These and
other pilot projects recognize that at least two major obstacles must
be overcome before non-proprietary extranets can reasonably be expected
to evolve beyond pilot projects and into full-scale commercial production:
The current state of the Internet infrastructure and the need for Internet
security.
Wanted:
More & Better Internet Infrastructure
In terms
of infrastructure, the Internet needs to do more than sign up seemingly
endless numbers of new users. It must also develop the technological
sophistication and consistency to support the kinds of mission-critical
collaborative business applications that commercial extranets will require.
The carriers are making massive investments to upgrade the Internet's
backbone. This process will accelerate as the Internet Engineering Task
Force, the major standards body for the Internet, and others agree on
ways to more accurately measure Internet usage among individual users.
Establishing
reliable Internet traffic-metering, and the supporting billing systems,
is key to encouraging economically rational pricing decisions among
the Internet's various classes of users. It will also help create something
that is conspicuously absent from today's Internet: guaranteed quality
of service. Some users would pay more for a higher class of service
to support mission-critical applications, like on-line ordering and
billing processes. Conversely, those same users might accept a lower
class of service for things like junk e-mail (affectionately known as
"spam"). Internet traffic-metering and billing sounds arcane, but ultimately
it's all about giving people choices. Once the carriers know who is
using the Internet and at what cost, they can start charging accordingly,
and the "right" level of investment should start flowing into the Internet
infrastructure based on actual consumer demand.
Many predict
that the advent of Internet traffic-metering and billing will lead to
a dramatic shake-out in the ISP industry. The jury's still out. But
if these predictions prove correct, the bright side for the remaining
ISPs is that they will also be able to charge the economically "right"
amount for their services -- again triggering the requisite upgrades
in infrastructure, including higher-speed local and regional Internet
access. Without accurate Internet traffic-metering, many ISP pricing
decisions seem a little like trial and error. What are we supposed to
think when America Online focuses on flat-rate pricing at the precise
moment when Netcom announces plans to drop it entirely?
Not to
be outdone by the major carriers and the ISPs, more than 100 U.S. universities
have endorsed the Internet 2 project, part of the federal government's
$100 million Next Generation Internet initiative. The goal of Internet
2 is to develop a broad-band infrastructure for the academic community
that will be 100 times faster than today's Internet. Just as an aside,
do you ever wonder if the professors behind projects like Internet 2
-- the experts who keep telling us their institutions can do for the
Internet -- ever worry about what the Internet might do to them? They
might want to get the March 10th issue of Forbes magazine and check
out the interview with management guru Peter Drucker:
Thirty
years from now the big university campuses will be relics. Universities
won't survive. It's as large a change as when we first got the printed
book. Do you realize that the cost of higher education has risen as
fast as the cost of health care? Such totally uncontrollable expenditures,
without any visible improvement in either the content or the quality
of education, means that the system is rapidly becoming untenable. Higher
education is in deep crisis. . . . Already we are beginning to deliver
more lectures and classes off campus via satellite or two-way video
at a fraction of the cost. The college won't survive as a residential
institution.
For his
part, Drucker -- who also happens to be a professor -- is apparently
the academic equivalent of Intel's Andy Grove: Only the Paranoid Survive.
There is
also the issue of bringing even basic Internet infrastructure to a great
many more places. This global network of networks is still located almost
entirely on the East and West Coasts of the United States. Fully 80
percent of all Internet usage occurs in the continental US. And nearly
100 percent of the data passes through a continental US-based Internet
Network Access Point (NAP) of one of the major carriers, such as Sprint,
MCI or AT&T. This latter point struck me last year at a series of
seminars InfoTEST sponsored in China. Like much of the developing world,
China's fledgling Internet backbone and connections to the United States
are less than three years old. And there is no NAP in China: When someone
sends e-mail from Beijing to China, it must first be routed through
the NASA/Ames NAP in Mountain View, California. This same absence of
basic Internet infrastructure can be found somewhere on every continent.
The commercialization of the extranet will shape, and be shaped by,
the extent to which the public Internet is diffused throughout the strategic
markets of the world.
The
Need for Internet Security
The other
biggest barrier to the commercial evolution of the extranet is the prevailing
lack of Internet security. Of course, information security is a huge
and growing problem, and not just because of the Internet. The Computer
Security Institute recently surveyed 563 U.S. corporate, governmental,
financial and academic organizations and found that three out of four
of them suffered financial losses from computer crimes within the past
year. Contrary to popular belief, most computer theft actually occurs
inside the firewall. The Information Warfare Division of the Defense
Information Agency recently conducted a security audit of 15,000 Pentagon
systems in which vulnerabilities had previously been pointed out to
systems managers for correction. Security auditors were able to gain
access to almost nine out of 10 of the systems simply by using publicly
available techniques. As a result, the Pentagon is reportedly telling
security managers to focus less on preventing outside penetration and
more on detecting intrusions and reacting with immediate shutdowns.
Yet we
also must realize that the Internet raises a unique security dilemma
because it is so broadly accessible throughout the world. We now know,
for instance, that during the Gulf War, computer vandals working from
Eindhoven in the Netherlands cracked into U.S. government computers
at 34 military sites to steal information about troop movements, missile
capabilities and other secret information. The bad guys then offered
these secrets to the Iraqis, who fortunately rejected it because they
mistakenly thought it was a hoax. As Dr. Eugene Schultz, the former
chief of computer security at the U.S. Department of Energy, recently
told the British Broadcasting Company:
We realized
that these files should not have been stored on Internet-capable machines.
They related to our military systems, they related to Operation Desert
Shield at the time, and later Operation Desert Storm. This was a huge
mistake.
By the
way, Saddam Hussein apparently still doesn't get it. A recent editorial
in the Iraqi government newspaper Al-Jumhuriya declares that the Internet,
which is still not accessible in Iraq, is "the end of civilizations,
cultures, interests and ethics." It also warns that the Internet is
"one of the American means to enter every house in the world. They want
to become the only source for controlling human beings in the new electronic
village." It would be nice if all of our enemies were this stupid, but
I wouldn't bank on it.
As America's
national security becomes more closely tied to our economic interests,
the need for greater Internet and information systems protection will
become increasingly critical to corporate users as well as the government.
The entire IT industry must always be realistic not only about the Internet's
current security limitations, but about the overall ambivalence with
which many corporate decisionmakers and government leaders regard the
Internet and all it represents. A recent Deloitte & Touche survey
of almost 1,500 companies around the world found that the overwhelming
majority -- roughly 19 out of 20 -- have no plans to use the Internet
for business transactions in the foreseeable future.
If we are
to succeed in changing corporate attitudes toward the Internet, we must
also recognize that leadership -- or the lack of it -- increasingly
comes from the top. IT-related investment decisions are increasingly
made outside the company's IS shop. A recent survey of 100 CEOs at companies
in North America, Europe and South America found that managers in areas
other than IT now initiate 46 percent of technology projects, while
17 percent are initiated at the board level. Almost half the chief executives
surveyed said they spend more than 10 percent of their time learning
about technology. Incidentally, this trend extends to the U.S. government
as well: Last year's Telecommunications Reform Act established the office
of Chief Information Officer within each major federal department and
agency -- coordinated by an oversight board, the Federal CIO Council
-- to help ensure that taxpayer-funded IT decisions would be made on
a more solid business basis.
By the
way, cultural ambivalence about the Internet, and about information
security, extends to the highest levels of the federal government. You'll
recall that the goal of InfoTEST International's manufacturing extranet
trial is to help Caterpillar and other manufacturers respond to customer
needs anywhere in the world. Yet our actual wide-area testing scenario
is currently limited entirely to the continental United States: The
Clinton Administration's current restrictions on the export of strong
encryption technology means we can't even test the most promising extranet
security solutions outside our borders.
This is
a case where the Clinton Administration and its allies in the business
community need to learn that solving the Internet security problem will
require more than a technological quick-fix. We must also address the
underlying business and public policy issues that are impeding the development
of extranets and other promising channels for electronic communication.
From a business standpoint, empowering virtual teams over the extranet
will require substantial reengineering of management processes and practices.
In this brave new world, your supply chain partner on one project may
simultaneously be your competitor on another. The lion and the lamb
can still lay down together, but only in designated areas. By way of
example, providing the appropriate level of authorization and access
to each individual extranet user only for the scope of a specific project
-- nothing more or less -- is fundamentally a management-driven security
issue, not just a question of the underlying technology and its capabilities.
If anything, the development of the law and corporate policy will probably
lag behind the technology. How companies respond to these and other
non-technological security challenges will determine how they will benefit
from extranet-related investments.
Finally,
on a public policy level, I would respectfully suggest that our government
ought to make it easier, not more difficult, for law-abiding U.S. companies
to protect their proprietary information from being compromised anywhere
in the world. At the same time, our government should place a greater
emphasis on the research and development of promising new security technologies
-- what the research community calls "information surety" -- as well
as the gathering and processing of intelligence and other preventative
measures regarding present and future threats to our information infrastructure.
Taking these steps will help strengthen the development of legitimate
commercial extranets that can increase American security and competitiveness.
Looking
Forward
I'll close
my remarks today with this caveat: As with anything involving the Internet,
when you think about the extranet's problems and possibilities, always
expect the unexpected. The pioneers of the extranet still face some
formidable challenges. Yet if the recent past is prologue, the day is
close at hand when the extranet will become as familar to doing business
as the World Wide Web and the intranet are today. As those pioneers,
you will continue to shatter the conventional wisdom in the months and
years ahead. You'll do amazing things and do the rest of us proud.
Of course,
you're not exactly making my job as a keynote speaker any easier. But
truth be told, if I were fortunate enough to see you again a year from
now, I wouldn't mind throwing away today's entire speech in tribute
to the unexpected successes that you and your fellow pioneers will achieve
in the exciting year that is to come. Thank you.
Back
to Top