Intranet Journal
The online resource for intranet professionals
Just around the corner there's a rainbow in the sky, but IT managers will be keeping their umbrellas handy—and their wallets covered—well into the new year. That consensus translates into continuing flat (or declining) budgets, with phrases like "IT portfolio management" and "leveraging existing assets" replacing "the Internet changes everything" as industry mottoes. Hard-headed business is the new New Age wisdom. Yet while few would argue against focusing on value when planning software projects, deciding how to generate value with Internet technology is a much dicier proposition.
Before the Web threw gold dust in our eyes, for instance, the basic metric for estimating the return on software investments was the FTE: the number of full-time employees the new system could displace. Under this regimen, technology is economically justified when the costs it eliminates or avoids exceed the system's total cost of ownership (TCO) over a specified time frame. Organizations love this veneer of mathematical precision, which is why cutting costs through automation has been technology's most dependable benefit since the Industrial Revolution.
But not for nothing is economics called the dismal science. Like the nineteenth-century machines that displaced cottage industries and turned generations of craftspeople into assembly-line drones, information systems built on the backs of FTEs have a grim feel about them. They tend to kill morale, for one thing. For another, replacing people with CPU cycles overlooks a firm's potential to do things better, rather than merely cheaper. All too often, the bottom-line benefits of automation come at the expense of missed top-line opportunities based on new services, new partners and new markets. Innovation and differentiation are the output of a creative, empowered workforce, not commodity laborers employed because their jobs have not yet been streamlined away.
As good a measure as any of how far we've come since the Web revolution is that phrases like "empowerment" and "creativity" now have a quaint, naïve ring. Nevertheless, these terms, together with "community," "collaboration" and even—whoa, Nelly—"cyberspace," are the right concepts for elevating fussy econometric arguments to the level of human enterprise.
Back in the day we knew this. We recognized the Internet to be more than a non-proprietary infrastructure for business communications. Intuitively, we apprehended the Web as a self-organizing, spontaneous community with no center but lots of value. That, rather than HTTP or the stateless soup of documents it enables, was the revolutionary aspect of the new medium. It still is.
This sounds a whole lot nicer than paying for technology with paychecks, but is there a shred of business sense in it? Or has building community on the Web become a piece of late-1990's kitsch, as admirably high-minded as putting flowers in a gun barrel but just as irrelevant to current events?
The answer is that facilitating creative dialogues between people is the Internet's greatest, and perhaps only, contribution to business culture, much more important than selling things online or lowering supply-chain costs. Contrary to many companies' mission statements, Internet commerce is an oxymoron. B2C and B2B Web sites have found it hard to sustain earnings not because they're missing a trick, but because open standards are all about leveling the playing field, giving everyone the same undifferentiated efficiencies. This is not good news for markets. When every player has access to the same process-streamlining technologies, no one can gain a meaningful cost advantage; when, at the same time, buyers have no exit barriers and substitutes are a click away, the market doesn't just become friction-free, it goes into free fall.
Cost-conscious analysts have been misreading the commoditizing power of open standards as a competitive advantage since they put the 'e' in e-business. While it is true that open technologies lower costs, they erode margins and weaken industry structures even faster. Making openness your business strategy is like stoking a fire with home furnishings: eventually, it leaves you homeless.
The place to look for value in an Internet strategy is the top line. In a marketplace of equals, competitive advantage is a matter of innovation and differentiation, qualities that customers are willing to pay for. But being first or being better are the province of enterprising people getting together to create cool stuff. What Internet technologies like e-mail, the Web and XML do best is lower communication barriers. Let them. Recognize that self-organizing, unmediated communities—whether Web-based discussion forums, mailing lists, or Usenet newsgroups—are by definition creative and self-motivated. Identify and invest in technology and processes that harvest this creative energy toward the goal of making your organization's products and services compellingly unique.
As one example, consider this publication's Intranet Exchange discussion forum, a simple, low-cost collaboration system. This virtual environment attracts a community of intranet professionals who, without formal affiliation or oversight, have generated around 40,000 pages of technical dialogue. That's a heck of a value proposition to keep in mind as you ponder your organization's next Internet investment.
Gordon Benett is a technology strategist with over 16 years experience analyzing, architecting and developing information systems. He is currently with Aberdeen Group (Boston, MA), where as a Senior Research Analyst he follows the Enterprise Java and Middleware markets. Gordon founded Intranet Journal in 1996 and remains a reader and contributing author. He welcomes your comments at gbenett@mediaone.net.